TOON Kartoon Studios Inc

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2024

 

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ___________ to ___________

 

Commission File Number: 000-54389

 

KARTOON STUDIOS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada	20-4118216
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

190 N. Canon Drive, 4^th FL

Beverly Hills, CA 90210

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: 310-273-4222

 

______________________________

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

 

Title of each class	Trading Symbol(s)	Name of Exchange where registered
Common Stock, par value $0.001 per share	TOON	The NYSE American

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o		Accelerated filer	o
Non-accelerated filer x		Smaller reporting company	x
		Emerging growth company	o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

 

As of November 13, 2024, the registrant had 39,568,887 shares of common stock outstanding.

 

 

 

Kartoon Studios, Inc.

FORM 10-Q

 

Table of Contents

 

PART I - FINANCIAL INFORMATION	Page Number
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at September 30, 2024 (unaudited) and December 31, 2023	3
Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2024 and 2023	4
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months ended September 30, 2024 and 2023	5
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months ended September 30, 2024 and 2023	6
Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2024 and 2023	8
Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	30
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	39
Item 4. Controls and Procedures.	39
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.	41
Item 1A. Risk Factors.	43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	46
Item 3. Defaults Upon Senior Securities.	46
Item 4. Mine Safety Disclosures.	46
Item 5. Other Information.	46
Item 6. Exhibits.	47
SIGNATURES	48

 

 

 

 

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements

 

Kartoon Studios, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and par value data)

 

		As of
		September 30, 2024				December 31, 2023
		(Unaudited)
ASSETS
Current Assets:
Cash		$	4,581			$	4,095
Investments in Marketable Securities (amortized cost of $4,266 and $12,838, respectively)			4,079				11,950
Accounts Receivable (net of allowance of $241 and $189, respectively)			11,893				18,072
Tax Credits Receivable (net of allowance of $610 and $527, respectively)			12,929				20,714
Notes and Accounts Receivable from Related Party			1,471				1,435
Other Receivable			1,327				103
Prepaid Expenses and Other Assets			900				740
Total Current Assets			37,180				57,109
Noncurrent Assets:
Property and Equipment, net			1,655				1,877
Operating Lease Right-of-Use Assets, net			6,365				7,076
Finance Lease Right-of-Use Assets, net			1,026				1,867
Film and Television Costs, net			1,858				1,295
Investment in Your Family Entertainment AG			17,965				19,094
Intangible Assets, net			21,126				22,993
Other Assets			124				125
Total Assets		$	87,299			$	111,436
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable		$	12,043			$	16,864
Participations Payable			1,188				1,915
Accrued Expenses			1,132				691
Accrued Salaries and Wages			1,707				1,926
Deferred Revenue			5,015				3,127
Margin Loan			1,069				782
Production Facilities			8,739				15,336
Bank Indebtedness			592				2,905
Current Portion of Operating Lease Liabilities			1,120				908
Current Portion of Finance Lease Liabilities			923				1,120
Warrant Liability			–				63
Due to Related Party			4				3
Other Current Liabilities			168				–
Total Current Liabilities			33,700				45,640
Noncurrent Liabilities:
Deferred Revenue			3,371				3,458
Operating Lease Liabilities, Net Current Portion			5,912				6,736
Finance Lease Liabilities, Net Current Portion			107				928
Deferred Tax Liability, net			1,402				1,399
Other Noncurrent Liabilities			7				14
Total Liabilities			44,499				58,175
Commitments and Contingencies (Note 19)							–
Stockholders’ Equity:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, as of September 30, 2024 and December 31, 2023			–				–
0% Series A Convertible Preferred Stock, $0.001 par value, 6,000 shares authorized, 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023			–				–
Series B Preferred Stock, $0.001 par value, 1 share authorized, 1 share issued and outstanding as of September 30, 2024 and December 31, 2023			–				–
Series C Preferred Stock, $0.001 par value, 50,000 shares authorized, 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023			–				–
Common Stock, $0.001 par value, 190,000,000 shares authorized, 39,630,851 and 35,323,217 shares issued and 39,555,161 and 35,247,744 outstanding as of September 30, 2024 and December 31, 2023, respectively			40				352
Additional Paid-in Capital			778,438				773,986
Treasury Stock at Cost, 75,690 and 75,473, shares of common stock as of September 30, 2024 and December 31, 2023, respectively			(339	)			(339	)
Accumulated Deficit			(733,521	)			(718,546	)
Accumulated Other Comprehensive Loss			(3,376	)			(3,883	)
Total Kartoon Studios, Inc. Stockholders' Equity			41,242				51,570
Non-Controlling Interests in Consolidated Subsidiaries			1,558				1,691
Total Stockholders' Equity			42,800				53,261
Total Liabilities and Stockholders’ Equity		$	87,299			$	111,436

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

Kartoon Studios, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(Unaudited)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Revenues:
Production Services		$	4,898			$	6,360			$	12,756			$	23,279
Content Distribution			2,348				2,562				7,002				8,815
Licensing & Royalties			37				153				235				362
Media Advisory & Advertising Services			1,425				997				3,177				2,820
Total Revenues			8,708				10,072				23,170				35,276
Operating Expenses:
Marketing and Sales			290				522				1,026				2,457
Direct Operating Costs			5,766				13,475				15,936				34,301
General and Administrative			5,199				8,679				19,710				26,274
Impairment of Property and Equipment			–				–				–				120
Impairment of Intangible Assets			–				–				–				4,023
Impairment of Goodwill			–				–				–				11,287
Total Operating Expenses			11,255				22,676				36,672				78,462
Loss from Operations			(2,547	)			(12,604	)			(13,502	)			(43,186	)
Interest Expense			(176	)			(672	)			(625	)			(2,777	)
Other Income (Expense), net			602				(2,236	)			(981	)			(6,783	)
Loss Before Income Tax Benefit			(2,121	)			(15,512	)			(15,108	)			(52,746	)
Income Tax Benefit			–				–				–				934
Net Loss			(2,121	)			(15,512	)			(15,108	)			(51,812	)
Net Loss Attributable to Non-Controlling Interests			64				36				133				83
Net Loss Attributable to Kartoon Studios, Inc.		$	(2,057	)		$	(15,476	)		$	(14,975	)		$	(51,729	)
Net Loss per Share (Basic)		$	(0.05	)		$	(0.44	)		$	(0.40	)		$	(1.56	)
Net Loss per Share (Diluted)		$	(0.05	)		$	(0.44	)		$	(0.40	)		$	(1.56	)
Weighted Average Shares Outstanding (Basic)			39,499,680				35,088,333				37,734,415				33,160,228
Weighted Average Shares Outstanding (Diluted)			39,499,680				35,088,333				37,734,415				33,160,228

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

 

Kartoon Studios, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(Unaudited)

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Net Loss		$	(2,121	)		$	(15,512	)		$	(15,108	)		$	(51,812	)
Change in Accumulated Other Comprehensive Income (Loss):
Change in Unrealized Gain on Marketable Securities			134				164				197				907
Realized Losses on Marketable Securities Reclassified from AOCI into Earnings			148				1,897				505				4,154
Foreign Currency Translation Adjustments			41				(550	)			(195	)			157
Total Change in Accumulated Other Comprehensive Loss			323				1,511				507				5,218
Total Comprehensive Net Loss			(1,798	)			(14,001	)			(14,601	)			(46,594	)
Net Loss Attributable to Non-Controlling Interests			64				36				133				83
Total Comprehensive Net Loss Attributable to Kartoon Studios, Inc.		$	(1,734	)		$	(13,965	)		$	(14,468	)		$	(46,511	)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

 

 

 

 

Kartoon Studios, Inc.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

(in thousands, except share data)

 

		Common Stock							Preferred Stock							Additional Paid-In				Treasury Stock							Accumulated				Accumulated Other Comprehensive				Non- Controlling
		Shares			Amount				Shares			Amount				Capital				Shares			Amount				Deficit				Loss				Interest				Total
Balance, December 31, 2023		35,247,744			$	352			1			$	–			$	773,986			75,473			$	(339	)		$	(718,546	)		$	(3,883	)		$	1,691			$	53,261
Issuance of Common Stock for Services		53,497				–			–				–				74			–				–				–				–				–				74
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes		49,949				–			–				–				–			–				–				–				–				–				–
Share Based Compensation		–				–			–				–				226			–				–				–				–				–				226
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss		–				–			–				–				–			–				–				–				161				–				161
Currency Translation Adjustment		–				–			–				–				–			–				–				–				(184	)			–				(184	)
Net Loss		–				–			–				–				–			–				–				(7,045	)			–				(19	)			(7,064	)
Balance, March 31, 2024		35,351,190			$	352			1			$	–			$	774,286			75,473			$	(339	)		$	(725,591	)		$	(3,906	)		$	1,672			$	46,474
Issuance of Common Stock for Services		73,745				–			–				–				83			–				–				–				–				–				83
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes		38,582				–			–				–				25			217				–				–				–				–				25
Proceeds from Securities Purchase Agreement, Net		4,000,000				4			–				–				3,325			–				–				–				–				–				3,329
Share Based Compensation		–				–			–				–				164			–				–				–				–				–				164
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss		–				–			–				–				–			–				–				–				259				–				259
Currency Translation Adjustment		–				–			–				–				–			–				–				–				(52	)			–				(52	)
Net Loss		–				–			–				–				–			–				–				(5,873	)			–				(50	)			(5,923	)
Balance, June 30, 2024		39,463,517			$	356			1			$	–			$	777,883			75,690			$	(339	)		$	(731,464	)		$	(3,699	)		$	1,622			$	44,359
Issuance of Common Stock for Services		91,644				–			–				–				84			–				–				–				–				–				84
Reclassification Related to Reverse Stock Split		–				(316	)		–				–				316			–				–				–				–				–				–
Share Based Compensation		–				–			–				–				155			–				–				–				–				–				155
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss		–				–			–				–				–			–				–				–				282				–				282
Currency Translation Adjustment		–				–			–				–				–			–				–				–				41				–				41
Net Loss		–				–			–				–				–			–				–				(2,057	)			–				(64	)			(2,121	)
Balance, September 30, 2024		39,555,161			$	40			1			$	–			$	778,438			75,690			$	(339	)		$	(733,521	)		$	(3,376	)		$	1,558			$	42,800

 

 

Kartoon Studios, Inc.

Condensed Consolidated Statements of Stockholders' Equity (Continued)

(Unaudited)

(in thousands, except share data)

 

		Common Stock							Preferred Stock							Additional Paid-In				Treasury Stock							Accumulated				Accumulated Other Comprehensive				Non- Controlling
		Shares			Amount				Shares			Amount				Capital				Shares			Amount				Deficit				Loss				Interest				Total
Balance, December 31, 2022		31,918,552			$	319			1			$	–			$	762,418			42,633			$	(290	)		$	(641,443	)		$	(9,925	)		$	1,790			$	112,869
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes		78,088				1			–				–				(1	)		3,700				(9	)			–				–				–				(9	)
Fractional Shares Issued Upon Reverse Stock Split		117,144				–			–				–				–			–				–				–				–				–				–
Share Based Compensation		–				–			–				–				910			–				–				–				–				–				910
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss		–				–			–				–				–			–				–				–				2,367				–				2,367
Currency Translation Adjustment		–				–			–				–				–			–				–				–				3				–				3
Net Loss		–				–			–				–				–			–				–				(23,828	)			–				(31	)			(23,859	)
Balance, March 31. 2023		32,113,784			$	320			1			$	–			$	763,327			46,333			$	(299	)		$	(665,271	)		$	(7,555	)		$	1,759			$	92,281
Issuance of Common Stock for Services		404,251				–			–				–				997			–				–				–				–				–				997
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes		224,988				29			–				–				(29	)		2,165				(6	)			–				–				–				(6	)
Proceeds From Warrant Exchange, net		2,311,550				2			–				–				4,855			–				–				–				–				–				4,857
Share Based Compensation		–				–			–				–				717			–				–				–				–				–				717
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss		–				–			–				–				–			–				–				–				633				–				633
Currency Translation Adjustment		–				–			–				–				–			–				–				–				704				–				704
Net Loss		–				–			–				–				–			–				–				(12,425	)			–				(16	)			(12,441	)
Balance, June 30, 2023		35,054,573			$	351			1			$	–			$	769,867			48,498			$	(305	)		$	(677,696	)		$	(6,218	)		$	1,743			$	87,742
Issuance of Common Stock for Services		26,152				–			–				–				43			–				–				–				–				–				43
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes		64,756				–			–				–				–			2,441				(9	)			–				–				–				(9	)
Share Based Compensation		–				–			–				–				465			–				–				–				–				–				465
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss		–				–			–				–				–			–				–				–				2,061				–				2,061
Currency Translation Adjustment		–				–			–				–				–			–				–				–				(550	)			–				(550	)
Net Loss		–				–			–				–				–			–				–				(15,476	)			–				(36	)			(15,512	)
Balance, September 30, 2023		35,145,481			$	351			1			$	–			$	770,375			50,939			$	(314	)		$	(693,172	)		$	(4,707	)		$	1,707			$	74,240

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

Kartoon Studios, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

		Nine Months Ended September 30,
		2024				2023
Cash Flows from Operating Activities:
Net Loss		$	(15,108	)		$	(51,812	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Amortization of Film and Television Costs			176				612
Depreciation and Amortization of Property, Equipment & Intangible Assets			1,791				1,943
Amortization of Right-of-Use Asset			1,400				2,179
Amortization of Premium on Marketable Securities			59				369
Share-Based Compensation Expense			545				2,091
Impairment of Film and Television Costs			–				6,172
Impairment of Intangible Assets			–				4,023
Impairment of Goodwill			–				11,287
Impairment of Property and Equipment			–				120
Deferred Income Taxes			–				(934	)
Loss on Early Lease Termination			–				232
Marketing Expenses in Exchange for Stock			–				1,195
(Gain) Loss on Revaluation of Equity Investments in Your Family Entertainment AG			1,342				(1,102	)
Unrealized (Gain) Loss on Foreign Currency of Equity Investments in Your Family Entertainment AG			(212	)			205
Gain on Revaluation of Warrants			(63	)			(8,999	)
Realized Loss on Marketable Securities			505				4,154
Warrant Incentive Expense			–				12,664
Stock Issued for Services			242				1,040
Credit Loss Expense			144				351
Other Non-Cash Items			(10	)			2
Decrease (Increase) in Operating Assets:
Accounts Receivable			6,127				3,481
Other Receivable			(1,229	)			909
Tax Credits Earned (less capitalized)			(6,468	)			(12,327	)
Tax Credits Received			13,760				12,247
Film and Television Costs, net			(744	)			(778	)
Prepaid Expenses and Other Assets			(169	)			(178	)
Increase (Decrease) in Operating Liabilities:
Accounts Payable			(4,816	)			(1,875	)
Accrued Salaries & Wages			(190	)			(358	)
Accrued Expenses			439				(71	)
Accrued Production Costs			491				806
Participations Payable			(709	)			(942	)
Deferred Revenue			1,840				(6,208	)
Lease Liability			(429	)			(695	)
Due to Related Party			(3	)			55
Other Liabilities			162				(26	)
Net Cash Used in Operating Activities			(1,127	)			(20,168	)
Cash Flows from Investing Activities:
Repayments from/(Loans to) Related Party for Note Receivables			(37	)			1,393
Proceeds from Principal Collections on Marketable Securities			–				460
Proceeds from Sales and Maturities of Marketable Securities			8,009				67,633
Purchase of Property & Equipment			(70	)			(68	)
Net Cash Provided by Investing Activities			7,902				69,418
Cash Flows from Financing Activities:
Proceeds from Margin Loan			9,054				17,619
Repayments of Margin Loan			(8,767	)			(76,182	)
Proceeds from Production Facilities			6,492				11,161
Repayment of Production Facilities			(13,168	)			(9,451	)
(Repayments of )/Proceeds from Bank Indebtedness, net			(2,253	)			573
Proceeds from Securities Purchase Agreement			3,329				5,299
Principal Payments on Finance Lease Obligations			(1,040	)			(1,555	)
Debt Issuance Costs			(116	)			(18	)
Shares Withheld for Taxes on Vested Restricted Shares			25				(25	)
Payment for Warrant Put Option Exercise			–				(250	)
Net Cash Used in Financing Activities			(6,444	)			(52,829	)
Effect of Exchange Rate Changes on Cash			155				34
Net Increase (Decrease) in Cash			486				(3,545	)
Beginning Cash			4,095				7,432
Ending Cash		$	4,581			$	3,887
Supplemental Disclosures of Cash Flow Information
Cash Paid for Interest		$	145			$	285
Non-Cash Financing and Investing Activities
Leased Assets Obtained in Exchange for New Finance Lease Liabilities		$	–			$	1,432
Warrants Issued for Services		$	–			$	443
Warrant Modification		$	–			$	3,510

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

 

Kartoon Studios, Inc.

Notes to Condensed Consolidated Financial Statements

September 30, 2024

 

Note 1: Organization and Business

 

Organization and Nature of Business

 

Kartoon Studios, Inc. (formerly known as Genius Brands International, Inc.; the “Company”) is a global content and brand management company that creates, produces, licenses, and broadcasts timeless and educational, multimedia animated content for children. Led by experienced industry personnel, the Company distributes its content primarily on streaming platforms and television, and licenses properties for a broad range of consumer products based on the Company’s characters. The Company is a “work for hire” producer for many of the streaming outlets and animated content intellectual property (“IP”) holders. In the children’s media sector, the Company’s portfolio features “content with a purpose” for toddlers to tweens, providing enrichment as well as entertainment. With the exception of selected WOW Unlimited Media Inc. (“Wow”) titles, the Company’s programs, along with licensed programs, are being broadcast in the United States on the Company’s wholly-owned advertisement supported video on demand (“AVOD”) service, its free ad supported TV (“FAST”) channels and subscription video on demand (“SVOD”) outlets, Kartoon Channel! and Ameba TV, as well as linear streaming platforms. These streaming platforms include Comcast, Cox, DISH, Sling TV, Amazon Prime Video, Amazon Fire, Roku, Apple TV, Apple iOS, Android TV, Android mobile, Pluto TV, Xumo, Tubi, YouTube, YouTube Kids and KartoonChannel.com, as well as Samsung and LG smart TVs. The Company's in-house owned and produced animated shows include Stan Lee’s Superhero Kindergarten starring Arnold Schwarzenegger, Llama Llama starring Jennifer Garner, and Rainbow Rangers, KC Pop Quiz and Shaq’s Garage starring Shaquille O’Neal. The Company’s library titles include the award-winning Baby Genius, adventure comedy Thomas Edison’s Secret Lab®, and Warren Buffett’s Secret Millionaires Club, created with and starring iconic investor Warren Buffett, Team Zenko Go!, Reboot, Bee & PuppyCat: Lazy in Space and Castlevania.

 

The Company also licenses its programs to other services worldwide, in addition to the operation of its own channels, including, but not limited to, Netflix, Paramount+, Max, Samsung TV Plus, LG Smart TVs, Amazon, Nickelodeon, and satellite, cable and terrestrial broadcasters around the world.

 

Through the Company’s investments in Germany’s Your Family Entertainment AG (“YFE”), a publicly traded company on the Frankfurt Stock Exchange (RTV-Frankfurt), it has gained access to a leading producer and distributor of high-quality children’s and family programming. YFE owns and operates one of Europe’s largest channel-independent libraries of around 150 titles and 3,500 half-hour episodes.

 

Through the ownership of Wow, the Company established an affiliate relationship with Mainframe Studios, which is one of the largest animation producers in the world. In addition, Wow owns Frederator Networks Inc. (“Frederator”), the largest animation focused creator network on YouTube with over 2,500 channels. Frederator also owns Frederator Studios, focused on developing and producing shorts and series for and with partners. Over the past 20 years, Frederator Studios has partnered with Cartoon Network, Nickelodeon, Nick Jr., Netflix, Sony Pictures Animation and Amazon.

 

The Company has rights to a select amount of valuable IP, including among them a controlling interest in Stan Lee Universe, LLC (“SLU”), through which it controls the name, likeness, signature, and all consumer product and IP rights to Stan Lee (the “Stan Lee Assets”). Known by his signature phrase “Excelsior!”, Stan Lee is one of the most prolific and legendary creators of all time. As Marvel's editor-in-chief, Stan "The Man" Lee helped build a universe of interlocking continuity, one where fans felt as if they could turn a street corner and run into a superhero from Spider-Man to the Fantastic Four, Thor, Iron Man, the Hulk, the X-Men, and more. Stan went on to become Marvel’s editorial director and publisher in 1972 and was eventually named chairman emeritus. He was the co-creator of characters appearing in 3 of the top 10 box office movies of all time, which featured Spider-Man, Iron Man, the Hulk, Thor, Guardians of the Galaxy, Black Panther, and of course the Avengers, accounting for billions of dollars of revenue for Marvel and the Walt Disney Company.

 

 

 

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The Company also owns The Beacon Media Group, LLC (“Beacon Media”) and The Beacon Communications Group, Ltd. (“Beacon Communications”) (collectively, “Beacon”), a North American marketing and media agency specializing in creating impactful connections between consumers and brands across various industries. With a focus on in-depth research and analysis the agency equips brands with a deep understanding of media landscapes, trends, and platform patterns across generations along with developing highly effective media strategies that deliver results for clients. Beacon represents over 20 kids and family clients including Bandai Namco, Moose Toys, Bazooka Candy Brands, Goliath Games, Playmates Toys, Cepia LLC, Cra-Z-Art, and Zebra Pens.

 

In addition, the Company owns the Canadian company Ameba Inc. (“Ameba”), which distributes SVOD service for kids and has become a focal point of revenue for TOON Media Networks’ subscription offering.

 

Recent Transactions

 

The Company announced the initial closing of its registered direct offering of up to $7,000,000 (the “Offering”) on April 23, 2024. In the initial closing, the Company sold 3,900,000 shares of its common stock, par value $0.001 per share (the “Common Stock”), and pre-funded warrants to purchase up to 100,000 shares of Common Stock (the “Pre-funded Warrants”) to an institutional investor (the "Investor"), at $1.00 per share of Common Stock and $0.99 per Pre-funded Warrant, for aggregate gross proceeds of approximately $4,000,000, prior to deducting placement agent fees and other offering expenses, pursuant to a securities purchase agreement, dated April 18, 2024 (the “SPA”). Pursuant to the terms of the SPA, the Investor had the sole option to purchase up to an additional 3,000,000 shares of Common Stock and/or Pre-funded Warrants as part of the Offering, at $1.00 per share of Common Stock and $0.99 per Pre-Funded Warrant, which has since expired. Additionally, the Company has 4,784,909 warrants with a reprice option that was triggered by the registered direct offering which reduced the exercise price from $2.50 per share to $1.00 per share.

 

On June 21, 2024, the Company announced the launch of “Winnie-the-Pooh” on the Kartoon Channel through a $30.0 million joint venture with Catalyst Venture Partners (the “JV”). The JV stipulates after Catalyst Venture Partners recoup their investment, the ownership and profit split between the partners is 60% to Kartoon Studios and 40% to Catalyst Venture Partners. “Winnie-the-Pooh” is based on the designs and stories of one of the most successful brands of all time, A.A. Milne’s “Winnie-the-Pooh,” a property that has generated over $80 billion in sales over the last four decades and is estimated to currently generate $3-$6 billion per year. Catalyst Venture Partners will provide the full amount of the production finance with the plan to include an animated holiday movie, five holiday specials and 4 seasons of episodic series.

 

Liquidity, Going Concern, and Capital Resources

 

As of September 30, 2024, the Company had cash of $4.6 million, which increased by $0.5 million as compared to December 31, 2023. The increase was primarily due to cash provided by investing activities of $7.9 million, offset by cash used in financing activities of $6.4 million and cash used for operating activities of $1.1 million. The cash provided by investing activities was primarily due to sales of marketable securities of $8.0 million. The cash used in financing activities was primarily due to repayments of the production facilities, finance lease obligations, and bank indebtedness, net of proceeds from each, resulting in net cash used of $10.0 million, offset by net proceeds from the Offering of $3.3 million and margin loan of $0.3 million.

 

As of September 30, 2024, the Company held available-for-sale marketable securities with a fair value of $4.1 million, a decrease of $7.9 million as compared to December 31, 2023 due to sales and maturities during the nine months ended September 30, 2024. The available-for-sale securities consist principally of corporate and government debt securities and are also available as a source of liquidity.

 

As of September 30, 2024 and December 31, 2023, the Company’s margin loan balance was $1.1 million and $0.8 million, respectively. During the nine months ended September 30, 2024, the Company borrowed an additional $9.1 million from its investment margin account and repaid $8.8 million primarily with cash received from sales and maturities of marketable securities. The borrowed amounts were primarily used for operational costs. The interest rates for the borrowings fluctuate based on the Fed Funds Upper Target plus 0.60%. The weighted average interest rates were 0.46% and 0.98%, respectively, on average margin loan balances of $1.0 million and $27.4 million as of September 30, 2024 and December 31, 2023, respectively.

 

 

 

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For the three months ended September 30, 2024 and September 30, 2023, the Company incurred interest expense on the margin loan of $11,070 and $0.2 million, respectively. The Company incurred interest expense on the margin loan of $42,131 and $1.5 million during the nine months ended September 30, 2024 and September 30, 2023, respectively. The investment margin account borrowings do not mature but are collateralized by the marketable securities held by the same custodian and the custodian can issue a margin call at any time, effecting a payable on demand loan. Due to the call option, the margin loan is recorded as a current liability on the Company’s condensed consolidated balance sheets.

 

The Company is subject to financial and customary affirmative and negative non-financial covenants on the revolving demand facility and equipment lease agreements that have an aggregate total outstanding balance of $1.2 million U.S. dollars (“USD”) or $1.6 million of Canadian dollars (“CAD”).

 

During March 2024, the Company amended the revolving demand facility, equipment lease line, and treasury risk management facility. As a result of the amendment, the revolving demand facility allows for draws of up to $0.7 million (CAD 1.0 million) to be made by way of CAD prime rate loans, CAD overdrafts, USD base rate loans or letters of credit up to a maximum of $200,000 in either CAD or USD and having a term of up to 1 year. The CAD prime borrowings and overdrafts bear interest at a rate equal to bank prime plus 2.00% per annum. The USD base rate borrowings bear interest at a rate equal to bank base rate plus 2.00% per annum. In addition, the equipment lease line was terminated, however, the Company has and will continue to make the regular principal and interest payments under the specific financing terms of the existing equipment lease agreements. The amendment removed the treasury risk management facility that allowed for advances of up to $0.4 million (CAD 0.5 million). As of the date of the amendment and December 31, 2023, there were no outstanding amounts drawn under the treasury risk management facility. The amendment also introduced revised financial covenants that are effective as of March 15, 2024. As of September 30, 2024, the Company was not in compliance with a financial covenant to maintain a minimum liquidity threshold. Due to financial covenant violations in the second quarter of 2024, the Company’s remaining equipment lease agreements with the lender of $0.6 million (CAD 0.8 million) as of September 30, 2024, are subject to early repayment. During the three months ended September 30, 2024, the lender and the Company agreed to a repayment plan for the equipment leases under the equipment lease line to be completed prior to the end of the fourth quarter of 2024. On August 30, 2024, the Company paid $0.1 million (CAD 0.1 million) to the lender as part of its early repayment plan for the existing equipment lease line agreements. Subsequent to September 30, 2024, the Company paid $0.3 million (CAD 0.4 million) to the lender as part of its repayment plan for the equipment lease line. The amendment and covenant violation did not have any impact on the Company’s production facilities that are separate from the revolving demand facility and are used for financing specific productions.

 

In accordance with Accounting Standards Codification (“ASC”), Presentation of Financial Statements – Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern for at least one year after the date the condensed consolidated financial statements are issued.

 

Historically, the Company has incurred net losses. For the three months ended September 30, 2024 and September 30, 2023, the Company reported net losses of $2.1 million and $15.5 million, respectively. For the nine months ended September 30, 2024 and September 30, 2023, the Company reported net losses of $15.1 million and $51.8 million, respectively. The Company reported net cash used in operating activities of $1.1 million and net cash used in operating activities of $20.2 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. As of September 30, 2024, the Company had an accumulated deficit of $733.5 million primarily due to approximately $450 million of expenses related to non-operational warrant and stock option expense recorded in 2020 and 2021, and total stockholders’ equity of $42.8 million. As of September 30, 2024, the Company had total current assets of $37.2 million, including cash of $4.6 million and marketable securities of $4.1 million, and total current liabilities of $33.7 million. The Company had working capital of $3.5 million as of September 30, 2024, compared to working capital of $11.5 million as of December 31, 2023. Based on our current expected level of operating expenditures and the cash and cash equivalents on hand at September 30, 2024, management concludes that there is substantial doubt about our ability to continue as a going concern for a period of at least 12 months subsequent to the issuance of the accompanying condensed consolidated financial statements. Historically, the Company has financed its operations primarily through revenue generated from operations, loans and sales of its securities, and the Company expects to continue to seek and obtain additional capital in a similar manner. The Company has filed a registration statement on Form S-3 on December 22, 2023, as amended, registering the sale of up to $75 million of the Company’s securities pursuant to a shelf registration statement, and a registration statement on Form S-1 on September 27, 2024, as amended, in connection with a best efforts public offering of up to $8 million of the Company’s securities. However, the Company does not have any committed sources of financing at this time, and it is uncertain whether any additional funding will be available when it needs it on terms that will be acceptable to it, or at all. The Company’s ability to sell securities registered on its registration statement on From S-3 is limited until such time that the market value of its voting securities held by non-affiliates is $75 million or more. In addition, the number of shares of common stock and securities convertible or exercisable for common stock that the Company can sell, under certain circumstances, will be limited by NYSE American rules and regulations. There can be no assurance that the Company will be able to raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of its existing shareholders will be diluted. The issuance of debt can result in restrictive covenants that limit operations. If funding is not available or not available at terms acceptable to the Company, the Company will seek to reduce overhead costs and reduce its weekly cash obligations in the short term as needed. In addition, the Company can look to divest or bring in equity partners for our various divisions and bring in near term capital.

 

 

 

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Note 2: Basis of Presentation and Summary of Significant Accounting Policies

 

The accompanying interim condensed consolidated financial statements of the Company have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on April 9, 2024. The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) that are reported in the condensed consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgments and estimates. Actual results may differ from these estimates.

 

Prior Periods and Reclassifications

 

Certain prior year amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on the Company’s reported total revenues, expenses, net loss, current assets, total assets, current liabilities, total liabilities, stockholders’ equity, non-controlling interests or cash flows. No reclassifications of prior period balances were material to the unaudited condensed consolidated financial statements.

 

Interim results are not necessarily indicative of financial results for a full year or any other period. The information included in this Form 10-Q should be read in conjunction with the Company’s 2023 Annual Report on Form 10-K.

 

The following is provided to update the Company’s significant accounting policies previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

 

Foreign Currency Forward Contracts

 

As of September 30, 2024, the gross amounts of foreign currency (“FX”) forward contracts in an asset and liability position subject to a master netting arrangement resulted in a net liability of $0.2 million recorded within Other Current Liabilities on the condensed consolidated balance sheets. As of December 31, 2023, the FX contracts were fully settled and netted to zero on the Company’s condensed consolidated balance sheets.

 

For the three and nine months ended September 30, 2024, the Company recorded a realized gain of $35,601 and $86,355, respectively, on FX forward contracts within Production Services Revenue on the condensed consolidated statements of operations. For the three and nine months ended September 30, 2023, the Company recorded a realized loss of $14,890 and $40,294, respectively, on FX forward contracts within Production Services Revenue on the condensed consolidated statements of operations.

 

Trade Accounts Receivable and Allowance for Credit Loss

 

As of September 30, 2024 and December 31, 2023, the Company recorded an allowance for credit loss of $0.2 million and $0.2 million, respectively.

 

Tax Credits Receivable

 

As of September 30, 2024 and December 31, 2023, $12.9 million and $20.7 million, respectively, in current tax credit receivables related to Wow’s film and television productions were recorded, net of $0.6 million and $0.5 million, respectively, recorded as an allowance for credit loss. It is estimated that the Company will collect the receivables balance; therefore, no additional reserve was recorded.

 

 

 

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Concentration of Risk

 

The Company maintains its cash in bank deposit accounts which, at times, may exceed the Federal Deposit Insurance Corporation’s (“FDIC”) or the Canadian Deposit Insurance Corporation’s (“CDIC”) insured amounts. Balances on interest bearing deposits at banks in the United States are insured by the FDIC up to $250,000 per account and deposits in banks in Canada are insured by the CDIC up to CAD 100,000. As of September 30, 2024 and December 31, 2023, the Company had twelve and ten bank deposit accounts with an aggregate uninsured balance of $3.0 million and $2.5 million, respectively.

 

The Company has a managed account with a financial institution. The managed account maintains its investments in marketable securities of approximately $4.1 million and $12.0 million as of September 30, 2024 and December 31, 2023, respectively. Assets in the managed account are protected by the Securities Investor Protection Corporation (“SIPC”) up to $500,000 (with a limit of $250,000 for cash). In addition, the financial institution provides additional “excess of SIPC” coverage which insures up to $1.0 billion. As of September 30, 2024 and December 31, 2023, the Company did not have account balances held at this financial institution that exceed the insured balances.

 

The Company’s investment portfolio consists of investment-grade securities diversified among security types, industries and issuers. The Company’s policy limits the amount of credit exposure to any one security issue or issuer and the Company believes no significant concentration of credit risk exists with respect to these investments.

 

During the three months ended September 30, 2024, the Company had four customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 77.2% of the total revenue.

 

During the nine months ended September 30, 2024, the Company had three customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 60.2% of the total revenue. As of September 30, 2024, the Company had three customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 59.4% of the total accounts receivable as of September 30, 2024.

 

During the three months ended September 30, 2023, the Company had four customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 73.1% of the total revenue.

 

During the nine months ended September 30, 2023, the Company had four customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 79.3% of the total revenue. As of September 30, 2023, the Company had three customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 55.6% of the total accounts receivable as of September 30, 2023.

 

There is significant financial risk associated with a dependence upon a small number of customers. The Company periodically assesses the financial strength of these customers and establishes allowances for any anticipated credit losses.

 

Fair Value of Financial Instruments

 

The following table summarizes the marketable securities measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2024 (in thousands):

 

Schedule of marketable securities measured at fair value on a recurring basis
		Level 1				Level 2				Total Fair Value
Investments in Marketable Securities:
Corporate Bonds		$	1,035			$	–			$	1,035
U.S. agency and government sponsored securities			–				1,913				1,913
U.S. states and municipalities			–				1,131				1,131
Total		$	1,035			$	3,044			$	4,079

 

 

 

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Fair values were determined for each individual security in the investment portfolio. The Company’s marketable securities are considered to be available-for-sale investments as defined under the Financial Accounting Standards Board (“FASB”) ASC 320, Investments – Debt and Equity Securities. An allowance for credit loss was not recorded for the marketable securities as of September 30, 2024 and December 31, 2023. Refer to Note 5 for additional details.

 

New Accounting Standards Issued but Not Yet Adopted

 

In October 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-06, Disclosure Improvements. The new guidance clarifies or improves disclosure and presentation requirements on a variety of topics in the codification. The amendments will align the requirements in the FASB Accounting Standard Codification with the SEC’s regulations. The amendments are effective prospectively on the date each individual amendment is effectively removed from Regulation S-X or Regulation S-K. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the condensed consolidated financial statements and related disclosures, which is not expected to be material.

 

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting – Improvements to Reportable Segments Disclosures. The amendments enhance disclosures of significant segment expenses by requiring disclosure of significant segment expenses regularly provided to the chief operating decision maker (CODM), extend certain annual disclosures to interim periods, and permit more than one measure of segment profit or loss to be reported under certain conditions. The amendments are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption of the amendment is permitted, including adoption in any interim periods for which financial statements have not been issued. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the condensed consolidated financial statements and related disclosures, which is expected to result in enhanced disclosures.

 

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the condensed consolidated financial statements and related disclosures, which is expected to result in enhanced disclosures and is not expected to be material.

 

Note 3: Variable Interest Entity

 

In July 2020, the Company entered into a binding term sheet with POW! Entertainment, LLC. (“POW”) in which the Company agreed to form an entity with POW to exploit certain rights in intellectual property created by Stan Lee, as well as the name and likeness of Stan Lee. The entity is called “Stan Lee Universe, LLC” (“SLU”). POW and the Company executed an operating agreement for the joint venture, effective as of June 1, 2021. The purpose of the acquisition was to enable the Company to assume the worldwide rights, in perpetuity, to the name, physical likeness, physical signature, live-action and animated motion picture, television, online, digital, publishing, comic book, merchandising and licensing rights to Stan Lee and over 100 original Stan Lee creations (the “Stan Lee Assets”), from which the Company plans to develop and license multiple properties each year.

 

During the three months ended September 30, 2024 and September 30, 2023, SLU generated a net loss of $63,552 and $35,846, respectively. During the nine months ended September 30, 2024 and September 30, 2023, SLU generated a net loss of $132,750 and $83,179, respectively. There were no contributions or distributions during the three and nine months ended September 30, 2024 and September 30, 2023, and there were no changes in facts and circumstances that would result in a re-evaluation of the VIE assessment.

 

 

 

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Note 4: Investment in Equity Interest

 

As of September 30, 2024 and December 31, 2023, the Company owned 6,857,132 shares of YFE. At the time of the initial investment in 2021, it was determined that based on the Company’s 28.69% ownership in YFE, the Company had significant influence over the entity. Therefore, under the equity method of accounting, the Company elected to account for the investment at fair value under the fair value option. Under the fair value option, the investment is remeasured and recorded at fair value each reporting period, with the change recorded through earnings. As of September 30, 2024, the fair value of the investment was determined to be $18.0 million recorded within noncurrent assets on the Company’s condensed consolidated balance sheets. YFE shows a considerably lower trading volume compared to industry standards, especially within the broader media and entertainment sector. Under ASC 820, for an asset or liability to qualify as Level 1, it must have quoted prices in an active market. However, the standard also addresses situations where trading volume is low. ASC 820-10-35-41 states that an active market is one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. When trading volume is low, determining whether the market is still active requires judgment. When considering the use of share price to value an investment in YFE the company had to weigh the arguments for and against the application of Level 1 inputs under ASC 820. An asset could remain in Level 1 if there are enough considerations to support that the market is accessible and reflects current pricing information, despite low volume. While the low trading volume raises concerns regarding the reliability of using share price as a Level 1 input under ASC 820, the company will closely monitor the trading volume and financial performance of the investee. This ongoing oversight will help ensure that any updates to the investment's fair value reflect true market conditions as they evolve over time, considering both the potential growth of the company and fluctuations in trading activity.

 

The fair value as of September 30, 2024 decreased by net $1.1 million, as compared to December 31, 2023. The decrease is the effect of foreign currency remeasurement from EURO to USD resulting in a gain of $0.2 million and share price fluctuations resulting in a loss of $1.3 million. The total change in fair value is recorded within Other Income (Expense), net on the Company’s condensed consolidated statements of operations. As of September 30, 2024 and December 31, 2023, the Company’s ownership in YFE was 44.8%.

 

Note 5: Marketable Securities

 

The Company classifies and accounts for its marketable debt securities as available-for-sale securities (“AFS”) and the securities are stated at fair value. Per ASC 326, the Company is required to recognize an allowance for credit losses on its AFS debt securities and recognize a credit loss expense once securities become impaired.

 

The investments in marketable securities had an adjusted cost basis of $4.3 million and a market value of $4.1 million as of September 30, 2024. The balances consisted of the following securities (in thousands):

 

Schedule of marketable securities
		Adjusted Cost				Unrealized Loss				Fair Value
Corporate Bonds		$	1,080			$	(45	)		$	1,035
U.S. Agency and Government Sponsored Securities			2,000				(87	)			1,913
U.S. States and Municipalities			1,186				(55	)			1,131
Total		$	4,266			$	(187	)		$	4,079

 

The investments in marketable securities as of December 31, 2023 had an adjusted cost basis of $12.8 million and a market value of $12.0 million. The balances consisted of the following securities (in thousands):

 

		Adjusted Cost				Unrealized Loss				Fair Value
Corporate Bonds		$	6,333			$	(425	)		$	5,908
U.S. Treasury			646				(37	)			609
U.S. Agency and Government Sponsored Securities			2,000				(148	)			1,852
U.S. States and Municipalities			3,859				(278	)			3,581
Total		$	12,838			$	(888	)		$	11,950

 

The Company holds 5 AFS securities, all of which were in an unrealized loss position and have been in an unrealized loss position for a period greater than 12 months as of September 30, 2024. The AFS securities held by the Company as of December 31, 2023 had also been in an unrealized loss position for a period greater than 12 months. The Company reported the net unrealized losses in accumulated other comprehensive income (loss), a component of stockholders’ equity. As of September 30, 2024 and December 31, 2023, an allowance for credit loss was not recognized as the issuers of the securities had not established a cause for default, various rating agencies had reaffirmed each security's investment grade status and the Company did not have the intent, nor is it required to sell its securities prior to recovery.

 

 

 

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Realized losses of $0.1 million and $1.9 million were recognized in earnings during the three months ended September 30, 2024 and September 30, 2023, respectively. Realized losses of $0.5 million and $4.2 million were recognized in earnings during the nine months ended September 30, 2024 and September 30, 2023, respectively. The losses were due to selling securities prior to maturity to prevent further market condition losses on the securities.

 

The contractual maturities of the Company’s marketable investments as of September 30, 2024 were as follows (in thousands):

 

Schedule of contractual maturities of marketable investments
		Fair Value
Due within 1 year		$	–
Due after 1 year through 5 years			4,079
Total		$	4,079

 

The Company may sell certain of its marketable debt securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation.

 

Note 6: Property and Equipment, net

 

The Company has property and equipment as follows (in thousands):

 

Schedule of property and equipment, net
		As of
		September 30, 2024				December 31, 2023
Furniture and Equipment		$	117			$	117
Computer Equipment			226				219
Leasehold Improvements			2,208				2,200
Software			250				192
Property and Equipment, gross			2,801				2,728
Less Accumulated Depreciation			(985	)			(724	)
Foreign Currency Translation Adjustment			(161	)			(127	)
Property and Equipment, net		$	1,655			$	1,877

 

During the three months ended September 30, 2024 and September 30, 2023, the Company recorded depreciation expense of $0.1 million and $0.1 million, respectively. During the nine months ended September 30, 2024 and September 30, 2023, the Company recorded depreciation expense of $0.3 million and $0.3 million, respectively.

 

The Company did not incur any impairment charges on its property and equipment during the three and nine months ended September 30, 2024.

 

Due to a lease termination effective August 1, 2023, $0.1 million of property and equipment was written down to zero and recorded in loss on lease termination within Other Income (Expense), net on the condensed consolidated statement of operations during the three and nine months ended September 30, 2023. In addition, during the first quarter of 2023, due to changes in the Company's estimated undiscounted future cash flows, a reassessment of its long-lived assets was performed. As a result, the carrying value of one of the Company's asset group’s property and equipment assets were written down to zero and an Impairment of Property and Equipment of $0.1 million was recorded within Operating Expenses in the condensed consolidated statement of operations.

 

 

 

16

 

 

Note 7: Leased Right-of-Use Assets, net

 

Leased right-of-use assets consisted of the following (in thousands):

 

Schedule of leased right of use assets
		As of
		September 30, 2024				December 31, 2023
Office Lease Assets		$	9,437			$	9,437
Equipment Lease Assets			5,360				5,360
Right-of-Use Assets, Gross			14,797				14,797
Accumulated Amortization			(6,637	)			(5,237	)
Foreign Currency Translation Adjustment			(769	)			(617	)
Leased Right-of-Use Assets, net		$	7,391			$	8,943

 

As of September 30, 2024, the weighted-average lease term for the Company’s operating leases was 76 months and the weighted-average discount rate was 11.1%. As of December 31, 2023, the weighted-average lease term for operating leases was 83 months and the weighted-average discount rate was 11.1%.

 

Operating lease costs during the three months ended September 30, 2024 and September 30, 2023 were $0.9 million and $0.4 million, respectively, recorded within General and Administrative Expenses on the Company’s condensed consolidated statements of operations. Operating lease costs during the nine months ended September 30, 2024 and September 30, 2023 were $1.2 million and $1.2 million, respectively, recorded within General and Administrative Expenses on the Company’s condensed consolidated statements of operations.

 

During the three and nine months ended September 30, 2024, the Company recorded right-of-use (“ROU”) amortization of $0.2 million and $1.0 million, respectively. During the three and nine months ended September 30, 2023, the Company recorded ROU amortization of $0.5 million and $1.6 million, respectively. ROU amortization is recorded within General and Administrative Expenses and accretion of interest expense is recorded within Other Income (Expense), net on the Company’s condensed consolidated statements of operations.

 

On August 2, 2023, Beacon Media, signed a Termination of Lease Agreement (the “Lease Termination”), effective August 1, 2023 (the “Effective Date”), related to the office space in Lyndhurst, NJ. The Lease Termination requires Beacon Media to pay an aggregate of $0.1 million in consideration for terminating the lease. The Company wrote off the ROU asset, lease liability, prepaid deposit and fixed assets on the Effective Date. Including fees, the Company recorded a total loss on lease termination of $0.2 million within Other Income (Expense), net on the Company’s condensed consolidated statement of operations during the three months ended September 30, 2023.

 

Note 8: Film and Television Costs, net

 

The following table highlights the activity in Film and Television Costs as of September 30, 2024 and December 31, 2023 (in thousands):

 

Schedule of film and television costs activity
Film and Television Costs, net as of December 31, 2023		$	1,295
Additions to Film and Television Costs			818
Disposals			(73	)
Film Amortization Expense			(176	)
Foreign Currency Translation Adjustment			(6	)
Film and Television Costs, net as of September 30, 2024		$	1,858

 

 

 

17

 

 

During the three months ended September 30, 2024 and September 30, 2023, the Company recorded film amortization expense of $61,672 and $0.1 million, respectively. During the nine months ended September 30, 2024 and September 30, 2023, the Company recorded amortization expense of $0.2 million and $0.5 million, respectively.

 

For the three and nine months ended September 30, 2023, the Company recorded film and television impairment write-downs of $6.2 million. The Company did not incur any film and television impairment write-downs during the three and nine months ended September 30, 2024.

 

Note 9: Intangible Assets, net

 

Intangible Assets, net

 

The Company had the following intangible assets (in thousands) with their weighted average remaining amortization period (in years):

 

Intangible Assets, net

 

Schedule of intangible asset
		Weighted Average Remaining Amortization				As of
		Period				September 30, 2024				December 31, 2023
Customer Relationships			5.7			$	17,390			$	17,325
Digital Networks			13.5				803				803
Trade Names			66.7				10,100				9,970
Intangible Assets, gross							28,293				28,098
Less: Accumulated Amortization							(5,528	)			(3,794	)
Foreign Currency Translation Adjustment							(1,639	)			(1,311	)
Intangible Assets, net						$	21,126			$	22,993

 

During the three months ended September 30, 2024 and September 30, 2023, the Company recorded intangible asset amortization expense of $0.5 million for each reporting period. During the nine months ended September 30, 2024 and September 30, 2023, the Company recorded intangible asset amortization expense of $1.5 million and $1.6 million, respectively.

 

The Company did not incur any impairment charges on its definite and indefinite-lived intangible assets during the three and nine months ended September 30, 2024.

 

During the nine months ended September 30, 2023, the Company recorded a total Impairment of Intangible Assets of $4.0 million within Operating Expenses in the condensed consolidated statement of operations. The impairment charge consisted of a write-down of definite-lived intangible assets of $2.8 million, net of $0.6 million in accumulated depreciation, due to a decrease in an asset group’s estimated undiscounted cash flows. Furthermore, it was determined that the Frederator tradename, an indefinite-lived intangible asset, was impaired by $1.3 million.

 

 

 

18

 

 

Expected future amortization of intangible assets subject to amortization as of September 30, 2024 is as follows (in thousands):

 

Schedule of expected future intangible asset amortization
Fiscal Year:
2024 (remainder of year)		$	516
2025			2,072
2026			2,062
2027			2,062
2028			2,062
Thereafter			6,792
Total		$	15,566

 

As of September 30, 2024, $5.6 million of the Company’s intangible assets related to the acquired trade names from the Wow acquisition had indefinite lives and are not subject to amortization.

 

Note 10: Deferred Revenue

 

As of September 30, 2024 and December 31, 2023, the Company had aggregate short term and long term deferred revenue of $8.4 million and $6.6 million, respectively. The increase in deferred revenue is primarily related to the stage of progress of various productions as of September 30, 2024, compared to the progress as of December 31, 2023. Wow's deferred revenue balance relates to cash received from customers for productions in progress. Revenue is fully recognized upon production completion. Deferred revenue also includes both (i) variable fee contracts with licensees and customers in which the Company collected advances and minimum guarantees against future royalties and (ii) fixed fee contracts. The Company recognizes revenue related to these contracts when all revenue recognition criteria have been met.

 

Note 11: Margin Loan

 

As of September 30, 2024 and December 31, 2023, the Company’s margin loan balance was $1.1 million and $0.8 million, respectively. During the nine months ended September 30, 2024, the Company borrowed an additional $9.1 million from its investment margin account and repaid $8.8 million primarily with cash received from sales and maturities of marketable securities. The borrowed amounts were primarily used for operational costs. The interest rates for the borrowings fluctuate based on the Fed Funds Upper Target plus 0.60%. The weighted average interest rates were 0.46% and 0.98%, respectively, on average margin loan balances of $1.0 million and $27.4 million as of September 30, 2024 and December 31, 2023, respectively.

 

For the three months ended September 30, 2024 and September 30, 2023, the Company incurred interest expense on the margin loan of $11,070 and $0.2 million, respectively. The Company incurred interest expense on the margin loan of $42,131 and $1.5 million during the nine months ended September 30, 2024 and September 30, 2023, respectively. The investment margin account borrowings do not mature but are collateralized by the marketable securities held by the same custodian and the custodian can issue a margin call at any time, effecting a payable on demand loan. Due to the call option, the margin loan is recorded as a current liability on the Company’s condensed consolidated balance sheets.

 

 

 

19

 

 

Note 12: Bank Indebtedness and Production Facilities

 

The Company has certain credit facilities (together, the “Facilities”) that are comprised of the following:

 

Revolving Demand Facility

 

As of September 30, 2024 and December 31, 2023, the Company had an outstanding balance of $0.6 million (CAD 0.8 million) and $2.9 million (CAD 3.8 million), respectively, on the revolving demand facility by way of bank prime rate loan draws, included as Bank Indebtedness within current liabilities on the Company’s condensed consolidated balance sheets.

 

During March 2024, the Company amended the revolving demand facility. As a result of the amendment, the revolving demand facility allows for draws of up to $0.7 million (CAD 1.0 million) to be made by way of CAD prime rate loans, CAD overdrafts, USD base rate loans or letters of credit up to a maximum of $0.2 million in either CAD or USD and having a term of up to 1 year. The CAD prime borrowings and overdrafts bear interest at a rate equal to bank prime plus 2.00% per annum. The USD base rate borrowings bear interest at a rate equal to bank base rate plus 2.00% per annum.

 

Treasury Risk Management Facility

 

During March 2024, an amendment was entered into that removed the treasury risk management facility. As of the date of the amendment and December 31, 2023, there were no outstanding amounts drawn under the treasury risk management facility.

 

Production Facilities

 

The production facilities are used for financing specific productions. The Company’s production facilities bear interest at rates ranging from bank prime plus 1.00% - 1.25% per annum. The production facilities are generally repayable on demand and are guaranteed and secured by the Company with no limitations for maximum potential future payments. The security reflects substantially all of the Company's tangible and intangible assets including a combination of federal and provincial tax credits, other government incentives, production service agreements and license agreements.

 

As of September 30, 2024 and December 31, 2023, the Company had an outstanding balance of $8.7 million (CAD 11.8 million), including $1.3 million (CAD 1.7 million) of interest, and $15.3 million (CAD 20.3 million), including $1.4 million (CAD 1.9 million) of interest, respectively, recorded as Production Facilities, net within current liabilities on the Company’s condensed consolidated balance sheets.

 

Equipment Lease Line

 

During March 2024, the equipment lease line was terminated, however, the Company continued to make the regular principal and interest payments under the specific financing terms of the existing equipment lease agreements. Each existing transaction under the equipment lease line has specific financing terms in respect of the leased equipment such as term, finance amount, rate, and payment terms. The finance rates for these equipment leases range from 4.49% to 7.18% with remaining lease terms of 1 - 2 months as of September 30, 2024.

 

As of September 30, 2024, the outstanding balance of $0.6 million (CAD 0.8 million) was included within current Finance Lease Liabilities on the Company’s condensed consolidated balance sheets.

 

 

 

20

 

 

Equipment Lease Facility

 

The Company also entered into an equipment lease agreement with a Canadian bank. This additional equipment lease facility allows the Company to finance equipment purchases of up to $1.0 million (CAD 1.4 million) in total. Each transaction under the equipment lease facility has specific financing terms in respect of the leased equipment such as term, finance amount, rate, and payment terms. As of September 30, 2024, the Company has leases remaining under this facility with finance rates of 7.52% to 8.20% and remaining lease terms of 14 - 23 months.

 

As of September 30, 2024, the outstanding balance of $0.4 million (CAD 0.5 million) was included within current and noncurrent Finance Lease Liabilities on the Company’s condensed consolidated balance sheets.

 

Loan Covenants, Violations and Waiver

 

The Company is subject to financial and customary affirmative and negative non-financial covenants on the revolving demand facility and equipment lease agreements that have an aggregate total outstanding balance of $1.2 million (CAD 1.6 million).

 

The Company has continued to make its regular principal and interest payments in a timely basis since the effective borrowing date.

 

The revolving demand facility and the equipment lease line can be called at any time by the lender as per the original and amended terms of the facilities. As of September 30, 2024, the Company was not in compliance with a financial covenant to maintain a minimum liquidity threshold. Due to financial covenant violations in the second quarter of 2024, the Company’s remaining equipment lease agreements with the lender of $0.6 million (CAD 0.8 million) as of September 30, 2024, are subject to early repayment. During the three months ended September 30, 2024, the lender and the Company reached an agreement in principle for a repayment plan for the equipment leases under the equipment lease line. On August 30, 2024, the Company paid $0.1 million (CAD 0.1 million) to the lender as part of its early repayment plan for the existing equipment lease line agreements. Subsequent to September 30, 2024, the Company paid $0.3 million (CAD 0.4 million) to the lender as part of its repayment plan for the equipment lease line. The Company expects to enter into a written agreement with the lender prior to the end of the fourth quarter of 2024 to amend the revolving demand facility and equipment lease line.

 

Note 13: Stockholders’ Equity

 

Common Stock

 

As of September 30, 2024 and December 31, 2023, the total number of authorized shares of common stock was 190,000,000.

 

As of September 30, 2024 and December 31, 2023, there were 39,555,161 and 35,247,744 shares of common stock outstanding, respectively.

 

Preferred Stock

 

The Company has 10,000,000 shares of preferred stock authorized with a par value of $0.001 per share. The board of directors is authorized, subject to any limitations prescribed by law, without further vote or action by the Company’s stockholders, to issue from time-to-time shares of preferred stock in one or more series. Each series of preferred stock will have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by the board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.

 

 

 

21

 

 

In connection with the Company’s acquisition of Wow, certain eligible Canadian stockholders, noteholders and optionholders of Wow elected to receive the Exchangeable Shares in the capital of the Wow Exchange Co. Inc. (“ExchangeCo”) instead of shares of the Company’s common stock to which they were otherwise entitled.

 

The shares of ExchangeCo were exchangeable into shares of the Company’s common stock in accordance with their terms. Holders of the ExchangeCo shares were entitled to defined voting rights (the “Voting Rights”) in the Company pursuant to a voting and exchange trust agreement (the “Voting Agreement”) dated April 6, 2022 among the Company, ExchangeCo, 1329258 B.C. Ltd. (“CallCo”) and Computershare Trust Company of Canada (the “Voting Trustee”). The Voting Trustee holds a single share of Series B Preferred Stock in the capital of the Company (the “Special Voting Share”), which granted the Voting Trustee that number of votes at the meetings of the Company’s stockholders as is equal to the number of shares of the Company’s common stock that at such time have not been delivered pursuant to the tender of ExchangeCo shares. The Voting Trustee was required to exercise each vote attached to the Special Voting Share only as directed by the relevant holder of the underlying Company shares of common stock and, in the absence of any instructions, would not exercise voting rights with respect to the applicable shares. On August 16, 2024, CallCo acquired the balance of the remaining exchangeable shares of ExchangeCo in consideration for shares in the Company’s common stock. Accordingly, the shares of ExchangeCo are no longer held by the public and therefore, (i) the Voting Agreement automatically terminated, and (ii) there are no longer Voting Rights in respect of the shares of ExchangeCo or the Special Voting Share.

 

As of September 30, 2024 and December 31, 2023, there were 0 shares of Series A Convertible Preferred Stock outstanding. As of September 30, 2024 and December 31, 2023, there was 1 share of Series B Preferred Stock outstanding. As of September 30, 2024 and December 31, 2023, there were 0 shares of Series C Preferred Stock outstanding.

 

Treasury Stock

 

During the nine months ended September 30, 2024 and September 30, 2023, 217 and 8,306 shares of common stock with a cost of $252 and $24,700, respectively, were withheld to cover taxes owed by certain employees, all of which were included as treasury stock outstanding and recorded at cost within Treasury Stock on the condensed consolidated balance sheet.

 

Note 14: Stock Options

 

On September 1, 2020, the Company adopted the Kartoon Studios, Inc. 2020 Incentive Plan (the “2020 Plan”) as voted by the Board of Directors. The Board of Directors approved the maximum number of shares available for issuance up to an aggregate of 3,000,000 shares of common stock, which does not include shares that the Company may issue related to acquisitions. On May 23, 2024, the Board of Directors approved the maximum number of shares available for issuance up to an aggregate of 5,000,000 shares from 3,000,000 shares of common stock in the initial 2020 Plan. The 2020 Plan replaced the previously adopted 2015 Incentive Plan (the “2015 Plan”) that had a total number of authorized shares of 216,767, however the remaining 12,000 outstanding shares granted under the 2015 Plan, as of September 30, 2024, remain to be governed under such plan. All expired or terminated shares granted under the 2015 Plan, that have not been vested or exercised, reverts to and again becomes available for issuance under the 2020 Plan.

 

During the nine months ended September 30, 2024 and September 30, 2023, the Company granted options to purchase 35,000 and no options, respectively. The 35,000 options to purchase common stock had a weighted-average grant date fair market value of $24,210.

 

 

 

22

 

 

The fair value of the options granted during the nine months ended September 30, 2024 were calculated using the Black-Scholes Merton (“BSM”) option pricing model based on the following assumptions:

 

Schedule of assumptions used
Exercise Price		$	0.95
Dividend Yield			– %
Volatility			92.1%
Risk-free interest rate			4.3%
Expected life of options			5.0 years

 

The following table summarizes the Company’s option activity:

 

Schedule of option activity
		Stock Options				Weighted-Average Remaining Contractual Life				Weighted-Average Exercise Price per Share
Outstanding at December 31, 2023			1,183,908				5.56			$	14.96
Granted			35,000				4.72			$	0.95
Exercised			–				–			$	–
Forfeited/Cancelled			(259,468	)			–			$	21.08
Expired			(5,800	)			–			$	19.90
Outstanding at September 30, 2024			953,640				5.04			$	12.75
Unvested at September 30, 2024			102,499				4.35			$	4.23
Vested and exercisable at September 30, 2024			851,141				5.12			$	13.77

 

During the nine months ended September 30, 2023, upon termination of certain employees, the Company accelerated the vesting of any unvested options held by the employees pursuant to their employment agreements. This resulted in 55,816 options becoming immediately vested on the separation date and $0.1 million in expense recognized by the Company.

 

During the three months ended September 30, 2024 and September 30, 2023, the Company recognized $23,804 and $0.2 million, respectively, in share-based compensation expense related to stock options. During the nine months ended September 30, 2024 and September 30, 2023, the Company recognized $0.1 million and $0.9 million, respectively, in share-based compensation expense related to stock options. Share-based compensation expense is included in General and Administrative Expense on the Company’s condensed consolidated statements of operations. The unrecognized share-based compensation expense at September 30, 2024 was $48,503 which will be recognized through the second quarter of 2025 assuming the underlying grants are not cancelled or forfeited. The outstanding shares as of September 30, 2024 had an aggregated intrinsic value of zero.

 

Note 15: Restricted Stock Units

 

Restricted stock units (“RSUs”) are granted under the Company’s 2020 Plan. During the nine months ended September 30, 2024 and September 30, 2023, the Company granted 286,324 and 76,508 fully vested RSUs to the Company’s board members, employees, and consultants, with a fair market value of $0.3 million and $0.2 million, respectively.

 

An aggregate of 307,417 shares of common stock were issued during the nine months ended September 30, 2024 as a result of RSUs vested during the current and prior periods.

 

 

 

23

 

 

The following table summarizes the Company’s RSU activity:

 

Schedule of RSU activity
		Restricted Stock Units				Weighted- Average Grant Date Fair Value per Share
Unvested at December 31, 2023			982,625			$	13.42
Granted			286,324			$	1.12
Vested			(291,449	)		$	1.42
Forfeited			–			$	–
Unvested at September 30, 2024			977,500			$	13.40

 

During the three months ended September 30, 2024 and September 30, 2023, the Company recognized $0.1 million and $0.3 million, respectively, in share-based compensation expense related to RSUs. During the nine months ended September 30, 2024 and September 30, 2023, the Company recognized $0.4 million and $1.2 million, respectively, in share-based compensation expense related to RSU awards included in General and Administrative Expenses on the Company’s condensed consolidated statements of operations. The unvested share-based compensation as of September 30, 2024 was $0.1 million which will be recognized through the fourth quarter of 2026 assuming the underlying grants are not cancelled or forfeited. The total fair value of shares vested during the nine months ended September 30, 2024 was $0.4 million.

 

Note 16: Warrants

 

The following table summarizes the Company’s warrant activity:

 

Schedule of warrant activity
		Warrants				Weighted-Average Remaining Contractual Life				Weighted-Average Exercise Price per Share
Outstanding at December 31, 2023		6,852,952				4.16				$	7.14
Granted			100,000				4.56			$	1.00
Exercised			–				–			$	–
Expired			(26,000	)			–			$	26.88
Forfeitures			–				–			$	–
Outstanding at September 30, 2024			6,926,952				3.45			$	6.98
Exercisable at September 30, 2024			6,926,952				3.45			$	6.98
Exercisable at December 31, 2023			6,852,952				4.16			$	7.14

 

As of September 30, 2024, 89,286 derivative warrants classified as a liability as issued with convertible notes in 2020 to purchase shares of the Company’s common stock remained outstanding and are revalued each reporting period. As of September 30, 2024, the warrants were revalued at approximately $291, resulting in a $0.1 million decrease in the liability as compared to December 31, 2023. The change in value was recorded as a Gain on Revaluation of Warrants within Other Income (Expense), net on the condensed consolidated statements of operations and within the Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities on the condensed consolidated statements of cash flows.

 

 

 

24

 

 

The Company has 4,784,909 warrants as of December 31, 2023 with a reprice option that was triggered by the registered direct offering which reduced the exercise price from $2.50 per share to $1.00 per share. The reduction in exercise price reduced the Weighted-Average Exercise Price per Share from $8.19 before the reprice to $7.14 after the reprice.

 

The fair value of the outstanding derivative warrants was determined by using the Black-Scholes Merton option pricing model based on the following assumptions as of September 30, 2024:

 

Schedule of assumptions
Market Price		$	0.87
Exercise Price		$	2.10
Dividend Yield			– %
Volatility			61%
Risk-free Interest Rate			3.98%
Expected Life of Warrants			0.45 years

 

Note 17: Supplemental Financial Statement Information

 

Other Income (Expense), net

 

Components of Other Income (Expense), net, are summarized as follows (in thousands):

 

Schedule of other income expense, net
		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Interest Expense (a)		$	(176	)		$	(672	)		$	(625	)		$	(2,777	)
Warrant Incentive Expense (b)			–				–				–				(12,664	)
Gain on Revaluation of Warrants (c)			3				2,797				63				8,999
Gain (Loss) on Revaluation of Equity Investment in YFE (d)			(461	)			(2,325	)			(1,342	)			1,102
Realized Loss on Marketable Securities Investments (e)			(148	)			(1,897	)			(505	)			(4,154	)
Gain (Loss) on Foreign Exchange (f)			999				(637	)			19				(282	)
Interest Income (g)			40				95				135				563
Loss on Early Lease Termination (h)			–				(232	)			–				(232	)
Finance Lease Interest Expense (i)			(20	)			(48	)			(74	)			(152	)
Other (j)			189				11				723				37
Other Income (Expense), net		$	602			$	(2,236	)		$	(981	)		$	(6,783	)

 

Three Months and Nine Months Ended September 30, 2024

 

	(a)	Interest Expense during the three and nine months ended September 30, 2024 primarily consisted of $0.2 million and $0.6 million, respectively, primarily due to interest incurred on production facilities and bank indebtedness.
	(b)	There was no warrant incentive expense in 2024.

 

 

 

25

 

 

	(c)	The Gain on Revaluation of Warrants during the three and nine months ended September 30, 2024 is primarily related to the changes in fair value of the remaining outstanding warrant classified as a liability due to decreases in market price.
	(d)	As accounted for using the fair value option, the loss on the YFE investment revaluation during the three and nine months ended September 30, 2024, excluding the impact of foreign currency recorded separately, is a result of a decrease in YFE’s stock price as of September 30, 2024.
	(e)	The Realized Loss on Marketable Securities Investments during the three and nine months ended September 30, 2024 reflects the loss that will not be recovered from the investments due to selling securities prior to maturity.
	(f)	The Gain on Foreign Exchange during the three and nine months ended September 30, 2024 primarily related to the revaluation of the YFE investment, resulting in a gain of $0.8 million and $0.2 million, respectively due to the EURO fluctuation to USD as compared to the prior reporting period. The remaining balance is related to remeasurements of transactions made in foreign currencies that are outstanding as of the condensed consolidated balance sheet date.
	(g)	Interest Income during the three and nine months ended September 30, 2024 primarily consisted of interest income, net of premium amortization expense, recorded for the investments in marketable securities.
	(h)	There was no gain or loss on lease termination in 2024.
	(i)	The Finance Lease Interest Expense during the three and nine months ended September 30, 2024 represents the interest portion of the finance lease obligations for equipment purchased under an equipment lease line.
	(j)	Other during the three and nine months ended September 30, 2024 is primarily related to late fees from select clients on a payment plan.

 

Three Months and Nine Months Ended September 30, 2023

 

	(a)	Interest expense during the three and nine months ended September 30, 2023 primarily consisted of $0.2 million and $1.5 million of interest incurred on the margin loan, respectively, and $0.5 million and $1.3 million, respectively, of interest incurred on production facilities loans and bank indebtedness.
	(b)	The Warrant Incentive Expense is related to the $12.7 million fair value of Exchange Warrants that were issued during the three months ended June 30, 2023 to certain existing warrant holders in exchange for previously issued outstanding warrants.
	(c)	The gain on warrant revaluation during the three months ended  September 30, 2023 is primarily related to the $2.7 million change in fair value as of the end of the current reporting period of the Exchange Warrants and SEG Warrants compared to the fair value as of the end of the prior reporting period due to a decrease in market price. The gain on warrant revaluation during the nine months ended September 30, 2023 is primarily related to the $8.8 million change in fair value as of the end of the current reporting period of the Exchange Warrants and SEG Warrants compared to the fair value as of the issuance date due to a decrease in market price.
	(d)	As accounted for using the fair value option, the gain or loss on the YFE investment revaluation, excluding the impact of foreign currency recorded separately, is a result of the increases or decreases in YFE’s stock price as of the current reporting period when compared to the prior reporting period.
	(e)	The net realized loss on marketable securities reflects the loss that will not be recovered from the investments due to selling securities and issuers' prepayments of principals on certain mortgage-backed securities.
	(f)	The loss on foreign currency exchange during the three and nine months ended September 30, 2023 primarily related to the EURO weakening against the USD when compared to the prior reporting period.
	(g)	Interest Income during the three and nine months ended September 30, 2023 primarily consisted of interest income of $0.1 million and $0.4 million, net of premium amortization expense, recorded for the investments in marketable securities, respectively.
	(h)	The loss on early termination of lease is due to early termination of the Lyndhurst, NJ office lease, effective August 1, 2023. The loss includes fees of $0.1 million and the write-down of assets and liabilities resulting in net, $0.1 million of loss.
	(i)	The finance lease interest expense represents the interest portion of the finance lease obligations for equipment purchased under an equipment lease line.
	(j)	Other during the three and nine months ended September 30, 2023 is primarily related to late fees from select clients on a payment plan.

 

 

 

26

 

 

Note 18: Income Taxes

 

The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.

 

ASC 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s condensed consolidated financial statements. ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the condensed consolidated financial statements.

 

Income tax benefit was $0.9 million for the nine months ended September 30, 2023, which related to impairments of certain intangible assets during the first quarter of 2023 resulting in a decrease to the Deferred Tax Liability, net, balance. There were no activities during the three and nine months ended September 30, 2024 that affected the Deferred Tax Liability, net, balance.

 

Kartoon Studios, Inc. and its wholly-owned U.S. subsidiaries are subject to U.S. income taxes and file a consolidated tax return in the U.S. The Beacon Communications Group, Ltd., Ameba Inc. and WOW Unlimited Media Inc. are subject to Canadian income taxes on a stand-alone basis and file separate tax returns in Canada.

 

The Company files income tax returns in the U.S. federal jurisdiction and in the states of California, Florida, Massachusetts, New Jersey, New York, as well as Canada. To the extent allowed by law, the taxing authorities may have the right to examine prior periods where net operating losses were generated and carried forward to make adjustments up to the amount of the net operating losses. The Company is currently subject to U.S. federal, state and local and foreign tax examinations by tax authorities. The Company is no longer subject to audits by U.S. federal, state, local or foreign authorities for years prior to 2019.

 

Kartoon Studios, Inc. and its wholly-owned U.S. subsidiaries are subject to U.S. income taxes and file a consolidated tax return in the U.S. The Beacon Communications Group, Ltd., Ameba Inc. and WOW Unlimited Media Inc. are subject to Canadian income taxes on a stand-alone basis and file separate tax returns in Canada.

 

Note 19: Commitments and Contingencies

 

The following is a schedule of future minimum cash contractual obligations as of September 30, 2024 (in thousands):

Schedule of future minimum lease payments
		2024				2025				2026				2027				2028				Thereafter				Total
Operating Leases		$	525			$	1,640			$	1,645			$	1,415			$	1,071			$	3,386			$	9,682
Finance Leases			756				278				54				–				–				–				1,088
Employment Contracts			1,014				1,646				222				–				–				–				2,882
Consulting Contracts			1,019				2,840				769				–				–				–				4,628
Debt			1,662				8,739				–				–				–				–				10,401
Contractual obligation		$	4,976			$	15,143			$	2,690			$	1,415			$	1,071			$	3,386			$	28,681

 

The present value discount of the minimum operating lease payments above was $2.7 million which when deducted from the cash commitments for the leases included in the table above, equates to the operating lease liabilities of $7.0 million recorded as of September 30, 2024 on the Company’s condensed consolidated balance sheet.

 

 

 

27

 

 

Other Funding Commitments

 

The Company enters into various agreements associated with its individual properties. Some of these agreements call for the potential future payment of royalties or “profit” participations for either (i) the use of third party intellectual property, in which the Company is obligated to share net profits with the underlying rights holders on a certain basis as defined in the respective agreements, or (ii) services rendered by animation studios, post-production studios, writers, directors, musicians or other creative talent for which the Company is obligated to share with these service providers a portion of the net profits of the properties on which they have rendered services, as defined in each respective agreement.

 

Note 20: Related Party Transactions

 

Pursuant to his employment agreement dated December 7, 2020, Andy Heyward, the Company’s CEO, is entitled to an executive producer fee of $12,500 per one-half hour episode for each episode he provides services as an executive producer. During the nine months ended September 30, 2024, Mr. Heyward did not earn any executive producer fees. During the nine months ended September 30, 2023, Mr. Heyward earned and was paid $0.3 million in executive producer fees. Mr. Heyward also earned his $55,000 quarterly bonus during each of the quarters in 2024 and 2023.

 

On August 25, 2022, Mr. Heyward’s employment agreement was amended to include assignment of music royalties to Mr. Heyward for all musical compositions in which he provides services as a composer for or on behalf of the Company, in the event that the Company acquires up to 50% of the writer's share of the royalties for that musical composition. If the Company acquires more than 50% of the writer's share of the royalties on musical compositions Mr. Heyward provided services for, he has the option to purchase the additional royalties from the Company at the price the Company paid to acquire the additional royalties. During the nine months ended September 30, 2024 and September 30, 2023, Mr. Heyward has not earned royalties from musical compositions.

 

On February 27, 2023, Mr. Heyward’s employment agreement was further amended to provide him a creative producer fee of $100,000 per quarter, prorated for the first quarter of 2023. During the nine months ended September 30, 2023, Mr. Heyward earned and was paid $0.2 million in creative producer fees. During the nine months ended September 30, 2024, Mr. Heyward earned and was paid $0.1 million during each of the quarters.

 

On July 21, 2020, the Company entered into a merchandising and licensing agreement with Andy Heyward Animation Art (“AHAA”), whose principal is Andy Heyward. The Company entered into a customary merchandise license agreement with AHAA for the use of characters and logos related to Warren Buffett’s Secret Millionaires Club and Stan Lee’s Mighty 7 in connection with certain products to be sold by AHAA. The terms and conditions of such license are customary within the industry, and the Company earns an arm’s-length industry standard royalty on all sales made by AHAA utilizing the licensed content. During the nine months ended September 30, 2024 and September 30, 2023, Mr. Heyward has not earned royalties from this agreement.

 

On July 19, 2022, the Company entered into a Shareholder Loan Agreement with YFE in the amount of $1.5 million (EURO 1.3 million), accruing interest at the fixed annualized rate of 5%, with successive interest periods of three months due on the last day of each calendar quarter. The principal plus interest must be repaid by no later than June 30, 2026. As of September 30, 2024 and December 31, 2023, $1.5 million and $1.4 million, respectively, is included within Notes and Accounts Receivable from Related Party on the Company’s condensed consolidated balance sheets.

 

During 2022, the Company entered into a sublease agreement with a related party to lease one office in the general office space at 190 N. Canon Drive, Suite 400, Beverly Hills, CA 90210. The monthly sublease payments were $595 for the three and nine months ended September 30, 2024 and September 30, 2023 and recorded within Other Income (Expense), net in the Company's condensed consolidated statements of operations.

 

During the quarter ended September 30, 2024, the Company entered into a one year consulting agreement with a related party for office space interior design services. The agreement is subject to an initial fee of $6,545 and a monthly fee of $595 that commenced on September 1, 2024. The interior design service fees are recorded within General and Administrative expenses in the Company's condensed consolidated statements of operations.

 

 

 

28

 

 

Note 21: Segment Reporting

 

The Company’s Chief Operating Decision Maker (“CODM”) uses revenue and net earnings to evaluate the profitability and performance of each operating segment. All other financial information is reviewed by the CODM on a condensed consolidated basis. The CODM does not evaluate the operating segments using asset information and it is therefore not disclosed. All expenses directly attributable to each reportable segment are included in the operating results for each segment. However, the CODM does not evaluate the expenses by operating segment and, therefore, it is not separately presented.

 

The following table presents the revenue and net earnings within the Company's two operating segments (in thousands):

 

Schedule of segment information by revenues and net earnings
		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Total Revenues:
Content Production & Distribution		$	7,283			$	9,075			$	19,993			$	32,456
Media Advisory & Advertising Services			1,425				997				3,177				2,820
Total Revenues		$	8,708			$	10,072			$	23,170			$	35,276
Net Loss:
Content Production & Distribution		$	(2,395	)		$	(14,947	)		$	(14,830	)		$	(50,113	)
Media Advisory & Advertising Services			338				(529	)			(145	)			(1,616	)
Total Net Loss Attributable to Kartoon Studio, Inc.		$	(2,057	)		$	(15,476	)		$	(14,975	)		$	(51,729	)

 

Geographic Information

 

The following table provides information about disaggregated revenue by geographic area (in thousands):

 

Schedule of segments by geographic area
		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Total Revenues:
United States		$	5,005			$	5,536			$	12,490			$	21,537
Canada			1,615				2,093				3,563				7,496
United Kingdom			1,909				2,381				6,708				5,972
Other			179				62				409				271
Total Revenues		$	8,708			$	10,072			$	23,170			$	35,276

 

Note 22: Subsequent Events

 

Subsequent to September 30, 2024, the Company sold marketable securities and received proceeds of $1.6 million and incurred a realized loss of $0.1 million.

 

As of November 14, 2024, there were no additional subsequent events to report.

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of our results of operations, financial condition and liquidity and capital resources should be read in conjunction with our financial statements and related notes for the three and nine months ended September 30, 2024 and September 30, 2023. Certain statements made or incorporated by reference in this report and our other filings with the Securities and Exchange Commission (the “SEC”), in our press releases and in statements made by or with the approval of authorized personnel constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are subject to the safe harbor created thereby. Forward-looking statements reflect intent, belief, current expectations, estimates or projections about, among other things, our industry, management’s beliefs, and future events and financial trends affecting us. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will” and variations of these words or similar expressions are intended to identify forward looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward looking statements. Although we believe the expectations reflected in any forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. These differences can arise as a result of the risks described in the section entitled “Risk Factors” below in this Quarterly Report on Form 10-Q (the “Form 10-Q”) and in the section entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on April 9, 2024 (the “2023 Annual Report”), and elsewhere in this report, as well as other factors that may affect our business, results of operations, or financial condition. Forward-looking statements in this report speak only as of the date hereof, and forward-looking statements in documents incorporated by reference speak only as of the date of those documents. Unless otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, we cannot assure you that the forward-looking statements contained in this report will, in fact, transpire. References to “we”, “us”,”our”, and the “Company” refer to Kartoon Studios, Inc.

 

Overview

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide readers of our condensed consolidated financial statements with the perspectives of management. This should allow the readers of this report to obtain a comprehensive understanding of our businesses, strategies, current trends, and future prospects. It should be noted that the MD&A contains forward-looking statements that involve risks and uncertainties.

 

Our Business

 

Our Content Distribution business is focused on achieving scale across our networks, including Kartoon Channel!, Frederator, Ameba, and Kartoon Channel! Worldwide. Revenue growth will be driven by the continued focus on licensed content and exploitation of our current content such as Stan Lee, Shaq's Garage, Rainbow Rangers and many more. Continued profit growth will be realized the more we can scale the business across our platforms. In addition, we are looking at artificial intelligence (“AI”) tools to reduce the cost of operating distribution expenses such as dubbing expenses, video resolution upscaling and converting between 2D and 3D.

 

Our Production Services business is focused on creating high-quality original and for hire content in the most efficient way possible. To achieve this, our Mainframe Studios division, the main driver of this business, is exploring more ways to improve operations by adopting a more flexible and efficient approach. This includes collaborating with outsource partners and utilizing AI technology to streamline processes and drive efficiencies within the organization.

 

 

 

 

Our Licensing & Royalties business has the most upside and potential for the Company. We are looking to take advantage of our incredible set of Stan Lee assets to drive consumer products - both digitally and physically. We will be focused on utilizing all of our IP assets further in 2024 and beyond.

 

Our Media Advisory & Advertising Services business is focused on driving deal flow opportunities and winning annuity business through retainers and projects. The team continues to focus on the toy business, but also expansion into tangential industries such as family and travel. The team has expanded their reach recently by leveraging their relationships with influencers to promote products and provide bespoke marketing initiatives for the clients.

 

Results of Operations

 

Our summary results for the three months ended September 30, 2024 and 2023 are below:

 

Revenue

 

		Three Months Ended September 30,
		2024				2023				Change				% Change
		(in thousands, except percentages)
Production Services		$	4,898			$	6,360			$	(1,462	)			(23)%
Content Distribution			2,348				2,562				(214	)			(8)%
Licensing & Royalties			37				153				(116	)			(76)%
Media Advisory & Advertising Services			1,425				997				428				43%
Total Revenue		$	8,708			$	10,072			$	(1,364	)			(14)%

 

Production Services revenue was generated specifically by Wow providing animation production services. Revenue for production services is recognized over time on a percentage of completion basis, therefore, as the projects are still in progress, we recognize revenue based upon the proportion of costs incurred cumulatively to total expected costs. Consequently, less revenue is recognized during the periods in which the projects are near completion or completed. Revenue for Wow production services for the three months ended September 30, 2024 was 23% lower than the Wow production services revenue recognized during three months ended September 30, 2023 primarily due to a lower volume of active service production projects in the current period versus the prior year period.

 

Revenue related to Content Distribution on advertisement supported video on demand (“AVOD”) and subscription video on demand (“SVOD”), including advertising sales for the three months ended September 30, 2024, decreased by 8% as compared to the three months ended September 30, 2023. This was primarily due to a decrease in Frederator’s creator network revenue of $0.2 million from YouTube due to reduced advertising spending and a decline in revenue per mille (“RPM”) advertising rates.

 

Revenue related to Licensing & Royalties for the three months ended September 30, 2024 decreased by 76% as compared to the three months ended September 30, 2023 primarily due to higher royalties earned in the prior year for owned IP and music royalties.

 

Revenue generated by Media Advisory & Advertising services for the three months ended September 30, 2024 increased by 43% as compared to the three months ended September 30, 2023 primarily due to higher net renewal activity and media purchases from clients.

 

 

 

 

Expenses

 

		Three Months Ended September 30,
		2024				2023				Change				% Change
		(in thousands, except percentages)
Marketing and Sales		$	290			$	522			$	(232	)			(44)%
Direct Operating Costs			5,766				13,475				(7,709	)			(57)%
General and Administrative			5,199				8,679				(3,480	)			(40)%
Total Expenses		$	11,255			$	22,676			$	(11,421	)			(50)%

 

The decrease in Marketing and Sales expenses for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily due to a decrease of $0.3 million in marketing expenses associated with company brand development.

 

Direct Operating Costs during the three months ended September 30, 2024 consisted primarily of salaries and related expenses for the animation production services employees of Wow and Frederator. Channel expenses, licensing and production of content costs, such as participation expenses related to profit sharing obligations with various animation studios, post-production studios, writers, directors, musicians or other creative talent that had rendered services and amortization, including any write-downs of film and television costs, make up the remainder of Direct Operating Costs. The decrease was primarily due to $6.3 million of film cost impairments and write-down of development projects for the three months ended September 30, 2023, a $1.1 million reduction in salary costs, net of tax credits, from a decline in headcount as a result of lower volumes of service production projects for the three months ended September 30, 2024, compared to the same period of the prior year, and a reduction of $0.2 million in participation estimates related to Wow owned IP.

 

The decrease in General and Administrative expenses for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023 was primarily due to a decrease in expenses of $1.9 million related to cost saving initiatives, a decrease of $0.6 million in litigation expenses mainly due to a litigation insurance provision recognized in the three months ended September 30, 2024, a decrease of $0.4 million in annual shareholder meeting expenses of holding the annual shareholder meeting during the quarter ended September 30, 2024 as opposed to earlier in the prior year, and lower depreciation expense of $0.3 million for the three months ended September 30, 2024 as compared to the three months ended September 30, 2023.

 

During the three months ended September 30, 2023, we reassessed our nonfinancial assets, including our definite-lived intangible assets, our indefinite-lived intangible assets and our remaining goodwill for impairment. As a result, we concluded that impairment charges to those assets were required. We concluded that there were no indications or triggering events that would further impair the assets during the three months ended September 30, 2024.

 

Our summary results for the nine months ended September 30, 2024 and 2023 are below:

 

Revenue

 

		Nine Months Ended September 30,
		2024				2023				Change				% Change
		(in thousands, except percentages)
Production Services		$	12,756			$	23,279			$	(10,523	)			(45)%
Content Distribution			7,002				8,815				(1,813	)			(21)%
Licensing & Royalties			235				362				(127	)			(35)%
Media Advisory & Advertising Services			3,177				2,820				357				13%
Total Revenue		$	23,170			$	35,276			$	(12,106	)			(34)%

 

 

 

 

Production Services revenue was generated specifically by Wow providing animation production services. Revenue for production services is recognized over time on a percentage of completion basis, therefore, as the projects are still in progress, we recognize revenue based upon the proportion of costs incurred cumulatively to total expected costs. Consequently, less revenue is recognized during the periods in which the projects are near completion or completed. Revenue for Wow production services for the nine months ended September 30, 2024 was 45% lower than the Wow production services revenue recognized during nine months ended September 30, 2023 primarily due to a lower volume of active service production projects in the current period versus the prior year period.

 

Revenue related to Content Distribution on AVOD and SVOD, including advertising sales for the nine months ended September 30, 2024, decreased by 21% as compared to the nine months ended September 30, 2023. This was primarily due to a decrease in Frederator’s creator network revenue of $1.7 million from YouTube due to reduced advertising spending and a decline in RPM advertising rates.

 

Revenue related to Licensing & Royalties for the nine months ended September 30, 2024 decreased by 35% as compared to the nine months ended September 30, 2023 primarily due to higher royalties earned in the prior year for music royalties.

 

Revenue generated by Media Advisory & Advertising services for the nine months ended September 30, 2024 increased by 13% as compared to the nine months ended September 30, 2023 primarily due to higher net renewal activity, client fees, and media purchases from clients.

 

Expenses

 

		Nine Months Ended September 30,
		2024				2023				Change				% Change
		(in thousands, except percentages)
Marketing and Sales		$	1,026			$	2,457			$	(1,431	)			(58)%
Direct Operating Costs			15,936				34,301				(18,365	)			(54)%
General and Administrative			19,710				26,274				(6,564	)			(25)%
Impairment of Property and Equipment			–				120				(120	)			—%
Impairment of Intangible Assets			–				4,023				(4,023	)			—%
Impairment of Goodwill			–				11,287				(11,287	)			—%
Total Expenses		$	36,672			$	78,462			$	(41,790	)			(53)%

 

The decrease in Marketing and Sales expenses for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 was primarily due to expenses incurred for stock issued for services of $1.3 million related to our Shaq’s Garage series that was not incurred during the current nine months ended September 30, 2024, and a decrease of $0.3 million in marketing expenses associated with company brand development

 

Direct Operating Costs during the nine months ended September 30, 2024 consisted primarily of salaries and related expenses for the animation production services employees of Wow and Frederator. Channel expenses, licensing and production of content costs, such as participation expenses related to profit sharing obligations with various animation studios, post-production studios, writers, directors, musicians or other creative talent that had rendered services and amortization, including any write-downs of film and television costs, make up the remainder of Direct Operating Costs. The decrease of 54% as compared to the nine months ended September 30, 2023 was primarily due to a $11.5 million reduction in salary costs, net of tax credits, as a result in a reduction in headcount due to a lower volume of service production projects for the nine months ended September 30, 2024, compared to the same period of the prior year, and $6.5 million of film cost impairments and write-down of development projects for the nine months ended September 30, 2024.

 

 

 

 

The decrease in General and Administrative expenses for the nine months ended September 30, 2024 as compared to the nine months ended September 30, 2023 was primarily due to a decrease of $2.0 million as a result of decreased use in equipment rentals and software licenses, a decrease of $1.5 million in share-based compensation expense, a decrease of $1.5 million in payroll related expenses, a decrease of $0.9 million in depreciation related to equipment leases that had ended prior to the current period, and a decrease of $0.6 million in general administrative expenses related to additional cost saving initiatives.

 

During the nine months ended September 30, 2023, we reassessed our nonfinancial assets, including our definite-lived intangible assets, our indefinite-lived intangible assets and our remaining goodwill for impairment. As a result, we concluded that impairment charges to those assets were required. We concluded that there were no indications or triggering events that would further impair the assets during the nine months ended September 30, 2024.

 

Other Expense, net

 

Components of Other Expense, net are summarized as follows (in thousands):

 

		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
Interest Expense (a)		$	(176	)		$	(672	)		$	(625	)		$	(2,777	)
Warrant Incentive Expense (b)			–				–				–				(12,664	)
Gain on Revaluation of Warrants (c)			3				2,797				63				8,999
Gain (Loss) on Revaluation of Equity Investment in YFE (d)			(461	)			(2,325	)			(1,342	)			1,102
Realized Loss on Marketable Securities Investments (e)			(148	)			(1,897	)			(505	)			(4,154	)
Gain (Loss) on Foreign Exchange (f)			999				(637	)			19				(282	)
Interest Income (g)			40				95				135				563
Loss on Early Lease Termination (h)			–				(232	)			–				(232	)
Finance Lease Interest Expense (i)			(20	)			(48	)			(74	)			(152	)
Other (j)			189				11				723				37
Other Income (Expense), net		$	602			$	(2,236	)		$	(981	)		$	(6,783	)

 

Three Months and Nine Months Ended September 30, 2024

 

	(a)	Interest Expense during the three and nine months ended September 30, 2024 primarily consisted of $0.2 million and $0.6 million, respectively, primarily due to interest incurred on production facilities and bank indebtedness.
	(b)	There was no warrant incentive expense in 2024.
	(c)	The Gain on Revaluation of Warrants during the three and nine months ended September 30, 2024 is primarily related to the changes in fair value of the remaining outstanding warrant classified as a liability due to decreases in market price.
	(d)	As accounted for using the fair value option, the loss on the YFE investment revaluation during the three and nine months ended September 30, 2024, excluding the impact of foreign currency recorded separately, is a result of a decrease in YFE’s stock price as of September 30, 2024.
	(e)	The Realized Loss on Marketable Securities Investments during the three and nine months ended September 30, 2024 reflects the loss that will not be recovered from the investments due to selling securities prior to maturity.

 

 

 

 

	(f)	The Gain on Foreign Exchange during the three and nine months ended September 30, 2024 primarily related to the revaluation of the YFE investment, resulting in a gain of $0.8 million and $0.2 million, respectively due to the EURO fluctuation to USD as compared to the prior reporting period. The remaining balance is related to remeasurements of transactions made in foreign currencies that are outstanding as of the condensed consolidated balance sheet date.
	(g)	Interest Income during the three and nine months ended September 30, 2024 primarily consisted of interest income, net of premium amortization expense, recorded for the investments in marketable securities.
	(h)	There was no gain or loss on lease termination in 2024.
	(i)	The Finance Lease Interest Expense during the three and nine months ended September 30, 2024 represents the interest portion of the finance lease obligations for equipment purchased under an equipment lease line.
	(j)	Other during the three and nine months ended September 30, 2024 is primarily related to late fees from select clients on a payment plan.

 

Three Months and Nine Months Ended September 30, 2023

 

	(a)	Interest expense during the three and nine months ended September 30, 2023 primarily consisted of $0.2 million and $1.5 million of interest incurred on the margin loan, respectively, and $0.5 million and $1.3 million, respectively, of interest incurred on production facilities loans and bank indebtedness.
	(b)	The Warrant Incentive Expense is related to the $12.7 million fair value of Exchange Warrants that were issued during the three months ended June 30, 2023 to certain existing warrant holders in exchange for previously issued outstanding warrants.
	(c)	The gain on warrant revaluation during the three months ended  September 30, 2023 is primarily related to the $2.7 million change in fair value as of the end of the current reporting period of the Exchange Warrants and SEG Warrants compared to the fair value as of the end of the prior reporting period due to a decrease in market price. The gain on warrant revaluation during the nine months ended September 30, 2023 is primarily related to the $8.8 million change in fair value as of the end of the current reporting period of the Exchange Warrants and SEG Warrants compared to the fair value as of the issuance date due to a decrease in market price.
	(d)	As accounted for using the fair value option, the gain or loss on the YFE investment revaluation, excluding the impact of foreign currency recorded separately, is a result of the increases or decreases in YFE’s stock price as of the current reporting period when compared to the prior reporting period.
	(e)	The net realized loss on marketable securities reflects the loss that will not be recovered from the investments due to selling securities and issuers' prepayments of principals on certain mortgage-backed securities.
	(f)	The loss on foreign currency exchange during the three and nine months ended September 30, 2023 primarily related to the EURO weakening against the USD when compared to the prior reporting period.
	(g)	Interest Income during the three and nine months ended September 30, 2023 primarily consisted of interest income of $0.1 million and $0.4 million, net of premium amortization expense, recorded for the investments in marketable securities, respectively.
	(h)	The loss on early termination of lease is due to early termination of the Lyndhurst, NJ office lease, effective August 1, 2023. The loss includes fees of $0.1 million and the write-down of assets and liabilities resulting in net, $0.1 million of loss.
	(i)	The finance lease interest expense represents the interest portion of the finance lease obligations for equipment purchased under an equipment lease line.
	(j)	Other during the three and nine months ended September 30, 2023 is primarily related to late fees from select clients on a payment plan.

 

Liquidity, Going Concern, and Capital Resources

 

As of September 30, 2024, we had cash of $4.6 million, which increased by $0.5 million as compared to December 31, 2023. The increase was primarily due to cash provided by investing activities of $7.9 million, offset by cash used in financing activities of $6.4 million and cash used for operating activities of $1.1 million. The cash used in financing activities was primarily due to repayments of the production facilities, finance lease obligations, and bank indebtedness, net of proceeds from each, resulting in net cash used of $10.0 million, offset by net proceeds from the Offering of $3.3 million and margin loan of $0.3 million. The cash provided by investing activities was primarily due to sales of marketable securities of $8.0 million.

 

 

 

 

As of September 30, 2024, we held available-for-sale marketable securities with a fair value of $4.1 million, a decrease of $7.9 million as compared to December 31, 2023 due to sales and maturities during the nine months ended September 30, 2024. The available-for-sale securities consist principally of corporate and government debt securities and are also available as a source of liquidity.

 

As of September 30, 2024 and December 31, 2023, our margin loan balance was $1.1 million and $0.8 million, respectively. During the nine months ended September 30, 2024, we borrowed an additional $9.1 million from our investment margin account and repaid $8.8 million primarily with cash received from sales and maturities of marketable securities. The borrowed amounts were primarily used for operational costs. The interest rates for the borrowings fluctuate based on the Fed Funds Upper Target plus 0.60%. The weighted average interest rates were 0.71% and 0.98%, respectively, on average margin loan balances of $7.5 million and $27.4 million as of September 30, 2024 and December 31, 2023, respectively.

 

For three months ended September 30, 2024 and September 30, 2023, we incurred interest expense on the loan of $11,070 and $0.2 million, respectively. We incurred interest expense on the margin loan of $42,131 and $1.5 million during the nine months ended September 30, 2024 and September 30, 2023, respectively. The investment margin account borrowings do not mature but are collateralized by the marketable securities held by the same custodian and the custodian can issue a margin call at any time, effecting a payable on demand loan. Due to the call option, the margin loan is recorded as a current liability on our condensed consolidated balance sheets.

 

We are subject to financial and customary affirmative and negative non-financial covenants on the revolving demand facility and equipment lease agreements that have an aggregate total outstanding balance of $1.2 million (CAD 1.6 million).

 

During March 2024, we amended the revolving demand facility, equipment lease line, and treasury risk management facility. As a result of the amendment, the revolving demand facility allows for draws of up to $0.7 million (CAD 1.0 million) to be made by way of CAD prime rate loans, CAD overdrafts, USD base rate loans or letters of credit up to a maximum of $200,000 in either CAD or USD and having a term of up to 1 year. The CAD prime borrowings and overdrafts bear interest at a rate equal to bank prime plus 2.00% per annum. The USD base rate borrowings bear interest at a rate equal to bank base rate plus 2.00% per annum. In addition, the equipment lease line was terminated, however, we have and will continue to make the regular principal and interest payments under the specific financing terms of the existing equipment lease agreements. The amendment removed the treasury risk management facility that allowed for advances of up to $0.4 million (CAD 0.5 million). As of the date of amendment and December 31, 2023, there were no outstanding amounts drawn under the treasury risk management facility. The amendment also introduced revised financial covenants that are effective as of March 15, 2024. As of September 30, 2024, we are not in compliance with a financial covenant to maintain a minimum liquidity threshold. Due to financial covenant violations in the second quarter of 2024, our remaining equipment lease agreements with the lender of $0.6 million (CAD 0.8 million) are subject to early repayment. During the three months ended September 30, 2024, the lender agreed to a repayment plan for the equipment leases under the equipment lease line to be completed prior to the end of the fourth quarter of 2024. On August 30, 2024, we paid $0.1 million (CAD 0.1 million) to the lender as part of our repayment plan for the existing equipment lease line agreements. Subsequent to September 30, 2024, we paid $0.3 million (CAD 0.4 million) to the lender as part of our repayment plan for the equipment lease line. The amendment and covenant violation did not have any impact on our production facilities that are separate from the revolving demand facility and are used for financing specific productions.

 

 

 

 

Working Capital

 

As of September 30, 2024, we had total current assets of $37.2 million, including cash of $4.6 million and marketable securities of $4.1 million, and our total current liabilities were $33.7 million. We had working capital of $3.5 million as of September 30, 2024 as compared to working capital of $11.5 million as of December 31, 2023. The decrease of $8.0 million was primarily due to sales of marketable securities of $8.0 million, a decrease in accounts receivable and tax credits receivable of $14.0 million, partially offset by a decrease in accounts payable of $4.8 million and a decrease in production facilities and bank indebtedness of $8.9 million. During the nine months ended September 30, 2024, we met our immediate cash requirements through existing cash balances and through the sale of marketable securities. Additionally, we used equity and equity-linked instruments to pay for services and compensation. Based on our current expected level of operating expenditures and the cash and cash equivalents on hand at September 30, 2024, management concludes that there is substantial doubt about our ability to continue as a going concern for a period of at least 12 months subsequent to the issuance of the accompanying condensed consolidated financial statements. Historically, the Company has financed its operations primarily through revenue generated from operations, loans and sales of its securities, and the Company expects to continue to seek and obtain additional capital in a similar manner. The Company has filed a registration statement on Form S-3 on December 22, 2023, as amended, registering the sale of up to $75 million of the Company’s securities pursuant to a shelf registration statement, and a registration statement on Form S-1 on September 27, 2024, as amended, in connection with a best efforts public offering of up to $8 million of the Company’s securities. However, the Company does not have any committed sources of financing at this time, and it is uncertain whether any additional funding will be available when it needs it on terms that will be acceptable to it, or at all. The Company’s ability to sell securities registered on its registration statement on From S-3 is limited until such time that the market value of its voting securities held by non-affiliates is $75 million or more. In addition, the number of shares of common stock and securities convertible or exercisable for common stock that the Company can sell, under certain circumstances, will be limited by NYSE American rules and regulations. There can be no assurance that the Company will be able to raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of its existing shareholders will be diluted. The issuance of debt can result in restrictive covenants that limit operations. If funding is not available or not available at terms acceptable to the Company, the Company will seek to reduce overhead costs and reduce its weekly cash obligations in the short term as needed. In addition, the Company can look to divest or bring in equity partners for our various divisions and bring in near term capital.

 

Comparison of Cash Flows for the Nine Months Ended September 30, 2024 and September 30, 2023

 

Our total cash as of September 30, 2024 and September 30, 2023 was $4.6 million and $3.9 million, respectively.

 

		Nine Months Ended September 30,
		2024				2023				Change
		(in thousands)
Net Cash Used in Operating Activities		$	(1,127	)		$	(20,168	)		$	19,041
Net Cash Provided by Investing Activities			7,902				69,418				(61,516	)
Net Cash Used in Financing Activities			(6,444	)			(52,829	)			46,385
Effect of Exchange Rate Changes on Cash			155				34				121
Net Increase (Decrease) in Cash		$	486			$	(3,545	)		$	4,031

 

 

 

 

 

Net Non-cash Expenses

 

Items necessary to reconcile from net loss to cash used in operating activities included net non-cash expenses of $5.9 million for the nine months ended September 30, 2024 as compared to net non-cash expenses of $37.6 million for the nine months ended September 30, 2023. The net decrease of $31.7 million in non-cash expenses was primarily due to the absence of the recognition of $21.6 million in impairment expenses of film and television costs, long-lived assets, intangible assets and goodwill, a decrease in warrant incentive expense of $12.7 million, a decrease of realized losses from marketable securities of $3.6 million, and a decrease in share-based compensation of $1.5 million. The decreases were partially offset by the nine months ended September 30, 2023 reconciling non-cash items of $8.9 million related to gains from revaluations of warrants.

 

Change in Operating Activities

 

The net change in operating asset and liability activities provided by operating activities of $8.1 million as of September 30, 2024 compared to the net change in operating asset and liability activities used by operating activities of $6.0 million as of September 30, 2023 was primarily due to an increase in net receipts of tax credits during the current year of $7.4 million as credits were received for production completed in the prior year, a decrease in deferred revenue of $8.0 million, an increase in accounts receivable, net of $2.6 million and a $2.9 million increase in accounts payable due to timing.

 

Change in Investing Activities

 

The decrease in cash provided by investing activities of $61.5 million was primarily due to a decrease in proceeds from the sales and maturities of marketable securities of $60.1 million during the nine months ended September 30, 2024 as a result of selling less marketable securities during the current period.

 

Change in Financing Activities

 

The decrease in cash used in financing activities of $46.4 million was primarily due to a decrease in repayments of our margin loan of $67.4 million, partially offset by less proceeds drawn from the margin loan and production facilities of $13.2 million, higher repayments during the current period, compared to proceeds from bank indebtedness during the prior year period, resulting in a net increase of cash used in financing of $2.8 million, and higher repayments of production facilities in the current year of $3.7 million.

 

Material Cash Requirements

 

We have entered into arrangements that contractually obligate us to make payments that will affect our liquidity and cash flows in future periods. Our material cash requirements from known contractual and other obligations primarily relate to our debt and lease obligations and our employment and consulting contracts. The aggregate amount of future minimum purchase obligations under these agreements over the period of next five years is approximately $25.3 million as of September 30, 2024, of which $5.0 million could be owed within one year. Included in the amount that could be due within one year is the margin loan current balance of $1.1 million and revolving demand facility current balance of $0.6 million.

 

We plan to utilize our liquidity (as described above) to fund our material cash requirements.

 

As of September 30, 2024, we had $1.1 million in commitments for capital expenditures, related to equipment leases.

 

 

 

 

Critical Accounting Estimates

 

The preparation of the financial statements and related disclosures in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) and our discussion and analysis of our financial condition and operating results require our management to make judgments, assumptions and estimates that affect the amounts reported. Management bases its estimates on historical experience and on various other assumptions it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates, and such differences may be material.

 

Note 2, “Summary of Significant Accounting Policies” in Part I, Item 1 of this Form 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of our 2023 Annual Report, and “Critical Accounting Policies and Estimates” in Part II, Item 7 of the 2023 Annual Report describe the significant accounting policies and methods used in the preparation of our condensed consolidated financial statements.

 

Off Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

As a “smaller reporting company,” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

 

Item 4.

Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) Exchange Act. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures, as defined in Rule 13a-15(e), were not effective at the reasonable assurance level due to material weaknesses in our internal control over financial reporting which were disclosed in our 2023 Annual Report. Our management, including our Chief Executive Officer and Chief Financial Officer, has also concluded that as of December 31, 2023, March 31, 2024, and June 30, 2024, our disclosure controls and procedures, as defined in Rule 13a-15(e), were not effective at the reasonable assurance level due to material weaknesses in our internal control over financial reporting which were disclosed in our 2023 Annual Report.

 

Material Weakness in Internal Control over Financial Reporting

 

As disclosed in Item 9A, “Controls and Procedures” of our 2023 Annual Report, our management identified the following material weaknesses in our internal control over financial reporting:

 

•

Inadequate design of user access provisioning/deprovisioning controls and inadequate segregation of duties on certain controls or processes;

 

•

Lack of specialized experts related to income tax areas; and

 

•

Inappropriate application of accounting standards related to warrant modifications

 

 

 

 

Notwithstanding the identified material weaknesses, our management believes the unaudited condensed financial statements included in this Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of and for the periods presented in accordance with GAAP.

 

Management’s Plan to Remediate the Material Weakness

 

We continue to be committed to maintaining a strong internal control environment. In response to the identified material weaknesses, management has taken comprehensive actions to strengthen its internal controls and has been and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated.

 

Our plans for remediation include, but are not limited to, the efforts summarized below, which have been or are in the process of being implemented:

 

•

Enhanced procedures for formal documented review and approval of journal entries;

 

•

Reorganized the accounting team members to ensure proper segregation of duties;

 

•

Implemented core financial reporting and financial close software systems;

 

•

Performed risk assessment procedures and improved the documentation of internal processes and controls;

 

•

Improved documentation over complex financial transactions;

 

•

Implemented additional procedures over assessment of cybersecurity and information technology general controls;

 

•

Increase the extent of oversight and verification checks included in operation of user access controls and processes; and

 

•

Continue to enhance review over financial reporting, financial operations, internal controls including segregation of duties; as well as improve tax analysis and fair value estimates.

 

We will not be able to conclude whether these efforts will fully remediate the material weakness until the updated process has operated for a sufficient period of time and management has concluded, through testing, that such controls are operating effectively.

 

Changes in Internal Control over Financial Reporting

 

Other than the remediation efforts described above, there was no change in our internal controls over financial reporting that occurred during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Inherent Limitations over Internal Controls

 

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

 

 

 

 

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

 

As of September 30, 2024, there were no material pending legal proceedings to which the Company is a party or as to which any of its property is subject other than as described below.

 

Securities Litigation. As previously disclosed, the U.S. Court of Appeals for the Ninth Circuit issued an opinion earlier this year affirming in part and reversing in part the District Court’s prior dismissal of the securities litigation. The case was remanded to the District Court for further proceedings. In early June 2024, the District Court directed Defendants to file a renewed motion to dismiss focused on the matters that remain in the case. Consistent with that order, Defendants filed their renewed motion on July 29, 2024, and it is fully briefed. The District Court took the motion under submission on the briefs, and the parties are now awaiting the District Court’s decision.

 

As previously disclosed, the Company, its Chief Executive Officer Andy Heyward, and its former Chief Financial Officer Robert Denton were named as defendants in a putative class action lawsuit filed in the U.S. District Court for the Central District of California and styled In re Genius Brands International, Inc. Securities Litigation, Master File No. 2:20-cv-07457 DSF (RAOx). Lead plaintiffs alleged generally that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) by issuing allegedly false or misleading statements about the Company, initially over an alleged class period running from March into early July 2020. Plaintiffs sought unspecified damages on behalf of the alleged class of persons who invested in the Company’s common stock during the alleged class period. Defendants moved to dismiss lead plaintiffs’ amended complaint; and in a decision issued on August 30, 2021, the Court dismissed the amended complaint but granted lead plaintiffs a further opportunity to plead a claim.

 

In September 2021, lead plaintiffs filed a second amended complaint, naming the same defendants. The new complaint alleged again that the Company made numerous – depending on how one counted, more than two dozen -- false or misleading statements about the Company’s business and business prospects, this time over an expanded alleged class period that extended into March 2021; they again alleged that these misstatements violated Section 10(b) and 20(a) of the Exchange Act. Lead plaintiffs again sought unspecified damages on behalf of an alleged class of persons who invested in the Company’s common stock during the expanded alleged class period. In November 2021, the defendants filed a motion to dismiss the second amended complaint. On July 15, 2022, the Court issued a decision dismissing the second amended complaint in its entirety and with prejudice. On August 12, 2022, lead plaintiffs filed a notice of appeal to the United States Court of Appeals for the Ninth Circuit. After a full briefing of the appeal, a panel of the Court of Appeals held oral argument on the appeal on November 6, 2023, and took the matter under submission.

 

On April 5, 2024, the Appellate Court issued its opinion, affirming in part and reversing in part the decision of the District Court. The Appellate Court affirmed the dismissal of certain claims pertaining to Company statements where it found that Plaintiffs failed to adequately plead a 10(b) cause of action but reversed the lower court’s dismissal of claims related to four of the Company’s alleged misstatements, finding that, in three of those instances, the Plaintiffs adequately pleaded loss causation, and in one instance adequately alleged a misleading statement. The Court of Appeals did not address other elements of any claims based on these four complained-of statements, noting that the District Court should address those issues on remand. The matter was remanded to the District Court in May 2024. By order entered June 4, 2024, the Court directed the defendants to file a renewed motion to dismiss on a schedule to be proposed by the parties. As noted, Defendants filed that motion on July 29, 2024. Under an agreed, and court-ordered, briefing schedule, briefing of the motion extended into October 2024, and the District Court took the motion under submission without a hearing. The parties are awaiting the District Court’s decision. The Company cannot predict the timing or outcome of the renewed motion to dismiss Plaintiffs’ remaining claims based on the four remaining alleged misstatements, or the outcome of the case more generally.

 

 

 

 

Shareholder Derivative Actions. Since the Company’s last quarterly report, there have been no developments in the shareholder derivative actions involving the Company. Related to the securities class action, the Company’s directors (other than Dr. Cynthia Turner-Graham, Michael Hirsh, and Stefan Piech), together with Messrs. Heyward and Denton and former director Michael Klein, have been named as defendants in several putative stockholder derivative lawsuits. As previously disclosed, these include a consolidated proceeding pending in the U.S. District Court for the Central District of California and styled In re Genius Brands Stockholder Derivative Litigation, Case No. 2:20-cv-08277 DSF (RAOx); an action filed in the Los Angeles County Superior Court captioned Ly, etc. v. Heyward, et al., Case No. 20STCV44611; and an additional case pending in the U.S. District Court for the District of Nevada, styled Miceli, etc. v. Heyward, et al., Case No. 3:21-cv-00132-MMD-WGC. While the allegations and legal claims vary somewhat among the derivative actions, they all generally allege that the defendants breached fiduciary duties owed to the Company. The plaintiffs, all alleged stockholders of the Company, purport to sue on behalf and for the benefit of the Company. Accordingly, the derivative plaintiffs seek no recovery from the Company. Instead, as a stockholder derivative action, the Company is named as a nominal defendant. Pursuant to agreements among the parties, the courts in all of the derivative lawsuits have stayed proceedings pending the outcome of the securities litigation. As the Company cannot predict the outcome of the securities litigation, it is likewise unable to predict the outcome of the shareholder derivative lawsuits.

 

Section 16(b) Litigation. As previously disclosed, the Company is also a nominal defendant in an action filed on January 11, 2022, in the U.S. District Court for the Southern District of New York and styled Todd Augenbaum v. Anson Investments Master Fund LP, et al., Case No. 1:22-cv-00249 AS. The action, which again purports to be brought on behalf and for the benefit of the Company, seeks the recovery under Section 16(b) of the Exchange Act of supposed short-swing profits allegedly realized by roughly a dozen persons and entities that participated as investors in certain of the Company’s private placements of securities in 2020. Plaintiff Augenbaum, who purports to be a Company stockholder, filed his lawsuit after issuing a demand to the Company’s Board of Directors asking that the Company sue the investor defendants. The Company rejected the demand in late December 2021, and Mr. Augenbaum sued a few weeks later, as Section 16(b) permits him to do. No Company officer or director is among the defendants. The defendant investors filed motions to dismiss the action. After full briefing, the court, by order entered March 30, 2023, granted the motion to dismiss with leave to amend. Plaintiff subsequently filed his First Amended Complaint on May 1, 2023. Defendants moved to dismiss again. After a full briefing and oral argument, the Court (with a new judge now sitting) denied the motion to dismiss by order entered on January 24, 2024. The parties then engaged in extensive fact discovery, which closed in October 2024. The parties are now proceeding with expert discovery, and dispositive motions are expected to be filed before year-end. The Court has not set a trial date. As noted, Plaintiff seeks no relief from the Company; indeed, he seeks monetary relief for the Company. In any event, the Company cannot predict the outcome of the case.

 

In connection with the Augenbaum lawsuit, two of the investor groups named as defendants (the “demanding defendants”) have made a demand on the Company for indemnification pursuant to terms of an indemnity provision of the securities purchase agreements under which they invested in the Company. The Company believes the indemnity provision to be inapplicable and has rejected the demands. The Company and the demanding defendants have entered into standstill agreements and the parties have agreed to defer resolution of the indemnification matter pending resolution of the underlying litigation. In addition, the Company’s placement agent for the offerings at issue, Special Equities Group (“SEG”), was subpoenaed by Mr. Augenbaum. Pursuant to its placement-agent agreement with the Company, which covers a relationship broader than the offerings at issue, SEG demanded indemnification from the Company for its legal fees to comply with that subpoena. While reserving its rights, the Company believes that SEG has an indemnity claim under the governing placement agent agreement that likely has more merit than the demanding defendants’ demands. The Company cannot predict whether other parties may issue indemnification demands, or the outcome of any future proceedings that might arise concerning the such demands.

 

Demand Letter. The Company received a demand letter from Dawson James Securities (“Dawson”) on or about April 22, 2024, alleging it was owed commissions and fees arising from the Company’s offering of securities announced on April 18, 2024. The Company disputes Dawson’s asserted entitlement to commissions and fees.

 

 

 

 

In all of the above-mentioned active proceedings, the Company has denied and continues to deny any wrongdoing and intends to defend the claims vigorously. The Company maintains a program of directors’ and officers’ liability insurance that, subject to the insurers’ reservations of rights, has offset a portion of the costs of defending the securities class action litigation, and that the Company expects will afford coverage for some costs of the other shareholder litigation should any of those cases proceed.

 

Item 1A.

Risk Factors

 

We have incurred net losses since inception.

 

We have a history of operating losses and incurred net losses in each fiscal quarter since our inception. During the nine months ended September 30, 2024, we generated total revenues of $23.2 million and incurred a net loss of $15.0 million, while for the same period the previous year, we generated total revenue of $35.3 million and incurred a net loss of $51.7 million, respectively. For the year ended December 31, 2023, we generated total revenues of $44.1 million and incurred a net loss of $77.1 million, while for the previous year, we generated net revenue of $62.3 million and incurred a net loss of $45.6 million. These losses, among other things, have had an adverse effect on our results of operations, financial condition, stockholders’ equity, net current assets and working capital.

 

We will need to generate additional revenue and/or reduce costs to achieve profitability. We are generating revenues derived from our existing properties, properties in production, and new brands being introduced into the marketplace. However, the ability to sustain these revenues and generate significant additional revenues and reduce our expenses or achieve profitability will depend upon numerous factors some of which are outside of our control.

 

There is uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt about our ability to continue as a going concern.

 

Based on our current expected level of operating expenditures and the cash and cash equivalents on hand at September 30, 2024, management concludes that there is substantial doubt about our ability to continue as a going concern for a period of at least 12 months subsequent to the issuance of the accompanying condensed consolidated financial statements.

 

Historically, we have financed its operations primarily through revenue generated from operations, loans and sales of our securities, and we expect to continue to seek and obtain additional capital in a similar manner. We have filed a registration statement on Form S-3 on December 22, 2023, as amended, registering the sale of up to $75 million of the Company’s securities pursuant to a shelf registration statement, and a registration statement on Form S-1 on September 27, 2024, as amended, in connection with a best efforts public offering of up to $8 million of the Company’s securities. However, we do not have any committed sources of financing at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all. Our ability sell securities registered on our registration statement on Form S-3 is limited until such time the market value of our voting securities held by non-affiliates is $75 million or more. In addition, the number of shares of common stock and securities convertible or exercisable for common stock that we can sell, under certain circumstances, will be limited by the NYSE American rules and regulations. There can be no assurance that we will be able to continue to raise funds through the sale of shares of common stock or issuance of debt. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of its existing stockholders will be diluted. The issuance of debt can result in restrictive covenants that limit operations. If funding is not available or not available at terms acceptable to us, we will seek to reduce overhead costs and reduce its weekly cash obligations in the short term as needed. In addition, we can look to divest or bring in equity partners for our various divisions and bring in near term capital. No adjustments have been made to the presented condensed consolidated financial statements as a result of this uncertainty.

 

 

 

 

We have incurred indebtedness that could adversely affect our operations and financial condition.

 

As of September 30, 2024, we and our subsidiaries have production loan facility obligations of approximately $8.7 million and advances outstanding of $0.6 million under our senior secured revolving credit facility. As of December 31, 2023, we and our subsidiaries have production loan facility obligations of approximately $15.3 million and advances outstanding of $2.9 million under our senior secured revolving credit facility. We also had an outstanding margin loan of $0.8 million secured by our marketable investment securities as of December 31, 2023. The facilities are guaranteed by us and the security reflects substantially all of our tangible and intangible assets including a combination of federal and provincial tax credits, other government incentives, production service agreements and license agreements. The facilities and the margin loan are generally repayable on demand and are subject to customary default provisions, representations and warranties and other terms and conditions.

 

Our level of debt could have adverse consequences on our business, such as making it more difficult for us to satisfy our obligations with respect to our other debt; limiting our ability to refinance such indebtedness or to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes; increasing our vulnerability to economic downturns and adverse developments in our business; exposing us to the risk of increased interest rates as certain of our borrowings are at fixed long term rates and or variable rates of interest; limiting our flexibility in planning for, and reducing our flexibility in reacting to, changes in the conditions of the financial markets and our industry; placing us at a competitive disadvantage compared to other, less leveraged competitors; increasing our cost of borrowing; and restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our existing and future indebtedness and exposing us to potential events of default (if not cured or waived) under covenants contained in our debt instruments.

 

We are currently in default under financial covenants under our revolving demand facility.

 

We were not in compliance with a financial covenant under the revolving demand facility as of September 30, 2024. Due to financial covenant violations in the second quarter of 2024, the Company’s remaining equipment lease agreements with the lender of $0.6 million (CAD 0.8 million) as of September 30, 2024, are subject to early repayment. During the three months ended September 30, 2024, the lender and the Company agreed to a repayment plan for the equipment leases under the equipment lease line to be completed prior to the end of the fourth quarter of 2024. On August 30, 2024, the Company paid $0.1 million (CAD 0.1 million) to the lender as part of its early repayment plan for the existing equipment lease line agreements. Subsequent to September 30, 2024, the Company paid $0.3 million (CAD 0.4 million) to the lender as part of its repayment plan for the equipment lease line. The amendment and covenant violations did not have any impact on the Company’s production facilities that are separate from the revolving demand facility and are used for financing specific productions.

 

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

 

If our stockholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period under Rule 144, or shares issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” and, in anticipation of which, the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. In general, under Rule 144, a non-affiliated person who has held restricted shares of our common stock for a period of six months may sell into the market all of their shares, subject to us being current in our periodic reports filed with the SEC.

 

As of September 30, 2024, approximately 37,303,946 shares of common stock are outstanding and unrestricted, out of the 39,555,161 shares of common stock issued, meaning they exclude shares held by insiders and can be freely traded on the open market. As of September 30, 2024, there were 6,926,952 warrants outstanding. Lastly, as of September 30, 2024, there are 953,640 shares of common stock underlying outstanding options granted, 2,385,247 shares, including vested and unvested, of common stock underlying outstanding restricted stock units (“RSUs”) and 1,832,734 shares reserved for issuance under our Kartoon Studios, Inc. 2020 Incentive Plan.

 

 

 

 

To date, our revenues have come from a limited number of customers, making us dependent on those few customers.

 

During the three months ended September 30, 2024, we had four customers, whose total revenue exceeded 10% of the total condensed consolidated revenue. These customers accounted for 77.2% of the total revenue.

 

During the nine months ended September 30, 2024, we had three customers, whose total revenue exceeded 10% of the total condensed consolidated revenue. These customers accounted for 60.2% of the total revenue. As of September 30, 2024, the Company had three customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 59.4% of the total accounts receivable as of September 30, 2024.

 

The loss of, or a significant reduction of business from, any of our primary customers will have a material adverse effect on our business, financial condition, and results of operation unless we are able to replace such customers with other primary customers.

 

We have identified material weaknesses in our internal control over financial reporting. Failure to remediate the material weaknesses or any other material weaknesses that we identify in the future could result in material misstatements in our financial statements.

 

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, our management is required to report on the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. Annually, we perform activities that include reviewing, documenting and testing our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control over financial reporting, we will not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002. If we fail to achieve and maintain an effective internal control environment, we could suffer misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could result in significant expenses to remediate any internal control deficiencies and lead to a decline in our stock price.

 

We have identified material weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

 

We cannot provide assurance that we have identified all, or that we will not in the future have additional, material weaknesses in our internal control over financial reporting. As a result, we may be required to implement further remedial measures and to design enhanced processes and controls to address deficiencies. If we do not effectively remediate the material weaknesses identified by management and maintain adequate internal controls over financial reporting in the future, we may not be able to prepare reliable financial reports and comply with our reporting obligations under the Exchange Act on a timely basis. Any such delays in the preparation of financial reports and the filing of our periodic reports may result in a loss of public confidence in the reliability of our financial statements, which, in turn, could materially adversely affect our business, the market value of our common stock and our access to capital markets.

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

(a) Unregistered Sales of Equity Securities

 

We did not sell any equity securities during the quarter ended September 30, 2024 in transactions that were not registered under the Securities Act other than as previously disclosed in our filings with the SEC.

 

(b) Use of Proceeds

 

Not applicable.

 

(c) Issuer Purchases of Equity Securities

 

Not applicable.

 

Item 3.

Defaults Upon Senior Securities

 

None.

 

Item 4.

Mine Safety Disclosures

 

Not applicable.

 

Item 5.

Other Information

 

During the quarter ended September 30, 2024, none of the Company’s directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (each as defined in Item 408 of Regulation S-K).

 

 

 

 

 

 

 

 

Item 6.

Exhibits

 

EXHIBIT INDEX

 

3.1	Articles of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K, filed with the SEC on March 31, 2021)
3.2	Certificate of Change to the Articles of Incorporation of the Company, filed with the Secretary of State of the State of Nevada on February 9, 2023 (Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on February 10, 2023)
3.3	Bylaws of the Company, as amended (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q, filed with the SEC on August 19, 2019)
3.4	Amended and Restated Certificate of Designations, Preferences and Rights of the 0% Series A Convertible Preferred Stock, filed with the Secretary of State of Nevada on November 21, 2019 (Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on November 21, 2019)
3.5	Certificate of Designation of Series B Preferred Stock (Incorporated by reference to the Company’s Current Report on Form 8-K, filed with the SEC on April 12, 2022)
3.6	Articles of Merger of Kartoon Studios, Inc. into the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on June 27, 2023).
3.7	Certificate of Designation of Series C Preferred Stock of the Company, dated September 25, 2023 (incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form 8-A, filed on September 25, 2023)
3.8	First Amendment to the Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on September 25, 2023)
3.9	Certificate of Change to the Articles of Incorporation of the Company, filed with the Secretary of State of the State of Nevada on November 9, 2023 (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on November 14, 2023)
31.1*	Section 302 Certification of Chief Executive Officer
31.2*	Section 302 Certification of Chief Financial Officer
32.1**	Section 906 Certification of Chief Executive Officer
32.2**	Section 906 Certification of Chief Financial Officer
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted in inline XBRL and included in exhibit 101).

__________

*

Filed herewith.

**

Furnished herewith.

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	Kartoon Studios, Inc.
November 14, 2024	By:	/s/ Andy Heyward
		Andy Heyward
		Chief Executive Officer (Principal Executive Officer)
November 14, 2024		/s/ Brian Parisi
		Brian Parisi
		Chief Financial Officer (Principal Financial and Accounting Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXHIBIT 31.1

 

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Andy Heyward, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 of Kartoon Studios, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 14, 2024		By:	/s/ Andy Heyward
			Andy Heyward Chief Executive Officer (Principal Executive Officer)

 

 

EXHIBIT 31.2

 

Certification of Chief Executive Officer

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

I, Brian Parisi, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 of Kartoon Studios, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 14, 2024		By:	/s/ Brian Parisi
			Brian Parisi Chief Financial Officer (Principal Financial and Accounting Officer)

 

 

EXHIBIT 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Brian Parisi, Chief Financial Officer of Kartoon Studios, Inc., (the “Company”), do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1)

the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Date: November 14, 2024			By:			/s/ Brian Parisi
						Brian Parisi Chief Financial Officer (Principal Financial and Accounting Officer)

 

v3.24.3

Cover - shares	9 Months Ended
	Sep. 30, 2024	Nov. 13, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2024
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	000-54389
Entity Registrant Name	KARTOON STUDIOS, INC.
Entity Central Index Key	0001355848
Entity Tax Identification Number	20-4118216
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	190 N. Canon Drive
Entity Address, Address Line Two	4th FL
Entity Address, City or Town	Beverly Hills
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90210
City Area Code	310
Local Phone Number	273-4222
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	TOON
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		39,568,887

v3.24.3

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Current Assets:
Cash	$ 4,581	$ 4,095
Investments in Marketable Securities (amortized cost of $4,266 and $12,838, respectively)	4,079	11,950
Accounts Receivable (net of allowance of $241 and $189, respectively)	11,893	18,072
Tax Credits Receivable (net of allowance of $610 and $527, respectively)	12,929	20,714
Prepaid Expenses and Other Assets	900	740
Total Current Assets	37,180	57,109
Noncurrent Assets:
Property and Equipment, net	1,655	1,877
Operating Lease Right-of-Use Assets, net	6,365	7,076
Finance Lease Right-of-Use Assets, net	1,026	1,867
Film and Television Costs, net	1,858	1,295
Investment in Your Family Entertainment AG	17,965	19,094
Intangible Assets, net	21,126	22,993
Other Assets	124	125
Total Assets	87,299	111,436
Current Liabilities:
Accounts Payable	12,043	16,864
Participations Payable	1,188	1,915
Accrued Expenses	1,132	691
Accrued Salaries and Wages	1,707	1,926
Deferred Revenue	5,015	3,127
Margin Loan	1,069	782
Production Facilities	8,739	15,336
Bank Indebtedness	592	2,905
Current Portion of Operating Lease Liabilities	1,120	908
Current Portion of Finance Lease Liabilities	923	1,120
Warrant Liability	0	63
Total Current Liabilities	33,700	45,640
Noncurrent Liabilities:
Deferred Revenue	3,371	3,458
Operating Lease Liabilities, Net Current Portion	5,912	6,736
Finance Lease Liabilities, Net Current Portion	107	928
Deferred Tax Liability, net	1,402	1,399
Other Noncurrent Liabilities	7	14
Total Liabilities	44,499	58,175
Commitments and Contingencies (Note 19)
Stockholders’ Equity:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, as of September 30, 2024 and December 31, 2023	0	0
Common Stock, $0.001 par value, 190,000,000 shares authorized, 39,630,851 and 35,323,217 shares issued and 39,555,161 and 35,247,744 outstanding as of September 30, 2024 and December 31, 2023, respectively	40	352
Additional Paid-in Capital	778,438	773,986
Treasury Stock at Cost, 75,690 and 75,473, shares of common stock as of September 30, 2024 and December 31, 2023, respectively	(339)	(339)
Accumulated Deficit	(733,521)	(718,546)
Accumulated Other Comprehensive Loss	(3,376)	(3,883)
Total Kartoon Studios, Inc. Stockholders' Equity	41,242	51,570
Non-Controlling Interests in Consolidated Subsidiaries	1,558	1,691
Total Stockholders' Equity	42,800	53,261
Total Liabilities and Stockholders’ Equity	87,299	111,436
Series A Preferred Stock [Member]
Stockholders’ Equity:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, as of September 30, 2024 and December 31, 2023	0	0
Series B Preferred Stock [Member]
Stockholders’ Equity:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, as of September 30, 2024 and December 31, 2023	0	0
Series C Preferred Stock [Member]
Stockholders’ Equity:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, as of September 30, 2024 and December 31, 2023	0	0
Related Party [Member]
Current Assets:
Other Receivable	1,471	1,435
Current Liabilities:
Other Current Liabilities	4	3
Nonrelated Party [Member]
Current Assets:
Other Receivable	1,327	103
Current Liabilities:
Other Current Liabilities	$ 168	$ 0

v3.24.3

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Amortized cost	$ 4,266	$ 12,838
Accounts receivable, net of allowance	241	189
Tax credits receivable, net of allowance	$ 610	$ 527
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	190,000,000	190,000,000
Common stock, shares issued	39,630,851	35,323,217
Common stock, shares outstanding	39,555,161	35,247,744
Treasury stock, shares	75,690	75,473
Series A Preferred Stock [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	6,000	6,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Series B Preferred Stock [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1	1
Preferred stock, shares issued	1	1
Preferred stock, shares outstanding	1	1
Series C Preferred Stock [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	50,000	50,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

v3.24.3

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenues:
Total Revenues	$ 8,708	$ 10,072	$ 23,170	$ 35,276
Operating Expenses:
Marketing and Sales	290	522	1,026	2,457
Direct Operating Costs	5,766	13,475	15,936	34,301
General and Administrative	5,199	8,679	19,710	26,274
Impairment of Property and Equipment	0	0	0	120
Impairment of Intangible Assets	0	0	0	4,023
Impairment of Goodwill	0	0	0	11,287
Total Operating Expenses	11,255	22,676	36,672	78,462
Loss from Operations	(2,547)	(12,604)	(13,502)	(43,186)
Interest Expense	(176)	(672)	(625)	(2,777)
Other Income (Expense), net	602	(2,236)	(981)	(6,783)
Loss Before Income Tax Benefit	(2,121)	(15,512)	(15,108)	(52,746)
Income Tax Benefit	0	0	0	934
Net Loss	(2,121)	(15,512)	(15,108)	(51,812)
Net Loss Attributable to Non-Controlling Interests	64	36	133	83
Net Loss Attributable to Kartoon Studios, Inc.	$ (2,057)	$ (15,476)	$ (14,975)	$ (51,729)
Net Loss per Share (Basic)	$ (0.05)	$ (0.44)	$ (0.40)	$ (1.56)
Net Loss per Share (Diluted)	$ (0.05)	$ (0.44)	$ (0.40)	$ (1.56)
Weighted Average Shares Outstanding (Basic)	39,499,680	35,088,333	37,734,415	33,160,228
Weighted Average Shares Outstanding (Diluted)	39,499,680	35,088,333	37,734,415	33,160,228
Production Services [Member]
Revenues:
Total Revenues	$ 4,898	$ 6,360	$ 12,756	$ 23,279
Content Distribution [Member]
Revenues:
Total Revenues	2,348	2,562	7,002	8,815
License [Member]
Revenues:
Total Revenues	37	153	235	362
Media Advisory And Advertising Services [Member]
Revenues:
Total Revenues	$ 1,425	$ 997	$ 3,177	$ 2,820

v3.24.3

Condensed Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Net Loss	$ (2,121)			$ (15,512)			$ (15,108)	$ (51,812)
Change in Accumulated Other Comprehensive Income (Loss):
Change in Unrealized Gain on Marketable Securities	134			164			197	907
Realized Losses on Marketable Securities Reclassified from AOCI into Earnings	148			1,897			505	4,154
Foreign Currency Translation Adjustments	41			(550)			(195)	157
Total Change in Accumulated Other Comprehensive Loss	323			1,511			507	5,218
Total Comprehensive Net Loss	(1,798)			(14,001)			(14,601)	(46,594)
Net Loss Attributable to Non-Controlling Interests	64			36			133	83
Total Comprehensive Net Loss Attributable to Kartoon Studios, Inc.	(1,734)			(13,965)			(14,468)	(46,511)
Balance, June 30, 2023	44,359	$ 46,474	$ 53,261	87,742	$ 92,281	$ 112,869	53,261	112,869
Issuance of Common Stock for Services	$ 84	83	74	43	997
Reclassification Related to Reverse Stock Split
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes		25		(9)	(6)	$ (9)
Proceeds From Warrant Exchange, net					4,857
Fractional Shares Issued Upon Reverse Stock Split
Proceeds from Securities Purchase Agreement, Net		3,329
Share Based Compensation	$ 155	164	226	465	717	$ 910
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss	282	259	161	2,061	633	2,367
Currency Translation Adjustment	41	(52)	(184)	(550)	704	3
Net Loss	(2,121)	(5,923)	(7,064)	(15,512)	(12,441)	(23,859)
Balance, September 30, 2023	42,800	44,359	46,474	74,240	87,742	92,281	42,800	74,240
Common Stock [Member]
Change in Accumulated Other Comprehensive Income (Loss):
Balance, June 30, 2023	$ 356	$ 352	$ 352	$ 351	$ 320	$ 319	$ 352	$ 319
Shares, Outstanding, Beginning Balance	39,463,517	35,351,190	35,247,744	35,054,573	32,113,784	31,918,552	35,247,744	31,918,552
Issuance of Common Stock for Services
Stock Issued During Period, Shares, Issued for Services	91,644	73,745	53,497	26,152	404,251
Reclassification Related to Reverse Stock Split	(316)
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes					$ 29	$ 1
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures		38,582	49,949	64,756	224,988	78,088
Proceeds From Warrant Exchange, net					$ 2
[custom:StockIssuedDuringPeriodSharesWarrantExchange]					2,311,550
Fractional Shares Issued Upon Reverse Stock Split
Stock Issued During Period, Shares, Stock Splits						117,144
Proceeds from Securities Purchase Agreement, Net		$ 4
Stock Issued During Period, Shares, New Issues		4,000,000
Share Based Compensation
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss
Currency Translation Adjustment
Net Loss
Balance, September 30, 2023	$ 40	$ 356	$ 352	$ 351	$ 351	$ 320	$ 40	$ 351
Shares, Outstanding, Ending Balance	39,555,161	39,463,517	35,351,190	35,145,481	35,054,573	32,113,784	39,555,161	35,145,481
Preferred Stock [Member]
Change in Accumulated Other Comprehensive Income (Loss):
Balance, June 30, 2023
Shares, Outstanding, Beginning Balance	1	1	1	1	1	1	1	1
Issuance of Common Stock for Services
Reclassification Related to Reverse Stock Split
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes
Proceeds From Warrant Exchange, net
Fractional Shares Issued Upon Reverse Stock Split
Proceeds from Securities Purchase Agreement, Net
Share Based Compensation
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss
Currency Translation Adjustment
Net Loss
Balance, September 30, 2023
Shares, Outstanding, Ending Balance	1	1	1	1	1	1	1	1
Additional Paid-in Capital [Member]
Change in Accumulated Other Comprehensive Income (Loss):
Balance, June 30, 2023	$ 777,883	$ 774,286	$ 773,986	$ 769,867	$ 763,327	$ 762,418	$ 773,986	$ 762,418
Issuance of Common Stock for Services	$ 84	83	74	43	997
Reclassification Related to Reverse Stock Split	316
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes		25			(29)	$ (1)
Proceeds From Warrant Exchange, net					4,855
Fractional Shares Issued Upon Reverse Stock Split
Proceeds from Securities Purchase Agreement, Net		3,325
Share Based Compensation	$ 155	164	226	465	717	$ 910
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss
Currency Translation Adjustment
Net Loss
Balance, September 30, 2023	778,438	777,883	774,286	770,375	769,867	763,327	778,438	770,375
Treasury Stock, Common [Member]
Change in Accumulated Other Comprehensive Income (Loss):
Balance, June 30, 2023	$ (339)	$ (339)	$ (339)	$ (305)	$ (299)	$ (290)	$ (339)	$ (290)
Shares, Outstanding, Beginning Balance	75,690	75,473	75,473	48,498	46,333	42,633	75,473	42,633
Issuance of Common Stock for Services
Reclassification Related to Reverse Stock Split
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes				$ (9)	$ (6)	$ (9)
Stock Issued During Period, Shares, Restricted Stock Award, Net of Forfeitures		217		2,441	2,165	3,700
Proceeds From Warrant Exchange, net
Fractional Shares Issued Upon Reverse Stock Split
Proceeds from Securities Purchase Agreement, Net
Share Based Compensation
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss
Currency Translation Adjustment
Net Loss
Balance, September 30, 2023	$ (339)	$ (339)	$ (339)	$ (314)	$ (305)	$ (299)	$ (339)	$ (314)
Shares, Outstanding, Ending Balance	75,690	75,690	75,473	50,939	48,498	46,333	75,690	50,939
Retained Earnings [Member]
Change in Accumulated Other Comprehensive Income (Loss):
Balance, June 30, 2023	$ (731,464)	$ (725,591)	$ (718,546)	$ (677,696)	$ (665,271)	$ (641,443)	$ (718,546)	$ (641,443)
Issuance of Common Stock for Services
Reclassification Related to Reverse Stock Split
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes
Proceeds From Warrant Exchange, net
Fractional Shares Issued Upon Reverse Stock Split
Proceeds from Securities Purchase Agreement, Net
Share Based Compensation
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss
Currency Translation Adjustment
Net Loss	(2,057)	(5,873)	(7,045)	(15,476)	(12,425)	(23,828)
Balance, September 30, 2023	(733,521)	(731,464)	(725,591)	(693,172)	(677,696)	(665,271)	(733,521)	(693,172)
AOCI Attributable to Parent [Member]
Change in Accumulated Other Comprehensive Income (Loss):
Balance, June 30, 2023	(3,699)	(3,906)	(3,883)	(6,218)	(7,555)	(9,925)	(3,883)	(9,925)
Issuance of Common Stock for Services
Reclassification Related to Reverse Stock Split
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes
Proceeds From Warrant Exchange, net
Fractional Shares Issued Upon Reverse Stock Split
Proceeds from Securities Purchase Agreement, Net
Share Based Compensation
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss	282	259	161	2,061	633	2,367
Currency Translation Adjustment	41	(52)	(184)	(550)	704	3
Net Loss
Balance, September 30, 2023	(3,376)	(3,699)	(3,906)	(4,707)	(6,218)	(7,555)	(3,376)	(4,707)
Noncontrolling Interest [Member]
Change in Accumulated Other Comprehensive Income (Loss):
Balance, June 30, 2023	1,622	1,672	1,691	1,743	1,759	1,790	1,691	1,790
Issuance of Common Stock for Services
Reclassification Related to Reverse Stock Split
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes
Proceeds From Warrant Exchange, net
Fractional Shares Issued Upon Reverse Stock Split
Proceeds from Securities Purchase Agreement, Net
Share Based Compensation
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss
Currency Translation Adjustment
Net Loss	(64)	(50)	(19)	(36)	(16)	(31)
Balance, September 30, 2023	$ 1,558	$ 1,622	$ 1,672	$ 1,707	$ 1,743	$ 1,759	$ 1,558	$ 1,707

v3.24.3

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash Flows from Operating Activities:
Net Loss	$ (15,108)	$ (51,812)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Amortization of Film and Television Costs	176	612
Depreciation and Amortization of Property, Equipment & Intangible Assets	1,791	1,943
Amortization of Right-of-Use Asset	1,400	2,179
Amortization of Premium on Marketable Securities	59	369
Share-Based Compensation Expense	545	2,091
Impairment of Film and Television Costs	0	6,172
Impairment of Intangible Assets	0	4,023
Impairment of Goodwill	0	11,287
Impairment of Property and Equipment	0	120
Deferred Income Taxes	0	(934)
Loss on Early Lease Termination	0	232
Marketing Expenses in Exchange for Stock	0	1,195
(Gain) Loss on Revaluation of Equity Investments in Your Family Entertainment AG	1,342	(1,102)
Unrealized (Gain) Loss on Foreign Currency of Equity Investments in Your Family Entertainment AG	(212)	205
Gain on Revaluation of Warrants	(63)	(8,999)
Realized Loss on Marketable Securities	505	4,154
Warrant Incentive Expense	0	12,664
Stock Issued for Services	242	1,040
Credit Loss Expense	144	351
Other Non-Cash Items	(10)	2
Decrease (Increase) in Operating Assets:
Accounts Receivable	6,127	3,481
Other Receivable	(1,229)	909
Tax Credits Earned (less capitalized)	(6,468)	(12,327)
Tax Credits Received	13,760	12,247
Film and Television Costs, net	(744)	(778)
Prepaid Expenses and Other Assets	(169)	(178)
Increase (Decrease) in Operating Liabilities:
Accounts Payable	(4,816)	(1,875)
Accrued Salaries & Wages	(190)	(358)
Accrued Expenses	439	(71)
Accrued Production Costs	491	806
Participations Payable	(709)	(942)
Deferred Revenue	1,840	(6,208)
Lease Liability	(429)	(695)
Due to Related Party	(3)	55
Other Liabilities	162	(26)
Net Cash Used in Operating Activities	(1,127)	(20,168)
Cash Flows from Investing Activities:
Repayments from/(Loans to) Related Party for Note Receivables	(37)	1,393
Proceeds from Principal Collections on Marketable Securities	0	460
Proceeds from Sales and Maturities of Marketable Securities	8,009	67,633
Purchase of Property & Equipment	(70)	(68)
Net Cash Provided by Investing Activities	7,902	69,418
Cash Flows from Financing Activities:
Proceeds from Margin Loan	9,054	17,619
Repayments of Margin Loan	(8,767)	(76,182)
Proceeds from Production Facilities	6,492	11,161
Repayment of Production Facilities	(13,168)	(9,451)
(Repayments of )/Proceeds from Bank Indebtedness, net	(2,253)	573
Proceeds from Securities Purchase Agreement	3,329	5,299
Principal Payments on Finance Lease Obligations	(1,040)	(1,555)
Debt Issuance Costs	(116)	(18)
Shares Withheld for Taxes on Vested Restricted Shares	25	(25)
Payment for Warrant Put Option Exercise	0	(250)
Net Cash Used in Financing Activities	(6,444)	(52,829)
Effect of Exchange Rate Changes on Cash	155	34
Net Increase (Decrease) in Cash	486	(3,545)
Beginning Cash	4,095	7,432
Ending Cash	4,581	3,887
Supplemental Disclosures of Cash Flow Information
Cash Paid for Interest	145	285
Non-Cash Financing and Investing Activities
Leased Assets Obtained in Exchange for New Finance Lease Liabilities	0	1,432
Warrants Issued for Services	0	443
Warrant Modification	$ 0	$ 3,510

v3.24.3

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure [Table]
Net Income (Loss)	$ (2,057)	$ (15,476)	$ (14,975)	$ (51,729)

v3.24.3

Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2024
Insider Trading Arrangements [Line Items]
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

v3.24.3

Organization and Business	9 Months Ended
	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Business	Note 1: Organization and Business   Organization and Nature of Business   Kartoon Studios, Inc. (formerly known as Genius Brands International, Inc.; the “Company”) is a global content and brand management company that creates, produces, licenses, and broadcasts timeless and educational, multimedia animated content for children. Led by experienced industry personnel, the Company distributes its content primarily on streaming platforms and television, and licenses properties for a broad range of consumer products based on the Company’s characters. The Company is a “work for hire” producer for many of the streaming outlets and animated content intellectual property (“IP”) holders. In the children’s media sector, the Company’s portfolio features “content with a purpose” for toddlers to tweens, providing enrichment as well as entertainment. With the exception of selected WOW Unlimited Media Inc. (“Wow”) titles, the Company’s programs, along with licensed programs, are being broadcast in the United States on the Company’s wholly-owned advertisement supported video on demand (“AVOD”) service, its free ad supported TV (“FAST”) channels and subscription video on demand (“SVOD”) outlets, Kartoon Channel! and Ameba TV, as well as linear streaming platforms. These streaming platforms include Comcast, Cox, DISH, Sling TV, Amazon Prime Video, Amazon Fire, Roku, Apple TV, Apple iOS, Android TV, Android mobile, Pluto TV, Xumo, Tubi, YouTube, YouTube Kids and KartoonChannel.com, as well as Samsung and LG smart TVs. The Company's in-house owned and produced animated shows include Stan Lee’s Superhero Kindergarten starring Arnold Schwarzenegger, Llama Llama starring Jennifer Garner, and Rainbow Rangers, KC Pop Quiz and Shaq’s Garage starring Shaquille O’Neal. The Company’s library titles include the award-winning Baby Genius, adventure comedy Thomas Edison’s Secret Lab®, and Warren Buffett’s Secret Millionaires Club, created with and starring iconic investor Warren Buffett, Team Zenko Go!, Reboot, Bee & PuppyCat: Lazy in Space and Castlevania.   The Company also licenses its programs to other services worldwide, in addition to the operation of its own channels, including, but not limited to, Netflix, Paramount+, Max, Samsung TV Plus, LG Smart TVs, Amazon, Nickelodeon, and satellite, cable and terrestrial broadcasters around the world.   Through the Company’s investments in Germany’s Your Family Entertainment AG (“YFE”), a publicly traded company on the Frankfurt Stock Exchange (RTV-Frankfurt), it has gained access to a leading producer and distributor of high-quality children’s and family programming. YFE owns and operates one of Europe’s largest channel-independent libraries of around 150 titles and 3,500 half-hour episodes.   Through the ownership of Wow, the Company established an affiliate relationship with Mainframe Studios, which is one of the largest animation producers in the world. In addition, Wow owns Frederator Networks Inc. (“Frederator”), the largest animation focused creator network on YouTube with over 2,500 channels. Frederator also owns Frederator Studios, focused on developing and producing shorts and series for and with partners. Over the past 20 years, Frederator Studios has partnered with Cartoon Network, Nickelodeon, Nick Jr., Netflix, Sony Pictures Animation and Amazon.   The Company has rights to a select amount of valuable IP, including among them a controlling interest in Stan Lee Universe, LLC (“SLU”), through which it controls the name, likeness, signature, and all consumer product and IP rights to Stan Lee (the “Stan Lee Assets”). Known by his signature phrase “Excelsior!”, Stan Lee is one of the most prolific and legendary creators of all time. As Marvel's editor-in-chief, Stan "The Man" Lee helped build a universe of interlocking continuity, one where fans felt as if they could turn a street corner and run into a superhero from Spider-Man to the Fantastic Four, Thor, Iron Man, the Hulk, the X-Men, and more. Stan went on to become Marvel’s editorial director and publisher in 1972 and was eventually named chairman emeritus. He was the co-creator of characters appearing in 3 of the top 10 box office movies of all time, which featured Spider-Man, Iron Man, the Hulk, Thor, Guardians of the Galaxy, Black Panther, and of course the Avengers, accounting for billions of dollars of revenue for Marvel and the Walt Disney Company.   The Company also owns The Beacon Media Group, LLC (“Beacon Media”) and The Beacon Communications Group, Ltd. (“Beacon Communications”) (collectively, “Beacon”), a North American marketing and media agency specializing in creating impactful connections between consumers and brands across various industries. With a focus on in-depth research and analysis the agency equips brands with a deep understanding of media landscapes, trends, and platform patterns across generations along with developing highly effective media strategies that deliver results for clients. Beacon represents over 20 kids and family clients including Bandai Namco, Moose Toys, Bazooka Candy Brands, Goliath Games, Playmates Toys, Cepia LLC, Cra-Z-Art, and Zebra Pens.   In addition, the Company owns the Canadian company Ameba Inc. (“Ameba”), which distributes SVOD service for kids and has become a focal point of revenue for TOON Media Networks’ subscription offering.   Recent Transactions   The Company announced the initial closing of its registered direct offering of up to $7,000,000 (the “Offering”) on April 23, 2024. In the initial closing, the Company sold 3,900,000 shares of its common stock, par value $0.001 per share (the “Common Stock”), and pre-funded warrants to purchase up to 100,000 shares of Common Stock (the “Pre-funded Warrants”) to an institutional investor (the "Investor"), at $1.00 per share of Common Stock and $0.99 per Pre-funded Warrant, for aggregate gross proceeds of approximately $4,000,000, prior to deducting placement agent fees and other offering expenses, pursuant to a securities purchase agreement, dated April 18, 2024 (the “SPA”). Pursuant to the terms of the SPA, the Investor had the sole option to purchase up to an additional 3,000,000 shares of Common Stock and/or Pre-funded Warrants as part of the Offering, at $1.00 per share of Common Stock and $0.99 per Pre-Funded Warrant, which has since expired. Additionally, the Company has 4,784,909 warrants with a reprice option that was triggered by the registered direct offering which reduced the exercise price from $2.50 per share to $1.00 per share.   On June 21, 2024, the Company announced the launch of “Winnie-the-Pooh” on the Kartoon Channel through a $30.0 million joint venture with Catalyst Venture Partners (the “JV”). The JV stipulates after Catalyst Venture Partners recoup their investment, the ownership and profit split between the partners is 60% to Kartoon Studios and 40% to Catalyst Venture Partners. “Winnie-the-Pooh” is based on the designs and stories of one of the most successful brands of all time, A.A. Milne’s “Winnie-the-Pooh,” a property that has generated over $80 billion in sales over the last four decades and is estimated to currently generate $3-$6 billion per year. Catalyst Venture Partners will provide the full amount of the production finance with the plan to include an animated holiday movie, five holiday specials and 4 seasons of episodic series.   Liquidity, Going Concern, and Capital Resources   As of September 30, 2024, the Company had cash of $4.6 million, which increased by $0.5 million as compared to December 31, 2023. The increase was primarily due to cash provided by investing activities of $7.9 million, offset by cash used in financing activities of $6.4 million and cash used for operating activities of $1.1 million. The cash provided by investing activities was primarily due to sales of marketable securities of $8.0 million. The cash used in financing activities was primarily due to repayments of the production facilities, finance lease obligations, and bank indebtedness, net of proceeds from each, resulting in net cash used of $10.0 million, offset by net proceeds from the Offering of $3.3 million and margin loan of $0.3 million.   As of September 30, 2024, the Company held available-for-sale marketable securities with a fair value of $4.1 million, a decrease of $7.9 million as compared to December 31, 2023 due to sales and maturities during the nine months ended September 30, 2024. The available-for-sale securities consist principally of corporate and government debt securities and are also available as a source of liquidity.   As of September 30, 2024 and December 31, 2023, the Company’s margin loan balance was $1.1 million and $0.8 million, respectively. During the nine months ended September 30, 2024, the Company borrowed an additional $9.1 million from its investment margin account and repaid $8.8 million primarily with cash received from sales and maturities of marketable securities. The borrowed amounts were primarily used for operational costs. The interest rates for the borrowings fluctuate based on the Fed Funds Upper Target plus 0.60%. The weighted average interest rates were 0.46% and 0.98%, respectively, on average margin loan balances of $1.0 million and $27.4 million as of September 30, 2024 and December 31, 2023, respectively.   For the three months ended September 30, 2024 and September 30, 2023, the Company incurred interest expense on the margin loan of $11,070 and $0.2 million, respectively. The Company incurred interest expense on the margin loan of $42,131 and $1.5 million during the nine months ended September 30, 2024 and September 30, 2023, respectively. The investment margin account borrowings do not mature but are collateralized by the marketable securities held by the same custodian and the custodian can issue a margin call at any time, effecting a payable on demand loan. Due to the call option, the margin loan is recorded as a current liability on the Company’s condensed consolidated balance sheets.   The Company is subject to financial and customary affirmative and negative non-financial covenants on the revolving demand facility and equipment lease agreements that have an aggregate total outstanding balance of $1.2 million U.S. dollars (“USD”) or $1.6 million of Canadian dollars (“CAD”).   During March 2024, the Company amended the revolving demand facility, equipment lease line, and treasury risk management facility. As a result of the amendment, the revolving demand facility allows for draws of up to $0.7 million (CAD 1.0 million) to be made by way of CAD prime rate loans, CAD overdrafts, USD base rate loans or letters of credit up to a maximum of $200,000 in either CAD or USD and having a term of up to 1 year. The CAD prime borrowings and overdrafts bear interest at a rate equal to bank prime plus 2.00% per annum. The USD base rate borrowings bear interest at a rate equal to bank base rate plus 2.00% per annum. In addition, the equipment lease line was terminated, however, the Company has and will continue to make the regular principal and interest payments under the specific financing terms of the existing equipment lease agreements. The amendment removed the treasury risk management facility that allowed for advances of up to $0.4 million (CAD 0.5 million). As of the date of the amendment and December 31, 2023, there were no outstanding amounts drawn under the treasury risk management facility. The amendment also introduced revised financial covenants that are effective as of March 15, 2024. As of September 30, 2024, the Company was not in compliance with a financial covenant to maintain a minimum liquidity threshold. Due to financial covenant violations in the second quarter of 2024, the Company’s remaining equipment lease agreements with the lender of $0.6 million (CAD 0.8 million) as of September 30, 2024, are subject to early repayment. During the three months ended September 30, 2024, the lender and the Company agreed to a repayment plan for the equipment leases under the equipment lease line to be completed prior to the end of the fourth quarter of 2024. On August 30, 2024, the Company paid $0.1 million (CAD 0.1 million) to the lender as part of its early repayment plan for the existing equipment lease line agreements. Subsequent to September 30, 2024, the Company paid $0.3 million (CAD 0.4 million) to the lender as part of its repayment plan for the equipment lease line. The amendment and covenant violation did not have any impact on the Company’s production facilities that are separate from the revolving demand facility and are used for financing specific productions.   In accordance with Accounting Standards Codification (“ASC”), Presentation of Financial Statements – Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern for at least one year after the date the condensed consolidated financial statements are issued.   Historically, the Company has incurred net losses. For the three months ended September 30, 2024 and September 30, 2023, the Company reported net losses of $2.1 million and $15.5 million, respectively. For the nine months ended September 30, 2024 and September 30, 2023, the Company reported net losses of $15.1 million and $51.8 million, respectively. The Company reported net cash used in operating activities of $1.1 million and net cash used in operating activities of $20.2 million for the nine months ended September 30, 2024 and September 30, 2023, respectively. As of September 30, 2024, the Company had an accumulated deficit of $733.5 million primarily due to approximately $450 million of expenses related to non-operational warrant and stock option expense recorded in 2020 and 2021, and total stockholders’ equity of $42.8 million. As of September 30, 2024, the Company had total current assets of $37.2 million, including cash of $4.6 million and marketable securities of $4.1 million, and total current liabilities of $33.7 million. The Company had working capital of $3.5 million as of September 30, 2024, compared to working capital of $11.5 million as of December 31, 2023. Based on our current expected level of operating expenditures and the cash and cash equivalents on hand at September 30, 2024, management concludes that there is substantial doubt about our ability to continue as a going concern for a period of at least 12 months subsequent to the issuance of the accompanying condensed consolidated financial statements. Historically, the Company has financed its operations primarily through revenue generated from operations, loans and sales of its securities, and the Company expects to continue to seek and obtain additional capital in a similar manner. The Company has filed a registration statement on Form S-3 on December 22, 2023, as amended, registering the sale of up to $75 million of the Company’s securities pursuant to a shelf registration statement, and a registration statement on Form S-1 on September 27, 2024, as amended, in connection with a best efforts public offering of up to $8 million of the Company’s securities. However, the Company does not have any committed sources of financing at this time, and it is uncertain whether any additional funding will be available when it needs it on terms that will be acceptable to it, or at all. The Company’s ability to sell securities registered on its registration statement on From S-3 is limited until such time that the market value of its voting securities held by non-affiliates is $75 million or more. In addition, the number of shares of common stock and securities convertible or exercisable for common stock that the Company can sell, under certain circumstances, will be limited by NYSE American rules and regulations. There can be no assurance that the Company will be able to raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of its existing shareholders will be diluted. The issuance of debt can result in restrictive covenants that limit operations. If funding is not available or not available at terms acceptable to the Company, the Company will seek to reduce overhead costs and reduce its weekly cash obligations in the short term as needed. In addition, the Company can look to divest or bring in equity partners for our various divisions and bring in near term capital.

v3.24.3

Basis of Presentation and Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Basis of Presentation and Summary of Significant Accounting Policies	Note 2: Basis of Presentation and Summary of Significant Accounting Policies   The accompanying interim condensed consolidated financial statements of the Company have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and are consistent in all material respects with those applied in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on April 9, 2024. The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amount of assets, liabilities, revenue, costs, expenses and other comprehensive income/(loss) that are reported in the condensed consolidated financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. On a regular basis, the Company evaluates the assumptions, judgments and estimates. Actual results may differ from these estimates.   Prior Periods and Reclassifications   Certain prior year amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on the Company’s reported total revenues, expenses, net loss, current assets, total assets, current liabilities, total liabilities, stockholders’ equity, non-controlling interests or cash flows. No reclassifications of prior period balances were material to the unaudited condensed consolidated financial statements.   Interim results are not necessarily indicative of financial results for a full year or any other period. The information included in this Form 10-Q should be read in conjunction with the Company’s 2023 Annual Report on Form 10-K.   The following is provided to update the Company’s significant accounting policies previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.   Foreign Currency Forward Contracts   As of September 30, 2024, the gross amounts of foreign currency (“FX”) forward contracts in an asset and liability position subject to a master netting arrangement resulted in a net liability of $0.2 million recorded within Other Current Liabilities on the condensed consolidated balance sheets. As of December 31, 2023, the FX contracts were fully settled and netted to zero on the Company’s condensed consolidated balance sheets.   For the three and nine months ended September 30, 2024, the Company recorded a realized gain of $35,601 and $86,355, respectively, on FX forward contracts within Production Services Revenue on the condensed consolidated statements of operations. For the three and nine months ended September 30, 2023, the Company recorded a realized loss of $14,890 and $40,294, respectively, on FX forward contracts within Production Services Revenue on the condensed consolidated statements of operations.   Trade Accounts Receivable and Allowance for Credit Loss   As of September 30, 2024 and December 31, 2023, the Company recorded an allowance for credit loss of $0.2 million and $0.2 million, respectively.   Tax Credits Receivable   As of September 30, 2024 and December 31, 2023, $12.9 million and $20.7 million, respectively, in current tax credit receivables related to Wow’s film and television productions were recorded, net of $0.6 million and $0.5 million, respectively, recorded as an allowance for credit loss. It is estimated that the Company will collect the receivables balance; therefore, no additional reserve was recorded.   Concentration of Risk   The Company maintains its cash in bank deposit accounts which, at times, may exceed the Federal Deposit Insurance Corporation’s (“FDIC”) or the Canadian Deposit Insurance Corporation’s (“CDIC”) insured amounts. Balances on interest bearing deposits at banks in the United States are insured by the FDIC up to $250,000 per account and deposits in banks in Canada are insured by the CDIC up to CAD 100,000. As of September 30, 2024 and December 31, 2023, the Company had twelve and ten bank deposit accounts with an aggregate uninsured balance of $3.0 million and $2.5 million, respectively.   The Company has a managed account with a financial institution. The managed account maintains its investments in marketable securities of approximately $4.1 million and $12.0 million as of September 30, 2024 and December 31, 2023, respectively. Assets in the managed account are protected by the Securities Investor Protection Corporation (“SIPC”) up to $500,000 (with a limit of $250,000 for cash). In addition, the financial institution provides additional “excess of SIPC” coverage which insures up to $1.0 billion. As of September 30, 2024 and December 31, 2023, the Company did not have account balances held at this financial institution that exceed the insured balances.   The Company’s investment portfolio consists of investment-grade securities diversified among security types, industries and issuers. The Company’s policy limits the amount of credit exposure to any one security issue or issuer and the Company believes no significant concentration of credit risk exists with respect to these investments.   During the three months ended September 30, 2024, the Company had four customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 77.2% of the total revenue.   During the nine months ended September 30, 2024, the Company had three customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 60.2% of the total revenue. As of September 30, 2024, the Company had three customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 59.4% of the total accounts receivable as of September 30, 2024.   During the three months ended September 30, 2023, the Company had four customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 73.1% of the total revenue.   During the nine months ended September 30, 2023, the Company had four customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 79.3% of the total revenue. As of September 30, 2023, the Company had three customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 55.6% of the total accounts receivable as of September 30, 2023.   There is significant financial risk associated with a dependence upon a small number of customers. The Company periodically assesses the financial strength of these customers and establishes allowances for any anticipated credit losses.   Fair Value of Financial Instruments   The following table summarizes the marketable securities measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2024 (in thousands):   Schedule of marketable securities measured at fair value on a recurring basis                             Level 1     Level 2     Total Fair Value   Investments in Marketable Securities:                         Corporate Bonds   $ 1,035     $ –     $ 1,035   U.S. agency and government sponsored securities     –       1,913       1,913   U.S. states and municipalities     –       1,131       1,131   Total   $ 1,035     $ 3,044     $ 4,079     Fair values were determined for each individual security in the investment portfolio. The Company’s marketable securities are considered to be available-for-sale investments as defined under the Financial Accounting Standards Board (“FASB”) ASC 320, Investments – Debt and Equity Securities. An allowance for credit loss was not recorded for the marketable securities as of September 30, 2024 and December 31, 2023. Refer to Note 5 for additional details.   New Accounting Standards Issued but Not Yet Adopted   In October 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-06, Disclosure Improvements. The new guidance clarifies or improves disclosure and presentation requirements on a variety of topics in the codification. The amendments will align the requirements in the FASB Accounting Standard Codification with the SEC’s regulations. The amendments are effective prospectively on the date each individual amendment is effectively removed from Regulation S-X or Regulation S-K. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the condensed consolidated financial statements and related disclosures, which is not expected to be material.   In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting – Improvements to Reportable Segments Disclosures. The amendments enhance disclosures of significant segment expenses by requiring disclosure of significant segment expenses regularly provided to the chief operating decision maker (CODM), extend certain annual disclosures to interim periods, and permit more than one measure of segment profit or loss to be reported under certain conditions. The amendments are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption of the amendment is permitted, including adoption in any interim periods for which financial statements have not been issued. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the condensed consolidated financial statements and related disclosures, which is expected to result in enhanced disclosures.   In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the condensed consolidated financial statements and related disclosures, which is expected to result in enhanced disclosures and is not expected to be material.

v3.24.3

Variable Interest Entity	9 Months Ended
	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Variable Interest Entity	Note 3: Variable Interest Entity   In July 2020, the Company entered into a binding term sheet with POW! Entertainment, LLC. (“POW”) in which the Company agreed to form an entity with POW to exploit certain rights in intellectual property created by Stan Lee, as well as the name and likeness of Stan Lee. The entity is called “Stan Lee Universe, LLC” (“SLU”). POW and the Company executed an operating agreement for the joint venture, effective as of June 1, 2021. The purpose of the acquisition was to enable the Company to assume the worldwide rights, in perpetuity, to the name, physical likeness, physical signature, live-action and animated motion picture, television, online, digital, publishing, comic book, merchandising and licensing rights to Stan Lee and over 100 original Stan Lee creations (the “Stan Lee Assets”), from which the Company plans to develop and license multiple properties each year.   During the three months ended September 30, 2024 and September 30, 2023, SLU generated a net loss of $63,552 and $35,846, respectively. During the nine months ended September 30, 2024 and September 30, 2023, SLU generated a net loss of $132,750 and $83,179, respectively. There were no contributions or distributions during the three and nine months ended September 30, 2024 and September 30, 2023, and there were no changes in facts and circumstances that would result in a re-evaluation of the VIE assessment.

v3.24.3

Investment in Equity Interest	9 Months Ended
	Sep. 30, 2024
Equity Method Investments and Joint Ventures [Abstract]
Investment in Equity Interest	Note 4: Investment in Equity Interest   As of September 30, 2024 and December 31, 2023, the Company owned 6,857,132 shares of YFE. At the time of the initial investment in 2021, it was determined that based on the Company’s 28.69% ownership in YFE, the Company had significant influence over the entity. Therefore, under the equity method of accounting, the Company elected to account for the investment at fair value under the fair value option. Under the fair value option, the investment is remeasured and recorded at fair value each reporting period, with the change recorded through earnings. As of September 30, 2024, the fair value of the investment was determined to be $18.0 million recorded within noncurrent assets on the Company’s condensed consolidated balance sheets. YFE shows a considerably lower trading volume compared to industry standards, especially within the broader media and entertainment sector. Under ASC 820, for an asset or liability to qualify as Level 1, it must have quoted prices in an active market. However, the standard also addresses situations where trading volume is low. ASC 820-10-35-41 states that an active market is one in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. When trading volume is low, determining whether the market is still active requires judgment. When considering the use of share price to value an investment in YFE the company had to weigh the arguments for and against the application of Level 1 inputs under ASC 820. An asset could remain in Level 1 if there are enough considerations to support that the market is accessible and reflects current pricing information, despite low volume. While the low trading volume raises concerns regarding the reliability of using share price as a Level 1 input under ASC 820, the company will closely monitor the trading volume and financial performance of the investee. This ongoing oversight will help ensure that any updates to the investment's fair value reflect true market conditions as they evolve over time, considering both the potential growth of the company and fluctuations in trading activity.   The fair value as of September 30, 2024 decreased by net $1.1 million, as compared to December 31, 2023. The decrease is the effect of foreign currency remeasurement from EURO to USD resulting in a gain of $0.2 million and share price fluctuations resulting in a loss of $1.3 million. The total change in fair value is recorded within Other Income (Expense), net on the Company’s condensed consolidated statements of operations. As of September 30, 2024 and December 31, 2023, the Company’s ownership in YFE was 44.8%.

v3.24.3

Marketable Securities	9 Months Ended
	Sep. 30, 2024
Investments, All Other Investments [Abstract]
Marketable Securities	Note 5: Marketable Securities   The Company classifies and accounts for its marketable debt securities as available-for-sale securities (“AFS”) and the securities are stated at fair value. Per ASC 326, the Company is required to recognize an allowance for credit losses on its AFS debt securities and recognize a credit loss expense once securities become impaired.   The investments in marketable securities had an adjusted cost basis of $4.3 million and a market value of $4.1 million as of September 30, 2024. The balances consisted of the following securities (in thousands):   Schedule of marketable securities                             Adjusted Cost     Unrealized Loss     Fair Value   Corporate Bonds   $ 1,080     $ (45 )   $ 1,035   U.S. Agency and Government Sponsored Securities     2,000       (87 )     1,913   U.S. States and Municipalities     1,186       (55 )     1,131   Total   $ 4,266     $ (187 )   $ 4,079     The investments in marketable securities as of December 31, 2023 had an adjusted cost basis of $12.8 million and a market value of $12.0 million. The balances consisted of the following securities (in thousands):       Adjusted Cost     Unrealized Loss     Fair Value   Corporate Bonds   $ 6,333     $ (425 )   $ 5,908   U.S. Treasury     646       (37 )     609   U.S. Agency and Government Sponsored Securities     2,000       (148 )     1,852   U.S. States and Municipalities     3,859       (278 )     3,581   Total   $ 12,838     $ (888 )   $ 11,950     The Company holds 5 AFS securities, all of which were in an unrealized loss position and have been in an unrealized loss position for a period greater than 12 months as of September 30, 2024. The AFS securities held by the Company as of December 31, 2023 had also been in an unrealized loss position for a period greater than 12 months. The Company reported the net unrealized losses in accumulated other comprehensive income (loss), a component of stockholders’ equity. As of September 30, 2024 and December 31, 2023, an allowance for credit loss was not recognized as the issuers of the securities had not established a cause for default, various rating agencies had reaffirmed each security's investment grade status and the Company did not have the intent, nor is it required to sell its securities prior to recovery.   Realized losses of $0.1 million and $1.9 million were recognized in earnings during the three months ended September 30, 2024 and September 30, 2023, respectively. Realized losses of $0.5 million and $4.2 million were recognized in earnings during the nine months ended September 30, 2024 and September 30, 2023, respectively. The losses were due to selling securities prior to maturity to prevent further market condition losses on the securities.   The contractual maturities of the Company’s marketable investments as of September 30, 2024 were as follows (in thousands):   Schedule of contractual maturities of marketable investments             Fair Value   Due within 1 year   $ –   Due after 1 year through 5 years     4,079   Total   $ 4,079     The Company may sell certain of its marketable debt securities prior to their stated maturities for reasons including, but not limited to, managing liquidity, credit risk, duration and asset allocation.

v3.24.3

Property and Equipment, net	9 Months Ended
	Sep. 30, 2024
Property, Plant and Equipment [Abstract]
Property and Equipment, net	Note 6: Property and Equipment, net   The Company has property and equipment as follows (in thousands):   Schedule of property and equipment, net                     As of       September 30, 2024     December 31, 2023   Furniture and Equipment   $ 117     $ 117   Computer Equipment     226       219   Leasehold Improvements     2,208       2,200   Software     250       192   Property and Equipment, gross     2,801       2,728                     Less Accumulated Depreciation     (985 )     (724 ) Foreign Currency Translation Adjustment     (161 )     (127 ) Property and Equipment, net   $ 1,655     $ 1,877     During the three months ended September 30, 2024 and September 30, 2023, the Company recorded depreciation expense of $0.1 million and $0.1 million, respectively. During the nine months ended September 30, 2024 and September 30, 2023, the Company recorded depreciation expense of $0.3 million and $0.3 million, respectively.   The Company did not incur any impairment charges on its property and equipment during the three and nine months ended September 30, 2024.   Due to a lease termination effective August 1, 2023, $0.1 million of property and equipment was written down to zero and recorded in loss on lease termination within Other Income (Expense), net on the condensed consolidated statement of operations during the three and nine months ended September 30, 2023. In addition, during the first quarter of 2023, due to changes in the Company's estimated undiscounted future cash flows, a reassessment of its long-lived assets was performed. As a result, the carrying value of one of the Company's asset group’s property and equipment assets were written down to zero and an Impairment of Property and Equipment of $0.1 million was recorded within Operating Expenses in the condensed consolidated statement of operations.

v3.24.3

Leased Right-of-Use Assets, net	9 Months Ended
	Sep. 30, 2024
Leased Right-of-use Assets Net
Leased Right-of-Use Assets, net	Note 7: Leased Right-of-Use Assets, net   Leased right-of-use assets consisted of the following (in thousands):   Schedule of leased right of use assets                     As of       September 30, 2024     December 31, 2023   Office Lease Assets   $ 9,437     $ 9,437   Equipment Lease Assets     5,360       5,360   Right-of-Use Assets, Gross     14,797       14,797                     Accumulated Amortization     (6,637 )     (5,237 ) Foreign Currency Translation Adjustment     (769 )     (617 ) Leased Right-of-Use Assets, net   $ 7,391     $ 8,943     As of September 30, 2024, the weighted-average lease term for the Company’s operating leases was 76 months and the weighted-average discount rate was 11.1%. As of December 31, 2023, the weighted-average lease term for operating leases was 83 months and the weighted-average discount rate was 11.1%.   Operating lease costs during the three months ended September 30, 2024 and September 30, 2023 were $0.9 million and $0.4 million, respectively, recorded within General and Administrative Expenses on the Company’s condensed consolidated statements of operations. Operating lease costs during the nine months ended September 30, 2024 and September 30, 2023 were $1.2 million and $1.2 million, respectively, recorded within General and Administrative Expenses on the Company’s condensed consolidated statements of operations.   During the three and nine months ended September 30, 2024, the Company recorded right-of-use (“ROU”) amortization of $0.2 million and $1.0 million, respectively. During the three and nine months ended September 30, 2023, the Company recorded ROU amortization of $0.5 million and $1.6 million, respectively. ROU amortization is recorded within General and Administrative Expenses and accretion of interest expense is recorded within Other Income (Expense), net on the Company’s condensed consolidated statements of operations.   On August 2, 2023, Beacon Media, signed a Termination of Lease Agreement (the “Lease Termination”), effective August 1, 2023 (the “Effective Date”), related to the office space in Lyndhurst, NJ. The Lease Termination requires Beacon Media to pay an aggregate of $0.1 million in consideration for terminating the lease. The Company wrote off the ROU asset, lease liability, prepaid deposit and fixed assets on the Effective Date. Including fees, the Company recorded a total loss on lease termination of $0.2 million within Other Income (Expense), net on the Company’s condensed consolidated statement of operations during the three months ended September 30, 2023.

v3.24.3

Film and Television Costs, net	9 Months Ended
	Sep. 30, 2024
Other Industries [Abstract]
Film and Television Costs, net	Note 8: Film and Television Costs, net   The following table highlights the activity in Film and Television Costs as of September 30, 2024 and December 31, 2023 (in thousands):   Schedule of film and television costs activity         Film and Television Costs, net as of December 31, 2023   $ 1,295   Additions to Film and Television Costs     818   Disposals     (73 ) Film Amortization Expense     (176 ) Foreign Currency Translation Adjustment     (6 ) Film and Television Costs, net as of September 30, 2024   $ 1,858     During the three months ended September 30, 2024 and September 30, 2023, the Company recorded film amortization expense of $61,672 and $0.1 million, respectively. During the nine months ended September 30, 2024 and September 30, 2023, the Company recorded amortization expense of $0.2 million and $0.5 million, respectively.   For the three and nine months ended September 30, 2023, the Company recorded film and television impairment write-downs of $6.2 million. The Company did not incur any film and television impairment write-downs during the three and nine months ended September 30, 2024.

v3.24.3

Intangible Assets, net	9 Months Ended
	Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets, net	Note 9: Intangible Assets, net   Intangible Assets, net   The Company had the following intangible assets (in thousands) with their weighted average remaining amortization period (in years):   Intangible Assets, net   Schedule of intangible asset                             Weighted Average Remaining Amortization     As of       Period     September 30, 2024     December 31, 2023   Customer Relationships     5.7     $ 17,390     $ 17,325   Digital Networks     13.5       803       803   Trade Names     66.7       10,100       9,970   Intangible Assets, gross             28,293       28,098                             Less: Accumulated Amortization             (5,528 )     (3,794 ) Foreign Currency Translation Adjustment             (1,639 )     (1,311 ) Intangible Assets, net           $ 21,126     $ 22,993     During the three months ended September 30, 2024 and September 30, 2023, the Company recorded intangible asset amortization expense of $0.5 million for each reporting period. During the nine months ended September 30, 2024 and September 30, 2023, the Company recorded intangible asset amortization expense of $1.5 million and $1.6 million, respectively.   The Company did not incur any impairment charges on its definite and indefinite-lived intangible assets during the three and nine months ended September 30, 2024.   During the nine months ended September 30, 2023, the Company recorded a total Impairment of Intangible Assets of $4.0 million within Operating Expenses in the condensed consolidated statement of operations. The impairment charge consisted of a write-down of definite-lived intangible assets of $2.8 million, net of $0.6 million in accumulated depreciation, due to a decrease in an asset group’s estimated undiscounted cash flows. Furthermore, it was determined that the Frederator tradename, an indefinite-lived intangible asset, was impaired by $1.3 million.   Expected future amortization of intangible assets subject to amortization as of September 30, 2024 is as follows (in thousands):   Schedule of expected future intangible asset amortization         Fiscal Year:       2024 (remainder of year)   $ 516   2025     2,072   2026     2,062   2027     2,062   2028     2,062   Thereafter     6,792   Total   $ 15,566     As of September 30, 2024, $5.6 million of the Company’s intangible assets related to the acquired trade names from the Wow acquisition had indefinite lives and are not subject to amortization.

v3.24.3

Deferred Revenue	9 Months Ended
	Sep. 30, 2024
Revenue from Contract with Customer [Abstract]
Deferred Revenue	Note 10: Deferred Revenue   As of September 30, 2024 and December 31, 2023, the Company had aggregate short term and long term deferred revenue of $8.4 million and $6.6 million, respectively. The increase in deferred revenue is primarily related to the stage of progress of various productions as of September 30, 2024, compared to the progress as of December 31, 2023. Wow's deferred revenue balance relates to cash received from customers for productions in progress. Revenue is fully recognized upon production completion. Deferred revenue also includes both (i) variable fee contracts with licensees and customers in which the Company collected advances and minimum guarantees against future royalties and (ii) fixed fee contracts. The Company recognizes revenue related to these contracts when all revenue recognition criteria have been met.

v3.24.3

Margin Loan	9 Months Ended
	Sep. 30, 2024
Debt Disclosure [Abstract]
Margin Loan	Note 11: Margin Loan   As of September 30, 2024 and December 31, 2023, the Company’s margin loan balance was $1.1 million and $0.8 million, respectively. During the nine months ended September 30, 2024, the Company borrowed an additional $9.1 million from its investment margin account and repaid $8.8 million primarily with cash received from sales and maturities of marketable securities. The borrowed amounts were primarily used for operational costs. The interest rates for the borrowings fluctuate based on the Fed Funds Upper Target plus 0.60%. The weighted average interest rates were 0.46% and 0.98%, respectively, on average margin loan balances of $1.0 million and $27.4 million as of September 30, 2024 and December 31, 2023, respectively.   For the three months ended September 30, 2024 and September 30, 2023, the Company incurred interest expense on the margin loan of $11,070 and $0.2 million, respectively. The Company incurred interest expense on the margin loan of $42,131 and $1.5 million during the nine months ended September 30, 2024 and September 30, 2023, respectively. The investment margin account borrowings do not mature but are collateralized by the marketable securities held by the same custodian and the custodian can issue a margin call at any time, effecting a payable on demand loan. Due to the call option, the margin loan is recorded as a current liability on the Company’s condensed consolidated balance sheets.

v3.24.3

Bank Indebtedness and Production Facilities	9 Months Ended
	Sep. 30, 2024
Bank Indebtedness And Production Facilities
Bank Indebtedness and Production Facilities	Note 12: Bank Indebtedness and Production Facilities   The Company has certain credit facilities (together, the “Facilities”) that are comprised of the following:   Revolving Demand Facility   As of September 30, 2024 and December 31, 2023, the Company had an outstanding balance of $0.6 million (CAD 0.8 million) and $2.9 million (CAD 3.8 million), respectively, on the revolving demand facility by way of bank prime rate loan draws, included as Bank Indebtedness within current liabilities on the Company’s condensed consolidated balance sheets.   During March 2024, the Company amended the revolving demand facility. As a result of the amendment, the revolving demand facility allows for draws of up to $0.7 million (CAD 1.0 million) to be made by way of CAD prime rate loans, CAD overdrafts, USD base rate loans or letters of credit up to a maximum of $0.2 million in either CAD or USD and having a term of up to 1 year. The CAD prime borrowings and overdrafts bear interest at a rate equal to bank prime plus 2.00% per annum. The USD base rate borrowings bear interest at a rate equal to bank base rate plus 2.00% per annum.   Treasury Risk Management Facility   During March 2024, an amendment was entered into that removed the treasury risk management facility. As of the date of the amendment and December 31, 2023, there were no outstanding amounts drawn under the treasury risk management facility.   Production Facilities   The production facilities are used for financing specific productions. The Company’s production facilities bear interest at rates ranging from bank prime plus 1.00% - 1.25% per annum. The production facilities are generally repayable on demand and are guaranteed and secured by the Company with no limitations for maximum potential future payments. The security reflects substantially all of the Company's tangible and intangible assets including a combination of federal and provincial tax credits, other government incentives, production service agreements and license agreements.   As of September 30, 2024 and December 31, 2023, the Company had an outstanding balance of $8.7 million (CAD 11.8 million), including $1.3 million (CAD 1.7 million) of interest, and $15.3 million (CAD 20.3 million), including $1.4 million (CAD 1.9 million) of interest, respectively, recorded as Production Facilities, net within current liabilities on the Company’s condensed consolidated balance sheets.   Equipment Lease Line   During March 2024, the equipment lease line was terminated, however, the Company continued to make the regular principal and interest payments under the specific financing terms of the existing equipment lease agreements. Each existing transaction under the equipment lease line has specific financing terms in respect of the leased equipment such as term, finance amount, rate, and payment terms. The finance rates for these equipment leases range from 4.49% to 7.18% with remaining lease terms of 1 - 2 months as of September 30, 2024.   As of September 30, 2024, the outstanding balance of $0.6 million (CAD 0.8 million) was included within current Finance Lease Liabilities on the Company’s condensed consolidated balance sheets.   Equipment Lease Facility   The Company also entered into an equipment lease agreement with a Canadian bank. This additional equipment lease facility allows the Company to finance equipment purchases of up to $1.0 million (CAD 1.4 million) in total. Each transaction under the equipment lease facility has specific financing terms in respect of the leased equipment such as term, finance amount, rate, and payment terms. As of September 30, 2024, the Company has leases remaining under this facility with finance rates of 7.52% to 8.20% and remaining lease terms of 14 - 23 months.   As of September 30, 2024, the outstanding balance of $0.4 million (CAD 0.5 million) was included within current and noncurrent Finance Lease Liabilities on the Company’s condensed consolidated balance sheets.   Loan Covenants, Violations and Waiver   The Company is subject to financial and customary affirmative and negative non-financial covenants on the revolving demand facility and equipment lease agreements that have an aggregate total outstanding balance of $1.2 million (CAD 1.6 million).   The Company has continued to make its regular principal and interest payments in a timely basis since the effective borrowing date.   The revolving demand facility and the equipment lease line can be called at any time by the lender as per the original and amended terms of the facilities. As of September 30, 2024, the Company was not in compliance with a financial covenant to maintain a minimum liquidity threshold. Due to financial covenant violations in the second quarter of 2024, the Company’s remaining equipment lease agreements with the lender of $0.6 million (CAD 0.8 million) as of September 30, 2024, are subject to early repayment. During the three months ended September 30, 2024, the lender and the Company reached an agreement in principle for a repayment plan for the equipment leases under the equipment lease line. On August 30, 2024, the Company paid $0.1 million (CAD 0.1 million) to the lender as part of its early repayment plan for the existing equipment lease line agreements. Subsequent to September 30, 2024, the Company paid $0.3 million (CAD 0.4 million) to the lender as part of its repayment plan for the equipment lease line. The Company expects to enter into a written agreement with the lender prior to the end of the fourth quarter of 2024 to amend the revolving demand facility and equipment lease line.

v3.24.3

Stockholders’ Equity	9 Months Ended
	Sep. 30, 2024
Equity [Abstract]
Stockholders’ Equity	Note 13: Stockholders’ Equity   Common Stock   As of September 30, 2024 and December 31, 2023, the total number of authorized shares of common stock was 190,000,000.   As of September 30, 2024 and December 31, 2023, there were 39,555,161 and 35,247,744 shares of common stock outstanding, respectively.   Preferred Stock   The Company has 10,000,000 shares of preferred stock authorized with a par value of $0.001 per share. The board of directors is authorized, subject to any limitations prescribed by law, without further vote or action by the Company’s stockholders, to issue from time-to-time shares of preferred stock in one or more series. Each series of preferred stock will have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by the board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.   In connection with the Company’s acquisition of Wow, certain eligible Canadian stockholders, noteholders and optionholders of Wow elected to receive the Exchangeable Shares in the capital of the Wow Exchange Co. Inc. (“ExchangeCo”) instead of shares of the Company’s common stock to which they were otherwise entitled.   The shares of ExchangeCo were exchangeable into shares of the Company’s common stock in accordance with their terms. Holders of the ExchangeCo shares were entitled to defined voting rights (the “Voting Rights”) in the Company pursuant to a voting and exchange trust agreement (the “Voting Agreement”) dated April 6, 2022 among the Company, ExchangeCo, 1329258 B.C. Ltd. (“CallCo”) and Computershare Trust Company of Canada (the “Voting Trustee”). The Voting Trustee holds a single share of Series B Preferred Stock in the capital of the Company (the “Special Voting Share”), which granted the Voting Trustee that number of votes at the meetings of the Company’s stockholders as is equal to the number of shares of the Company’s common stock that at such time have not been delivered pursuant to the tender of ExchangeCo shares. The Voting Trustee was required to exercise each vote attached to the Special Voting Share only as directed by the relevant holder of the underlying Company shares of common stock and, in the absence of any instructions, would not exercise voting rights with respect to the applicable shares. On August 16, 2024, CallCo acquired the balance of the remaining exchangeable shares of ExchangeCo in consideration for shares in the Company’s common stock. Accordingly, the shares of ExchangeCo are no longer held by the public and therefore, (i) the Voting Agreement automatically terminated, and (ii) there are no longer Voting Rights in respect of the shares of ExchangeCo or the Special Voting Share.   As of September 30, 2024 and December 31, 2023, there were 0 shares of Series A Convertible Preferred Stock outstanding. As of September 30, 2024 and December 31, 2023, there was 1 share of Series B Preferred Stock outstanding. As of September 30, 2024 and December 31, 2023, there were 0 shares of Series C Preferred Stock outstanding.   Treasury Stock   During the nine months ended September 30, 2024 and September 30, 2023, 217 and 8,306 shares of common stock with a cost of $252 and $24,700, respectively, were withheld to cover taxes owed by certain employees, all of which were included as treasury stock outstanding and recorded at cost within Treasury Stock on the condensed consolidated balance sheet.

v3.24.3

Stock Options	9 Months Ended
	Sep. 30, 2024
Equity [Abstract]
Stock Options	Note 14: Stock Options   On September 1, 2020, the Company adopted the Kartoon Studios, Inc. 2020 Incentive Plan (the “2020 Plan”) as voted by the Board of Directors. The Board of Directors approved the maximum number of shares available for issuance up to an aggregate of 3,000,000 shares of common stock, which does not include shares that the Company may issue related to acquisitions. On May 23, 2024, the Board of Directors approved the maximum number of shares available for issuance up to an aggregate of 5,000,000 shares from 3,000,000 shares of common stock in the initial 2020 Plan. The 2020 Plan replaced the previously adopted 2015 Incentive Plan (the “2015 Plan”) that had a total number of authorized shares of 216,767, however the remaining 12,000 outstanding shares granted under the 2015 Plan, as of September 30, 2024, remain to be governed under such plan. All expired or terminated shares granted under the 2015 Plan, that have not been vested or exercised, reverts to and again becomes available for issuance under the 2020 Plan.   During the nine months ended September 30, 2024 and September 30, 2023, the Company granted options to purchase 35,000 and no options, respectively. The 35,000 options to purchase common stock had a weighted-average grant date fair market value of $24,210.   The fair value of the options granted during the nine months ended September 30, 2024 were calculated using the Black-Scholes Merton (“BSM”) option pricing model based on the following assumptions:   Schedule of assumptions used         Exercise Price   $ 0.95   Dividend Yield     – %   Volatility     92.1%   Risk-free interest rate     4.3%   Expected life of options     5.0 years     The following table summarizes the Company’s option activity:   Schedule of option activity                             Stock Options     Weighted-Average Remaining Contractual Life     Weighted-Average Exercise Price per Share   Outstanding at December 31, 2023     1,183,908       5.56     $ 14.96   Granted     35,000       4.72     $ 0.95   Exercised     –       –     $ –   Forfeited/Cancelled     (259,468 )     –     $ 21.08   Expired     (5,800 )     –     $ 19.90   Outstanding at September 30, 2024     953,640       5.04     $ 12.75                             Unvested at September 30, 2024     102,499       4.35     $ 4.23   Vested and exercisable at September 30, 2024     851,141       5.12     $ 13.77     During the nine months ended September 30, 2023, upon termination of certain employees, the Company accelerated the vesting of any unvested options held by the employees pursuant to their employment agreements. This resulted in 55,816 options becoming immediately vested on the separation date and $0.1 million in expense recognized by the Company.   During the three months ended September 30, 2024 and September 30, 2023, the Company recognized $23,804 and $0.2 million, respectively, in share-based compensation expense related to stock options. During the nine months ended September 30, 2024 and September 30, 2023, the Company recognized $0.1 million and $0.9 million, respectively, in share-based compensation expense related to stock options. Share-based compensation expense is included in General and Administrative Expense on the Company’s condensed consolidated statements of operations. The unrecognized share-based compensation expense at September 30, 2024 was $48,503 which will be recognized through the second quarter of 2025 assuming the underlying grants are not cancelled or forfeited. The outstanding shares as of September 30, 2024 had an aggregated intrinsic value of zero.

v3.24.3

Restricted Stock Units	9 Months Ended
	Sep. 30, 2024
Restricted Stock Units
Restricted Stock Units	Note 15: Restricted Stock Units   Restricted stock units (“RSUs”) are granted under the Company’s 2020 Plan. During the nine months ended September 30, 2024 and September 30, 2023, the Company granted 286,324 and 76,508 fully vested RSUs to the Company’s board members, employees, and consultants, with a fair market value of $0.3 million and $0.2 million, respectively.   An aggregate of 307,417 shares of common stock were issued during the nine months ended September 30, 2024 as a result of RSUs vested during the current and prior periods.   The following table summarizes the Company’s RSU activity:   Schedule of RSU activity                     Restricted Stock Units     Weighted- Average Grant Date Fair Value per Share   Unvested at December 31, 2023     982,625     $ 13.42   Granted     286,324     $ 1.12   Vested     (291,449 )   $ 1.42   Forfeited     –     $ –   Unvested at September 30, 2024     977,500     $ 13.40     During the three months ended September 30, 2024 and September 30, 2023, the Company recognized $0.1 million and $0.3 million, respectively, in share-based compensation expense related to RSUs. During the nine months ended September 30, 2024 and September 30, 2023, the Company recognized $0.4 million and $1.2 million, respectively, in share-based compensation expense related to RSU awards included in General and Administrative Expenses on the Company’s condensed consolidated statements of operations. The unvested share-based compensation as of September 30, 2024 was $0.1 million which will be recognized through the fourth quarter of 2026 assuming the underlying grants are not cancelled or forfeited. The total fair value of shares vested during the nine months ended September 30, 2024 was $0.4 million.

v3.24.3

Warrants	9 Months Ended
	Sep. 30, 2024
Warrants
Warrants	Note 16: Warrants   The following table summarizes the Company’s warrant activity:   Schedule of warrant activity                             Warrants     Weighted-Average Remaining Contractual Life     Weighted-Average Exercise Price per Share   Outstanding at December 31, 2023   6,852,952     4.16     $ 7.14   Granted     100,000       4.56     $ 1.00   Exercised     –       –     $ –   Expired     (26,000 )     –     $ 26.88   Forfeitures     –       –     $ –   Outstanding at September 30, 2024     6,926,952       3.45     $ 6.98                             Exercisable at September 30, 2024     6,926,952       3.45     $ 6.98   Exercisable at December 31, 2023     6,852,952       4.16     $ 7.14     As of September 30, 2024, 89,286 derivative warrants classified as a liability as issued with convertible notes in 2020 to purchase shares of the Company’s common stock remained outstanding and are revalued each reporting period. As of September 30, 2024, the warrants were revalued at approximately $291, resulting in a $0.1 million decrease in the liability as compared to December 31, 2023. The change in value was recorded as a Gain on Revaluation of Warrants within Other Income (Expense), net on the condensed consolidated statements of operations and within the Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities on the condensed consolidated statements of cash flows.   The Company has 4,784,909 warrants as of December 31, 2023 with a reprice option that was triggered by the registered direct offering which reduced the exercise price from $2.50 per share to $1.00 per share. The reduction in exercise price reduced the Weighted-Average Exercise Price per Share from $8.19 before the reprice to $7.14 after the reprice.   The fair value of the outstanding derivative warrants was determined by using the Black-Scholes Merton option pricing model based on the following assumptions as of September 30, 2024:   Schedule of assumptions         Market Price   $ 0.87   Exercise Price   $ 2.10   Dividend Yield     – %   Volatility     61%   Risk-free Interest Rate     3.98%   Expected Life of Warrants     0.45 years

v3.24.3

Supplemental Financial Statement Information	9 Months Ended
	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Supplemental Financial Statement Information	Note 17: Supplemental Financial Statement Information   Other Income (Expense), net   Components of Other Income (Expense), net, are summarized as follows (in thousands):   Schedule of other income expense, net                                     Three Months Ended September 30,     Nine Months Ended September 30,       2024     2023     2024     2023   Interest Expense (a)   $ (176 )   $ (672 )   $ (625 )   $ (2,777 )                                   Warrant Incentive Expense (b)     –       –       –       (12,664 ) Gain on Revaluation of Warrants (c)     3       2,797       63       8,999   Gain (Loss) on Revaluation of Equity Investment in YFE (d)     (461 )     (2,325 )     (1,342 )     1,102   Realized Loss on Marketable Securities Investments (e)     (148 )     (1,897 )     (505 )     (4,154 ) Gain (Loss) on Foreign Exchange (f)     999       (637 )     19       (282 ) Interest Income (g)     40       95       135       563   Loss on Early Lease Termination (h)     –       (232 )     –       (232 ) Finance Lease Interest Expense (i)     (20 )     (48 )     (74 )     (152 ) Other (j)     189       11       723       37   Other Income (Expense), net   $ 602     $ (2,236 )   $ (981 )   $ (6,783 )   Three Months and Nine Months Ended September 30, 2024     (a) Interest Expense during the three and nine months ended September 30, 2024 primarily consisted of $0.2 million and $0.6 million, respectively, primarily due to interest incurred on production facilities and bank indebtedness.   (b) There was no warrant incentive expense in 2024.     (c) The Gain on Revaluation of Warrants during the three and nine months ended September 30, 2024 is primarily related to the changes in fair value of the remaining outstanding warrant classified as a liability due to decreases in market price.   (d) As accounted for using the fair value option, the loss on the YFE investment revaluation during the three and nine months ended September 30, 2024, excluding the impact of foreign currency recorded separately, is a result of a decrease in YFE’s stock price as of September 30, 2024.   (e) The Realized Loss on Marketable Securities Investments during the three and nine months ended September 30, 2024 reflects the loss that will not be recovered from the investments due to selling securities prior to maturity.   (f) The Gain on Foreign Exchange during the three and nine months ended September 30, 2024 primarily related to the revaluation of the YFE investment, resulting in a gain of $0.8 million and $0.2 million, respectively due to the EURO fluctuation to USD as compared to the prior reporting period. The remaining balance is related to remeasurements of transactions made in foreign currencies that are outstanding as of the condensed consolidated balance sheet date.   (g) Interest Income during the three and nine months ended September 30, 2024 primarily consisted of interest income, net of premium amortization expense, recorded for the investments in marketable securities.   (h) There was no gain or loss on lease termination in 2024.   (i) The Finance Lease Interest Expense during the three and nine months ended September 30, 2024 represents the interest portion of the finance lease obligations for equipment purchased under an equipment lease line.   (j) Other during the three and nine months ended September 30, 2024 is primarily related to late fees from select clients on a payment plan.   Three Months and Nine Months Ended September 30, 2023     (a) Interest expense during the three and nine months ended September 30, 2023 primarily consisted of $0.2 million and $1.5 million of interest incurred on the margin loan, respectively, and $0.5 million and $1.3 million, respectively, of interest incurred on production facilities loans and bank indebtedness.   (b) The Warrant Incentive Expense is related to the $12.7 million fair value of Exchange Warrants that were issued during the three months ended June 30, 2023 to certain existing warrant holders in exchange for previously issued outstanding warrants.   (c) The gain on warrant revaluation during the three months ended  September 30, 2023 is primarily related to the $2.7 million change in fair value as of the end of the current reporting period of the Exchange Warrants and SEG Warrants compared to the fair value as of the end of the prior reporting period due to a decrease in market price. The gain on warrant revaluation during the nine months ended September 30, 2023 is primarily related to the $8.8 million change in fair value as of the end of the current reporting period of the Exchange Warrants and SEG Warrants compared to the fair value as of the issuance date due to a decrease in market price.   (d) As accounted for using the fair value option, the gain or loss on the YFE investment revaluation, excluding the impact of foreign currency recorded separately, is a result of the increases or decreases in YFE’s stock price as of the current reporting period when compared to the prior reporting period.   (e) The net realized loss on marketable securities reflects the loss that will not be recovered from the investments due to selling securities and issuers' prepayments of principals on certain mortgage-backed securities.   (f) The loss on foreign currency exchange during the three and nine months ended September 30, 2023 primarily related to the EURO weakening against the USD when compared to the prior reporting period.   (g) Interest Income during the three and nine months ended September 30, 2023 primarily consisted of interest income of $0.1 million and $0.4 million, net of premium amortization expense, recorded for the investments in marketable securities, respectively.   (h) The loss on early termination of lease is due to early termination of the Lyndhurst, NJ office lease, effective August 1, 2023. The loss includes fees of $0.1 million and the write-down of assets and liabilities resulting in net, $0.1 million of loss.   (i) The finance lease interest expense represents the interest portion of the finance lease obligations for equipment purchased under an equipment lease line.   (j) Other during the three and nine months ended September 30, 2023 is primarily related to late fees from select clients on a payment plan.

v3.24.3

Income Taxes	9 Months Ended
	Sep. 30, 2024
Income Tax Disclosure [Abstract]
Income Taxes	Note 18: Income Taxes   The Company accounts for income taxes in accordance with ASC 740, Income Taxes, which requires the recognition of deferred tax liabilities and assets at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized.   ASC 740 provides guidance on the accounting for uncertainty in income taxes recognized in a company’s condensed consolidated financial statements. ASC 740 requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the condensed consolidated financial statements.   Income tax benefit was $0.9 million for the nine months ended September 30, 2023, which related to impairments of certain intangible assets during the first quarter of 2023 resulting in a decrease to the Deferred Tax Liability, net, balance. There were no activities during the three and nine months ended September 30, 2024 that affected the Deferred Tax Liability, net, balance.   Kartoon Studios, Inc. and its wholly-owned U.S. subsidiaries are subject to U.S. income taxes and file a consolidated tax return in the U.S. The Beacon Communications Group, Ltd., Ameba Inc. and WOW Unlimited Media Inc. are subject to Canadian income taxes on a stand-alone basis and file separate tax returns in Canada.   The Company files income tax returns in the U.S. federal jurisdiction and in the states of California, Florida, Massachusetts, New Jersey, New York, as well as Canada. To the extent allowed by law, the taxing authorities may have the right to examine prior periods where net operating losses were generated and carried forward to make adjustments up to the amount of the net operating losses. The Company is currently subject to U.S. federal, state and local and foreign tax examinations by tax authorities. The Company is no longer subject to audits by U.S. federal, state, local or foreign authorities for years prior to 2019.   Kartoon Studios, Inc. and its wholly-owned U.S. subsidiaries are subject to U.S. income taxes and file a consolidated tax return in the U.S. The Beacon Communications Group, Ltd., Ameba Inc. and WOW Unlimited Media Inc. are subject to Canadian income taxes on a stand-alone basis and file separate tax returns in Canada.

v3.24.3

Commitments and Contingencies	9 Months Ended
	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 19: Commitments and Contingencies   The following is a schedule of future minimum cash contractual obligations as of September 30, 2024 (in thousands): Schedule of future minimum lease payments                                                             2024     2025     2026     2027     2028     Thereafter     Total   Operating Leases   $ 525     $ 1,640     $ 1,645     $ 1,415     $ 1,071     $ 3,386     $ 9,682   Finance Leases     756       278       54       –       –       –       1,088   Employment Contracts     1,014       1,646       222       –       –       –       2,882   Consulting Contracts     1,019       2,840       769       –       –       –       4,628   Debt     1,662       8,739       –       –       –       –       10,401   Contractual obligation   $ 4,976     $ 15,143     $ 2,690     $ 1,415     $ 1,071     $ 3,386     $ 28,681     The present value discount of the minimum operating lease payments above was $2.7 million which when deducted from the cash commitments for the leases included in the table above, equates to the operating lease liabilities of $7.0 million recorded as of September 30, 2024 on the Company’s condensed consolidated balance sheet.   Other Funding Commitments   The Company enters into various agreements associated with its individual properties. Some of these agreements call for the potential future payment of royalties or “profit” participations for either (i) the use of third party intellectual property, in which the Company is obligated to share net profits with the underlying rights holders on a certain basis as defined in the respective agreements, or (ii) services rendered by animation studios, post-production studios, writers, directors, musicians or other creative talent for which the Company is obligated to share with these service providers a portion of the net profits of the properties on which they have rendered services, as defined in each respective agreement.

v3.24.3

Related Party Transactions	9 Months Ended
	Sep. 30, 2024
Related Party Transactions [Abstract]
Related Party Transactions	Note 20: Related Party Transactions   Pursuant to his employment agreement dated December 7, 2020, Andy Heyward, the Company’s CEO, is entitled to an executive producer fee of $12,500 per one-half hour episode for each episode he provides services as an executive producer. During the nine months ended September 30, 2024, Mr. Heyward did not earn any executive producer fees. During the nine months ended September 30, 2023, Mr. Heyward earned and was paid $0.3 million in executive producer fees. Mr. Heyward also earned his $55,000 quarterly bonus during each of the quarters in 2024 and 2023.   On August 25, 2022, Mr. Heyward’s employment agreement was amended to include assignment of music royalties to Mr. Heyward for all musical compositions in which he provides services as a composer for or on behalf of the Company, in the event that the Company acquires up to 50% of the writer's share of the royalties for that musical composition. If the Company acquires more than 50% of the writer's share of the royalties on musical compositions Mr. Heyward provided services for, he has the option to purchase the additional royalties from the Company at the price the Company paid to acquire the additional royalties. During the nine months ended September 30, 2024 and September 30, 2023, Mr. Heyward has not earned royalties from musical compositions.   On February 27, 2023, Mr. Heyward’s employment agreement was further amended to provide him a creative producer fee of $100,000 per quarter, prorated for the first quarter of 2023. During the nine months ended September 30, 2023, Mr. Heyward earned and was paid $0.2 million in creative producer fees. During the nine months ended September 30, 2024, Mr. Heyward earned and was paid $0.1 million during each of the quarters.   On July 21, 2020, the Company entered into a merchandising and licensing agreement with Andy Heyward Animation Art (“AHAA”), whose principal is Andy Heyward. The Company entered into a customary merchandise license agreement with AHAA for the use of characters and logos related to Warren Buffett’s Secret Millionaires Club and Stan Lee’s Mighty 7 in connection with certain products to be sold by AHAA. The terms and conditions of such license are customary within the industry, and the Company earns an arm’s-length industry standard royalty on all sales made by AHAA utilizing the licensed content. During the nine months ended September 30, 2024 and September 30, 2023, Mr. Heyward has not earned royalties from this agreement.   On July 19, 2022, the Company entered into a Shareholder Loan Agreement with YFE in the amount of $1.5 million (EURO 1.3 million), accruing interest at the fixed annualized rate of 5%, with successive interest periods of three months due on the last day of each calendar quarter. The principal plus interest must be repaid by no later than June 30, 2026. As of September 30, 2024 and December 31, 2023, $1.5 million and $1.4 million, respectively, is included within Notes and Accounts Receivable from Related Party on the Company’s condensed consolidated balance sheets.   During 2022, the Company entered into a sublease agreement with a related party to lease one office in the general office space at 190 N. Canon Drive, Suite 400, Beverly Hills, CA 90210. The monthly sublease payments were $595 for the three and nine months ended September 30, 2024 and September 30, 2023 and recorded within Other Income (Expense), net in the Company's condensed consolidated statements of operations.   During the quarter ended September 30, 2024, the Company entered into a one year consulting agreement with a related party for office space interior design services. The agreement is subject to an initial fee of $6,545 and a monthly fee of $595 that commenced on September 1, 2024. The interior design service fees are recorded within General and Administrative expenses in the Company's condensed consolidated statements of operations.

v3.24.3

Segment Reporting	9 Months Ended
	Sep. 30, 2024
Segment Reporting [Abstract]
Segment Reporting	Note 21: Segment Reporting   The Company’s Chief Operating Decision Maker (“CODM”) uses revenue and net earnings to evaluate the profitability and performance of each operating segment. All other financial information is reviewed by the CODM on a condensed consolidated basis. The CODM does not evaluate the operating segments using asset information and it is therefore not disclosed. All expenses directly attributable to each reportable segment are included in the operating results for each segment. However, the CODM does not evaluate the expenses by operating segment and, therefore, it is not separately presented.   The following table presents the revenue and net earnings within the Company's two operating segments (in thousands):   Schedule of segment information by revenues and net earnings                                     Three Months Ended September 30,     Nine Months Ended September 30,       2024     2023     2024     2023   Total Revenues:                                 Content Production & Distribution   $ 7,283     $ 9,075     $ 19,993     $ 32,456   Media Advisory & Advertising Services     1,425       997       3,177       2,820   Total Revenues   $ 8,708     $ 10,072     $ 23,170     $ 35,276                                     Net Loss:                                 Content Production & Distribution   $ (2,395 )   $ (14,947 )   $ (14,830 )   $ (50,113 ) Media Advisory & Advertising Services     338       (529 )     (145 )     (1,616 ) Total Net Loss Attributable to Kartoon Studio, Inc.   $ (2,057 )   $ (15,476 )   $ (14,975 )   $ (51,729 )   Geographic Information   The following table provides information about disaggregated revenue by geographic area (in thousands):   Schedule of segments by geographic area                                     Three Months Ended September 30,     Nine Months Ended September 30,       2024     2023     2024     2023   Total Revenues:                                 United States   $ 5,005     $ 5,536     $ 12,490     $ 21,537   Canada     1,615       2,093       3,563       7,496   United Kingdom     1,909       2,381       6,708       5,972   Other     179       62       409       271   Total Revenues   $ 8,708     $ 10,072     $ 23,170     $ 35,276

v3.24.3

Subsequent Events	9 Months Ended
	Sep. 30, 2024
Subsequent Events [Abstract]
Subsequent Events	Note 22: Subsequent Events   Subsequent to September 30, 2024, the Company sold marketable securities and received proceeds of $1.6 million and incurred a realized loss of $0.1 million.   As of November 14, 2024, there were no additional subsequent events to report.

v3.24.3

Basis of Presentation and Summary of Significant Accounting Policies (Policies)	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Prior Periods and Reclassifications	Prior Periods and Reclassifications   Certain prior year amounts have been reclassified to conform to the current year presentation. Such reclassifications had no impact on the Company’s reported total revenues, expenses, net loss, current assets, total assets, current liabilities, total liabilities, stockholders’ equity, non-controlling interests or cash flows. No reclassifications of prior period balances were material to the unaudited condensed consolidated financial statements.   Interim results are not necessarily indicative of financial results for a full year or any other period. The information included in this Form 10-Q should be read in conjunction with the Company’s 2023 Annual Report on Form 10-K.   The following is provided to update the Company’s significant accounting policies previously described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
Foreign Currency Forward Contracts	Foreign Currency Forward Contracts   As of September 30, 2024, the gross amounts of foreign currency (“FX”) forward contracts in an asset and liability position subject to a master netting arrangement resulted in a net liability of $0.2 million recorded within Other Current Liabilities on the condensed consolidated balance sheets. As of December 31, 2023, the FX contracts were fully settled and netted to zero on the Company’s condensed consolidated balance sheets.   For the three and nine months ended September 30, 2024, the Company recorded a realized gain of $35,601 and $86,355, respectively, on FX forward contracts within Production Services Revenue on the condensed consolidated statements of operations. For the three and nine months ended September 30, 2023, the Company recorded a realized loss of $14,890 and $40,294, respectively, on FX forward contracts within Production Services Revenue on the condensed consolidated statements of operations.
Trade Accounts Receivable and Allowance for Credit Loss	Trade Accounts Receivable and Allowance for Credit Loss   As of September 30, 2024 and December 31, 2023, the Company recorded an allowance for credit loss of $0.2 million and $0.2 million, respectively.
Tax Credits Receivable	Tax Credits Receivable   As of September 30, 2024 and December 31, 2023, $12.9 million and $20.7 million, respectively, in current tax credit receivables related to Wow’s film and television productions were recorded, net of $0.6 million and $0.5 million, respectively, recorded as an allowance for credit loss. It is estimated that the Company will collect the receivables balance; therefore, no additional reserve was recorded.
Concentration of Risk	Concentration of Risk   The Company maintains its cash in bank deposit accounts which, at times, may exceed the Federal Deposit Insurance Corporation’s (“FDIC”) or the Canadian Deposit Insurance Corporation’s (“CDIC”) insured amounts. Balances on interest bearing deposits at banks in the United States are insured by the FDIC up to $250,000 per account and deposits in banks in Canada are insured by the CDIC up to CAD 100,000. As of September 30, 2024 and December 31, 2023, the Company had twelve and ten bank deposit accounts with an aggregate uninsured balance of $3.0 million and $2.5 million, respectively.   The Company has a managed account with a financial institution. The managed account maintains its investments in marketable securities of approximately $4.1 million and $12.0 million as of September 30, 2024 and December 31, 2023, respectively. Assets in the managed account are protected by the Securities Investor Protection Corporation (“SIPC”) up to $500,000 (with a limit of $250,000 for cash). In addition, the financial institution provides additional “excess of SIPC” coverage which insures up to $1.0 billion. As of September 30, 2024 and December 31, 2023, the Company did not have account balances held at this financial institution that exceed the insured balances.   The Company’s investment portfolio consists of investment-grade securities diversified among security types, industries and issuers. The Company’s policy limits the amount of credit exposure to any one security issue or issuer and the Company believes no significant concentration of credit risk exists with respect to these investments.   During the three months ended September 30, 2024, the Company had four customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 77.2% of the total revenue.   During the nine months ended September 30, 2024, the Company had three customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 60.2% of the total revenue. As of September 30, 2024, the Company had three customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 59.4% of the total accounts receivable as of September 30, 2024.   During the three months ended September 30, 2023, the Company had four customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 73.1% of the total revenue.   During the nine months ended September 30, 2023, the Company had four customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 79.3% of the total revenue. As of September 30, 2023, the Company had three customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 55.6% of the total accounts receivable as of September 30, 2023.   There is significant financial risk associated with a dependence upon a small number of customers. The Company periodically assesses the financial strength of these customers and establishes allowances for any anticipated credit losses.
Fair Value of Financial Instruments	Fair Value of Financial Instruments   The following table summarizes the marketable securities measured at fair value on a recurring basis by level within the fair value hierarchy as of September 30, 2024 (in thousands):   Schedule of marketable securities measured at fair value on a recurring basis                             Level 1     Level 2     Total Fair Value   Investments in Marketable Securities:                         Corporate Bonds   $ 1,035     $ –     $ 1,035   U.S. agency and government sponsored securities     –       1,913       1,913   U.S. states and municipalities     –       1,131       1,131   Total   $ 1,035     $ 3,044     $ 4,079     Fair values were determined for each individual security in the investment portfolio. The Company’s marketable securities are considered to be available-for-sale investments as defined under the Financial Accounting Standards Board (“FASB”) ASC 320, Investments – Debt and Equity Securities. An allowance for credit loss was not recorded for the marketable securities as of September 30, 2024 and December 31, 2023. Refer to Note 5 for additional details.
New Accounting Standards Issued but Not Yet Adopted	New Accounting Standards Issued but Not Yet Adopted   In October 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-06, Disclosure Improvements. The new guidance clarifies or improves disclosure and presentation requirements on a variety of topics in the codification. The amendments will align the requirements in the FASB Accounting Standard Codification with the SEC’s regulations. The amendments are effective prospectively on the date each individual amendment is effectively removed from Regulation S-X or Regulation S-K. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the condensed consolidated financial statements and related disclosures, which is not expected to be material.   In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting – Improvements to Reportable Segments Disclosures. The amendments enhance disclosures of significant segment expenses by requiring disclosure of significant segment expenses regularly provided to the chief operating decision maker (CODM), extend certain annual disclosures to interim periods, and permit more than one measure of segment profit or loss to be reported under certain conditions. The amendments are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption of the amendment is permitted, including adoption in any interim periods for which financial statements have not been issued. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the condensed consolidated financial statements and related disclosures, which is expected to result in enhanced disclosures.   In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires that an entity, on an annual basis, disclose additional income tax information, primarily related to the rate reconciliation and income taxes paid. The amendment in the ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this ASU are effective for annual periods beginning after December 15, 2024. The Company is in the process of evaluating the impact that the adoption of this ASU will have to the condensed consolidated financial statements and related disclosures, which is expected to result in enhanced disclosures and is not expected to be material.

v3.24.3

Basis of Presentation and Summary of Significant Accounting Policies (Tables)	9 Months Ended
	Sep. 30, 2024
Accounting Policies [Abstract]
Schedule of marketable securities measured at fair value on a recurring basis	Schedule of marketable securities measured at fair value on a recurring basis                             Level 1     Level 2     Total Fair Value   Investments in Marketable Securities:                         Corporate Bonds   $ 1,035     $ –     $ 1,035   U.S. agency and government sponsored securities     –       1,913       1,913   U.S. states and municipalities     –       1,131       1,131   Total   $ 1,035     $ 3,044     $ 4,079

v3.24.3

Marketable Securities (Tables)	9 Months Ended
	Sep. 30, 2024
Investments, All Other Investments [Abstract]
Schedule of marketable securities	Schedule of marketable securities                             Adjusted Cost     Unrealized Loss     Fair Value   Corporate Bonds   $ 1,080     $ (45 )   $ 1,035   U.S. Agency and Government Sponsored Securities     2,000       (87 )     1,913   U.S. States and Municipalities     1,186       (55 )     1,131   Total   $ 4,266     $ (187 )   $ 4,079     The investments in marketable securities as of December 31, 2023 had an adjusted cost basis of $12.8 million and a market value of $12.0 million. The balances consisted of the following securities (in thousands):       Adjusted Cost     Unrealized Loss     Fair Value   Corporate Bonds   $ 6,333     $ (425 )   $ 5,908   U.S. Treasury     646       (37 )     609   U.S. Agency and Government Sponsored Securities     2,000       (148 )     1,852   U.S. States and Municipalities     3,859       (278 )     3,581   Total   $ 12,838     $ (888 )   $ 11,950
Schedule of contractual maturities of marketable investments	Schedule of contractual maturities of marketable investments             Fair Value   Due within 1 year   $ –   Due after 1 year through 5 years     4,079   Total   $ 4,079

v3.24.3

Property and Equipment, net (Tables)	9 Months Ended
	Sep. 30, 2024
Property, Plant and Equipment [Abstract]
Schedule of property and equipment, net	Schedule of property and equipment, net                     As of       September 30, 2024     December 31, 2023   Furniture and Equipment   $ 117     $ 117   Computer Equipment     226       219   Leasehold Improvements     2,208       2,200   Software     250       192   Property and Equipment, gross     2,801       2,728                     Less Accumulated Depreciation     (985 )     (724 ) Foreign Currency Translation Adjustment     (161 )     (127 ) Property and Equipment, net   $ 1,655     $ 1,877

v3.24.3

Leased Right-of-Use Assets, net (Tables)	9 Months Ended
	Sep. 30, 2024
Leased Right-of-use Assets Net
Schedule of leased right of use assets	Schedule of leased right of use assets                     As of       September 30, 2024     December 31, 2023   Office Lease Assets   $ 9,437     $ 9,437   Equipment Lease Assets     5,360       5,360   Right-of-Use Assets, Gross     14,797       14,797                     Accumulated Amortization     (6,637 )     (5,237 ) Foreign Currency Translation Adjustment     (769 )     (617 ) Leased Right-of-Use Assets, net   $ 7,391     $ 8,943

v3.24.3

Film and Television Costs, net (Tables)	9 Months Ended
	Sep. 30, 2024
Other Industries [Abstract]
Schedule of film and television costs activity	Schedule of film and television costs activity         Film and Television Costs, net as of December 31, 2023   $ 1,295   Additions to Film and Television Costs     818   Disposals     (73 ) Film Amortization Expense     (176 ) Foreign Currency Translation Adjustment     (6 ) Film and Television Costs, net as of September 30, 2024   $ 1,858

v3.24.3

Intangible Assets, net (Tables)	9 Months Ended
	Sep. 30, 2024
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of intangible asset	Schedule of intangible asset                             Weighted Average Remaining Amortization     As of       Period     September 30, 2024     December 31, 2023   Customer Relationships     5.7     $ 17,390     $ 17,325   Digital Networks     13.5       803       803   Trade Names     66.7       10,100       9,970   Intangible Assets, gross             28,293       28,098                             Less: Accumulated Amortization             (5,528 )     (3,794 ) Foreign Currency Translation Adjustment             (1,639 )     (1,311 ) Intangible Assets, net           $ 21,126     $ 22,993
Schedule of expected future intangible asset amortization	Schedule of expected future intangible asset amortization         Fiscal Year:       2024 (remainder of year)   $ 516   2025     2,072   2026     2,062   2027     2,062   2028     2,062   Thereafter     6,792   Total   $ 15,566

v3.24.3

Stock Options (Tables)	9 Months Ended
	Sep. 30, 2024
Equity [Abstract]
Schedule of assumptions used	Schedule of assumptions used         Exercise Price   $ 0.95   Dividend Yield     – %   Volatility     92.1%   Risk-free interest rate     4.3%   Expected life of options     5.0 years
Schedule of option activity	Schedule of option activity                             Stock Options     Weighted-Average Remaining Contractual Life     Weighted-Average Exercise Price per Share   Outstanding at December 31, 2023     1,183,908       5.56     $ 14.96   Granted     35,000       4.72     $ 0.95   Exercised     –       –     $ –   Forfeited/Cancelled     (259,468 )     –     $ 21.08   Expired     (5,800 )     –     $ 19.90   Outstanding at September 30, 2024     953,640       5.04     $ 12.75                             Unvested at September 30, 2024     102,499       4.35     $ 4.23   Vested and exercisable at September 30, 2024     851,141       5.12     $ 13.77

v3.24.3

Restricted Stock Units (Tables)	9 Months Ended
	Sep. 30, 2024
Restricted Stock Units
Schedule of RSU activity	Schedule of RSU activity                     Restricted Stock Units     Weighted- Average Grant Date Fair Value per Share   Unvested at December 31, 2023     982,625     $ 13.42   Granted     286,324     $ 1.12   Vested     (291,449 )   $ 1.42   Forfeited     –     $ –   Unvested at September 30, 2024     977,500     $ 13.40

v3.24.3

Warrants (Tables)	9 Months Ended
	Sep. 30, 2024
Warrants
Schedule of warrant activity	Schedule of warrant activity                             Warrants     Weighted-Average Remaining Contractual Life     Weighted-Average Exercise Price per Share   Outstanding at December 31, 2023   6,852,952     4.16     $ 7.14   Granted     100,000       4.56     $ 1.00   Exercised     –       –     $ –   Expired     (26,000 )     –     $ 26.88   Forfeitures     –       –     $ –   Outstanding at September 30, 2024     6,926,952       3.45     $ 6.98                             Exercisable at September 30, 2024     6,926,952       3.45     $ 6.98   Exercisable at December 31, 2023     6,852,952       4.16     $ 7.14
Schedule of assumptions	Schedule of assumptions         Market Price   $ 0.87   Exercise Price   $ 2.10   Dividend Yield     – %   Volatility     61%   Risk-free Interest Rate     3.98%   Expected Life of Warrants     0.45 years

v3.24.3

Supplemental Financial Statement Information (Tables)	9 Months Ended
	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of other income expense, net	Schedule of other income expense, net                                     Three Months Ended September 30,     Nine Months Ended September 30,       2024     2023     2024     2023   Interest Expense (a)   $ (176 )   $ (672 )   $ (625 )   $ (2,777 )                                   Warrant Incentive Expense (b)     –       –       –       (12,664 ) Gain on Revaluation of Warrants (c)     3       2,797       63       8,999   Gain (Loss) on Revaluation of Equity Investment in YFE (d)     (461 )     (2,325 )     (1,342 )     1,102   Realized Loss on Marketable Securities Investments (e)     (148 )     (1,897 )     (505 )     (4,154 ) Gain (Loss) on Foreign Exchange (f)     999       (637 )     19       (282 ) Interest Income (g)     40       95       135       563   Loss on Early Lease Termination (h)     –       (232 )     –       (232 ) Finance Lease Interest Expense (i)     (20 )     (48 )     (74 )     (152 ) Other (j)     189       11       723       37   Other Income (Expense), net   $ 602     $ (2,236 )   $ (981 )   $ (6,783 )   Three Months and Nine Months Ended September 30, 2024     (a) Interest Expense during the three and nine months ended September 30, 2024 primarily consisted of $0.2 million and $0.6 million, respectively, primarily due to interest incurred on production facilities and bank indebtedness.   (b) There was no warrant incentive expense in 2024.     (c) The Gain on Revaluation of Warrants during the three and nine months ended September 30, 2024 is primarily related to the changes in fair value of the remaining outstanding warrant classified as a liability due to decreases in market price.   (d) As accounted for using the fair value option, the loss on the YFE investment revaluation during the three and nine months ended September 30, 2024, excluding the impact of foreign currency recorded separately, is a result of a decrease in YFE’s stock price as of September 30, 2024.   (e) The Realized Loss on Marketable Securities Investments during the three and nine months ended September 30, 2024 reflects the loss that will not be recovered from the investments due to selling securities prior to maturity.   (f) The Gain on Foreign Exchange during the three and nine months ended September 30, 2024 primarily related to the revaluation of the YFE investment, resulting in a gain of $0.8 million and $0.2 million, respectively due to the EURO fluctuation to USD as compared to the prior reporting period. The remaining balance is related to remeasurements of transactions made in foreign currencies that are outstanding as of the condensed consolidated balance sheet date.   (g) Interest Income during the three and nine months ended September 30, 2024 primarily consisted of interest income, net of premium amortization expense, recorded for the investments in marketable securities.   (h) There was no gain or loss on lease termination in 2024.   (i) The Finance Lease Interest Expense during the three and nine months ended September 30, 2024 represents the interest portion of the finance lease obligations for equipment purchased under an equipment lease line.   (j) Other during the three and nine months ended September 30, 2024 is primarily related to late fees from select clients on a payment plan.   Three Months and Nine Months Ended September 30, 2023     (a) Interest expense during the three and nine months ended September 30, 2023 primarily consisted of $0.2 million and $1.5 million of interest incurred on the margin loan, respectively, and $0.5 million and $1.3 million, respectively, of interest incurred on production facilities loans and bank indebtedness.   (b) The Warrant Incentive Expense is related to the $12.7 million fair value of Exchange Warrants that were issued during the three months ended June 30, 2023 to certain existing warrant holders in exchange for previously issued outstanding warrants.   (c) The gain on warrant revaluation during the three months ended  September 30, 2023 is primarily related to the $2.7 million change in fair value as of the end of the current reporting period of the Exchange Warrants and SEG Warrants compared to the fair value as of the end of the prior reporting period due to a decrease in market price. The gain on warrant revaluation during the nine months ended September 30, 2023 is primarily related to the $8.8 million change in fair value as of the end of the current reporting period of the Exchange Warrants and SEG Warrants compared to the fair value as of the issuance date due to a decrease in market price.   (d) As accounted for using the fair value option, the gain or loss on the YFE investment revaluation, excluding the impact of foreign currency recorded separately, is a result of the increases or decreases in YFE’s stock price as of the current reporting period when compared to the prior reporting period.   (e) The net realized loss on marketable securities reflects the loss that will not be recovered from the investments due to selling securities and issuers' prepayments of principals on certain mortgage-backed securities.   (f) The loss on foreign currency exchange during the three and nine months ended September 30, 2023 primarily related to the EURO weakening against the USD when compared to the prior reporting period.   (g) Interest Income during the three and nine months ended September 30, 2023 primarily consisted of interest income of $0.1 million and $0.4 million, net of premium amortization expense, recorded for the investments in marketable securities, respectively.   (h) The loss on early termination of lease is due to early termination of the Lyndhurst, NJ office lease, effective August 1, 2023. The loss includes fees of $0.1 million and the write-down of assets and liabilities resulting in net, $0.1 million of loss.   (i) The finance lease interest expense represents the interest portion of the finance lease obligations for equipment purchased under an equipment lease line.   (j) Other during the three and nine months ended September 30, 2023 is primarily related to late fees from select clients on a payment plan.

v3.24.3

Commitments and Contingencies (Tables)	9 Months Ended
	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Schedule of future minimum lease payments	Schedule of future minimum lease payments                                                             2024     2025     2026     2027     2028     Thereafter     Total   Operating Leases   $ 525     $ 1,640     $ 1,645     $ 1,415     $ 1,071     $ 3,386     $ 9,682   Finance Leases     756       278       54       –       –       –       1,088   Employment Contracts     1,014       1,646       222       –       –       –       2,882   Consulting Contracts     1,019       2,840       769       –       –       –       4,628   Debt     1,662       8,739       –       –       –       –       10,401   Contractual obligation   $ 4,976     $ 15,143     $ 2,690     $ 1,415     $ 1,071     $ 3,386     $ 28,681

v3.24.3

Segment Reporting (Tables)	9 Months Ended
	Sep. 30, 2024
Segment Reporting [Abstract]
Schedule of segment information by revenues and net earnings	Schedule of segment information by revenues and net earnings                                     Three Months Ended September 30,     Nine Months Ended September 30,       2024     2023     2024     2023   Total Revenues:                                 Content Production & Distribution   $ 7,283     $ 9,075     $ 19,993     $ 32,456   Media Advisory & Advertising Services     1,425       997       3,177       2,820   Total Revenues   $ 8,708     $ 10,072     $ 23,170     $ 35,276                                     Net Loss:                                 Content Production & Distribution   $ (2,395 )   $ (14,947 )   $ (14,830 )   $ (50,113 ) Media Advisory & Advertising Services     338       (529 )     (145 )     (1,616 ) Total Net Loss Attributable to Kartoon Studio, Inc.   $ (2,057 )   $ (15,476 )   $ (14,975 )   $ (51,729 )
Schedule of segments by geographic area	Schedule of segments by geographic area                                     Three Months Ended September 30,     Nine Months Ended September 30,       2024     2023     2024     2023   Total Revenues:                                 United States   $ 5,005     $ 5,536     $ 12,490     $ 21,537   Canada     1,615       2,093       3,563       7,496   United Kingdom     1,909       2,381       6,708       5,972   Other     179       62       409       271   Total Revenues   $ 8,708     $ 10,072     $ 23,170     $ 35,276

v3.24.3

Organization and Business (Details Narrative) $ / shares in Units, $ in Millions						1 Months Ended	3 Months Ended		9 Months Ended			12 Months Ended
	Sep. 27, 2024 USD ($)	Aug. 30, 2024 USD ($)	Aug. 30, 2024 CAD ($)	Apr. 23, 2024 USD ($) $ / shares shares	Dec. 22, 2023 USD ($)	Mar. 31, 2024 USD ($)	Sep. 30, 2024 USD ($) $ / shares	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) Title Episode Channel Client $ / shares	Sep. 30, 2024 CAD ($) Title Episode Channel Client	Sep. 30, 2023 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)	Sep. 30, 2024 CAD ($)	Jun. 21, 2024 USD ($)	Mar. 31, 2024 CAD ($)	Dec. 31, 2023 USD ($) $ / shares shares
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Common stock, par value | $ / shares							$ 0.001		$ 0.001								$ 0.001
Number of share sold, value					$ 75,000,000
Cash							$ 4,581,000		$ 4,581,000								$ 4,095,000
Increase in cash									486,000		$ (3,545,000)
Net cash provided by investing activities									7,902,000		69,418,000
Net cash used in financing activities									6,444,000		52,829,000
Net cash used in operating activities									1,127,000		20,168,000
Proceeds from sale of marketable securities									8,009,000		67,633,000
Net of proceeds									10,000,000
Net proceeds from the Offering									3,329,000		5,299,000
Margin loan									300,000
Available-for-sale marketable securities with a fair value							4,100,000		4,100,000								12,000,000
Due to sales and maturities									7,900,000
Average margin loan balances							1,069,000		1,069,000								782,000
Proceeds from loan									6,492,000		11,161,000
Repayment of loan									13,168,000		9,451,000
Net loss							2,121,000	$ 15,512,000	15,108,000		51,812,000
Accumulated deficit							733,521,000		733,521,000								718,546,000
Expenses related to non-operational warrant and stock option expense												$ 450,000,000	$ 450,000,000
Total stockholders' equity							42,800,000		42,800,000
Total current assets							37,180,000		37,180,000								57,109,000
Marketable securities							4,079,000		4,079,000								11,950,000
Total current liabilities							33,700,000		33,700,000								45,640,000
Working capital							3,500,000		3,500,000								11,500,000
Public offering	$ 8,000,000
Market value of its voting securities held by non-affiliates					$ 75,000,000
Revolving Demand Facility And Equipment Lease Line [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Outstanding amounts							1,200,000		1,200,000					$ 1.6
Revolving Demand Facility [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Interest rate						2.00%
Maximum letters of credit						$ 700,000										$ 1.0
Letter of Credit [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Interest rate						2.00%
Maximum letters of credit						$ 200,000
Debt instrument, term						1 year
Treasury Risk Management Facility [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Outstanding amounts																	0
Maximum letters of credit						$ 400,000										$ 0.5
Equipment Lease Line [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Repayment of loan		$ 100,000	$ 0.1						300,000	$ 0.4
Outstanding amounts							600,000		600,000					$ 0.8
Margin Loan [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Average margin loan balances							$ 1,100,000		1,100,000								$ 800,000
Proceeds from loan									9,100,000
Repayment of loan									$ 8,800,000
Interest rate									0.60%	0.60%
Weighted average interest rates							0.46%		0.46%					0.46%			0.98%
Interest expense							$ 11,070	$ 200,000	$ 42,131		$ 1,500,000
Median [Member] | Margin Loan [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Average margin loan balances							$ 1,000,000		$ 1,000,000								$ 27,400,000
Registered Direct Offering [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Sale of stock, maximum authorized consideration				$ 7,000,000
Number of share sold, value				$ 4,000,000
Registered Direct Offering [Member] | Pre Funded Warrants [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Warrants to purchase | shares				100,000
Sale of stock, price per share | $ / shares				$ 0.99
Warrant per share | $ / shares				$ 0.99
Registered Direct Offering [Member] | Warrant Repricing Option [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Warrants | shares				4,784,909													4,784,909
Registered Direct Offering [Member] | Warrant Repricing Option [Member] | Maximum [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Warrant per share | $ / shares				$ 2.50													$ 2.50
Registered Direct Offering [Member] | Warrant Repricing Option [Member] | Minimum [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Warrant per share | $ / shares				$ 1.00													$ 1.00
Registered Direct Offering [Member] | Common Stock [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of shares, sold | shares				3,900,000
Common stock, par value | $ / shares				$ 0.001
Sale of stock, price per share | $ / shares				$ 1.00
Over-Allotment Option [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of shares, sold | shares				3,000,000
Over-Allotment Option [Member] | Common Stock [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Sale of stock, price per share | $ / shares				$ 1.00
Wow [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of multi channel | Channel									2,500	2,500
Beacon Media Group [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of multi channel | Client									20	20
Winnie The Pooh [Member] | Maximum [Member] | The Walt Disney Company [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Revenue from contract with customer excluding assessed tax term estimated annual															$ 6,000,000,000
Winnie The Pooh [Member] | Minimum [Member] | The Walt Disney Company [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Revenue from contract with customer excluding assessed tax term															80,000,000,000
Revenue from contract with customer excluding assessed tax term estimated annual															$ 3,000,000,000
YFE [Member] | YFE Acquisition [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of titles | Title									150	150
Number of episodes | Episode									3,500	3,500
Kartoon Channel Winnie The Pooh Joint Venture [Member] | Winnie The Pooh [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Ownership percentage															60.00%
Ownership percentage, noncontrolling															40.00%
Kartoon Channel Winnie The Pooh Joint Venture [Member] | Winnie The Pooh [Member] | Catalyst Venture Partners [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Fair value of joint venture															$ 30,000,000

v3.24.3

Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	$ 4,079	$ 11,950
Corporate Bond Securities [Member]
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	1,035	5,908
US Agency And Government Sponsored Securities [Member]
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	1,913	1,852
US Treasury Notes Securities [Member]
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	1,131	$ 3,581
Fair Value, Inputs, Level 1 [Member]
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	1,035
Fair Value, Inputs, Level 1 [Member] | Corporate Bond Securities [Member]
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	1,035
Fair Value, Inputs, Level 1 [Member] | US Agency And Government Sponsored Securities [Member]
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	0
Fair Value, Inputs, Level 1 [Member] | US Treasury Notes Securities [Member]
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	0
Fair Value, Inputs, Level 2 [Member]
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	3,044
Fair Value, Inputs, Level 2 [Member] | Corporate Bond Securities [Member]
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	0
Fair Value, Inputs, Level 2 [Member] | US Agency And Government Sponsored Securities [Member]
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	1,913
Fair Value, Inputs, Level 2 [Member] | US Treasury Notes Securities [Member]
Platform Operator, Crypto Asset [Line Items]
Total Fair Value	$ 1,131

v3.24.3

Basis of Presentation and Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Product Information [Line Items]
Allowance for credit loss	$ 200,000		$ 200,000		$ 200,000
Tax credits receivable	12,929,000		12,929,000		20,714,000
Allowance for tax credit receivable	610,000		610,000		527,000
Aggregate uninsured balance	3,000,000		3,000,000		2,500,000
Investments in marketable securities	$ 4,100,000		$ 4,100,000		$ 12,000,000
Four Customers [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Product Information [Line Items]
Concentration risk, percentage	77.20%	73.10%		79.30%
Four Customers [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]
Product Information [Line Items]
Concentration risk, percentage				55.60%
Three Customers [Member] | Customer Concentration Risk [Member] | Revenue Benchmark [Member]
Product Information [Line Items]
Concentration risk, percentage			60.20%
Three Customers [Member] | Customer Concentration Risk [Member] | Accounts Receivable [Member]
Product Information [Line Items]
Concentration risk, percentage			59.40%
Foreign Exchange Contract [Member]
Product Information [Line Items]
Net liability	$ 200,000		$ 200,000
Foreign Exchange Contract [Member] | Production Services [Member]
Product Information [Line Items]
Realized gain (loss)	$ 35,601	$ (14,890)	$ 86,355	$ (40,294)

v3.24.3

Variable Interest Entity (Details Narrative)	3 Months Ended		9 Months Ended
	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Jul. 31, 2020 Creation
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Net loss	$ (2,121,000)	$ (15,512,000)	$ (15,108,000)	$ (51,812,000)
Variable Interest Entity, Primary Beneficiary [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Net loss	$ 63,552	$ 35,846	$ 132,750	$ 83,179
Stan Lee Universe [Member]
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items]
Number of creations | Creation					100

v3.24.3

Investment in Equity Interest (Details Narrative) - YFE Acquisition [Member] - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2024	Dec. 31, 2023	Dec. 31, 2021
Schedule of Equity Method Investments [Line Items]
Equity method investments, ownership percentage	44.80%	44.80%		28.69%
Equity Method Investments	$ 18.0	$ 18.0
Equity method investments, fair value net, gain (loss)		1.1
Equity method investments, foreign currency impact, gain (loss)	$ 0.8	0.2
Equity method investments, stock price impact, gain (loss)		$ (1.3)
Common Stock [Member]
Schedule of Equity Method Investments [Line Items]
[custom:EquityMethodInvestmentsShares-0]			6,857,132

v3.24.3

Marketable Securities (Details - Investments in marketable securities) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Debt securities, available-for-sale, amortized cost	$ 4,266	$ 12,838
Debt securities, available-for-sale, unrealized loss	(187)	(888)
Available-for-sale marketable securities with a fair value	4,079	11,950
Corporate Bond Securities [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Debt securities, available-for-sale, amortized cost	1,080	6,333
Debt securities, available-for-sale, unrealized loss	(45)	(425)
Available-for-sale marketable securities with a fair value	1,035	5,908
US Agency And Government Sponsored Securities [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Debt securities, available-for-sale, amortized cost	2,000	2,000
Debt securities, available-for-sale, unrealized loss	(87)	(148)
Available-for-sale marketable securities with a fair value	1,913	1,852
US Treasury Notes Securities [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Debt securities, available-for-sale, amortized cost	1,186	3,859
Debt securities, available-for-sale, unrealized loss	(55)	(278)
Available-for-sale marketable securities with a fair value	$ 1,131	3,581
US Treasury Securities [Member]
Debt Securities, Held-to-Maturity, Allowance for Credit Loss [Line Items]
Debt securities, available-for-sale, amortized cost		646
Debt securities, available-for-sale, unrealized loss		(37)
Available-for-sale marketable securities with a fair value		$ 609

v3.24.3

Marketable Securities (Details - Contractual maturities) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Investments, All Other Investments [Abstract]
Due within 1 year	$ 0
Due after 1 year through 5 years	4,079
Total	$ 4,079	$ 11,950

v3.24.3

Marketable Securities (Details Narrative)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024 USD ($) Security	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) Security	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Investments, All Other Investments [Abstract]
Debt securities, available-for-sale, amortized cost	$ 4,266,000		$ 4,266,000		$ 12,838,000
Investments in marketable securities	$ 4,100,000		$ 4,100,000		$ 12,000,000
AFS securities, unrealized loss position | Security	5		5
Unrealized loss position, period			12 months		12 months
Allowance for credit loss	$ 0		$ 0		$ 0
Realized loss	$ 100,000	$ 1,900,000	$ 505,000	$ 4,154,000

v3.24.3

Property and Equipment, Net (Details - Property and equipment) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	$ 2,801	$ 2,728
Less Accumulated Depreciation	(985)	(724)
Foreign Currency Translation Adjustment	(161)	(127)
Property and Equipment, net	1,655	1,877
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	117	117
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	226	219
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	2,208	2,200
Software Development [Member]
Property, Plant and Equipment [Line Items]
Property and Equipment, gross	$ 250	$ 192

v3.24.3

Property and Equipment, net (Details Narrative) - USD ($) $ in Thousands		3 Months Ended			9 Months Ended
	Aug. 02, 2023	Sep. 30, 2024	Sep. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023
Property, Plant and Equipment [Abstract]
Depreciation		$ 100	$ 100		$ 300	$ 300
Impairment charges on property and equipment		$ 0	$ 0	$ 100	0	120
Loss on lease termination	$ 100				$ (0)	$ (232)

v3.24.3

Leased Right-of-Use Assets, net (Details - Leased right-of-use assets) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
[custom:OperatingAndFinanceLeaseRightOfUseAssetBeforeAmortization-0]	$ 14,797	$ 14,797
[custom:OperatingAndFinanceLeaseRightOfUseAssetAccumulatedAmortization-0]	(6,637)	(5,237)
[custom:OperatingAndFinanceLeaseRightOfUseAssetAccumulatedAmortizationForeignCurrencyTranslationAdjustment-0]	(769)	(617)
[custom:OperatingAndFinanceLeaseRightOfUseAsset-0]	7,391	8,943
Office Lease Assets [Member]
Property, Plant and Equipment [Line Items]
[custom:OperatingAndFinanceLeaseRightOfUseAssetBeforeAmortization-0]	9,437	9,437
Equipment Lease Assets [Member]
Property, Plant and Equipment [Line Items]
[custom:OperatingAndFinanceLeaseRightOfUseAssetBeforeAmortization-0]	$ 5,360	$ 5,360

v3.24.3

Leased Right-of-Use Assets, net (Details Narrative) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Aug. 02, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Operating leases, weighted-average lease term		76 months		76 months		83 months
Operating leases, weighted-average discount rate		11.10%		11.10%		11.10%
Operating lease costs		$ 900	$ 400	$ 1,200	$ 1,200
Right-of-use amortization		$ 200	$ 500	1,000	1,600
Loss on lease termination	$ 100			$ (0)	$ (232)
Lyndhurst NJ [Member]
Termination expense	100
Loss on lease termination	$ 200

v3.24.3

Film and Television Costs, net (Details - Activity in film and television costs) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($)
Other Industries [Abstract]
[custom:FilmAndTelevisionCostsNet-1]	$ 1,295
[custom:FilmAndTelevisionCostsNetAdditions]	818
[custom:FilmAndTelevisionCostsNetDisposals]	(73)
[custom:FilmAndTelevisionCostsNetAmortizationExpensesAndImpairmentLosses]	(176)
[custom:FilmAndTelevisionCostsNetForeignCurrencyTranslation]	(6)
[custom:FilmAndTelevisionCostsNet-2]	$ 1,858

v3.24.3

Film and Television Costs, net (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Other Industries [Abstract]
Film amortization expense	$ 61,672	$ 100,000	$ 200,000	$ 500,000
Film and television impairment write-downs	$ 0	$ 6,200,000	$ 0	$ 6,200,000

v3.24.3

Intangible Assets, net - Components of Intangible Assets, net (Details - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Intangible Assets, Gross (Excluding Goodwill)	$ 28,293	$ 28,098
Finite-Lived Intangible Assets, Accumulated Amortization	(5,528)	(3,794)
[custom:IntangibleAssetsForeignCurrencyTranslationAdjustment-0]	(1,639)	(1,311)
Intangible Assets, Net (Excluding Goodwill)	$ 21,126	22,993
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite lived intangible assets	5 years 8 months 12 days
Intangible Assets, Gross (Excluding Goodwill)	$ 17,390	17,325
Digital Networks [Member]
Finite-Lived Intangible Assets [Line Items]
Finite lived intangible assets	13 years 6 months
Intangible Assets, Gross (Excluding Goodwill)	$ 803	803
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Finite lived intangible assets	66 years 8 months 12 days
Intangible Assets, Gross (Excluding Goodwill)	$ 10,100	$ 9,970

v3.24.3

Intangible Assets, net - Expected Future Intangible Asset Amortization (Details) $ in Thousands	Sep. 30, 2024 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2024 (remainder of year)	$ 516
2025	2,072
2026	2,062
2027	2,062
2028	2,062
Thereafter	6,792
Total	$ 15,566

v3.24.3

Intangible Assets, net (Details Narrative) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 500	$ 500		$ 1,500	$ 1,600
Impairment charges	0	0	$ 100	0	120
Impairment of intangible assets					4,000
Impairment of intangible assets, definite lived					2,800
Accumulated depreciation	600			600
Impairment of intangible assets, finite lived	0	$ 0		0	4,023
Intangible assets gross	28,293			28,293		$ 28,098
Wow [Member] | Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets gross	5,600			5,600
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets gross	$ 10,100			$ 10,100		$ 9,970
Trade Names [Member] | Frederator [Member]
Finite-Lived Intangible Assets [Line Items]
Impairment of intangible assets, finite lived					$ 1,300

v3.24.3

Deferred Revenue (Details Narrative) - USD ($) $ in Millions	Sep. 30, 2024	Dec. 31, 2023
Revenue from Contract with Customer [Abstract]
Aggregate short term and long term deferred revenue	$ 8.4	$ 6.6

v3.24.3

Margin Loan (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Short-Term Debt [Line Items]
Line of credit	$ 1,069,000		$ 1,069,000		$ 782,000
Proceeds from lines of credit			6,492,000	$ 11,161,000
Repayments of lines of credit			13,168,000	9,451,000
Margin Loan [Member]
Short-Term Debt [Line Items]
Line of credit	$ 1,100,000		1,100,000		$ 800,000
Proceeds from lines of credit			9,100,000
Repayments of lines of credit			$ 8,800,000
Debt instrument on variable rate			0.60%
Weighted average interest rates	0.46%		0.46%		0.98%
Interest expense	$ 11,070	$ 200,000	$ 42,131	$ 1,500,000
Margin Loan [Member] | Median [Member]
Short-Term Debt [Line Items]
Line of credit	$ 1,000,000		$ 1,000,000		$ 27,400,000

v3.24.3

Bank Indebtedness and Production Facilities (Details Narrative) $ in Millions			1 Months Ended	9 Months Ended
	Aug. 30, 2024 USD ($)	Aug. 30, 2024 CAD ($)	Mar. 31, 2024 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2024 CAD ($)	Sep. 30, 2024 CAD ($)	Mar. 31, 2024 CAD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2023 CAD ($)
Line of Credit Facility [Line Items]
Bank indebtedness, current				$ 592,000				$ 2,905,000
Production facilities net, current				8,739,000				15,336,000
Revolving Demand Facility [Member]
Line of Credit Facility [Line Items]
Bank indebtedness, current				600,000		$ 0.8		2,900,000	$ 3.8
Line of credit facility, maximum borrowing capacity			$ 700,000				$ 1.0
Debt instrument on variable rate			2.00%
Letter of Credit [Member]
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity			$ 200,000
Debt instrument, term			1 year
Debt instrument on variable rate			2.00%
Treasury Risk Management Facility [Member]
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity			$ 400,000				$ 0.5
Line of credit								0
Production Facilities [Member]
Line of Credit Facility [Line Items]
Production facilities net, current				8,700,000		11.8		15,300,000	20.3
Production facilities interest				$ 1,300,000		1.7		$ 1,400,000	$ 1.9
Production Facilities [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Debt instrument on variable rate				1.00%	1.00%
Production Facilities [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Debt instrument on variable rate				1.25%	1.25%
Equipment Lease Line [Member]
Line of Credit Facility [Line Items]
Line of credit				$ 600,000		$ 0.8
Payments to acquire equipment on lease	$ 100,000	$ 0.1		$ 300,000	$ 0.4
Equipment Lease Line [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Line of credit facility, interest rate				4.49%	4.49%
Lessee finance lease				1 month		1 month
Equipment Lease Line [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Line of credit facility, interest rate				7.18%	7.18%
Lessee finance lease				2 months		2 months
Equipment Lease Facility [Member]
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity				$ 1,000,000		$ 1.4
Line of credit				$ 400,000		$ 0.5
Equipment Lease Facility [Member] | Minimum [Member]
Line of Credit Facility [Line Items]
Line of credit facility, interest rate				7.52%	7.52%
Lessee finance lease				14 months		14 months
Equipment Lease Facility [Member] | Maximum [Member]
Line of Credit Facility [Line Items]
Line of credit facility, interest rate				8.20%	8.20%
Lessee finance lease				23 months		23 months
Revolving Demand Facility And Equipment Lease Line [Member]
Line of Credit Facility [Line Items]
Line of credit				$ 1,200,000		$ 1.6

v3.24.3

Stockholders’ Equity (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Class of Stock [Line Items]
Common stock shares authorized	190,000,000		190,000,000
Common stock shares outstanding	39,555,161		35,247,744
Preferred stock shares authorized	10,000,000		10,000,000
Preferred stock par value	$ 0.001		$ 0.001
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock shares authorized	6,000		6,000
Preferred stock par value	$ 0.001		$ 0.001
Preferred stock shares outstanding	0		0
Series B Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock shares authorized	1		1
Preferred stock par value	$ 0.001		$ 0.001
Preferred stock shares outstanding	1		1
Series C Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock shares authorized	50,000		50,000
Preferred stock par value	$ 0.001		$ 0.001
Preferred stock shares outstanding	0		0
Treasury Stock, Common [Member]
Class of Stock [Line Items]
Shares of common stock withheld to cover taxes	217	8,306
Cost of common stock withheld to cover taxes	$ 252	$ 24,700

v3.24.3

Stock Options (Details - Option pricing model assumptions) - Share-Based Payment Arrangement, Option [Member]	9 Months Ended
	Sep. 30, 2024 $ / shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Exercise price	$ 0.95
Dividend yield	0.00%
Volatility	92.10%
Risk-free interest rate	4.30%
Expected life	5 years

v3.24.3

Stock Options (Details - Option activity) - Share-Based Payment Arrangement, Option [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of options outstanding, beginning balance	1,183,908
Weighted average remaining contractual life	5 years 14 days	5 years 6 months 21 days
Weighted average exercise price per share, beginning balance	$ 14.96
Number of options, granted	35,000
Weighted average remaining contractual life, options granted	4 years 8 months 19 days
Weighted average exercise price per share, granted	$ 0.95
Number of options, exercised	0
Weighted average exercise price per share, exercised	$ 0
Number of options, forfeited/cancelled	(259,468)
Weighted average exercise price per share, forfeited/cancelled	$ 21.08
Number of options, expired	(5,800)
Weighted average exercise price per share, expired	$ 19.90
Number of options outstanding, ending balance	953,640	1,183,908
Weighted average exercise price per share, ending balance	$ 12.75	$ 14.96
Number of options, unvested	102,499
Weighted- average remaining contractual life, unvested	4 years 4 months 6 days
Weighted average exercise price per share, unvested	$ 4.23
Number of options, vested and exercisable	851,141
Weighted- average remaining contractual life, vested and exercisable	5 years 1 month 13 days
Weighted average exercise price per share, vested and exercisable	$ 13.77

v3.24.3

Stock Options (Details Narrative) - Share-Based Payment Arrangement, Option [Member] - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	May 23, 2024	Sep. 01, 2020
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Options granted			35,000	0
Options to purchase common stock			35,000
Fair market value			$ 24,210
Share-based compensation expense	$ 23,804	$ 200,000	100,000	$ 900,000
Unrecognized share-based compensation expense	48,503		48,503
Aggregated intrinsic value	$ 0		$ 0
Employees [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares vested				55,816
Number of value vested				$ 100,000
Plan 2020 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares available for issuance					5,000,000	3,000,000
Plan 2015 [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares available for issuance					216,767
Outstanding shares granted	12,000		12,000

v3.24.3

Restricted Stock Units (Details - RSU activity) - Restricted Stock Units (RSUs) [Member]	9 Months Ended
	Sep. 30, 2024 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
RSUs Outstanding shares, beginning balance | shares	982,625
Weighted- average grant date fair value per share, beginning balance | $ / shares	$ 13.42
RSUs Granted | shares	286,324
Weighted- average grant date fair value per share, granted | $ / shares	$ 1.12
RSUs Vested | shares	(291,449)
Weighted- average grant date fair value per share, vested | $ / shares	$ 1.42
RSUs Forfeited | shares	0
Weighted- average grant date fair value per share, forfeited | $ / shares	$ 0
RSUs Outstanding shares, ending balance | shares	977,500
Weighted- average grant date fair value per share, ending balance | $ / shares	$ 13.40

v3.24.3

Restricted Stock Units (Details Narrative) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Number of shares issued			307,417
Restricted Stock Units (RSUs) [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
RSU's granted			286,324
Share-based compensation expense	$ 0.1	$ 0.3	$ 0.4	$ 1.2
Unvested share-based compensation	$ 0.1		0.1
Fair value shares vested			$ 0.4
Restricted Stock Units (RSUs) [Member] | Boards Members And Consultants [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
RSU's granted			286,324	76,508
RSU's fair market value			$ 0.3	$ 0.2

v3.24.3

Warrants (Details - Warrant activity) - Warrant [Member] - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants outstanding at beginning balance	6,852,952
Weighted-average remaining contractual life	3 years 5 months 12 days	4 years 1 month 28 days
Weighted-average exercise price per share at beginning balance	$ 7.14
Warrants outstanding, granted	100,000
Weighted-average remaining contractual life, granted	4 years 6 months 21 days
Weighted-average exercise price per share, granted	$ 1.00
Warrants outstanding, exercised	0
Warrants outstanding, expired	(26,000)
Weighted-average exercise price per share, expired	$ 26.88
Warrants outstanding, forfeitures	0
Warrants outstanding at ending balance	6,926,952	6,852,952
Weighted-average exercise price per share at ending balance	$ 6.98	$ 7.14
Number of warrant exercisable	6,926,952	6,852,952
Weighted-average remaining contractual life, exercisable	3 years 5 months 12 days	4 years 1 month 28 days
Weighted-average exercise price per share, exercisable	$ 6.98	$ 7.14

v3.24.3

Warrants (Details - Warrant assumptions) - Warrant [Member]	9 Months Ended
	Sep. 30, 2024 $ / shares
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Market price	$ 0.87
Exercise Price	$ 2.10
Dividend yield	0.00%
Volatility	61.00%
Risk-free interest rate	3.98%
Expected life of warrants	5 months 12 days

v3.24.3

Warrants (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2024	Apr. 23, 2024	Dec. 31, 2023
Warrant Repricing Option [Member] | Registered Direct Offering [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants outstanding		4,784,909	4,784,909
Warrant Repricing Option [Member] | Registered Direct Offering [Member] | Maximum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant exercise price		$ 2.50	$ 2.50
Warrant Repricing Option [Member] | Registered Direct Offering [Member] | Minimum [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant exercise price		$ 1.00	1.00
Warrant Before Repricing Option [Member] | Registered Direct Offering [Member] | Weighted Average [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant exercise price			8.19
Warrant After Repricing Option [Member] | Registered Direct Offering [Member] | Weighted Average [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrant exercise price			$ 7.14
Warrant [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]
Warrants issued	89,286
Warrants revalued amount	$ 291
Increase decrease warrant liability	$ 100,000
Warrants outstanding	6,926,952		6,852,952
Warrant exercise price	$ 6.98		$ 7.14

v3.24.3

Supplemental Financial Statement Information (Details - Other Income Expense) - USD ($)		3 Months Ended		9 Months Ended
	Aug. 01, 2023	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Jun. 30, 2023
Short-Term Debt [Line Items]
Interest Expense (a)		$ (176,000)	$ (672,000)	$ (625,000)	$ (2,777,000)
Warrant Incentive Expense (b)		0	0	0	(12,664,000)
Gain on revaluation of warrants		3,000	2,797,000	63,000	8,999,000
Gain (Loss) on Revaluation of Equity Investment in YFE (d)		(461,000)	(2,325,000)	(1,342,000)	1,102,000
Realized Loss on Marketable Securities Investments (e)		(148,000)	(1,897,000)	(505,000)	(4,154,000)
Gain (Loss) on Foreign Exchange (f)		999,000	(637,000)	19,000	(282,000)
Interest Income (g)		40,000	95,000	135,000	563,000
Loss on Early Lease Termination (h)		0	(232,000)	0	(232,000)
Finance Lease Interest Expense (i)		(20,000)	(48,000)	(74,000)	(152,000)
Other (j)		189,000	11,000	723,000	37,000
Other Income (Expense), net		602,000	(2,236,000)	(981,000)	(6,783,000)
Warrant incentive expense		(0)	(0)	0	12,664,000
Interest income			100,000		400,000
Write-down of assets and liabilities	$ 100,000
Gain loss termination lease	$ 100,000
Warrant [Member] | Exchange Warrants [Member]
Short-Term Debt [Line Items]
Gain on revaluation of warrants			2,700,000		8,800,000
Warrant incentive expense						$ 12,700,000
YFE Acquisition [Member]
Short-Term Debt [Line Items]
Gain on foreign exchange		800,000		200,000
Bank Indebtedness [Member]
Short-Term Debt [Line Items]
Interest expense		200,000		600,000
Margin Loan [Member]
Short-Term Debt [Line Items]
Interest expense		$ 11,070	200,000	$ 42,131	1,500,000
Production Facilities Loans And Bank Indebtedness [Member]
Short-Term Debt [Line Items]
Interest expense			$ 500,000		$ 1,300,000

v3.24.3

Income Taxes (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income tax benefit	$ 0	$ 0	$ 0	$ 934,000
Deferred tax liability, net	$ 0	$ 0	$ 0	$ 0

v3.24.3

Commitment and Contingencies (Details - Minimum lease commitments) $ in Thousands	Sep. 30, 2024 USD ($)
Operating Leases
2024	$ 525
2025	1,640
2026	1,645
2027	1,415
2028	1,071
Thereafter	3,386
Total	9,682
Finance Leases
2024	756
2025	278
2026	54
2027	0
2028	0
Thereafter	0
Total	1,088
Contractual obligation
2024	4,976
2025	15,143
2026	2,690
2027	1,415
2028	1,071
Thereafter	3,386
Total	28,681
Employment Contracts [Member]
Finance Leases
2024	1,014
2025	1,646
2026	222
2027	0
2028	0
Thereafter	0
Total	2,882
Consulting Contracts [Member]
Finance Leases
2024	1,019
2025	2,840
2026	769
2027	0
2028	0
Thereafter	0
Total	4,628
Debt [Member]
Finance Leases
2024	1,662
2025	8,739
2026	0
2027	0
2028	0
Thereafter	0
Total	$ 10,401

v3.24.3

Commitments and Contingencies (Details Narrative) $ in Millions	9 Months Ended
	Sep. 30, 2024 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Operating lease payments	$ 2.7
Operating lease liabilities	$ 7.0

v3.24.3

Related Party Transactions (Details Narrative) - Related Party [Member] € in Millions					3 Months Ended		9 Months Ended
	Feb. 27, 2023 USD ($)	Aug. 25, 2022	Jul. 19, 2022 USD ($)	Dec. 07, 2020 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Dec. 31, 2022 Office	Jul. 19, 2022 EUR (€)
Related Party Transaction [Line Items]
Accounts receivable from related Party					$ 1,471,000		$ 1,471,000		$ 1,435,000
Shareholder Loan Agreement [Member] | YFE [Member]
Related Party Transaction [Line Items]
Interest payable current			$ 1,500,000								€ 1.3
Fixed annualized rate			5.00%
Successive interest periods			3 months
Accounts receivable from related Party					1,500,000		1,500,000		$ 1,400,000
Sublease Agreement [Member] | Beverly Hills C A [Member]
Related Party Transaction [Line Items]
Number of related party lease office space | Office										1
Monthly sublease payments					595	$ 595	595	$ 595
Consulting Agreement [Member]
Related Party Transaction [Line Items]
Initial fee					6,545
Monthly fee					595
Chief Executive Officer [Member] | Employment Agreements [Member]
Related Party Transaction [Line Items]
Executive producer fees				$ 12,500			0	300,000
Quarterly bonus					$ 55,000	$ 55,000
Royalties percentage		50.00%
Earned royalties							0	0
Creative producer fees	$ 100,000							200,000
Creative producer paid							100,000
Chief Executive Officer [Member] | Merchandising And Licensing Agreement [Member]
Related Party Transaction [Line Items]
Earned royalties							$ 0	$ 0

v3.24.3

Segment Reporting (Details- Revenue and net earnings) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Segment Reporting Information [Line Items]
Total revenues	$ 8,708	$ 10,072	$ 23,170	$ 35,276
Total net loss attributable to kartoon studio, inc.	(2,057)	(15,476)	(14,975)	(51,729)
Content Production Distribution [Member]
Segment Reporting Information [Line Items]
Total revenues	7,283	9,075	19,993	32,456
Total net loss attributable to kartoon studio, inc.	(2,395)	(14,947)	(14,830)	(50,113)
Media Advisory And Advertising Services [Member]
Segment Reporting Information [Line Items]
Total revenues	1,425	997	3,177	2,820
Total net loss attributable to kartoon studio, inc.	$ 338	$ (529)	$ (145)	$ (1,616)

v3.24.3

Segment Reporting (Details- Disaggregated revenue) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenues	$ 8,708	$ 10,072	$ 23,170	$ 35,276
UNITED STATES
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenues	5,005	5,536	12,490	21,537
CANADA
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenues	1,615	2,093	3,563	7,496
UNITED KINGDOM
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenues	1,909	2,381	6,708	5,972
Other Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Total revenues	$ 179	$ 62	$ 409	$ 271

v3.24.3

Segment Reporting (Details Narrative)	9 Months Ended
	Sep. 30, 2024 Segment
Segment Reporting [Abstract]
Operating segments	2

v3.24.3

Subsequent Events (Details Narrative) - USD ($)		3 Months Ended		9 Months Ended
	Oct. 02, 2024	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Subsequent Event [Line Items]
Incurred realized loss		$ (100,000)	$ (1,900,000)	$ (505,000)	$ (4,154,000)
Subsequent Event [Member]
Subsequent Event [Line Items]
Sold marketable securities	$ 1,600,000
Incurred realized loss	$ 100,000

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