Angel Studios, Inc.
Form 10-K
TABLE OF CONTENTS
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| PART I | |
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| | Item 1. | Business | 7 |
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| | Item 1A. | Risk Factors | 15 |
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| | Item 1B. | Unresolved Staff Comments | 33 |
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| | Item 1C. | Cybersecurity | 33 |
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| | Item 2. | Properties | 33 |
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| | Item 3. | Legal Proceedings | 34 |
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| | Item 4. | Mine Safety Disclosures | 36 |
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| PART II | | |
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| | Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 37 |
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| | Item 6. | [Reserved] | 38 |
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| | Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 38 |
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| | Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 49 |
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| | Item 8. | Financial Statements and Supplementary Data | 50 |
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| | Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 50 |
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| | Item 9A. | Controls and Procedures | 50 |
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| | Item 9B. | Other Information | 50 |
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| | Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 50 |
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| PART III | | |
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| | Item 10. | Directors, Executive Officers and Corporate Governance | 51 |
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| | Item 11. | Executive Compensation | 51 |
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| | Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 51 |
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| | Item 13. | Certain Relationships and Related Transactions, and Director Independence | 51 |
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| | Item 14. | Principal Accounting Fees and Services | 51 |
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| PART IV | | |
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| | Item 15. | Exhibits and Financial Statement Schedules | 52 |
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CERTAIN TERMS
On September 10, 2025, Angel Studios, Inc., a Delaware corporation, and its subsidiaries and affiliates (collectively, the “Company”) (f/k/a Southport Acquisition Corporation or “Southport”) consummated the previously announced Business Combination (as defined below) pursuant to that certain Agreement and Plan of Merger, dated as of September 11, 2024 (as amended, the “Merger Agreement”), by and among the Company, Sigma Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of the Company (“Merger Sub”), and Angel Studios Legacy, Inc. (f/k/a Angel Studios, Inc.), a Delaware corporation (“Angel Legacy”).
Pursuant to the terms of the Merger Agreement, a merger was effected in which Merger Sub merged with and into Angel Legacy, the separate corporate existence of Merger Sub ceased and Angel Legacy survived as the surviving company and direct wholly-owned subsidiary of the Company (the “Merger” and, collectively with the other transactions described in the Merger Agreement, the “Business Combination”). On the Closing Date (as defined in the Merger Agreement), and prior to the Effective Time (as defined in the Merger Agreement), the Company changed its name from “Southport Acquisition Corporation” to “Angel Studios, Inc.” Angel Legacy subsequently merged up and into Angel Studios, Inc., with Angel Studios, Inc. as the surviving entity.
References in this Annual Report on Form 10-K (this “Annual Report”) to “we,” “us,” “our,” “Angel Studios” or the “Company” are to Angel Studios, Inc. and its subsidiaries and affiliates after the close of the Business Combination.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Annual Report including, without limitation, statements under*“Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”* regarding our financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. The forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Such forward-looking statements contained in this Annual Report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties, which are more fully described under*“Part I, Item 1A. Risk Factors,”* include, but are not limited to, the following risks, uncertainties and other factors:
●the ability to recognize the anticipated benefits of and successfully deploy the business combination, which may be affected by, among other things, competition, and the ability of the combined business to grow and manage growth profitably;
| · | the Company’s ability to achieve and maintain profitability in the future; |
| · | the Company’s ability to successfully monetize projects; |
| · | the Company’s success in retaining or recruiting its officers, key employees or directors; |
| · | officers and directors allocating their time to other businesses and potentially having conflicts of interest with the Company’s business; |
| · | the Company’s ability to attract and maintain an adequate customer base; |
| · | the Company’s ability to create and distribute content that is popular with consumers and affiliates; |
| · | the Company’s reliance on a number of partners to make its service available on their devices; |
| · | the Company’s ability to continue to develop and enhance its existing technology; |
| · | any significant disruption in or unauthorized access to the Company’s computer systems or those of third parties that the Company utilizes in its operations, including those relating to cybersecurity or arising from cyber-attacks; |
| · | the Company’s ability to successfully, or profitably, compete with current and new competitors; |
| · | the Company’s ability to consummate any interim financing, and the ability of the Company to raise additional capital, if necessary; |
| · | the Company’s ability to successfully defend litigation or investigations; |
| · | the ability to maintain the listing of the Company’s Common Stock on the NYSE; |
| · | the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; |
| · | changes in applicable laws or regulations; |
| · | geopolitical events and general economic conditions; and |
These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Annual Report are more fully described under the heading “Risk Factors” and elsewhere in this Annual Report. The risks described under the heading “Risk Factors” are not exhaustive. Other sections of this Annual Report describe additional factors that could adversely affect the business, financial condition or results of operations of the Company. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can the Company assess the impact of all such risk factors on its business, or the extent to which any factor or combination of factors may cause actual results to differ materially and adversely from those contained in any forward-looking statements. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. These statements speak only as of the date hereof, and the Company undertakes no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
In addition, statements of belief and similar statements reflect the beliefs and opinions of the Company on the relevant subject. These statements are based upon information available to the Company as of the date of this Annual Report, and while the Company believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that the Company has conducted an exhaustive inquiry into, or review of, all potentially available relevant information.
SUMMARY RISK FACTORS
Our business is subject to varying degrees of risk and uncertainty. Investors should consider the risks and uncertainties summarized below, as well as the risks and uncertainties discussed inPart I, Item 1A, “Risk Factors” of this Annual Report on Form 10-K.
Our business is subject to the following principal risks and uncertainties:
General Risks Related to Our Business
| ● | We are employing a business model with a limited track record, which may make our business difficult to evaluate. |
| ● | We have a history of net losses and can in no way guarantee that we will be able to become or maintain profitability. |
| ● | If our efforts to attract and retain customers are not successful, our business will be adversely affected. |
| ● | The popularity of subscription video on demand releases are difficult to predict and can change rapidly, leading to significant fluctuations in our revenues. A low public acceptance rate of our content may adversely affect our results of operations. |
| ● | The video industry is subject to rapid technological change. We must continue to enhance and improve our technology. |
| ● | Changes in competitive offerings for entertainment video, including the potential rapid adoption of piracy-based video offerings, could adversely impact our business. |
| ● | If we are not able to manage change and growth, our business could be adversely affected. |
| ● | If we fail to maintain or, in new markets establish, a positive reputation with customers concerning our service, including the content we offer and the way in which we allow the customer to help us choose the content that is ultimately added to the service, we may not be able to attract or retain customers, and our operating results may be adversely affected. |
| ● | Changes in how we market our service could adversely affect our marketing expenses and our customer base may be adversely affected. |
| ● | We face risks, such as unforeseen costs and potential liability, in connection with content we acquire and/or distribute through our service. |
| ● | Theatrical distribution typically involves significant risk and high upfront marketing costs, which can cause our financial results to vary from time to time. |
| ● | We rely upon a number of partners to make our service available on their devices. |
| ● | Any significant disruption in or unauthorized access to our computer systems or those of third parties that we utilize in our operations, including those relating to cybersecurity or arising from cyber-attacks, could result in a loss or degradation of service, unauthorized disclosure of data, including customer and corporate information, or theft of intellectual property, including digital content assets, which could adversely impact our business. |
| ● | We rely upon certain third-party cloud computing service providers to operate certain aspects of our service and any disruption of or interference with our use of such services from our providers would impact our operations and our business would be adversely impacted. |
| ● | If the technology we use in operating our business fails, becomes unavailable, or does not operate as expected, our business and operating results could be adversely impacted. |
| ● | If government regulations relating to the internet or other areas of our business change, we may need to alter the manner in which we conduct our business or incur greater operating expenses. |
| ● | Changes in how network operators handle and charge for access to data that travel across their networks could adversely impact our business. |
| ● | Privacy concerns could limit our ability to collect and leverage our customer data and disclosure of customer data could adversely impact our business and reputation. |
| ● | Our reputation and relationships with customers would be harmed if our customer data, particularly billing data, were accessed by unauthorized persons. |
| ● | We are subject to payment processing risk. |
| ● | If our trademarks and other proprietary rights are not adequately protected to prevent use or appropriation by our competitors, the value of our brand and other intangible assets may be diminished, and our business may be adversely affected. |
| ● | Intellectual property claims against us could be costly and result in the loss of significant rights related to, among other things, our website, our recommendation and merchandising technology and marketing activities. |
| ● | We may be engaged in legal proceedings that could cause us to incur unforeseen expenses and could occupy a significant amount of our management’s time and attention. |
| ● | We may seek additional capital that may result in stockholder dilution or others having rights senior to those of our stockholders. |
| ● | We depend on our senior management to achieve our objectives, and our loss of, or inability to obtain, key personnel or inability to attract and retain highly skilled employees could delay or hinder implementation of our business and growth strategies, which could adversely affect the value of your investment and our ability to pay dividends. |
| ● | Our ability to monetize content that we distribute is heavily reliant on factors outside of our control. |
| ● | Holders of our Common Stock will have only limited rights regarding our management, and will thus not have the ability to actively influence the day-to-day management of our business and affairs. |
| ● | We may change our operational policies and business and growth strategies without stockholder consent, which may subject us to different and more significant risks in the future. |
| ● | The ability of a stockholder to recover all or any portion of such stockholder’s investment in the event of a dissolution or termination may be limited. |
| ● | Our Board and our executive officers will have limited liability for, and will be indemnified and held harmless from, our losses. |
| ● | Our business may be subject to regulatory or legislative changes. |
| ● | Members of our Board and our executive officers may have other business interests and obligations to other entities. |
| ● | Provisions in our governing documents and under Delaware law could discourage a takeover that stockholders may consider favorable. |
| ● | Financial forecasting may differ materially and adversely from actual results. |
| ● | Our future indebtedness may limit our ability to declare and pay dividends and may affect our operations, including our ability to repay existing debt obligations. |
| ● | An investment in us is a speculative investment, and therefore, no assurance can be given that our investors or stockholders will realize their investment objectives. |
| ● | We may be found in violation of the Disney Settlement Agreement (as defined below) in relation to the unauthorized use of Copyrighted Works by a Studio or its affiliates. If a Studio prevails in an Enforcement Action against us, our business would be adversely impacted and this would significantly impair our ability to continue as a going concern. |
| ● | We are subject to liens on our personal property, including our intellectual property, under the Reorganization Plan, which if enforced, would significantly impair our intellectual property rights and our ability to continue as a going concern. |
| ● | We do not intend to pay dividends for the foreseeable future. |
| ● | Artificial intelligence (“AI”) technologies present both competitive risks and strategic opportunities for our business. |
| ● | Our increasing use of AI tools in engineering and operations introduces new risks. |
Risks Relating to Our Bitcoin Treasury Strategy
| ● | Our bitcoin holdings are and will be less liquid than cash and cash equivalents and may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. |
| ● | Bitcoin is a highly volatile asset, and fluctuations in the price of bitcoin have in the past influenced and are likely to continue to influence our financial results and the market price of the Common Stock. |
| ● | Bitcoin and other digital assets are novel assets, and are subject to significant legal, commercial, regulatory and technical uncertainty. |
| ● | Our historical financial statements do not reflect the potential variability in earnings that we may experience in the future relating to our bitcoin holdings. |
| ● | We expect that our bitcoin holdings will significantly impact our financial results and the market price of our Common Stock. |
| ● | A significant decrease in the market value of our bitcoin holdings could adversely affect our ability to satisfy our financial obligations. |
| ● | We face risks relating to the custody of our bitcoin, including the loss or destruction of private keys required to access our bitcoin and cyberattacks or other data loss relating to our bitcoin. |
| ● | The emergence or growth of other digital assets, including those with significant private or public sector backing, could have a negative impact on the price of bitcoin and adversely affect our business. |
| ● | Our bitcoin treasury strategy could subject us to enhanced regulatory oversight. |
| ● | Due to the unregulated nature and lack of transparency surrounding the operations of many bitcoin trading venues, bitcoin trading venues may experience greater fraud, security failures or regulatory or operational problems than trading venues for more established asset classes, which may result in a loss of confidence in bitcoin trading venues and adversely affect the value of our bitcoin. |
