TOON Kartoon Studios Inc

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Organization and Nature of Business

Kartoon Studios, Inc. (formerly known as Genius Brands International, Inc.; “we,” “us,” “our,” or 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. These streaming services are available on Apple TV, Apple iOS, Android TV, Android mobile, Amazon Prime, Amazon Fire, Tubi, Roku, Comcast, Cox, Dish/Sling, Xumo, Pluto, Samsung Smart TVs, LG Smart TVs, as well as YouTube, among other platforms. The Company's in-house owned and produced animated shows include Stan Lee’s Superhero Kindergarten starring Arnold Schwarzenegger, Llama Llama starring Jennifer Garner, 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, HBO Max, Paramount+, Nickelodeon, and satellite, cable and terrestrial broadcasters around the world.

Through the Company’s investments in Germany’s Your Family Entertainment (“YFE”), a publicly traded company on the Frankfurt Exchange (RTV-Frankfurt), it has gained access to one of the largest animation catalogues in Europe with over 50 titles consisting of over 1,600 episodes, and a global distribution network which currently covers over 60 territories worldwide.

Through the ownership of Wow, the Company has 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”) and its Channel Frederator Network, the largest animation focused multi-channel network on YouTube with over 2,500 channels.

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”).

The Company also owns Beacon Media Group (“Beacon”), the largest media buying service for children in North America. Beacon represents over 30 major toy companies, including Playmobile, Bandai Toys, Bazooka and Moose Toys.

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

The Company and its affiliates provide world class animation production studios a catalogue representing thousands of hours of premium global content for children, a broadcast system for delivering that content and an in-house consumer products licensing infrastructure to fully exploit the content.

On June 23, 2023, the Company was renamed Kartoon Studios, Inc. On June 26, 2023, the Company transferred its listing to NYSE American LLC (“NYSE American”). In connection with listing on NYSE American, the Company

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Recent Developments

Common Stock

On February 6, 2023, the Company’s board of directors approved a 1-for-10 reverse stock split of the Company’s outstanding shares of common stock. The reverse stock split was effected on February 10, 2023 at 5:00 p.m. Eastern time. At the effective time, every 10 issued and outstanding shares of the Company’s common stock were converted into one share of common stock. Any fractional shares of common stock resulting from the reverse stock split were rounded up to the nearest whole post-split share and no shareholders received cash in lieu of fractional shares. The par value of each share of common stock remained unchanged. The reverse stock split proportionately reduced the number of shares of authorized common stock from 400,000,000 to 40,000,000 shares. The reverse stock split also applied to common stock issuable upon the exercise of the Company's outstanding warrants and stock options. The reverse stock split did not affect the authorized preferred stock of 10,000,000 shares. Unless noted, all references to shares of common stock and per share amounts contained in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect a 1-for-10 reverse stock split.

Exercise of 2021 Warrants and Issuance of New Warrants

On June 26, 2023, the Company entered into warrant exercise inducement offer letters (the “Letter Agreements”) with certain existing institutional and accredited investors pursuant to which such investors agreed to exercise for cash certain warrants issued by the Company in January 2021 (the “2021 Warrants”) to purchase 2,311,550 shares of common stock (the “Exercise”). To induce the Exercise by holders of the 2021 Warrants, the Company also amended the exercise price of the 2021 Warrants from $23.70 per share (as adjusted pursuant to a 1-for-10 reverse stock split of our outstanding shares of common stock effected on February 10, 2023) to $2.50 per share pursuant to the terms of the 2021 Warrants. In consideration for the Exercise, the exercising holders received warrants to purchase up to 4,623,100 shares of common stock, and The Special Equities Group, LLC, a division of Dawson James Securities, which acted as the warrant solicitation agent for the Exercise, received a warrant to purchase up to 161,809 shares of common stock (collectively, the “Warrants”). Prior to closing of the Exercise, the Company had 32,755,748 shares of common stock outstanding. Following the repricing of the 2021 Warrants, certain 2021 Warrants were exercised for an aggregate of 2,311,550 shares, resulting in 35,067,298 outstanding shares. Therefore, the issuance of 4,784,909 shares of common stock upon exercise of the Warrants would have constituted an excess of 19.99% of the outstanding shares of common stock of the Company (determined as of the date of, and without regard for, the issuance of the Warrants and the shares issued upon exercise of the repriced 2021 Warrants). The Warrants will be exercisable at any time at a price per share of $2.50 upon approval by the Company’s shareholders of (a) a proposal to approve an amendment to the articles of incorporation to increase the authorized shares of common stock from 40,000,000 shares to 190,000,000 shares with a corresponding increase in the total number of authorized shares of capital stock of the Company from 50,000,000 shares to 200,000,000 shares (the “Share Increase Proposal”) and (b) approve, in accordance with 713(A) of the NYSE American Company Guide, the issuance of more than 19.99% of the Company’s outstanding common stock upon the exercise of the Warrants (the “Warrant Exercise Proposal” and together with the Share Increase Proposal, the “Proposals”). The Company is holding its annual shareholder meeting on August 25, 2023, at which the Company will seek the shareholders approval of the Proposals. The Warrants have a term of exercise of five years from the date of Shareholder Approvals. Pursuant to the Letter Agreements, the Company filed a registration statement on Form S-3 covering the resale of the shares of common stock issuable upon the exercise of the Warrants on July 26, 2023, which registration statement is currently pending with the Securities and Exchange Commission (“SEC”).

Liquidity

As of June 30, 2023, the Company had cash and cash equivalents of $4.8 million, which decreased by $2.6 million as compared to December 31, 2022. The decrease was primarily due to cash used in financing activities of $27.9 million, primarily due to repayment of the margin loan, net proceeds, offset by the cash received from the warrant exchange and $10.6 million used in operating activities. The cash used was offset by cash provided by sales and maturities of marketable securities of $34.2 million.

As of June 30, 2023, the Company held available-for-sale marketable securities with a fair value of $49.5 million, which decreased by $34.2 million as compared to December 31, 2022 due to sales and maturities during the six months

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ended June 30, 2023. The available-for-sale securities consist principally of corporate and government debt securities and are also available as a source of liquidity.

The Company borrowed an additional $8.6 million from its investment margin account during the six months ended June 30, 2023 and repaid $41.8 million primarily with cash received from sales and maturities of marketable securities. During the six months ended June 30, 2023, the borrowed amounts were primarily used for operational costs. The interest rates for the borrowings fluctuate based on the Federal Funds Rate plus 0.65%. The weighted average interest rates were 0.67% and 1.66% on average margin loan balances of $44.2 million and $27.1 million as of June 30, 2023 and December 31, 2022, respectively. The Company incurred interest expense on the loan of $0.6 million and $0.2 million during the three months ended June 30, 2023 and June 30, 2022, respectively. The Company incurred interest expense on the loan of $1.3 million and $0.2 million during the six months ended June 30, 2023 and June 30, 2022, 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. As of June 30, 2023 and December 31, 2022, the Company’s margin loan balances were $27.6 million and $60.8 million, respectively.

The Company is subject to financial and customary affirmative and negative non-financial covenants on the revolving demand facility, revolving equipment lease line and treasury risk management facility that have an aggregate total outstanding balance of $6.7 million USD ($8.9 million CAD). The Company was in technical violation of two financial covenants requiring a minimum fixed charge ratio and a maximum senior funded debt to EBITDA ratio as of June 30, 2023. 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 treasury risk management facility can be called at anytime by the lender as per the original terms of the facilities. The risk of the lender demanding repayment can be deemed greater due to the breach of covenants, however, at the time the financial statements were available for issuance, the lender has not provided the Company with a formal notification of a covenant breach.

Historically, the Company has incurred net losses. For the three months ended June 30, 2023 and June 30, 2022, the Company reported net losses of $15.2 million and $13.3 million, respectively. For the six months ended June 30, 2023 and June 30, 2022, the Company reported net losses of $40.0 million and $17.9 million, respectively. The Company reported net cash used in operating activities of $10.6 million and $17.5 million for the six months ended June 30, 2023 and June 30, 2022, respectively. As of June 30, 2023, the Company had an accumulated deficit of $681.4 million and total stockholders’ equity of $87.5 million. As of June 30, 2023, the Company had current assets of $91.6 million, including cash and cash equivalents of $4.8 million and marketable securities of $49.5 million, and current liabilities of $77.2 million. The Company had working capital of $14.4 million as of June 30, 2023, compared to working capital of $28.6 million as of December 31, 2022.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”).

The accompanying condensed consolidated financial statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to state fairly the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Loss, Statements of Stockholders’ Equity, and Statements of Cash Flows for all periods presented.

Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.

Out-of-Period Adjustment

The Company identified an error in the Company’s condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2023 and balance sheet for the period ended March 31, 2023. The Company’s deferred tax liability, and net loss for the period ended March 31, 2023, are overstated by $705,000. In accordance with Staff Accounting Bulletin (“SAB”) No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” The Company believes

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that the impact of the error was not material to the financial statements for the three months ended March 31, 2023, based on an evaluation of both quantitative and qualitative factors. As a result, the Company determined that correcting the prior period financial statements for such an immaterial error would not require the Form 10-Q for the three months ended March 31, 2023 to be amended. The Company has elected to record an out-of-period adjustment and record the amount in the condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2023, the condensed consolidated statement of cash flow for the six months ended June 30, 2023 and the condensed consolidated statements of stockholders’ equity for the three months ended June 30, 2023. The Company does not believe recording the amount in the condensed consolidated statement of operations and comprehensive loss for the three months ended June 30, 2023 has a material impact on the Company’s results of operations.

Segments

The Company determines its operating segments on the same basis that it assesses performance and makes operating decisions. The Company principally operates in two distinct business segments: the Content Production & Distribution Segment, which produces and distributes children’s content, and the Media Advisory & Advertising Services Segment, which provides media and advertising services. These segments are reflective of how the Company’s Chief Operating Decision Maker (“CODM”) reviews operating results for the purposes of allocating resources and assessing performance. The Company has identified its Chief Executive Officer as the CODM. The segments are organized around the products and services provided to customers and represent the Company’s reportable segments.

The accounting policies for each segment are the same as for the Company as a whole. Refer to Note 21 for additional information.

Principles of Consolidation and Basis of Presentation

The Company’s condensed consolidated financial statements include the accounts of Kartoon Studios, Inc. and its wholly-owned subsidiaries. The Company consolidates all majority-owned subsidiaries and variable interest entities where the Company has been determined to be the primary beneficiary. The interests in a variable interest entity which the Company does not control are recorded as non-controlling interests. Non-consolidated investments are accounted for using the equity method or the fair value option and recorded at fair value with changes recognized within Other Income (Expense), Net on the condensed consolidated statements of operations and comprehensive income (loss). All significant intercompany accounts and transactions have been eliminated upon consolidation.

Business Combinations

The Company accounts for transactions that are classified as business combinations in accordance with the Financial Accounting Standards Boards’ (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). Once a business is acquired, the Company allocates the fair value of the purchase consideration to the tangible assets, liabilities, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. As required, preliminary fair values are determined upon acquisition, with the final determination of the fair values being completed within the one-year measurement period from the date of acquisition. The valuation of acquired assets and assumed liabilities requires significant judgment and estimates, especially with respect to intangible assets. The valuation of intangible assets requires that the Company use valuation techniques such as the income approach. The income approach includes the use of a discounted cash flow model, which includes discounted cash flow scenarios and requires significant estimates such as future expected revenue, expenses, capital expenditures and other costs, and discount rates. The Company estimates the fair value based upon assumptions that management believes to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. Acquisition-related expenses and any related restructuring costs are recognized separately from the business combination and are expensed as incurred.

Variable Interest Entities

The Company holds an interest in Stan Lee University, LLC (“SLU”), an entity that is considered a variable interest entity (“VIE”). The variable interest relates to 50% ownership in the entity that is comprised of the Stan Lee Assets

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and that requires additional financial support from the Company to continue operations. The Company is considered the primary beneficiary and is required to consolidate the VIE.

In evaluating whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and the Company’s decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important.

In determining whether the Company has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, the Company evaluates all of its economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s design, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of the Company’s interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have the potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of the Company’s economic interests is a matter that requires the exercise of professional judgment. The Company continuously assesses whether it is the primary beneficiary of a variable interest entity as changes to existing relationships or future transactions may result in the Company consolidating its collaborators or partners.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Foreign Currency

The Company considers the U.S. dollar (“USD”) to be its functional currency for its United States and certain Canadian based operations. The Canadian dollar (“CAD”) is the functional currency of Wow, a wholly-owned subsidiary of the Company. Accordingly, the financial information is translated from CAD to USD for inclusion in the Company’s condensed consolidated financial statements. Revenue and expenses are translated at average exchange rates prevailing during the period, and assets and liabilities are translated at exchange rates in effect at the balance sheet date. Resulting translation adjustments are included as a component of Accumulated Other Comprehensive Income (Loss), net in stockholders’ equity.

Foreign exchange transaction gains and losses are included in Other Income (Expense), Net on the condensed consolidated statements of operations.

Foreign Currency Forward Contracts

The Company’s wholly-owned subsidiary, Wow, is exposed to fluctuations in various foreign currencies against its functional currency, the Canadian dollar. Wow uses foreign currency derivatives, specifically foreign currency forward contracts (“FX forwards”), to manage its exposure to fluctuations in the CAD-USD exchange rates. FX forwards involve fixing the foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date. The FX forwards are typically settled in CAD for their fair value at or close to their settlement date. The Company does not currently designate any of the FX forwards under hedge accounting and therefore reflects changes in fair value as unrealized gains or losses immediately in earnings as part of the revenue generated from the transactions hedged. The Company does not hold or use these instruments for speculative or trading purposes.

Per FASB ASC 815-10-45, Derivatives and Hedging, the Company has elected an accounting policy to offset the fair value amounts recognized for eligible forward contract derivative instruments. Therefore, the Company presents the asset or liability position of the FX forwards that are with the same counterparty net as either an asset or liability in its condensed consolidated balance sheets.

As of June 30, 2023, the gross amounts of FX forwards in an asset and liability position subject to a master netting arrangement were $17.7 million and $17.7 million, respectively, resulting in an asset recorded within Prepaid Expenses and Other Assets on the condensed consolidated balance sheet. The change in fair value of $0.1 million and $0.2 million for the

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three and six months ended June 30, 2023, respectively, was recorded as an unrealized gain within Production Services Revenue on the condensed consolidated statement of operations. The Company did not hold FX forwards prior to the Wow Acquisition.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments with initial maturities of three months or less to be cash equivalents. As of June 30, 2023 and December 31, 2022, the Company had cash and cash equivalents of $4.8 million and $7.4 million, respectively, that at times could exceed FDIC or CDIC limits.

Allowance for Doubtful Accounts

Accounts receivables are presented on the condensed consolidated balance sheets, net of estimated uncollectible amounts. The carrying amounts of trade accounts receivable and unbilled accounts receivable represent the maximum credit risk exposure of these assets. On a quarterly basis, in accordance with FASB ASC 326, Measurement of Credit Losses on Financial Instruments (“ASC 326”), the Company evaluates the collectability of outstanding accounts receivable balances to determine an allowance for doubtful accounts that reflects its best estimate of the lifetime expected credit losses. The allowance for credit loss is based on an assessment of past events, current economic conditions, and forecasts of future events. Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful. As of June 30, 2023 and December 31, 2022, the Company recorded an allowance for doubtful accounts of $112,250 and $65,421, respectively.

The Company limits its exposure to this credit risk through a credit approval process and credit monitoring procedures. In addition, Wow’s contracts with customers usually require upfront and milestone payments throughout the production process. The Company’s customer base is mainly comprised of major Canadian, American, and worldwide studios, distributors, broadcasters, toy companies and AVOD and SVOD platforms that have been customers for several years.

Tax Credits Receivable

The Canadian federal government and certain provincial governments in Canada provide programs that are designed to assist film and television production in the form of refundable tax credits or other incentives.

Estimated amounts receivable in respect of refundable tax credits are recorded as an offset to the related production operating cost, or to investment in film and television costs when the conditions for eligibility of production assistance based on the government’s criteria are met, the qualifying expenditures are made and there is reasonable assurance of realization. Determination of when and if the conditions of eligibility have been met is based on management’s judgment, and the amount recognized is based on management’s estimates of qualifying expenditures. The ultimate collection of previously recorded estimates is subject to ordinary course audits from the CRA and provincial agencies. Changes in administrative policies by the CRA or subsequent review of eligibility documentation may impact the collectability of these estimates. The Company continuously reviews the results of these audits to determine if any circumstances arise that in management’s judgment would result in a previously recognized amount to be considered no longer collectible.

The Company classifies the tax credits receivable as current based on their normal operating cycle. Government assistance, in the form of refundable tax credits, is relied upon as a key component of production financing. These amounts are claimed from the CRA through the submission of income tax returns and can take up to 18 to 24 months from the date of the first tax credit dollar being earned to being received. As this financing is fundamental to the Company’s ability to produce animated productions and generate revenue in the normal course of business, the normal operating cycle for such assets is considered to be a 12 to 24-month period, or the time it takes for the CRA to assess and refund the tax credits earned.

As of June 30, 2023 and December 31, 2022, $25.1 million and $26.3 million in current tax credit receivables related to Wow’s film and television productions were recorded, net of $0.4 million and $0.2 million recorded as an allowance for doubtful accounts, respectively.

Marketable Debt Securities

The Company purchases high quality, investment grade securities from diverse issuers. Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet

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date. Currently, the Company classifies its investments in marketable securities as available-for-sale (“AFS”) and records these investments at fair value. The securities are available to support current operations and, accordingly, the Company classifies the investments as current assets without regard to their contractual maturity.

Unrealized gains or losses on available-for-sale securities for which the Company expects to fully recover the amortized cost basis are recognized in Accumulated Other Comprehensive Income (Loss), a component of stockholders’ equity. Gains and losses as a result of sales of securities are reclassified from previously unrealized gains and losses on AFS securities in Accumulated Other Comprehensive Income (Loss) to Other Income (Expense), Net, in the condensed consolidated statements of operations.

On a quarterly basis, the Company reviews its AFS securities to assess declines in fair value for credit losses. For each AFS security with an amortized cost that exceeds its fair value, the Company first determines if it intends to sell or is more-likely-than-not required to sell the debt security before the expected recovery of its amortized cost. If it intends to sell or will more-likely-than-not be required to sell the security, the Company recognizes the impairment as a credit loss in the condensed consolidated statements of operations by writing down the security’s amortized cost to its fair value. For AFS securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss. The portion of the decline in fair value that is due to factors other than a credit loss is recognized in Accumulated Other Comprehensive Income (Loss) as an unrealized loss.

The Company reports accrued interest receivable separately from the AFS securities and has elected not to measure an allowance for credit losses for accrued interest receivables. Uncollectible accrued interest is written off when the Company determines that no additional interest payments will be received. Classified within Other Receivables on the condensed consolidated balance sheets, approximately $0.2 million and $0.3 million in interest income were receivable as of June 30, 2023 and December 31, 2022, respectively.

Interest earned on investment securities is reported in interest income, net of applicable adjustments for accretion of discounts and amortization of premiums accounted for over the life of the security or, in the case of callable securities, through the first call date, using the level yield method, with no prepayment anticipated.

Equity-Method Investments

When the Company does not have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial policies, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option available under U.S. GAAP. Significant influence generally exists when the firm owns 20% to 50% of the entity’s common stock or in-substance common stock.

In general, the Company accounts for investments acquired at fair value. See Note 4 for further information about the Company’s investment in YFE’s equity securities accounted for under the fair value option.

Property and Equipment

Property and equipment are recorded at cost. Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from two to seven years. Maintenance, repairs, and renewals, which neither materially add to the value of the assets nor appreciably prolong their lives, are charged to expense as incurred. Gains and losses from any dispositions of property and equipment are reflected in the condensed consolidated statement of operations. Whenever events or circumstances change, an assessment is made as to whether there has been impairment to the value of long-lived assets by determining whether projected undiscounted cash flows generated by the applicable asset exceed its net book value as of the assessment date. During the first quarter of 2023, the Company performed an interim review of its long-lived assets due to decreases in the Company's market value. There were not any events or circumstances that required the Company to reassess its assets during the three months ended June 30, 2023. Refer to Note 6 for details.

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Right of Use Leased Assets

The Company determines at contract inception whether the arrangement is a lease based on its ability to control a physically distinct asset and determines the classification of the lease as either operating or finance under FASB ASC 842, Leases (“ASC 842”). For all leases, the Company combines all components of the lease including related nonlease components as a single component. Operating leases are reflected as Operating Lease Right of Use (“ROU”) Assets and Operating Lease Liabilities and finance leases are reflected as Finance Lease ROU assets and Finance Lease Liabilities on the condensed consolidated balance sheets.

Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company estimates the incremental borrowing rate to reflect the profile of collateralized borrowing over the expected term of the leases based on the information available on the lease commencement date or for leases existing upon the date of initial adoption of ASC 842, the date of adoption. The implicit rates within the Company’s existing finance leases are determinable and therefore used to determine the present value of finance lease payments.

The operating lease ROU assets also include any lease payments made prior to lease commencement date and excludes lease incentives. Specific lease terms used in computing the ROU assets and lease liabilities may include options to extend or terminate the lease when the Company is reasonably certain that it will exercise the option. The Company will reassess expected lease terms based on changes in circumstances that indicate options may be more or less likely to be exercised. Lease expense is recognized on a straight-line basis over the lease term within General and Administrative Expenses on the condensed consolidated statements of operations. Lease incentives are recognized as a reduction to the lease expense on a straight-line basis over the underlying lease term. Refer to Notes 7 and 19 for details of the Company’s leases.

Film and Television Costs

The Company capitalizes production costs for episodic series produced in accordance with FASB ASC 926-20, Entertainment-Films - Other Assets - Film Costs. Accordingly, production costs are capitalized at actual cost and amortized using the individual-film-forecast method, whereby these costs are amortized, and participations costs are accrued based on the ratio of the current period’s revenues to management’s estimate of ultimate revenue expected to be recognized from each production.

Productions in Development

Capitalized development costs are reclassified to productions in progress once the project is approved and physical production of the film or television program commences. Development costs include the costs of acquiring film rights to books, scripts or original screenplays and the third-party costs to adapt such projects, including visual development and design. Advances or contributions received from third parties to assist in development are deducted from these costs.

Productions in Progress

For the Company’s film and television programs in progress, capitalized costs include all direct production and financing costs incurred during production that are expected to provide future economic benefit to the Company. Borrowing costs and depreciation are capitalized to the cost of a film or television program until substantially all of the activities necessary to prepare the film or television program for its use intended by management are complete.

Completed Productions

Completed productions are carried at the cost of proprietary film and television programs which have been produced by the Company or to which the Company has acquired distribution rights, less accumulated amortization and accumulated impairment losses.

Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results. In addition, in the normal course of business, some titles are more successful or less successful than anticipated. Management reviews the ultimate revenue and cost estimates on a title-by-title basis, when an event or change in circumstances indicates that the fair value of the production may be less than its unamortized cost. This may result in a

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change in the rate of amortization of film costs and participations and/or a write-down of all or a portion of the unamortized costs of the film or television production to its estimated fair value. An impairment charge is recorded in the amount by which the unamortized costs exceed the estimated fair value. These write-downs are included in amortization expense within Direct Operating Expenses on the condensed consolidated statements of operations.

All capitalized costs that exceed the initial market firm commitment revenue are expensed in the period of delivery of the episodes. Additionally, for episodic series, from time to time, the Company develops additional content, improved animation and bonus songs/features for its existing content. After the initial release of the episodic series, the costs of significant improvement to existing products are capitalized while routine and periodic alterations to existing products are expensed as incurred.

Goodwill and Intangible Assets

Goodwill represents the excess of purchase price over the estimated fair value of net assets acquired in business combinations accounted for by the acquisition method. In accordance with FASB ASC 350, Intangibles Goodwill and Other, goodwill and certain intangible assets are presumed to have indefinite useful lives and are thus not amortized, but subject to an impairment test annually or more frequently if indicators of impairment arise. The Company completes the annual goodwill and indefinite-lived intangible asset impairment tests at the end of each fiscal year. To test for goodwill impairment, the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit, of which the Company has two, is less than its carrying value. If impairment is indicated in the qualitative assessment, or, if management elects to initially perform a quantitative assessment of goodwill, the impairment test uses a one-step approach. The fair value of a reporting unit is compared with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

Changes in future results, assumptions, and estimates after the measurement date may lead to an outcome where additional impairment charges would be required in future periods. Specifically, actual results may vary from the Company’s forecasts and such variations may be material and unfavorable, thereby triggering the need for future impairment tests where the conclusions may differ in reflection of prevailing market conditions. Further, continued adverse market conditions could result in the recognition of additional impairment if the Company determines that the fair values of its reporting units have fallen below their carrying values.

Intangible assets have been acquired, either individually or with a group of other assets, and were initially recognized and measured based on fair value. Annual amortization of these intangible assets is computed based on the straight-line method over the remaining economic life of the asset.

During the first quarter of 2023, the Company performed an interim review of its long-lived assets due to decreases in the Company’s market value. There were not any events or circumstances that required the Company to reassess its assets during the three months ended June 30, 2023. Refer to Note 9 for details.

Debt and Attached Equity-Linked Instruments

The Company measures issued debt on an amortized cost basis, net of debt premium/discount and debt issuance costs amortized using the effective interest rate method or the straight-line method when the latter does not lead to materially different results.

The Company analyzes freestanding equity-linked instruments including warrants attached to debt to determine whether the instrument meets the definition of the derivative and whether it is considered indexed to the Company’s own stock. If the instrument is not considered indexed to the Company’s stock, it is classified as an asset or liability recorded at fair value. If the instrument is considered indexed to the Company’s stock, the Company analyzes additional equity classification requirements per FASB ASC 815-40, Contract’s in Entity’s Own Equity. When the requirements are met, the instrument is recorded as part of the Company’s equity, initially measured based on its relative fair value with no subsequent re-measurement. When the equity classification requirements are not met, the instrument is recorded as an asset or liability and is measured at fair value with subsequent changes in fair value recorded in earnings.

When required, the Company also considers the bifurcation guidance for embedded derivatives per ASC 815-15, Embedded Derivatives.

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Treasury stock

The Company records the repurchase of shares of its common stock at cost on the trade date of the transaction. These shares are considered treasury stock, which is a reduction to stockholders’ equity. Treasury stock is included in authorized and issued shares but excluded from outstanding shares.

Revenue Recognition

The Company accounts for revenue according to standard FASB ASC 606, Revenue from Contracts with Customers (“ASC 606”).

Revenue is measured based on the consideration specified in a contract with a customer. Revenue is recognized when a customer obtains control of the products or services in a contract. Judgment is required in determining the timing of whether the transfer of control occurs at a point in time or over time and is discussed below. The Company evaluates each contract to identify separate performance obligations as a contract with a customer may have one or more performance obligations. Consideration in a contract with multiple performance obligations is allocated to the separate performance obligations based on their stand-alone selling prices. If a stand-alone selling price is not determinable, the Company estimates the stand-alone selling price using an adjusted market assessment approach. The Company’s main sources of revenue are derived from animation production services provided to third parties, the sale of licenses for the distribution of films and television programs, advertising revenues, and merchandising and licensing sales.

The Company has identified the following material and distinct performance obligations:

•Providing animation production services.

•Licensing rights to exploit Functional Intellectual Property (“functional IP” is defined as intellectual property that has significant standalone functionality, such as the ability to be played or aired. Functional IP derives a substantial portion of its utility from its significant standalone functionality).

•Licensing rights to exploit Symbolic Intellectual Property (“symbolic IP” is intellectual property that is not functional as it does not have significant standalone use and substantially all of the utility of symbolic IP is derived from its association with the entity’s past or ongoing activities, including its ordinary business activities, such as the Company’s licensing and merchandising programs associated with its animated content).

•Providing media and advertising services to clients.

•Fixed and variable fee advertising and subscription-based revenue generated from the Kartoon Studios Kartoon Channel!, the Frederator owned and operated YouTube channels and revenues generated from the operation of its multi-channel network on YouTube.

•Options to renew or extend a contract at fixed terms (while this performance obligation is not significant for the Company’s current contracts, it could become significant in the future).

•Options on future seasons of content at fixed terms (while this performance obligation is not significant for the Company’s current contracts, it could become significant in the future).

Production Services

Animation Production Services

For revenue from animation production services, the customer controls the output throughout the production process. Each production is made to an individual customer’s specifications and if the contract is terminated by the customer, the Company is entitled to be reimbursed for any costs incurred to date, and for any prepaid commitments made, plus the agreed contractual mark-up. Revenue and the associated costs of such contracts are recognized over time on a percentage of completion basis - i.e., as the project is being produced, prior to it being delivered to the customer. The percentage-of-completion is calculated based upon the proportion of costs incurred cumulatively to total expected costs. Changes in revenue recognized as a result of adjustments to total expected costs are recognized in profit or loss on a prospective basis. Invoices related to these projects are issued based on the achievement of milestones during the project or other contractual terms. The difference between contractual payments received and revenue recognized is recorded as deferred revenue when receipts exceed revenue. When revenue exceeds milestone billings, the Company recognizes this

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difference as unbilled accounts receivable within other receivables on the Company’s condensed consolidated balance sheet. Unbilled accounts receivables are transferred to accounts receivable when the Company has an unconditional right to consideration.

When the outcome of an arrangement cannot be estimated reliably, revenue is recognized only to the extent of the expenses incurred that are recoverable.

Content Distribution

Film and Television Licensing

The Company recognizes revenue related to licensed rights to exploit functional IP in two ways; for minimum guarantees, the Company recognizes fixed revenue upon delivery of content and the start of the license period and for functional IP contracts with a variable component, the Company estimates revenue such that it is probable there will not be a material reversal of revenue in future periods. The Company recognizes revenue related to licensed rights to exploit symbolic IP substantially similarly to functional IP. Although it has a different recognition pattern from functional IP, the valuation method is substantially the same, depending on the nature of the license.

Invoices related to these projects are issued based on the achievement of milestones during the project or other contractual terms. The difference between contractual payments received and revenue recognized is recorded as deferred revenue when receipts exceed revenue. When revenue exceeds milestone billings, the Company recognizes this difference as unbilled accounts receivable within other receivables on the Company’s condensed consolidated balance sheet. Unbilled accounts receivables are transferred to accounts receivable when the Company has an unconditional right to consideration.

Advertising revenues

The Company sells advertising and subscriptions on its wholly-owned AVOD service, Kartoon Channel!, and its SVOD distribution outlets, Kartoon Channel! Kidaverse, and Ameba TV. Advertising sales are generated in the form of either flat rate promotions or advertising impressions served. For flat rate promotions with a fixed term, revenue is recognized when all five revenue recognition criteria under ASC 606 are met. For impressions served, the Company delivers a certain minimum number of impressions on the channel to the advertiser for which the advertiser pays a contractual cost per mille impressions (“CPM”). Impressions served are reported on a monthly basis, and revenue is reported in the month the impressions are served. For subscription-based revenue, revenue is recognized when a customer downloads the mobile device application and their credit card is charged.

Upon the acquisition of Wow, the Company generates advertising revenue from Frederator’s owned and operated YouTube channels as well as revenues generated from the operation of its multi-channel network on YouTube. Revenue is recognized when services are provided in accordance with the Company’s agreement with YouTube, the price is fixed or determinable, and collection of the related receivable is probable. Receivables are usually collectable within 30 days.

Licensing & Royalties

Merchandising and licensing

The Company enters into merchandising and licensing agreements that allow licensees to produce merchandise utilizing certain of the Company’s intellectual property. For minimum guaranteed amounts that make up a contract, revenue is recognized over time, over the term of the license period commencing on the date at which the licensees can use and benefit from the licensed content. Variable consideration in excess of non-refundable guaranteed amounts, such as royalties and other contractual payments are recognized as revenue when the amounts are known and become due provided collectability is reasonably assured. Invoices are issued based on the contractual terms of an agreement and are usually payable within 30-45 days.

Product Sales

The Company recognizes revenue related to product sales when the Company completes its performance obligation, which is when the goods are transferred to the buyer.

Media Advisory & Advertising Services

Media and Advertising Services

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The Company provides media and advertising services to clients. Revenue is recognized when the services are performed. When the Company purchases advertising for clients on linear and across digital and streaming platforms and receives a commission, the commissions are recognized as revenue in the month the advertising is displayed.

Gross Versus Net Revenue Presentation

The Company evaluates individual arrangements with third parties to determine whether the Company acts as principal or agent under the terms. To the extent that the Company acts as the principal in an arrangement, revenues are reported on a gross basis, resulting in revenues and expenses being classified in their respective financial statement line items. To the extent that the Company acts as the agent in an arrangement, revenues are reported on a net basis, resulting in revenues being presented net of any expenses incurred in providing agency services. Determining whether the Company acts as principal or agent is based on an evaluation of which party has substantial risks and rewards of ownership under the terms of an arrangement. The most significant factors that the Company considers include identification of the primary obligor, as well as which party has credit risk, general and inventory risk and the latitude or ability in establishing prices.

Direct Operating Costs

Direct operating costs include costs of the Company’s product sales, non-capitalizable film costs, film and television cost amortization expense, impairment expenses related to film and television costs, and participation expense related to agreements with various animation studios, post-production studios, writers, directors, musicians or other creative talent with which the Company is obligated to share net profits of the properties on which they have rendered services. Upon the acquisition of Wow, the Company also includes the salaries and related service production employee costs of Wow as part of its direct operating costs.

Share-Based Compensation

The Company issues stock-based awards to employees and non-employees that are generally in the form of stock options or restricted stock units (“RSUs”). Share-based compensation cost is recorded for all options and RSUs based on the grant-date fair value of the award.

The fair value of stock options is estimated at the date of grant using the Black-Scholes-Merton (“BSM”) option pricing model, which requires management to make assumptions with respect to the fair value on the grant date. The assumptions are as follows: (i) the expected term assumption of the award is based on the Company’s historical exercise and post-vesting behavior (ii) the expected volatility assumption is based on historical and implied volatilities of the Company’s common stock calculated based on a period of time generally commensurate with the expected term of the award; (iii) the risk-free interest rates are based on the implied yield available on U.S. treasury zero-coupon issues with an equivalent expected term; (iv) and the expected dividend yields of the Company’s stock are based on history and expectations of future dividends payable. In the case of RSUs, the fair value is calculated based on the Company’s underlying common stock on the date of grant.

The Company recognizes compensation expense over the requisite service period ratably, using the graded attribution method, which is in-substance, recognizing multiple awards based on the vesting schedule. The Company has elected to account for forfeitures when they occur. The Company issues authorized shares available for issuance under the Company’s 2015 Incentive Plan and the Company’s 2020 Incentive Plan upon employees’ exercise of their stock options.

Debt Issuance Costs

Debt issuance costs relate to the issuance of Wow’s Production Facilities and are recorded as a reduction to the carrying amount of debt and amortized to interest expense using the effective interest method over the respective terms of the facilities. Debt issuance costs directly attributable to the acquisition or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time the assets are substantially ready for their intended use or sale. Debt issuance costs as of June 30, 2023 and December 31, 2022 were insignificant.

Earnings Per Share

Basic earnings (loss) per share of common stock (“EPS”) is calculated by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted EPS is calculated by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding, plus the assumed exercise of all dilutive securities using the treasury stock or “as converted”

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method, as appropriate. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are antidilutive.

Income Taxes

Deferred income tax assets and liabilities are recognized based on differences between the financial statement and tax basis of assets and liabilities using presently enacted tax rates. At each balance sheet date, the Company evaluates the available evidence about future taxable income and other possible sources of realization of deferred tax assets and records a valuation allowance that reduces the deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that more likely than not will be realized.

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 $100,000 CAD. As of June 30, 2023 and December 31, 2022, the Company had 14 and 12 bank deposit accounts with an aggregate uninsured balance of $3.1 million and $3.4 million, respectively.

The Company has a managed account with a financial institution. The managed account maintains its investments in marketable securities of $49.5 million and $83.7 million as of June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022, 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 June 30, 2023, the Company had four customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 81.2% of the total revenue.

During the six months ended June 30, 2023, the Company had three customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 71.4% of the total revenue. As of June 30, 2023, the Company had four customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 70.4% of the total accounts receivable as of June 30, 2023.

During the three months ended June 30, 2022, the Company had five customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 81.3% of the total revenue.

During the six months ended June 30, 2022, the Company had five customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 76.3% of the total revenue. As of June 30, 2022, the Company had four customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 65.0% of the total accounts receivable as of June 30, 2022.

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 bad debt.

Fair value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include:

•Level 1 - Observable inputs such as quoted prices for identical instruments in active markets;

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•Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

•Level 3 - Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The carrying amounts of cash, restricted cash, receivables, payables, accrued liabilities, bank indebtedness and the margin loan approximate fair value due to the short-term nature of the instruments. The Company used the fair values of the liability-classified derivative warrants revalued at the end of each reporting period determined using the BSM model (Level 2) with standard valuation inputs. Refer to Note 16 for additional details. The investment in YFE is also revalued at the end of each reporting period based on the trading price of YFE (Level 1). Refer to Note 4 for additional details. Upon the acquisition of Wow, foreign currency forward contracts that are not traded in active markets were assumed. These are fair valued using observable forward exchange rates at the measurement dates and interest rates corresponding to the maturity of the contracts (Level 2).

The fair values of the AFS securities are generally based on quoted market prices, where available. These fair values are obtained primarily from third-party pricing services, which generally use Level 1 or Level 2 inputs for the determination of fair value to facilitate fair value measurements and disclosures. Level 2 securities primarily include corporate securities, securities from states, municipalities and political subdivisions, mortgage-backed securities, United States Government securities, foreign government securities, and certain other asset-backed securities. For securities not actively traded, the pricing services may use quoted market prices of comparable instruments or a variety of valuation techniques, incorporating inputs that are currently observable in the markets for similar securities.

The following table summarizes the marketable securities measured at fair value by level within the fair value hierarchy as of June 30, 2023 (in thousands):

			Level 1						Level 2						Total Fair Value
Marketable investments:
Corporate Bonds			$	18,299					$	–					$	18,299
U.S. Treasury			15,367						–						15,367
U.S. agency and government sponsored securities			–						6,343						6,343
U.S. states and municipalities			–						9,489						9,489
Total			$	33,666					$	15,832					$	49,498

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 FASB ASC 320, Investments – Debt and Equity Securities. An allowance for credit loss was not recorded for the marketable securities as of June 30, 2023 and December 31, 2022. Refer to Note 5 for additional details.

Financial and nonfinancial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs and include the Company’s goodwill, intangible assets and film and television costs.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 replaces the “incurred loss” credit losses framework with a new accounting standard that requires management's measurement of the allowance for credit losses to be based on a broader range of reasonable and supportable information for lifetime credit loss estimates. The new model, referred to as the current expected credit loss (“CECL”) model, applies to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. The CECL model does not apply to AFS debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. ASU No. 2016-13

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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 and six months ended June 30, 2023, SLU generated an insignificant amount of net income. The Company's net investment as of June 30, 2023 of $0.8 million remained the same as compared to December 31, 2022. There were no changes in facts and circumstances that occurred during the six months ended June 30, 2023 that would result in a re-evaluation of the VIE assessment.

The Company classifies and accounts for its marketable debt securities as AFS and the securities are stated at fair value. On January 1, 2023, the Company adopted ASU 2016-13 Measurement of Credit Losses on Financial Instruments (Topic 326), which replaced the legacy GAAP other-than-temporary impairment (“OTTI”) model with a credit loss model. The credit loss model applicable to AFS debt securities requires the recognition of credit losses through an allowance account but retains the concept from the OTTI model that credit losses are recognized once securities become impaired. The adoption of the ASU did not have a material impact on the Company's financial statements.

The investments in marketable securities had an adjusted cost basis of $53.1 million and a market value of $49.5 million as of June 30, 2023. The balances consisted of the following securities (in thousands):

			Adjusted Cost						Unrealized Gain/(Loss)						Fair Value
Corporate Bonds			$	19,594					$	(1,295)					$	18,299
U.S. Treasury			16,355						(988)						15,367
U.S. Agency and Government Sponsored Securities			6,899						(556)						6,343
U.S. States and Municipalities			10,265						(776)						9,489
Total			$	53,113					$	(3,615)					$	49,498

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The investments in marketable securities as of December 31, 2022 had an adjusted cost basis of $90.3 million and a market value of $83.7 million. The balances consisted of the following securities (in thousands):

			Adjusted Cost						Unrealized Gain/(Loss)						Fair Value
Corporate Bonds			$	40,823					$	(2,579)					$	38,244
U.S. Treasury			20,869						(1,313)						19,556
Mortgage-Backed			5,980						(606)						5,374
U.S. Agency and Government Sponsored Securities			10,781						(1,221)						9,560
U.S. States and Municipalities			11,801						(895)						10,906
Asset-Backed			67						(1)						66
Total			$	90,321					$	(6,615)					$	83,706

The Company holds 31 AFS securities, all of which were in an unrealized loss position and have been in an unrealized loss position for a period greater than twelve months as of June 30, 2023. The AFS securities held by the Company as of December 31, 2022 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 June 30, 2023 and December 31, 2022, 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 $0.7 million and $2.3 million were recognized in earnings during the three and six months ended June 30, 2023, respectively, primarily due to selling securities prior to maturity to prevent further market condition losses on the securities. In addition, realized losses of $44,241 and $123,292 were recognized during the three and six months ended June 30, 2022, respectively, due to prepayments of principal on certain mortgage-backed securities.

The contractual maturities of the Company’s marketable investments as of June 30, 2023 were as follows (in thousands):

			Fair Value
Due within 1 year			$	13,821
Due after 1 year through 5 years			35,677
Total			$	49,498

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.

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

			June 30, 2023						December 31, 2022
Furniture and Equipment			$	180					$	224
Computer Equipment			212						315
Leasehold Improvements			2,259						2,273
Software			184						263
Production Equipment			—						23
Property and Equipment, Gross			2,835						3,098
Less Accumulated Depreciation			(572)						(530)
Foreign Currency Translation Adjustment			(127)						(168)
Property and Equipment, Net			$	2,136					$	2,400

During the three months ended June 30, 2023 and 2022, the Company recorded depreciation expense of $0.1 million and $0.2 million, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded depreciation expense of $0.2 million for both respective periods.

Right of use asset consisted of the following (in thousands):

			June 30, 2023						December 31, 2022
Office Lease Assets			$	10,313					$	10,313
Equipment Lease Assets			5,144						3,928
Right Of Use Asset, Gross			15,457						14,241
Accumulated Amortization			(4,091)						(2,587)
Foreign Currency Translation Adjustment			(617)						(810)
Right Of Use Asset, Net			$	10,749					$	10,844

Refer to Note 19 for details on the Company’s lease commitments.

As of June 30, 2023, the weighted-average lease term for the Company’s operating leases was 87 months and the weighted-average discount rate was 10.5%. As of December 31, 2022, the weighted-average lease term for operating leases was 93 months and the weighted-average discount rate was 10.4%.

Operating lease costs during the three and six months ended June 30, 2023 were $0.7 million and $0.8 million, respectively, recorded within General and Administrative Expenses on the Company’s condensed consolidated statement of operations.

During the three and six months ended June 30, 2023 the Company recorded finance lease costs of $0.6 million and $1.2 million, respectively, comprised of ROU amortization of $0.5 million and $1.1 million, respectively, recorded within General and Administrative Expenses on the Company’s condensed consolidated statement of operations and accretion of interest expense of $53,533 and $103,727, respectively, recorded within Other Income (Expense) on the Company’s condensed consolidated statement of operations.

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The following table highlights the activity in Film and Television Costs as of June 30, 2023 and December 31, 2022 (in thousands):

Film and Television Costs, Net as of December 31, 2021			$	2,940
Additions to Film and Television Costs			18,364
Disposals			(11)
Film Amortization Expense & Impairment Losses			(12,996)
Foreign Currency Translation Adjustment			(517)
Film and Television Costs, Net as of December 31, 2022			7,780
Additions to Film and Television Costs			734
Disposals			(7)
Film Amortization Expense			(474)
Foreign Currency Translation Adjustment			67
Film and Television Costs, Net as of June 30, 2023			$	8,100

Intangible Assets, Net

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

Intangible Assets, Net

			Weighted Average Remaining Amortization Period
						June 30, 2023						December 31, 2022
Customer Relationships			7.0			$	17,325					$	17,325
Digital Networks			14.8			803						3,537
Trade Names			67.9			10,360						11,783
Technology			–			–						293
Other Intangible Assets (a)			–			–						325
Intangible Assets, Gross						28,488						33,263
Less Accumulated Amortization						(2,752)						(2,398)
Foreign Currency Translation Adjustment						(1,320)						(1,698)
Intangible Assets, Net						$	24,416					$	29,167

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(a)Represents the remaining unamortized logo and website intangible assets related to the merger with A Squared.

During the three months ended June 30, 2023 and 2022, the Company recorded intangible asset amortization expense of $0.5 million and $0.9 million, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded intangible asset amortization expense of $1.1 million and $0.7 million, respectively.

Pursuant to ASC 350-30, General Intangibles Other than Goodwill, the Company reviews its intangible assets periodically to determine if the value should be retired or impaired due to recent events. During the three months ended March 31, 2023, due to changes in the Company’s financial projections, the Company reassessed its definite and indefinite-

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lived intangible asset values to determine whether impairments existed. As a result, 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 due to a decrease in an asset group’s estimated undiscounted cash flows. In addition, due to a decrease in its estimated present value of cash flows, it was determined that the Frederator tradename, an indefinite-lived intangible asset, was impaired by $1.3 million.

The Company did not incur any impairment charges during the six months ended June 30, 2022.

Expected future amortization of intangible assets subject to amortization as of June 30, 2023 is as follows (in thousands):

Fiscal Year:
2023			1,051
2024			2,098
2025			2,098
2026			2,098
2027			2,098
Thereafter			8,933
Total			$	18,376

As of June 30, 2023, $6.0 million of the Company’s intangible assets related to the acquired trade names from the Wow acquisition have indefinite lives and are not subject to amortization.

Goodwill

In 2013, the Company recognized $10.4 million in goodwill as a result of its merger with A Squared, which was allocated to the Content Production and Distribution reporting unit. During the first quarter of 2021, the Company recognized $9.7 million in goodwill as a result of its acquisition of Beacon, which was allocated to its Media Advisory and Advertising Services reporting unit.

As a result of the Ameba Acquisition during the first quarter of 2022 and the Wow Acquisition during the second quarter of 2022, the Company recorded goodwill of $1.5 million, including a tax basis step-up of $0.8 million and $21.4 million, respectively. The goodwill resulting from the Ameba and Wow Acquisitions was allocated to the Content Production and Distribution reportable segment. As Wow's functional currency is the CAD, goodwill changes each period due to currency exchange differences.

As of December 31, 2022, the goodwill allocated to the Company’s Media Advisory and Advertising Services reporting unit was written down to zero due to impairment.

During the three months ended March 31, 2023, the Company reassessed its remaining goodwill allocated to the Content Production and Distribution reporting unit for impairment. As a result, the Company recorded an Impairment of Goodwill of $11.3 million within Operating Expenses in its condensed consolidated statement of operations. Included in the goodwill impairment was $0.9 million of goodwill allocated to Ameba. Due to the write-off of Ameba’s intangible assets and goodwill, the deferred income tax liability balance of $0.7 million, recorded as of December 31, 2022 as part of the estimated underlying tax basis of the acquired assets, was reversed and recorded as an income tax benefit on the condensed consolidated statement of operations during the six months ended June 30, 2023.

The Company did not incur any impairment charges during the six months ended June 30, 2022.

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The following table summarizes the changes in the carrying amount of goodwill by reporting unit (in thousands):

			Content Production & Distribution						Media Advisory & Advertising Services						Total
Goodwill as of December 31, 2022			$	31,807					$	–					$	31,807
Goodwill Impairment			(11,287)						–						(11,287)
Foreign Currency Translation Adjustment			332						–						332
Goodwill as of June 30, 2023			$	20,852					$	–					$	20,852

Upon the acquisition of Wow, the Company assumed certain credit facilities (together the “Facilities”). The Facilities are comprised of the following:

Revolving Demand Facility

On December 15, 2022, the Company amended the revolving demand facility. Draws of up to $8.0 million CAD (previously $5.0 million CAD) under the revolving demand facility can be made in Canadian or US dollars at the option of the Company by way of bank prime rate loans, Canadian Bankers’ Acceptances, Secured Overnight Financing Rate (“SOFR”) or letters of credit. Canadian or US dollar bank prime borrowings bear interest at a rate equal to bank prime plus 2.00% per annum.         

For other draws under the revolving facility, the respective loans bear interest at a rate equal to Canadian Bankers’ Acceptances or SOFR plus 3.75% per annum.

As of June 30, 2023 and December 31, 2022, the Company had an outstanding balance of $4.8 million USD ($6.3 million CAD) and $1.7 million USD ($2.4 million CAD), 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.

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Equipment Lease Line

On March 17, 2023, the Company amended the terms of its equipment lease line. Under the equipment lease line, the Company may borrow up to $4.0 million CAD (previously $4.3 million CAD).

Each 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 3.94% to 7.18% with remaining lease terms of 2 - 37 months.

As of June 30, 2023 and December 31, 2022, the Company has drawn down a total of $2.0 million USD ($2.6 million CAD) and $2.4 million USD ($3.3 million CAD), respectively, under the equipment lease line. As of June 30, 2023 and December 31, 2022, the outstanding balances, net of repayments, were included within current and noncurrent Finance Lease Liabilities on the Company’s condensed consolidated balance sheets.

Treasury Risk Management Facility

Advances of up to $500,000 CAD available under the treasury risk management facility are subject to market rates as determined by the lender’s treasury department or derivatives group at the time of the drawdown request. The maximum term for foreign exchange forward contracts and interest rate swaps is one year. The treasury risk management facility is payable on demand at anytime.

As of June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022, the Company had an outstanding balance of $17.8 million USD ($22.5 million CAD), including $0.8 million USD ($1.1 million CAD) of interest and $18.3 million USD ($24.8 million CAD), including $1.1 million USD ($1.5 million CAD) of interest, respectively, recorded as Production Facilities, net within current liabilities on the Company’s condensed consolidated balance sheets.

Equipment Lease Facility

Separate from the equipment lease line described above, the Company 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 $1.4 million CAD in total. Each equipment lease is for a term of three years and will have specific financing terms such as finance amount and the bank’s lease base rate.

The outstanding balance as of June 30, 2023 and December 31, 2022, net of repayments, was $0.5 million USD ($0.7 million CAD) for both respective periods and is 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, revolving equipment lease line and treasury risk management facility that have an aggregate total outstanding balance of $6.7 million USD ($8.9 million CAD). The Company was in technical violation of two financial covenants requiring a minimum fixed charge ratio and a maximum senior funded debt to EBITDA ratio as of June 30, 2023. 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 treasury risk management facility can be called at anytime by the lender as per the original terms of the facilities. The risk of the lender demanding repayment can be deemed greater due to the breach

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of covenants, however, at the time the financial statements were available for issuance, the lender has not provided the Company with a formal notification of a covenant breach.

As of December 31, 2022, the Company met all required financial and non-financial covenants.

Common Stock

On February 6, 2023, the Company’s board of directors approved a 1-for-10 reverse stock split of the Company’s outstanding shares of common stock. The reverse stock split was effected on February 10, 2023 at 5:00 p.m. Eastern time. At the effective time, every 10 issued and outstanding shares of the Company’s common stock were converted into one share of common stock. Any fractional shares of common stock resulting from the reverse stock split were rounded up to the nearest whole post-split share and no shareholders received cash in lieu of fractional shares. The par value of each share of common stock remained unchanged. The reverse stock split proportionately reduced the number of shares of authorized common stock from 400,000,000 to 40,000,000 shares. The reverse stock split also applied to common stock issuable upon the exercise of the Company’s then outstanding warrants and stock options. The reverse stock split did not affect the authorized preferred stock of 10,000,000 shares. Unless noted, all references to shares of common stock and per share amounts contained in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect a 1-for-10 reverse stock split.

As of June 30, 2023, the total number of authorized shares of common stock was 40,000,000.

As of June 30, 2023 and December 31, 2022, there were 35,054,573 and 31,918,552 shares of common stock outstanding, respectively.

During the six months ended June 30, 2023, the Company issued 404,251 shares of common stock for services. Included in the issued shares were 400,000 shares of common stock valued at $1.0 million, or $2.47 per share, issued to the Company's lawyers and recorded as a prepaid retainer fee within Prepaid Expenses and Other Assets on the condensed consolidated balance sheet. The prepaid fee is reduced as the Company incurs lawyer fees. As of June 30, 2023, the remaining prepaid expense balance was $0.7 million.

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 our shareholders, 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 shareholders, 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 are exchangeable into shares of the Company’s common stock in accordance with their terms. Holders of the ExchangeCo shares are 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. 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 grants the Voting Trustee that number of votes at the meetings of the Company’s shareholders 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 is 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, will not exercise voting rights with respect to the applicable shares.

As of June 30, 2023 and December 31, 2022, there were 0 shares of Series A Convertible Preferred Stock outstanding. As of June 30, 2023 and December 31, 2022, there was 1 share of Series B Preferred Stock outstanding.

Treasury Stock

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On September 18, 2015, the Company adopted the Kartoon Studios, Inc. 2015 Incentive Plan (the “2015 Plan”). The total number of shares that can be issued under the 2015 Plan is 216,767 shares.

On September 1, 2020, the Company adopted the Kartoon Studios, Inc. 2020 Incentive Plan (the “2020 Plan”). On August 4, 2020, the Board of Directors voted to adopt the 2020 Plan. The shares available for issuance under the 2020 Plan were approved by shareholders on August 27, 2020. The 2020 Plan as approved by the shareholders increased 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.

The following table summarizes the stock option activity during the six months ended June 30, 2023:

			Number of Shares						Weighted- Average Remaining Contractual Life						Weighted- Average Exercise Price
Outstanding at December 31, 2022			1,351,421						6.49						$	15.09
Granted			–						–						$	–
Exercised			–						–						$	–
Forfeited/Cancelled			(118,964)						6.71						$	15.52
Expired			(17,016)						–						$	29.95
Outstanding at June 30, 2023			1,215,441						6.01						$	14.84
Unvested at June 30, 2023			236,637						5.47						$	9.95
Vested and exercisable June 30, 2023			978,804						6.14						$	16.03

During the six months ended June 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 June 30, 2023 and 2022, the Company recognized $0.3 million and $0.4 million, respectively, in share-based compensation expense related to stock options. During the six months ended June 30, 2023 and 2022, the Company recognized $0.7 million and $0.8 million, respectively, in share-based compensation expense related to stock options. The unrecognized share-based compensation expense as of June 30, 2023 was $0.6 million which will be recognized through the second quarter of 2025 assuming the underlying grants are not cancelled or forfeited. The outstanding shares as of June 30, 2023 had an aggregated intrinsic value of zero.

During the six months ended June 30, 2023, the Company granted 34,431 fully vested RSUs to the Company’s board members and consultants, with a fair market value of $0.1 million. The RSUs expire five years from the date of grant.

An aggregate of 303,076 shares of common stock were issued during the six months ended June 30, 2023 as a result of vested RSUs.

The following table summarizes the Company’s RSU activity during the six months ended June 30, 2023:

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			Restricted Stock Units						Weighted- Average Remaining Contractual Life						Weighted- Average Grant Date Fair Value per Share
Unvested at December 31, 2022			1,151,944						3.41						$	13.67
Granted			34,431						4.88						$	2.89
Vested			(83,799)						3.83						$	8.93
Forfeited/Cancelled			–						–						$	–
Unvested at June 30, 2023			1,102,576						2.91						$	13.74

During the six months ended June 30, 2023, upon termination of certain employees, the Company accelerated the vesting of any unvested shares held by such employees pursuant to their employment agreements. This resulted in 27,576 shares becoming immediately vested and issued on the separation dates and $0.1 million in expense recognized by the Company.

During the three months ended June 30, 2023 and 2022, the Company recognized $0.4 million and $3.9 million, respectively, in share-based compensation expense related to RSUs. During the six months ended June 30, 2023 and 2022, the Company recognized $0.9 million and $7.9 million, respectively, in share-based compensation expense related to RSU awards. The unvested share-based compensation as of June 30, 2023 was $0.9 million which will be recognized through the second quarter of 2025 assuming the underlying grants are not cancelled or forfeited. The total fair value of shares vested during the six months ended June 30, 2023 was $0.8 million.

The following table summarizes the activity in the Company’s outstanding warrants during the six months ended June 30, 2023:

			Warrants Outstanding Number of Shares						Weighted Average Remaining Contractual Life						Weighted Average Exercise Price Per Share
Balance at December 31, 2022			4,433,593						3.37						$	22.50
Granted			4,784,909						5.16						$	2.50
Exercised			(2,311,550)						2.59						$	23.70
Expired			(4,000)						–						$	30.00
Forfeitures			(50,000)						7.69						$	13.90
Balance at June 30, 2023			6,852,952						4.54						$	8.19
Exercisable June 30, 2023			2,068,043						3.10						$	21.35
Exercisable December 31, 2022			4,433,593						4.77						$	22.50

The warrants to purchase shares of the Company’s common stock outstanding as of June 30, 2023 and December 31, 2022 had a total value of $39.2 million and $73.3 million, respectively.

As of June 30, 2023, 89,286 liability classified derivative warrants to purchase shares of the Company’s common stock remained outstanding and are revalued each reporting period. As of June 30, 2023, the warrants were revalued at $0.1 million, resulting in a decrease of $0.2 million in liability as compared to December 31, 2022. The change in value was recorded within Other Income (Expense), Net on the condensed consolidated statements of operations and Gain on Warrant Revaluation within the condensed consolidated statement of cash flows.

The fair value of the outstanding derivative warrants was determined by using the Black-Scholes option pricing model (“BSM”) based on the following assumptions:

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Exercise Price			$	2.10
Dividend Yield			0		%
Volatility			151		%
Risk-free interest rate			4.71		%
Expected Life of Warrants			1.7 years

On February 16, 2023, the Company received a notification of exercise from the holder of the remaining 50,000 warrants with a put option. The put option was exercised for a fixed rate of $250,000.

Warrant Exchange

On June 26, 2023, the Company entered into warrant exercise inducement offer letters (the “Letter Agreements”) with certain holders of the warrants issued by the Company in January 2021 that had an exercise price of $23.70 per share and were exercisable for an aggregate of 2,311,550 shares of the Company’s common stock (the “2021 Warrants”). Pursuant to the Letter Agreements, the exercising holders and the Company agreed that, subject to any applicable beneficial ownership limitations, the holders would exercise all of their 2021 Warrants for shares of the Company’s common stock at a reduced exercise price of $2.50 per share of common stock in exchange for the issuance of new unregistered warrants (the “Exchange Warrants”) to purchase up to an aggregate of 4,623,100 shares of common stock, equal to 200% of the number of common stock underlying the 2021 Warrants.

The aggregate number of shares of common stock issuable pursuant to the Exchange Warrants, together with the shares of common stock issued pursuant to the repriced 2021 Warrants, exceeds 19.99% of the outstanding shares of common stock of the Company (determined as of the date of, and without regard for, the issuance of the Exchange Warrants and the shares issued upon exercise of the repriced 2021 Warrants). In addition, upon issuance of the Exchange Warrants, the Company will not have a sufficient number of underlying common stock that would be required to deliver based on its existing outstanding shares and commitments and the maximum number of shares that would be required to be delivered upon exercise of the Exchange Warrants. The Company is holding its annual shareholder meeting on August 25, 2023, during which the shareholders will be asked to (a) approve an amendment to the articles of incorporation to increase the authorized shares of common stock from 40,000,000 shares to 190,000,000 shares with a corresponding increase in the total number of authorized shares of capital stock of the Company from 50,000,000 shares to 200,000,000 shares (the “Share Increase Proposal”) and (b) approve, in accordance with 713(A) of the NYSE American Company Guide, the issuance of more than 19.99% of the Company’s outstanding common stock upon the exercise of the Warrants (the “Warrant Exercise Proposal” and together with the Share Increase Proposal, the “Proposals” and the “Shareholder Approvals”). Pursuant to the Letter Agreements, the Company filed a registration statement on Form S-3 covering the resale of the shares of common stock issuable upon the exercise of the Warrants on July 26, 2023, which registration statement is currently pending with the Securities and Exchange Commission (“SEC”).

The Exchange Warrants have an exercise price of $2.50 per share and a term of five years from the date of the Shareholder Approvals. Consequently, the exercise of the Exchange Warrants in full is subject to Shareholder Approvals. If the Company does not obtain the Shareholder Approvals during the 2023 annual meeting, the Company has agreed to call a meeting of shareholders every 90 days thereafter to seek shareholder approval until the Shareholder Approvals are obtained. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends and stock splits, subsequent equity sales, subsequent rights offerings, pro rata distributions and certain fundamental transactions affecting the shares of common stock. A holder will not have the right to exercise any portion of the Exchange Warrant if the holder would beneficially own in excess of 4.99% (or, at the election of the holder, 9.99%) of the outstanding common stock immediately after exercise, except that upon notice from the holder to the Company, the holder may increase or decrease the beneficial ownership limitation up to 9.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Exchange Warrants, provided that any increase in such beneficial ownership limitation shall not be effective until 61 days following notice from the holder to the Company.

The Company received approximately $5.8 million in gross proceeds recorded as an increase to Additional Paid-in Capital. The Special Equities Group, a division of Bradley Woods & Co. Ltd. (“SEG”), acted as warrant solicitation agent and received a cash fee of $0.4 million, equal to 7.0% of the total gross proceeds, and warrants with a value of $0.4 million on the issuance date to purchase up to 161,809 of the Company’s common stock at $2.50 per share (the “SEG Warrants”). In addition, through issuance of the Company’s common stock, the Company paid lawyer fees of $0.1 million for costs directly attributable to the warrant re-pricing and exchange. The total issuance costs of $0.9 million were netted against the

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proceeds received and recorded as a reduction to Additional Paid in Capital on the Company's condensed consolidated balance sheet.

As the 2021 Warrants were repriced prior to exercising, the Company utilized ASC 815 to account for the modification. As per ASC 815, an entity shall treat a modification of the terms or conditions or an exchange of a freestanding equity classified written call option as an exchange of the original instrument for a new instrument. The effect of a modification or an exchange shall be measured as the excess, if any, of the fair value of the modified or exchanged instrument over the fair value of that instrument immediately before it is modified or exchanged (the “incremental expense”).

The Company calculated the fair value of the 2021 Warrants exercised immediately before the repricing using the Black-Scholes option pricing model (“BSM”). The calculation used the original exercise price of $23.70 per share and the BSM assumptions as of June 26, 2023 to calculate the fair value immediately before the repricing and calculated the fair value of the 2021 Warrants exercised utilizing the modified exercise price of $2.50 per share and the same BSM assumptions as of June 26, 2023. The resulting difference of $3.5 million, was recorded as an incremental expense as a Warrant Incentive Expense within Other Income (Expense), Net on the condensed consolidated statement of operations and as an increase to Additional Paid-in Capital on the condensed consolidated balance sheet as of June 30, 2023.

The fair value of the aggregate total of 4,784,909 Exchange Warrants and the SEG Warrants (collectively, the “Warrants”) on the issuance date of June 26, 2023 was determined to be $13.1 million, or $2.74 per share, as calculated using the BSM based on the following assumptions:

			June 26, 2023
Market Price			$	3.30
Exercise Price			$	2.50
Dividend Yield			0		%
Volatility			110		%
Risk-free interest rate			3.96		%
Expected Life of Warrants			5.0 years

The fair value of the Exchange Warrants of $12.7 million was recorded as a Warrant Incentive Expense within Other Income (Expense), Net on the condensed consolidated statement of operations. The fair value of the SEG Warrants was recorded as a reduction to Additional Paid-in Capital on the condensed consolidated balance sheet.

Per review of ASC 815 to determine the classification of the Warrants as either assets or liabilities the Company must evaluate whether it has a sufficient number of authorized and unissued shares at the classification assessment date to control settlement by delivering shares. As noted above, when taking into consideration the Company’s existing outstanding common stock and future commitments to issue common stock prior to the issuance of the Warrants, the Company does not have a sufficient number of common stock underlying its commitments, when including the Warrants, with a calculated deficit of 4,240,784 shares as of June 26, 2023.

In addition, ASC 815 states that if an entity could be required to obtain shareholder approval to increase the entity’s authorized shares to net share or physically settle a contract, share settlement is not controlled by the entity, therefore would be liability classified.

As the Company does not have a sufficient number of authorized and unissued shares required to be delivered upon settlement of equity instruments and is required to obtain the Shareholder Approvals to increase the authorized shares, the settlement is not considered controlled by the Company. Consequently, the Warrants are required to be classified as a liability and revalued at each reporting period end date. The fair value of the Warrants as of June 30, 2023 was determined to be $7.1 million, or $1.48 per share, using the BSM based on the following assumptions:

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Other Income (Expense), Net

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

			Three Months Ended									Six Months Ended
			June 30, 2023						June 30, 2022			June 30, 2023						June 30, 2022
Interest Expense (a)			$	(1,020)					$	(388)		$	(2,105)					$	(443)
Warrant Incentive Expense (b)			(16,174)						–			(16,174)						–
Gain on Revaluation of Warrants (c)			6,063						227			6,202						269
Gain (Loss) on Revaluation of Equity Investment in YFE (d)			4,322						(2,494)			3,427						2,901
Realized Loss on Marketable Securities Investments (e)			(720)						(44)			(2,257)						(123)
Gain (Loss) on Foreign Exchange (f)			35						(1,073)			355						(1,262)
Interest Income (g)			158						253			468						501
Finance Lease Interest Expense (h)			(54)						(30)			(104)						(30)
Other			2						–			3						–
Other Income (Expense)			$	(6,368)					$	(3,161)		$	(8,080)					$	2,256

			(a)			Interest expense during the three and six months ended June 30, 2023 primarily consisted of $0.6 million and $1.3 million of interest incurred on the margin loan, respectively, and $0.4 million and $0.8 million, respectively, of interest incurred on production facilities loans and bank indebtedness assumed as part of the Wow Acquisition.
			(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 and $3.5 million recorded as the incremental expense of the 2021 Warrants immediately before and after the repricing.
			(c)			The gain on warrant revaluation during the three and six months ended June 30, 2023 is primarily related to the $6.0 million change in fair value as of the end of the reporting period of the Exchange and SEG Warrants compared to the fair value at issuance date.
			(d)			As accounted for using the fair value option, the gain on the YFE investment revaluation during the three and six months ended June 30, 2023, excluding the impact of foreign currency recorded separately, is a result of an increase in YFE’s stock price as of June 30, 2023 when compared to the three and six months ended prior 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 gain on foreign currency exchange during the three and six months ended June 30, 2023 primarily related to the EURO weakening against the USD compared to the three and six months ended prior period.
			(g)			Interest Income during the three and six months ended June 30, 2023 primarily consisted of cash interest received of $0.3 million and $0.7 million from the investments in marketable securities, respectively, net of premium amortization expense of $0.2 million and $0.3 million, respectively.
			(h)			The finance lease interest expense represents the interest portion of the finance lease obligations assumed as part of the Wow Acquisition for equipment purchased under an equipment lease line. Prior to the acquisition of Wow, finance leases did not exist.

Supplemental Pro forma information

On January 13, 2022, the Company completed the acquisition of Ameba, at which Ameba’s financial information was consolidated into the Company’s financials.

On April 6, 2022, the Company completed the acquisition of Wow. Wow’s financial information was consolidated into the Company’s financials starting April 1, 2022.

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The following unaudited supplemental pro forma information summarizes the Company’s results of operations as if the Company completed the Wow and Ameba acquisitions at the beginning of the annual period 2022, when acquired (in thousands, except for share and per share data):

Supplemental pro forma information is as follows:

			Three Months Ended						Six Months Ended
			June 30, 2022						June 30, 2022
Total Revenues			$	22,124					41,667
Net Loss Attributable to Kartoon Studios, Inc.			$	(13,343)					(16,926)
Net Loss per Share (Basic and Diluted)			$	(0.42)					$	(0.55)
Weighted Average Shares Outstanding (Basic and Diluted)			31,551,991						30,968,201

The unaudited pro forma combined financial information is presented for informational purposes only and is not intended to represent or be indicative of the combined results of operations or financial position that the Company would have reported had the acquisitions been completed as of the date and for the periods presented and should not be taken as representative of the Company’s consolidated results of operations or financial condition following the acquisition. In addition, the unaudited pro forma combined financial information is not intended to project the future financial position or results of operations of the combined company.

The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), 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 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 financial statements.

As part of the Ameba purchase price allocation, a $0.7 million deferred tax liability was previously recorded. Due to the impairment write-off of the related intangible assets, the deferred income tax liability was reversed and recorded as an income tax benefit during the six months ended June 30, 2023.

The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operation in the provision for income taxes. As of June 30, 2023 and December 31, 2022, the Company had no accrued interest or penalties related to uncertain tax positions.

The Company files income tax returns in the U.S. federal jurisdiction and in the states of California, Massachusetts and New Jersey and will start filing in New York. The Company is currently subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities since inception of the Company.

The Company is subject to U.S. income taxes on a stand-alone basis. The Company, the Beacon Media Group (formerly ChizComm) and Wow file separate stand-alone tax returns in each jurisdiction in which they operate. Beacon Communications, Wow and Ameba are corporations operating in Canada and are subject to Canadian income taxes on their stand-alone taxable income.

---

The following is a schedule of future minimum contractual obligations as of June 30, 2023 (in thousands):

			2023						2024						2025						2026						2027						Thereafter						Total
Operating Leases			$	829					$	1,724					$	1,773					$	1,791					$	1,564					$	4,695					$	12,376
Finance Leases			946						1,089						600						232						–						–						2,867
Employment Contracts			2,536						1,094						427						–						–						–						4,057
Consulting Contracts			1,696						784						–						–						–						–						2,480
Debt			32,368						17,794						–						–						–						–						50,162
			$	38,375					$	22,485					$	2,800					$	2,023					$	1,564					$	4,695					$	71,942

Leases

On January 30, 2019, the Company entered into an operating lease for 5,838 square feet of general office space at 190 N. Canon Drive, Suite 400, Beverly Hills, CA 90210 pursuant to a 96-month lease that commenced on August 1, 2019. The Company pays rent of $0.4 million annually, subject to annual escalations of 3.5%.

On February 1, 2021, as part of the ChizComm Acquisition, the Company assumed an operating lease that was entered into on May 19, 2019 for 6,845 square feet of general office space located at 245 Fairview Mall Drive, Suites 202 and 301, Toronto, Ontario M2J 4T1 pursuant to an 84-month lease which commenced on October 1, 2019. The Company pays rent of $95,830 annually, subject to annual escalations of 5% to 7%.

On March 2, 2021, the Company entered into an operating lease for 4,765 square feet of general office space located at 1050 Wall Street West, Suite 665, Lyndhurst NJ, 07071 pursuant to an 89-month lease which commenced on October 1, 2021. The Company pays rent of $115,154 annually, subject to annual escalations of 2.5%.

On April 6, 2022, as part of the Wow Acquisition, the Company assumed an operating lease for 45,119 square feet of general office space located at 2025 West Broadway, Suite 200, Vancouver, B.C., V6J 1Z6. The right of use asset and lease liability were revalued on the acquisition date based on the remaining lease term of 117 months with payments of $81,769 per month, subject to escalations of 7% each of the third and fifth years. The lease liability and right of use asset were determined to be $6.6 million, utilizing a discount rate of 11.5%. As part of the assumed office lease, the Company also assumed a parking lease for 80 parking spaces. The parking lease was also revalued utilizing the 11.5% discount rate. With a remaining lease term of 117 months, paying $6,091 per month, the ROU asset and lease liability were determined to be $0.5 million as of the acquisition date and recorded within current and noncurrent Operating Lease Liabilities on the Company's condensed consolidated balance sheet upon acquisition.

Also, as part of the Wow Acquisition, the Company assumed various equipment finance leases, the majority of which are under Master Line of Credit Agreements with certain banking institutions. As the rates were implicit in the leases, the Company determined that the carrying value of the leases as of the acquisition date equaled the fair value. With the implicit rates in the leases ranging from 3.7% to 14.5%, remaining lease terms of 10-33 months and monthly payments of $1,346-$57,362, the finance lease obligations were determined to be $3.5 million as of the Wow Acquisition date and recorded as current and noncurrent Finance Lease Liabilities on the Company’s condensed consolidated balance sheet upon consolidation.

The present value discount of the minimum operating lease payments above was $3.7 million as of June 30, 2023.

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.

---

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 six months ended June 30, 2023 and June 30, 2022, Mr. Heyward earned and was paid $0.3 million and $0.6 million in executive producer fees, respectively. Mr. Heyward also earned his $55,000 quarterly bonus during each of the quarters in 2023 and 2022. An unpaid balance of $55,000 is recorded as Due to Related Party on the Company's condensed consolidated balance sheet.

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 six months ended June 30, 2023 and June 30, 2022, Mr. Heyward has not earned royalties from musical compositions.

Pursuant to his employment agreement dated April 7, 2022, Michael Hirsh, CEO of Wow and its Frederator and Mainframe Studio subsidiaries, is entitled to an executive producer fee of $12,400 per one-half hour for each episode of any audio-visual production produced by Wow and any of its subsidiaries during the term of his employment, up to 52 episodes per year. During the six months ended June 30, 2023 and June 30, 2022, Mr. Hirsh has not earned executive producer fees under the employment agreement.

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-length industry standard royalty on all sales made by AHAA utilizing the licensed content. During the six months ended June 30, 2023 and June 30, 2022, Mr. Heyward has not earned royalties from this agreement.

On September 30, 2021, the Company entered into a Loan Agreement and Promissory Note with POW in the amount of $1,250,000, accruing simple interest at the annualized rate of 9%. The loan accrued interest of $0.2 million and $0.1 million as of June 30, 2023 and December 31, 2022, respectively, recorded with the principal balance within Note Receivable from Related Party on the Company’s condensed consolidated balance sheets. In addition, pursuant to its joint venture with POW and formation of the entity Stan Lee Universe, LLC, the Company included within Note Receivable from Related Party the amount owed to the Company related to the 50% non-controlling interest held by POW. POW has since repaid the loan during April 2023.

On July 19, 2022, the Company entered into a Shareholder Loan Agreement with YFE in the amount of 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 entire principal sum was required to be remitted to YFE within five days of the effective date. The principal plus interest must be repaid by no later than June 30, 2026. The loan accrued interest of USD $44,701 as of June 30, 2023 recorded with the principal balance within Note Receivable from Related Party on the Company’s condensed consolidated balance sheet.

On December 1, 2021, the Company entered into an Independent Contractor Agreement for a term of two years with F&M Film and Medien Beteiligungs GmbH (“F&M”), a company controlled by Dr. Stefan Piëch. Pursuant to the agreement, F&M would receive $150,000 annually, paid on a semi-monthly basis. In addition, F&M was granted 30,000 of the Company's RSUs that would vest in three six-month intervals beginning on December 1, 2021.

---

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):

			Three Months Ended												Six Months Ended
			June 30, 2023						June 30, 2022						June 30, 2023						June 30, 2022
Total Revenues:
Content Production & Distribution			$	10,148					$	21,042					$	23,381					$	21,496
Media Advisory & Advertising Services			890						1,082						1,846						2,067
Total Revenue			$	11,038					$	22,124					$	25,227					$	23,563
Net Loss:
Content Production & Distribution			$	(14,697)					$	(12,823)					$	(38,905)					$	(16,860)
Media Advisory & Advertising Services			(533)						(520)						(1,087)						(1,012)
Total Net Loss			$	(15,230)					$	(13,343)					$	(39,992)					$	(17,872)

Geographic Information

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

			Three Months Ended									Six Months Ended
			June 30, 2023						June 30, 2022			June 30, 2023						June 30, 2022
Total Revenues:
United States			$	7,362					$	15,441		$	16,001					$	15,993
Canada			1,871						5,709			5,426						6,596
United Kingdom			1,747						974			3,591						974
Other			58						—			209						—
Total Revenue			$	11,038					$	22,124		$	25,227					$	23,563

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v3.23.2

Cover - shares	6 Months Ended
	Jun. 30, 2023	Aug. 14, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	000-54389
Entity Registrant Name	KARTOON STUDIOS, INC.
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	20-4118216
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		35,060,546
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001355848
Amendment Flag	false

v3.23.2

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Current Assets:
Cash and Cash Equivalents	$ 4,839	$ 7,432
Investments in Marketable Securities (amortized cost of $53,113)	49,498	83,706
Accounts Receivable, net	8,328	15,558
Tax Credits Receivable, net	25,093	26,255
Prepaid Expenses and Other Assets	1,946	2,568
Total Current Assets	91,611	139,525
Noncurrent Assets:
Property and Equipment, net	2,136	2,400
Operating Lease Right of Use Assets, net	8,216	8,506
Finance Lease Right of Use Assets, net	2,533	2,338
Film and Television Costs, net	8,100	7,780
Investment in Your Family Entertainment AG	19,969	16,247
Intangible Assets, net	24,416	29,167
Goodwill	20,852	31,807
Other Assets	150	148
Total Assets	177,983	237,918
Current Liabilities:
Accounts Payable	6,236	11,436
Participations Payable	2,168	2,965
Accrued Expenses	1,234	895
Accrued Salaries and Wages	2,578	2,484
Deferred Revenue	4,971	9,065
Margin Loan	27,613	60,810
Production Facilities, net	17,793	18,282
Bank Indebtedness	4,755	1,741
Current Portion of Operating Lease Liability	868	802
Current Portion of Finance Lease Liability	1,635	1,623
Warrant Liability	7,202	548
Total Current Liabilities	77,187	110,908
Noncurrent Liabilities:
Deferred Revenue	3,369	3,369
Operating Lease Liability, Net Current Portion	7,763	8,095
Finance Lease Liability, Net Current Portion	1,223	1,020
Deferred Tax Liability	0	705
Other Noncurrent Liabilities	928	952
Total Liabilities	90,470	125,049
Commitments and Contingencies (Note 19)
Stockholders’ Equity:
Common Stock, $0.001 par value, 40,000,000 shares authorized, 35,054,573 and 31,918,552 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	351	319
Additional Paid-in Capital	773,377	762,418
Treasury Stock at Cost, 48,498 and 42,633 shares of common stock as of June 30, 2023 and December 31, 2022, respectively	(305)	(290)
Accumulated Deficit	(681,435)	(641,443)
Accumulated Other Comprehensive Loss	(6,218)	(9,925)
Total Kartoon Studios, Inc. Stockholders' Equity	85,770	111,079
Non-Controlling Interests in Consolidated Subsidiaries	1,743	1,790
Total Stockholders' Equity	87,513	112,869
Total Liabilities and Stockholders’ Equity	177,983	237,918
Related Party
Current Assets:
Other Receivable	1,487	2,844
Current Liabilities:
Other Current Liabilities	55	2
Nonrelated Party
Current Assets:
Other Receivable	420	1,162
Current Liabilities:
Other Current Liabilities	79	255
Preferred Stock Series A
Stockholders’ Equity:
Preferred stock	0	0
Preferred Stock Series B
Stockholders’ Equity:
Preferred stock	$ 0	$ 0

v3.23.2

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Amortized cost	$ 53,113	$ 90,321
Preferred stock, par value (in dollars per share)	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	40,000,000	40,000,000
Common stock, shares, issued (in shares)	35,054,573	31,918,552
Common stock, shares outstanding (in shares)	35,054,573	31,918,552
Treasury stock, shares (in shares)	48,498	42,633
Series A Preferred Stock
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	9,999,999	9,999,999
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Series B Preferred Stock
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	1	1
Preferred stock, shares issued (in shares)	1	1
Preferred stock, shares outstanding (in shares)	1	1

v3.23.2

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues:
Total Revenue	$ 11,038,000	$ 22,124,000	$ 25,227,000	$ 23,563,000
Operating Expenses:
Marketing and Sales	1,690,000	972,000	1,935,000	1,132,000
Direct Operating Costs	9,541,000	14,648,000	20,826,000	14,992,000
General and Administrative	8,370,000	15,105,000	17,595,000	25,962,000
Impairment of Property and Equipment	0	0	120,000	0
Impairment of Intangible Assets	0	0	4,023,000	0
Impairment of Goodwill	0	0	11,287,000	0
Total Operating Expenses	19,601,000	30,725,000	55,786,000	42,086,000
Loss from Operations	(8,563,000)	(8,601,000)	(30,559,000)	(18,523,000)
Interest Expense	(1,020,000)	(388,000)	(2,105,000)	(443,000)
Other Income (Expense), Net	(6,368,000)	(3,161,000)	(8,080,000)	2,256,000
Loss Before Income Tax Benefit	(15,951,000)	(12,150,000)	(40,744,000)	(16,710,000)
Income Tax Benefit	705,000	0	705,000	0
Net Loss	(15,246,000)	(12,150,000)	(40,039,000)	(16,710,000)
Net (Income) Loss Attributable to Non-Controlling Interests	16,000	(1,193,000)	47,000	(1,162,000)
Net Loss Attributable to Kartoon Studios, Inc.	$ (15,230,000)	$ (13,343,000)	$ (39,992,000)	$ (17,872,000)
Net Loss per Share (Basic) (in dollars per share)	$ (0.47)	$ (0.42)	$ (1.24)	$ (0.58)
Net Loss per Share (Diluted) (in dollars per share)	$ (0.47)	$ (0.42)	$ (1.24)	$ (0.58)
Weighted Average Shares Outstanding (Basic) (in shares)	32,379,852	31,551,991	32,180,202	30,968,201
Weighted Average Shares Outstanding (Diluted) (in shares)	32,379,852	31,551,991	32,180,202	30,968,201
Production Services
Revenues:
Total Revenue	$ 7,033,000	$ 10,018,000	$ 16,919,000	$ 10,018,000
Content Distribution
Revenues:
Total Revenue	3,012,000	8,529,000	6,313,000	8,942,000
Licensing & Royalties
Revenues:
Total Revenue	103,000	2,495,000	149,000	2,536,000
Media Advisory & Advertising Services
Revenues:
Total Revenue	$ 890,000	$ 1,082,000	$ 1,846,000	$ 2,067,000

v3.23.2

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Statement [Abstract]
Net Loss	$ (15,246)	$ (12,150)	$ (40,039)	$ (16,710)
Change in Accumulated Other Comprehensive Income (Loss):
Change in Unrealized Gain/(Losses) on Marketable Securities	(87)	(1,095)	743	(4,595)
Realized Losses on Marketable Securities Reclassified from AOCI into Earnings	720	44	2,257	123
Foreign Currency Translation Adjustments	704	(1,477)	707	(1,440)
Total Change in Accumulated Other Comprehensive Loss	1,337	(2,528)	3,707	(5,912)
Total Comprehensive Net Loss	(13,909)	(14,678)	(36,332)	(22,622)
Net (Income) Loss Attributable to Non-Controlling Interests	16	(1,193)	47	(1,162)
Total Comprehensive Net Loss Attributable to Kartoon Studios, Inc.	$ (13,893)	$ (15,871)	$ (36,285)	$ (23,784)

v3.23.2

Condensed Consolidated Statements of Stockholder's Equity - USD ($)	Total	Common Stock	Preferred Stock	Additional Paid-In Capital	Treasury Stock	Accumulated Deficit	Accumulated Other Comprehensive Loss	Non-Controlling Interest
Beginning balance (in shares) at Dec. 31, 2021		30,337,914
Beginning balance at Dec. 31, 2021	$ 144,653,000	$ 303,000	$ 0	$ 739,495,000	$ 0	$ (595,848,000)	$ (1,221,000)	$ 1,924,000
Beginning balance (in shares) at Dec. 31, 2021			0
Beginning balance (in shares) at Dec. 31, 2021					0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of Common Stock for Services (in shares)		38,620
Issuance of Common Stock for Services	311,000			311,000
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes (in shares)		60,366
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes	0	$ 1,000		(1,000)
Share Based Compensation	4,491,000			4,491,000
Unrealized Loss on Marketable Securities	(3,421,000)						(3,421,000)
Foreign Translation Adjustment	37,000						37,000
Net Loss	(4,562,000)					(4,531,000)		(31,000)
Ending balance (in shares) at Mar. 31, 2022		30,436,900
Ending balance at Mar. 31, 2022	141,509,000	$ 304,000	$ 0	744,296,000	$ 0	(600,379,000)	(4,605,000)	1,893,000
Ending balance (in shares) at Mar. 31, 2022			0
Ending balance (in shares) at Mar. 31, 2022					0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Shares Issued for Wow Acquisition (in shares)		1,105,708	1
Shares Issued for Wow Acquisition	11,554,000	$ 11,000		11,543,000
Fair Value of Replacement Options Related to Wow Acquisition	1,213,000			1,213,000
Issuance of Common Stock for Services (in shares)		73,667
Issuance of Common Stock for Services	442,000	$ 1,000		441,000
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes (in shares)		107,241
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes	0	$ 1,000		(1,000)
Share Based Compensation	4,245,000			4,245,000
Unrealized Loss on Marketable Securities	(1,051,000)						(1,051,000)
Foreign Translation Adjustment	(1,477,000)						(1,477,000)
Distributions to Non-Controlling Interests	(1,200,000)							(1,200,000)
Net Loss	(12,148,000)					(13,341,000)		1,193,000
Ending balance (in shares) at Jun. 30, 2022		31,723,516
Ending balance at Jun. 30, 2022	$ 143,087,000	$ 317,000	$ 0	761,737,000	$ 0	(613,720,000)	(7,133,000)	1,886,000
Ending balance (in shares) at Jun. 30, 2022			1
Ending balance (in shares) at Jun. 30, 2022					0
Beginning balance (in shares) at Dec. 31, 2022	31,918,552	31,918,552
Beginning balance at Dec. 31, 2022	$ 112,869,000	$ 319,000	$ 0	762,418,000	$ (290,000)	(641,443,000)	(9,925,000)	1,790,000
Beginning balance (in shares) at Dec. 31, 2022			1
Beginning balance (in shares) at Dec. 31, 2022	42,633				42,633
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes (in shares)		78,088			3,700
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes	$ (9,000)	$ 1,000		(1,000)	$ (9,000)
Fractional Shares Issued Upon Reverse Stock Split (in shares)		117,144
Share Based Compensation	910,000			910,000
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss	2,367,000						2,367,000
Foreign Translation Adjustment	3,000						3,000
Net Loss	(24,793,000)					(24,762,000)		(31,000)
Ending balance (in shares) at Mar. 31, 2023		32,113,784
Ending balance at Mar. 31, 2023	$ 91,347,000	$ 320,000	$ 0	763,327,000	$ (299,000)	(666,205,000)	(7,555,000)	1,759,000
Ending balance (in shares) at Mar. 31, 2023			1
Ending balance (in shares) at Mar. 31, 2023					46,333
Beginning balance (in shares) at Dec. 31, 2022	31,918,552	31,918,552
Beginning balance at Dec. 31, 2022	$ 112,869,000	$ 319,000	$ 0	762,418,000	$ (290,000)	(641,443,000)	(9,925,000)	1,790,000
Beginning balance (in shares) at Dec. 31, 2022			1
Beginning balance (in shares) at Dec. 31, 2022	42,633				42,633
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of Common Stock for Services (in shares)		404,251
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes (in shares)					5,865
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes					$ (15,930)
Ending balance (in shares) at Jun. 30, 2023	35,054,573	35,054,573
Ending balance at Jun. 30, 2023	$ 87,513,000	$ 351,000	$ 0	773,377,000	$ (305,000)	(681,435,000)	(6,218,000)	1,743,000
Ending balance (in shares) at Jun. 30, 2023			1
Ending balance (in shares) at Jun. 30, 2023	48,498				48,498
Beginning balance (in shares) at Mar. 31, 2023		32,113,784
Beginning balance at Mar. 31, 2023	$ 91,347,000	$ 320,000	$ 0	763,327,000	$ (299,000)	(666,205,000)	(7,555,000)	1,759,000
Beginning balance (in shares) at Mar. 31, 2023			1
Beginning balance (in shares) at Mar. 31, 2023					46,333
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of Common Stock for Services (in shares)		404,251
Issuance of Common Stock for Services	997,000			997,000
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes (in shares)		224,988			2,165
Issuance of Common Stock for Vested Restricted Stock Units, Net of Shares Withheld for Taxes	(6,000)	$ 29,000		(29,000)	$ (6,000)
Proceeds From Warrant Exchange, net (in shares)		2,311,550
Proceeds From Warrant Exchange, net	4,856,000	$ 2,000		4,854,000
Warrant Inducement	3,511,000			3,511,000
Share Based Compensation	717,000			717,000
Realized Loss Reclassified from AOCI to Earnings, net change in Unrealized Loss	633,000						633,000
Foreign Translation Adjustment	704,000						704,000
Net Loss	$ (15,246,000)					(15,230,000)		(16,000)
Ending balance (in shares) at Jun. 30, 2023	35,054,573	35,054,573
Ending balance at Jun. 30, 2023	$ 87,513,000	$ 351,000	$ 0	$ 773,377,000	$ (305,000)	$ (681,435,000)	$ (6,218,000)	$ 1,743,000
Ending balance (in shares) at Jun. 30, 2023			1
Ending balance (in shares) at Jun. 30, 2023	48,498				48,498

v3.23.2

Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash Flows from Operating Activities:
Net Loss	$ (40,039,000)	$ (16,710,000)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Amortization of Film and Television Costs	474,000	2,253,000
Depreciation and Amortization of Property, Equipment & Intangible Assets	1,324,000	1,103,000
Amortization of Right of Use Asset	1,486,000	700,000
Amortization of Premium on Marketable Securities	322,000	545,000
Share Based Compensation Expense	1,627,000	8,736,000
Impairment Loss of Intangible Assets	4,023,000	0
Impairment of Goodwill	11,287,000	0
Impairment of Property and Equipment	120,000	0
Warrant Incentive Expense	16,174,000	0
Deferred Income Taxes	(705,000)	0
Marketing Expenses in Exchange for Stock	1,195,000	0
Gain on Revaluation of Equity Investments in Your Family Entertainment AG	(3,427,000)	(2,901,000)
Unrealized (Gain) Loss for Foreign Currency of Equity Investments in Your Family Entertainment AG	(295,000)	1,296,000
Gain on Warrant Revaluation	(6,202,000)	(269,000)
Realized Loss on Marketable Securities	2,257,000	123,000
Stock Issued for Services	997,000	312,000
Bad Debt Expense	246,000	51,000
Other Non-Cash Items	(3,000)	0
Decrease (Increase) in Operating Assets:
Accounts Receivable, net	7,217,000	6,078,000
Other Receivable	749,000	384,000
Tax Credits Earned (less capitalized)	(8,931,000)	(4,247,000)
Tax Credits Received, net	10,419,000	1,702,000
Film and Television Costs, net	(689,000)	(6,015,000)
Prepaid Expenses and Other Assets	(563,000)	(469,000)
Increase (Decrease) in Operating Liabilities:
Accounts Payable	(5,219,000)	(4,439,000)
Accrued Salaries & Wages	54,000	338,000
Accrued Expenses	339,000	(2,048,000)
Accrued Production Costs	473,000	(1,438,000)
Participations Payable	(813,000)	1,283,000
Deferred Revenue	(4,216,000)	(3,455,000)
Lease Liability	(297,000)	(352,000)
Due To Related Party	53,000	(63,000)
Other Liabilities	(24,000)	(42,000)
Net Cash Used in Operating Activities	(10,587,000)	(17,544,000)
Cash Flows from Investing Activities:
Cash Payment for Wow, net of Cash Acquired	0	(37,311,000)
Cash Payment for Equity Investment in Your Family Entertainment	0	(9,540,000)
Cash Payment for Ameba, net of Cash Acquired	0	(3,893,000)
Repayments from/(Loans to) Related Party for Note Receivables	1,357,000	(128,000)
Proceeds from Principal Collections on Marketable Securities	460,000	4,420,000
Proceeds from Sales and Maturities of Marketable Securities	34,169,000	5,536,000
Investment in Intangible Assets, net	0	(22,000)
Purchase of Property & Equipment	(38,000)	(401,000)
Net Cash Provided by (Used in) Investing Activities	35,948,000	(41,339,000)
Cash Flows from Financing Activities:
Proceeds from Margin Loan	8,582,000	58,980,000
Repayments of Margin Loan	(41,778,000)	(4,522,000)
(Repayments of)/Proceeds from Production Facilities, net	(1,494,000)	2,495,000
Proceeds from Bank Indebtedness, net	2,931,000	1,291,000
Proceeds From Warrant Exchange, net	5,299,000	0
Repayments of Notes Payable	0	(9,000)
Principal Payments on Finance Lease Obligations	(1,216,000)	(442,000)
Distributions to Non-Controlling Interest	0	(1,200,000)
Shares Withheld for Taxes on Vested Restricted Shares	(15,000)	0
Payment for Warrant Put Option Exercise	(250,000)	0
Net Cash (Used in) Provided by Financing Activities	(27,941,000)	56,593,000
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	(13,000)	46,000
Net Decrease in Cash, Cash Equivalents and Restricted Cash	(2,593,000)	(2,244,000)
Beginning Cash, Cash Equivalents and Restricted Cash	7,432,000	10,060,000
Ending Cash, Cash Equivalents and Restricted Cash	4,839,000	7,816,000
Schedule of Non-Cash Financing and Investing Activities
Leased Assets Obtained in Exchange for New Finance Lease Liabilities	1,216,000	0
Warrants Issued for Services	443,000	0
Shares Issued for Wow Acquisition	0	11,554,000
Fair Value of Replacement Options Granted Related to Wow Acquisition	$ 0	$ 1,213,000

v3.23.2

Organization and Business	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Business	Organization and Business Organization and Nature of Business Kartoon Studios, Inc. (formerly known as Genius Brands International, Inc.; “we,” “us,” “our,” or 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. These streaming services are available on Apple TV, Apple iOS, Android TV, Android mobile, Amazon Prime, Amazon Fire, Tubi, Roku, Comcast, Cox, Dish/Sling, Xumo, Pluto, Samsung Smart TVs, LG Smart TVs, as well as YouTube, among other platforms. The Company's in-house owned and produced animated shows include Stan Lee’s Superhero Kindergarten starring Arnold Schwarzenegger, Llama Llama starring Jennifer Garner, 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, HBO Max, Paramount+, Nickelodeon, and satellite, cable and terrestrial broadcasters around the world. Through the Company’s investments in Germany’s Your Family Entertainment (“YFE”), a publicly traded company on the Frankfurt Exchange (RTV-Frankfurt), it has gained access to one of the largest animation catalogues in Europe with over 50 titles consisting of over 1,600 episodes, and a global distribution network which currently covers over 60 territories worldwide. Through the ownership of Wow, the Company has 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”) and its Channel Frederator Network, the largest animation focused multi-channel network on YouTube with over 2,500 channels. 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”). The Company also owns Beacon Media Group (“Beacon”), the largest media buying service for children in North America. Beacon represents over 30 major toy companies, including Playmobile, Bandai Toys, Bazooka and Moose Toys. In addition, the Company owns the Canadian company Ameba Inc. (“Ameba”), which distributes SVOD service for kids and has become the focal point of revenue growth for TOON Media Networks’ subscription offering. The Company and its affiliates provide world class animation production studios a catalogue representing thousands of hours of premium global content for children, a broadcast system for delivering that content and an in-house consumer products licensing infrastructure to fully exploit the content. On June 23, 2023, the Company was renamed Kartoon Studios, Inc. On June 26, 2023, the Company transferred its listing to NYSE American LLC (“NYSE American”). In connection with listing on NYSE American, the Company voluntarily delisted from the Nasdaq Capital Market (“Nasdaq”). The Company’s common stock began trading on NYSE American under the new symbol “TOON” on June 26, 2023. Recent Developments Common Stock On February 6, 2023, the Company’s board of directors approved a 1-for-10 reverse stock split of the Company’s outstanding shares of common stock. The reverse stock split was effected on February 10, 2023 at 5:00 p.m. Eastern time. At the effective time, every 10 issued and outstanding shares of the Company’s common stock were converted into one share of common stock. Any fractional shares of common stock resulting from the reverse stock split were rounded up to the nearest whole post-split share and no shareholders received cash in lieu of fractional shares. The par value of each share of common stock remained unchanged. The reverse stock split proportionately reduced the number of shares of authorized common stock from 400,000,000 to 40,000,000 shares. The reverse stock split also applied to common stock issuable upon the exercise of the Company's outstanding warrants and stock options. The reverse stock split did not affect the authorized preferred stock of 10,000,000 shares. Unless noted, all references to shares of common stock and per share amounts contained in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect a 1-for-10 reverse stock split. Exercise of 2021 Warrants and Issuance of New Warrants On June 26, 2023, the Company entered into warrant exercise inducement offer letters (the “Letter Agreements”) with certain existing institutional and accredited investors pursuant to which such investors agreed to exercise for cash certain warrants issued by the Company in January 2021 (the “2021 Warrants”) to purchase 2,311,550 shares of common stock (the “Exercise”). To induce the Exercise by holders of the 2021 Warrants, the Company also amended the exercise price of the 2021 Warrants from $23.70 per share (as adjusted pursuant to a 1-for-10 reverse stock split of our outstanding shares of common stock effected on February 10, 2023) to $2.50 per share pursuant to the terms of the 2021 Warrants. In consideration for the Exercise, the exercising holders received warrants to purchase up to 4,623,100 shares of common stock, and The Special Equities Group, LLC, a division of Dawson James Securities, which acted as the warrant solicitation agent for the Exercise, received a warrant to purchase up to 161,809 shares of common stock (collectively, the “Warrants”). Prior to closing of the Exercise, the Company had 32,755,748 shares of common stock outstanding. Following the repricing of the 2021 Warrants, certain 2021 Warrants were exercised for an aggregate of 2,311,550 shares, resulting in 35,067,298 outstanding shares. Therefore, the issuance of 4,784,909 shares of common stock upon exercise of the Warrants would have constituted an excess of 19.99% of the outstanding shares of common stock of the Company (determined as of the date of, and without regard for, the issuance of the Warrants and the shares issued upon exercise of the repriced 2021 Warrants). The Warrants will be exercisable at any time at a price per share of $2.50 upon approval by the Company’s shareholders of (a) a proposal to approve an amendment to the articles of incorporation to increase the authorized shares of common stock from 40,000,000 shares to 190,000,000 shares with a corresponding increase in the total number of authorized shares of capital stock of the Company from 50,000,000 shares to 200,000,000 shares (the “Share Increase Proposal”) and (b) approve, in accordance with 713(A) of the NYSE American Company Guide, the issuance of more than 19.99% of the Company’s outstanding common stock upon the exercise of the Warrants (the “Warrant Exercise Proposal” and together with the Share Increase Proposal, the “Proposals”). The Company is holding its annual shareholder meeting on August 25, 2023, at which the Company will seek the shareholders approval of the Proposals. The Warrants have a term of exercise of five years from the date of Shareholder Approvals. Pursuant to the Letter Agreements, the Company filed a registration statement on Form S-3 covering the resale of the shares of common stock issuable upon the exercise of the Warrants on July 26, 2023, which registration statement is currently pending with the Securities and Exchange Commission (“SEC”). Liquidity As of June 30, 2023, the Company had cash and cash equivalents of $4.8 million, which decreased by $2.6 million as compared to December 31, 2022. The decrease was primarily due to cash used in financing activities of $27.9 million, primarily due to repayment of the margin loan, net proceeds, offset by the cash received from the warrant exchange and $10.6 million used in operating activities. The cash used was offset by cash provided by sales and maturities of marketable securities of $34.2 million. As of June 30, 2023, the Company held available-for-sale marketable securities with a fair value of $49.5 million, which decreased by $34.2 million as compared to December 31, 2022 due to sales and maturities during the six months ended June 30, 2023. The available-for-sale securities consist principally of corporate and government debt securities and are also available as a source of liquidity. The Company borrowed an additional $8.6 million from its investment margin account during the six months ended June 30, 2023 and repaid $41.8 million primarily with cash received from sales and maturities of marketable securities. During the six months ended June 30, 2023, the borrowed amounts were primarily used for operational costs. The interest rates for the borrowings fluctuate based on the Federal Funds Rate plus 0.65%. The weighted average interest rates were 0.67% and 1.66% on average margin loan balances of $44.2 million and $27.1 million as of June 30, 2023 and December 31, 2022, respectively. The Company incurred interest expense on the loan of $0.6 million and $0.2 million during the three months ended June 30, 2023 and June 30, 2022, respectively. The Company incurred interest expense on the loan of $1.3 million and $0.2 million during the six months ended June 30, 2023 and June 30, 2022, 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. As of June 30, 2023 and December 31, 2022, the Company’s margin loan balances were $27.6 million and $60.8 million, respectively. The Company is subject to financial and customary affirmative and negative non-financial covenants on the revolving demand facility, revolving equipment lease line and treasury risk management facility that have an aggregate total outstanding balance of $6.7 million USD ($8.9 million CAD). The Company was in technical violation of two financial covenants requiring a minimum fixed charge ratio and a maximum senior funded debt to EBITDA ratio as of June 30, 2023. 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 treasury risk management facility can be called at anytime by the lender as per the original terms of the facilities. The risk of the lender demanding repayment can be deemed greater due to the breach of covenants, however, at the time the financial statements were available for issuance, the lender has not provided the Company with a formal notification of a covenant breach. Historically, the Company has incurred net losses. For the three months ended June 30, 2023 and June 30, 2022, the Company reported net losses of $15.2 million and $13.3 million, respectively. For the six months ended June 30, 2023 and June 30, 2022, the Company reported net losses of $40.0 million and $17.9 million, respectively. The Company reported net cash used in operating activities of $10.6 million and $17.5 million for the six months ended June 30, 2023 and June 30, 2022, respectively. As of June 30, 2023, the Company had an accumulated deficit of $681.4 million and total stockholders’ equity of $87.5 million. As of June 30, 2023, the Company had current assets of $91.6 million, including cash and cash equivalents of $4.8 million and marketable securities of $49.5 million, and current liabilities of $77.2 million. The Company had working capital of $14.4 million as of June 30, 2023, compared to working capital of $28.6 million as of December 31, 2022.

v3.23.2

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Summary of Significant Accounting Policies Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”). The accompanying condensed consolidated financial statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to state fairly the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Loss, Statements of Stockholders’ Equity, and Statements of Cash Flows for all periods presented. Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. Out-of-Period Adjustment The Company identified an error in the Company’s condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2023 and balance sheet for the period ended March 31, 2023. The Company’s deferred tax liability, and net loss for the period ended March 31, 2023, are overstated by $705,000. In accordance with Staff Accounting Bulletin (“SAB”) No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” The Company believes that the impact of the error was not material to the financial statements for the three months ended March 31, 2023, based on an evaluation of both quantitative and qualitative factors. As a result, the Company determined that correcting the prior period financial statements for such an immaterial error would not require the Form 10-Q for the three months ended March 31, 2023 to be amended. The Company has elected to record an out-of-period adjustment and record the amount in the condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2023, the condensed consolidated statement of cash flow for the six months ended June 30, 2023 and the condensed consolidated statements of stockholders’ equity for the three months ended June 30, 2023. The Company does not believe recording the amount in the condensed consolidated statement of operations and comprehensive loss for the three months ended June 30, 2023 has a material impact on the Company’s results of operations. Segments The Company determines its operating segments on the same basis that it assesses performance and makes operating decisions. The Company principally operates in two distinct business segments: the Content Production & Distribution Segment, which produces and distributes children’s content, and the Media Advisory & Advertising Services Segment, which provides media and advertising services. These segments are reflective of how the Company’s Chief Operating Decision Maker (“CODM”) reviews operating results for the purposes of allocating resources and assessing performance. The Company has identified its Chief Executive Officer as the CODM. The segments are organized around the products and services provided to customers and represent the Company’s reportable segments. The accounting policies for each segment are the same as for the Company as a whole. Refer to Note 21 for additional information. Principles of Consolidation and Basis of Presentation The Company’s condensed consolidated financial statements include the accounts of Kartoon Studios, Inc. and its wholly-owned subsidiaries. The Company consolidates all majority-owned subsidiaries and variable interest entities where the Company has been determined to be the primary beneficiary. The interests in a variable interest entity which the Company does not control are recorded as non-controlling interests. Non-consolidated investments are accounted for using the equity method or the fair value option and recorded at fair value with changes recognized within Other Income (Expense), Net on the condensed consolidated statements of operations and comprehensive income (loss). All significant intercompany accounts and transactions have been eliminated upon consolidation. Business Combinations The Company accounts for transactions that are classified as business combinations in accordance with the Financial Accounting Standards Boards’ (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). Once a business is acquired, the Company allocates the fair value of the purchase consideration to the tangible assets, liabilities, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. As required, preliminary fair values are determined upon acquisition, with the final determination of the fair values being completed within the one-year measurement period from the date of acquisition. The valuation of acquired assets and assumed liabilities requires significant judgment and estimates, especially with respect to intangible assets. The valuation of intangible assets requires that the Company use valuation techniques such as the income approach. The income approach includes the use of a discounted cash flow model, which includes discounted cash flow scenarios and requires significant estimates such as future expected revenue, expenses, capital expenditures and other costs, and discount rates. The Company estimates the fair value based upon assumptions that management believes to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. Acquisition-related expenses and any related restructuring costs are recognized separately from the business combination and are expensed as incurred. Variable Interest Entities The Company holds an interest in Stan Lee University, LLC (“SLU”), an entity that is considered a variable interest entity (“VIE”). The variable interest relates to 50% ownership in the entity that is comprised of the Stan Lee Assets and that requires additional financial support from the Company to continue operations. The Company is considered the primary beneficiary and is required to consolidate the VIE. In evaluating whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and the Company’s decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important. In determining whether the Company has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, the Company evaluates all of its economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s design, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of the Company’s interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have the potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of the Company’s economic interests is a matter that requires the exercise of professional judgment. The Company continuously assesses whether it is the primary beneficiary of a variable interest entity as changes to existing relationships or future transactions may result in the Company consolidating its collaborators or partners. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Foreign Currency The Company considers the U.S. dollar (“USD”) to be its functional currency for its United States and certain Canadian based operations. The Canadian dollar (“CAD”) is the functional currency of Wow, a wholly-owned subsidiary of the Company. Accordingly, the financial information is translated from CAD to USD for inclusion in the Company’s condensed consolidated financial statements. Revenue and expenses are translated at average exchange rates prevailing during the period, and assets and liabilities are translated at exchange rates in effect at the balance sheet date. Resulting translation adjustments are included as a component of Accumulated Other Comprehensive Income (Loss), net in stockholders’ equity. Foreign exchange transaction gains and losses are included in Other Income (Expense), Net on the condensed consolidated statements of operations. Foreign Currency Forward Contracts The Company’s wholly-owned subsidiary, Wow, is exposed to fluctuations in various foreign currencies against its functional currency, the Canadian dollar. Wow uses foreign currency derivatives, specifically foreign currency forward contracts (“FX forwards”), to manage its exposure to fluctuations in the CAD-USD exchange rates. FX forwards involve fixing the foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date. The FX forwards are typically settled in CAD for their fair value at or close to their settlement date. The Company does not currently designate any of the FX forwards under hedge accounting and therefore reflects changes in fair value as unrealized gains or losses immediately in earnings as part of the revenue generated from the transactions hedged. The Company does not hold or use these instruments for speculative or trading purposes. Per FASB ASC 815-10-45, Derivatives and Hedging, the Company has elected an accounting policy to offset the fair value amounts recognized for eligible forward contract derivative instruments. Therefore, the Company presents the asset or liability position of the FX forwards that are with the same counterparty net as either an asset or liability in its condensed consolidated balance sheets. As of June 30, 2023, the gross amounts of FX forwards in an asset and liability position subject to a master netting arrangement were $17.7 million and $17.7 million, respectively, resulting in an asset recorded within Prepaid Expenses and Other Assets on the condensed consolidated balance sheet. The change in fair value of $0.1 million and $0.2 million for the three and six months ended June 30, 2023, respectively, was recorded as an unrealized gain within Production Services Revenue on the condensed consolidated statement of operations. The Company did not hold FX forwards prior to the Wow Acquisition. Cash and Cash Equivalents The Company considers all highly liquid debt instruments with initial maturities of three months or less to be cash equivalents. As of June 30, 2023 and December 31, 2022, the Company had cash and cash equivalents of $4.8 million and $7.4 million, respectively, that at times could exceed FDIC or CDIC limits. Allowance for Doubtful Accounts Accounts receivables are presented on the condensed consolidated balance sheets, net of estimated uncollectible amounts. The carrying amounts of trade accounts receivable and unbilled accounts receivable represent the maximum credit risk exposure of these assets. On a quarterly basis, in accordance with FASB ASC 326, Measurement of Credit Losses on Financial Instruments (“ASC 326”), the Company evaluates the collectability of outstanding accounts receivable balances to determine an allowance for doubtful accounts that reflects its best estimate of the lifetime expected credit losses. The allowance for credit loss is based on an assessment of past events, current economic conditions, and forecasts of future events. Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful. As of June 30, 2023 and December 31, 2022, the Company recorded an allowance for doubtful accounts of $112,250 and $65,421, respectively. The Company limits its exposure to this credit risk through a credit approval process and credit monitoring procedures. In addition, Wow’s contracts with customers usually require upfront and milestone payments throughout the production process. The Company’s customer base is mainly comprised of major Canadian, American, and worldwide studios, distributors, broadcasters, toy companies and AVOD and SVOD platforms that have been customers for several years. Tax Credits Receivable The Canadian federal government and certain provincial governments in Canada provide programs that are designed to assist film and television production in the form of refundable tax credits or other incentives. Estimated amounts receivable in respect of refundable tax credits are recorded as an offset to the related production operating cost, or to investment in film and television costs when the conditions for eligibility of production assistance based on the government’s criteria are met, the qualifying expenditures are made and there is reasonable assurance of realization. Determination of when and if the conditions of eligibility have been met is based on management’s judgment, and the amount recognized is based on management’s estimates of qualifying expenditures. The ultimate collection of previously recorded estimates is subject to ordinary course audits from the CRA and provincial agencies. Changes in administrative policies by the CRA or subsequent review of eligibility documentation may impact the collectability of these estimates. The Company continuously reviews the results of these audits to determine if any circumstances arise that in management’s judgment would result in a previously recognized amount to be considered no longer collectible. The Company classifies the tax credits receivable as current based on their normal operating cycle. Government assistance, in the form of refundable tax credits, is relied upon as a key component of production financing. These amounts are claimed from the CRA through the submission of income tax returns and can take up to 18 to 24 months from the date of the first tax credit dollar being earned to being received. As this financing is fundamental to the Company’s ability to produce animated productions and generate revenue in the normal course of business, the normal operating cycle for such assets is considered to be a 12 to 24-month period, or the time it takes for the CRA to assess and refund the tax credits earned. As of June 30, 2023 and December 31, 2022, $25.1 million and $26.3 million in current tax credit receivables related to Wow’s film and television productions were recorded, net of $0.4 million and $0.2 million recorded as an allowance for doubtful accounts, respectively. Marketable Debt Securities The Company purchases high quality, investment grade securities from diverse issuers. Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date. Currently, the Company classifies its investments in marketable securities as available-for-sale (“AFS”) and records these investments at fair value. The securities are available to support current operations and, accordingly, the Company classifies the investments as current assets without regard to their contractual maturity. Unrealized gains or losses on available-for-sale securities for which the Company expects to fully recover the amortized cost basis are recognized in Accumulated Other Comprehensive Income (Loss), a component of stockholders’ equity. Gains and losses as a result of sales of securities are reclassified from previously unrealized gains and losses on AFS securities in Accumulated Other Comprehensive Income (Loss) to Other Income (Expense), Net, in the condensed consolidated statements of operations. On a quarterly basis, the Company reviews its AFS securities to assess declines in fair value for credit losses. For each AFS security with an amortized cost that exceeds its fair value, the Company first determines if it intends to sell or is more-likely-than-not required to sell the debt security before the expected recovery of its amortized cost. If it intends to sell or will more-likely-than-not be required to sell the security, the Company recognizes the impairment as a credit loss in the condensed consolidated statements of operations by writing down the security’s amortized cost to its fair value. For AFS securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss. The portion of the decline in fair value that is due to factors other than a credit loss is recognized in Accumulated Other Comprehensive Income (Loss) as an unrealized loss. The Company reports accrued interest receivable separately from the AFS securities and has elected not to measure an allowance for credit losses for accrued interest receivables. Uncollectible accrued interest is written off when the Company determines that no additional interest payments will be received. Classified within Other Receivables on the condensed consolidated balance sheets, approximately $0.2 million and $0.3 million in interest income were receivable as of June 30, 2023 and December 31, 2022, respectively. Interest earned on investment securities is reported in interest income, net of applicable adjustments for accretion of discounts and amortization of premiums accounted for over the life of the security or, in the case of callable securities, through the first call date, using the level yield method, with no prepayment anticipated. Equity-Method Investments When the Company does not have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial policies, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option available under U.S. GAAP. Significant influence generally exists when the firm owns 20% to 50% of the entity’s common stock or in-substance common stock. In general, the Company accounts for investments acquired at fair value. See Note 4 for further information about the Company’s investment in YFE’s equity securities accounted for under the fair value option. Property and Equipment Property and equipment are recorded at cost. Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from two to seven years. Maintenance, repairs, and renewals, which neither materially add to the value of the assets nor appreciably prolong their lives, are charged to expense as incurred. Gains and losses from any dispositions of property and equipment are reflected in the condensed consolidated statement of operations. Whenever events or circumstances change, an assessment is made as to whether there has been impairment to the value of long-lived assets by determining whether projected undiscounted cash flows generated by the applicable asset exceed its net book value as of the assessment date. During the first quarter of 2023, the Company performed an interim review of its long-lived assets due to decreases in the Company's market value. There were not any events or circumstances that required the Company to reassess its assets during the three months ended June 30, 2023. Refer to Note 6 for details. Right of Use Leased Assets The Company determines at contract inception whether the arrangement is a lease based on its ability to control a physically distinct asset and determines the classification of the lease as either operating or finance under FASB ASC 842, Leases (“ASC 842”). For all leases, the Company combines all components of the lease including related nonlease components as a single component. Operating leases are reflected as Operating Lease Right of Use (“ROU”) Assets and Operating Lease Liabilities and finance leases are reflected as Finance Lease ROU assets and Finance Lease Liabilities on the condensed consolidated balance sheets. Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company estimates the incremental borrowing rate to reflect the profile of collateralized borrowing over the expected term of the leases based on the information available on the lease commencement date or for leases existing upon the date of initial adoption of ASC 842, the date of adoption. The implicit rates within the Company’s existing finance leases are determinable and therefore used to determine the present value of finance lease payments. The operating lease ROU assets also include any lease payments made prior to lease commencement date and excludes lease incentives. Specific lease terms used in computing the ROU assets and lease liabilities may include options to extend or terminate the lease when the Company is reasonably certain that it will exercise the option. The Company will reassess expected lease terms based on changes in circumstances that indicate options may be more or less likely to be exercised. Lease expense is recognized on a straight-line basis over the lease term within General and Administrative Expenses on the condensed consolidated statements of operations. Lease incentives are recognized as a reduction to the lease expense on a straight-line basis over the underlying lease term. Refer to Notes 7 and 19 for details of the Company’s leases. Film and Television Costs The Company capitalizes production costs for episodic series produced in accordance with FASB ASC 926-20, Entertainment-Films - Other Assets - Film Costs. Accordingly, production costs are capitalized at actual cost and amortized using the individual-film-forecast method, whereby these costs are amortized, and participations costs are accrued based on the ratio of the current period’s revenues to management’s estimate of ultimate revenue expected to be recognized from each production. Productions in Development Capitalized development costs are reclassified to productions in progress once the project is approved and physical production of the film or television program commences. Development costs include the costs of acquiring film rights to books, scripts or original screenplays and the third-party costs to adapt such projects, including visual development and design. Advances or contributions received from third parties to assist in development are deducted from these costs. Productions in Progress For the Company’s film and television programs in progress, capitalized costs include all direct production and financing costs incurred during production that are expected to provide future economic benefit to the Company. Borrowing costs and depreciation are capitalized to the cost of a film or television program until substantially all of the activities necessary to prepare the film or television program for its use intended by management are complete. Completed Productions Completed productions are carried at the cost of proprietary film and television programs which have been produced by the Company or to which the Company has acquired distribution rights, less accumulated amortization and accumulated impairment losses. Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results. In addition, in the normal course of business, some titles are more successful or less successful than anticipated. Management reviews the ultimate revenue and cost estimates on a title-by-title basis, when an event or change in circumstances indicates that the fair value of the production may be less than its unamortized cost. This may result in a change in the rate of amortization of film costs and participations and/or a write-down of all or a portion of the unamortized costs of the film or television production to its estimated fair value. An impairment charge is recorded in the amount by which the unamortized costs exceed the estimated fair value. These write-downs are included in amortization expense within Direct Operating Expenses on the condensed consolidated statements of operations. All capitalized costs that exceed the initial market firm commitment revenue are expensed in the period of delivery of the episodes. Additionally, for episodic series, from time to time, the Company develops additional content, improved animation and bonus songs/features for its existing content. After the initial release of the episodic series, the costs of significant improvement to existing products are capitalized while routine and periodic alterations to existing products are expensed as incurred. Goodwill and Intangible Assets Goodwill represents the excess of purchase price over the estimated fair value of net assets acquired in business combinations accounted for by the acquisition method. In accordance with FASB ASC 350, Intangibles Goodwill and Other, goodwill and certain intangible assets are presumed to have indefinite useful lives and are thus not amortized, but subject to an impairment test annually or more frequently if indicators of impairment arise. The Company completes the annual goodwill and indefinite-lived intangible asset impairment tests at the end of each fiscal year. To test for goodwill impairment, the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit, of which the Company has two, is less than its carrying value. If impairment is indicated in the qualitative assessment, or, if management elects to initially perform a quantitative assessment of goodwill, the impairment test uses a one-step approach. The fair value of a reporting unit is compared with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Changes in future results, assumptions, and estimates after the measurement date may lead to an outcome where additional impairment charges would be required in future periods. Specifically, actual results may vary from the Company’s forecasts and such variations may be material and unfavorable, thereby triggering the need for future impairment tests where the conclusions may differ in reflection of prevailing market conditions. Further, continued adverse market conditions could result in the recognition of additional impairment if the Company determines that the fair values of its reporting units have fallen below their carrying values. Intangible assets have been acquired, either individually or with a group of other assets, and were initially recognized and measured based on fair value. Annual amortization of these intangible assets is computed based on the straight-line method over the remaining economic life of the asset. During the first quarter of 2023, the Company performed an interim review of its long-lived assets due to decreases in the Company’s market value. There were not any events or circumstances that required the Company to reassess its assets during the three months ended June 30, 2023. Refer to Note 9 for details. Debt and Attached Equity-Linked Instruments The Company measures issued debt on an amortized cost basis, net of debt premium/discount and debt issuance costs amortized using the effective interest rate method or the straight-line method when the latter does not lead to materially different results. The Company analyzes freestanding equity-linked instruments including warrants attached to debt to determine whether the instrument meets the definition of the derivative and whether it is considered indexed to the Company’s own stock. If the instrument is not considered indexed to the Company’s stock, it is classified as an asset or liability recorded at fair value. If the instrument is considered indexed to the Company’s stock, the Company analyzes additional equity classification requirements per FASB ASC 815-40, Contract’s in Entity’s Own Equity. When the requirements are met, the instrument is recorded as part of the Company’s equity, initially measured based on its relative fair value with no subsequent re-measurement. When the equity classification requirements are not met, the instrument is recorded as an asset or liability and is measured at fair value with subsequent changes in fair value recorded in earnings. When required, the Company also considers the bifurcation guidance for embedded derivatives per ASC 815-15, Embedded Derivatives. Treasury stock The Company records the repurchase of shares of its common stock at cost on the trade date of the transaction. These shares are considered treasury stock, which is a reduction to stockholders’ equity. Treasury stock is included in authorized and issued shares but excluded from outstanding shares. Revenue Recognition The Company accounts for revenue according to standard FASB ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenue is measured based on the consideration specified in a contract with a customer. Revenue is recognized when a customer obtains control of the products or services in a contract. Judgment is required in determining the timing of whether the transfer of control occurs at a point in time or over time and is discussed below. The Company evaluates each contract to identify separate performance obligations as a contract with a customer may have one or more performance obligations. Consideration in a contract with multiple performance obligations is allocated to the separate performance obligations based on their stand-alone selling prices. If a stand-alone selling price is not determinable, the Company estimates the stand-alone selling price using an adjusted market assessment approach. The Company’s main sources of revenue are derived from animation production services provided to third parties, the sale of licenses for the distribution of films and television programs, advertising revenues, and merchandising and licensing sales. The Company has identified the following material and distinct performance obligations: •Providing animation production services. •Licensing rights to exploit Functional Intellectual Property (“functional IP” is defined as intellectual property that has significant standalone functionality, such as the ability to be played or aired. Functional IP derives a substantial portion of its utility from its significant standalone functionality). •Licensing rights to exploit Symbolic Intellectual Property (“symbolic IP” is intellectual property that is not functional as it does not have significant standalone use and substantially all of the utility of symbolic IP is derived from its association with the entity’s past or ongoing activities, including its ordinary business activities, such as the Company’s licensing and merchandising programs associated with its animated content). •Providing media and advertising services to clients. •Fixed and variable fee advertising and subscription-based revenue generated from the Kartoon Studios Kartoon Channel!, the Frederator owned and operated YouTube channels and revenues generated from the operation of its multi-channel network on YouTube. •Options to renew or extend a contract at fixed terms (while this performance obligation is not significant for the Company’s current contracts, it could become significant in the future). •Options on future seasons of content at fixed terms (while this performance obligation is not significant for the Company’s current contracts, it could become significant in the future). Production Services Animation Production Services For revenue from animation production services, the customer controls the output throughout the production process. Each production is made to an individual customer’s specifications and if the contract is terminated by the customer, the Company is entitled to be reimbursed for any costs incurred to date, and for any prepaid commitments made, plus the agreed contractual mark-up. Revenue and the associated costs of such contracts are recognized over time on a percentage of completion basis - i.e., as the project is being produced, prior to it being delivered to the customer. The percentage-of-completion is calculated based upon the proportion of costs incurred cumulatively to total expected costs. Changes in revenue recognized as a result of adjustments to total expected costs are recognized in profit or loss on a prospective basis. Invoices related to these projects are issued based on the achievement of milestones during the project or other contractual terms. The difference between contractual payments received and revenue recognized is recorded as deferred revenue when receipts exceed revenue. When revenue exceeds milestone billings, the Company recognizes this difference as unbilled accounts receivable within other receivables on the Company’s condensed consolidated balance sheet. Unbilled accounts receivables are transferred to accounts receivable when the Company has an unconditional right to consideration. When the outcome of an arrangement cannot be estimated reliably, revenue is recognized only to the extent of the expenses incurred that are recoverable. Content Distribution Film and Television Licensing The Company recognizes revenue related to licensed rights to exploit functional IP in two ways; for minimum guarantees, the Company recognizes fixed revenue upon delivery of content and the start of the license period and for functional IP contracts with a variable component, the Company estimates revenue such that it is probable there will not be a material reversal of revenue in future periods. The Company recognizes revenue related to licensed rights to exploit symbolic IP substantially similarly to functional IP. Although it has a different recognition pattern from functional IP, the valuation method is substantially the same, depending on the nature of the license. Invoices related to these projects are issued based on the achievement of milestones during the project or other contractual terms. The difference between contractual payments received and revenue recognized is recorded as deferred revenue when receipts exceed revenue. When revenue exceeds milestone billings, the Company recognizes this difference as unbilled accounts receivable within other receivables on the Company’s condensed consolidated balance sheet. Unbilled accounts receivables are transferred to accounts receivable when the Company has an unconditional right to consideration. Advertising revenues The Company sells advertising and subscriptions on its wholly-owned AVOD service, Kartoon Channel!, and its SVOD distribution outlets, Kartoon Channel! Kidaverse, and Ameba TV. Advertising sales are generated in the form of either flat rate promotions or advertising impressions served. For flat rate promotions with a fixed term, revenue is recognized when all five revenue recognition criteria under ASC 606 are met. For impressions served, the Company delivers a certain minimum number of impressions on the channel to the advertiser for which the advertiser pays a contractual cost per mille impressions (“CPM”). Impressions served are reported on a monthly basis, and revenue is reported in the month the impressions are served. For subscription-based revenue, revenue is recognized when a customer downloads the mobile device application and their credit card is charged. Upon the acquisition of Wow, the Company generates advertising revenue from Frederator’s owned and operated YouTube channels as well as revenues generated from the operation of its multi-channel network on YouTube. Revenue is recognized when services are provided in accordance with the Company’s agreement with YouTube, the price is fixed or determinable, and collection of the related receivable is probable. Receivables are usually collectable within 30 days. Licensing & Royalties Merchandising and licensing The Company enters into merchandising and licensing agreements that allow licensees to produce merchandise utilizing certain of the Company’s intellectual property. For minimum guaranteed amounts that make up a contract, revenue is recognized over time, over the term of the license period commencing on the date at which the licensees can use and benefit from the licensed content. Variable consideration in excess of non-refundable guaranteed amounts, such as royalties and other contractual payments are recognized as revenue when the amounts are known and become due provided collectability is reasonably assured. Invoices are issued based on the contractual terms of an agreement and are usually payable within 30-45 days. Product Sales The Company recognizes revenue related to product sales when the Company completes its performance obligation, which is when the goods are transferred to the buyer. Media Advisory & Advertising Services Media and Advertising Services The Company provides media and advertising services to clients. Revenue is recognized when the services are performed. When the Company purchases advertising for clients on linear and across digital and streaming platforms and receives a commission, the commissions are recognized as revenue in the month the advertising is displayed. Gross Versus Net Revenue Presentation The Company evaluates individual arrangements with third parties to determine whether the Company acts as principal or agent under the terms. To the extent that the Company acts as the principal in an arrangement, revenues are reported on a gross basis, resulting in revenues and expenses being classified in their respective financial statement line items. To the extent that the Company acts as the agent in an arrangement, revenues are reported on a net basis, resulting in revenues being presented net of any expenses incurred in providing agency services. Determining whether the Company acts as principal or agent is based on an evaluation of which party has substantial risks and rewards of ownership under the terms of an arrangement. The most significant factors that the Company considers include identification of the primary obligor, as well as which party has credit risk, general and inventory risk and the latitude or ability in establishing prices. Direct Operating Costs Direct operating costs include costs of the Company’s product sales, non-capitalizable film costs, film and television cost amortization expense, impairment expenses related to film and television costs, and participation expense related to agreements with various animation studios, post-production studios, writers, directors, musicians or other creative talent with which the Company is obligated to share net profits of the properties on which they have rendered services. Upon the acquisition of Wow, the Company also includes the salaries and related service production employee costs of Wow as part of its direct operating costs. Share-Based Compensation The Company issues stock-based awards to employees and non-employees that are generally in the form of stock options or restricted stock units (“RSUs”). Share-based compensation cost is recorded for all options and RSUs based on the grant-date fair value of the award. The fair value of stock options is estimated at the date of grant using the Black-Scholes-Merton (“BSM”) option pricing model, which requires management to make assumptions with respect to the fair value on the grant date. The assumptions are as follows: (i) the expected term assumption of the award is based on the Company’s historical exercise and post-vesting behavior (ii) the expected volatility assumption is based on historical and implied volatilities of the Company’s common stock calculated based on a period of time generally commensurate with the expected term of the award; (iii) the risk-free interest rates are based on the implied yield available on U.S. treasury zero-coupon issues with an equivalent expected term; (iv) and the expected dividend yields of the Company’s stock are based on history and expectations of future dividends payable. In the case of RSUs, the fair value is calculated based on the Company’s underlying common stock on the date of grant. The Company recognizes compensation expense over the requisite service period ratably, using the graded attribution method, which is in-substance, recognizing multiple awards based on the vesting schedule. The Company has elected to account for forfeitures when they occur. The Company issues authorized shares available for issuance under the Company’s 2015 Incentive Plan and the Company’s 2020 Incentive Plan upon employees’ exercise of their stock options. Debt Issuance Costs Debt issuance costs relate to the issuance of Wow’s Production Facilities and are recorded as a reduction to the carrying amount of debt and amortized to interest expense using the effective interest method over the respective terms of the facilities. Debt issuance costs directly attributable to the acquisition or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time the assets are substantially ready for their intended use or sale. Debt issuance costs as of June 30, 2023 and December 31, 2022 were insignificant. Earnings Per Share Basic earnings (loss) per share of common stock (“EPS”) is calculated by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted EPS is calculated by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding, plus the assumed exercise of all dilutive securities using the treasury stock or “as converted” method, as appropriate. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are antidilutive. Income Taxes Deferred income tax assets and liabilities are recognized based on differences between the financial statement and tax basis of assets and liabilities using presently enacted tax rates. At each balance sheet date, the Company evaluates the available evidence about future taxable income and other possible sources of realization of deferred tax assets and records a valuation allowance that reduces the deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that more likely than not will be realized. 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 $100,000 CAD. As of June 30, 2023 and December 31, 2022, the Company had 14 and 12 bank deposit accounts with an aggregate uninsured balance of $3.1 million and $3.4 million, respectively. The Company has a managed account with a financial institution. The managed account maintains its investments in marketable securities of $49.5 million and $83.7 million as of June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022, 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 June 30, 2023, the Company had four customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 81.2% of the total revenue. During the six months ended June 30, 2023, the Company had three customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 71.4% of the total revenue. As of June 30, 2023, the Company had four customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 70.4% of the total accounts receivable as of June 30, 2023. During the three months ended June 30, 2022, the Company had five customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 81.3% of the total revenue. During the six months ended June 30, 2022, the Company had five customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 76.3% of the total revenue. As of June 30, 2022, the Company had four customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 65.0% of the total accounts receivable as of June 30, 2022. 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 bad debt. Fair value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: •Level 1 - Observable inputs such as quoted prices for identical instruments in active markets; •Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and •Level 3 - Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The carrying amounts of cash, restricted cash, receivables, payables, accrued liabilities, bank indebtedness and the margin loan approximate fair value due to the short-term nature of the instruments. The Company used the fair values of the liability-classified derivative warrants revalued at the end of each reporting period determined using the BSM model (Level 2) with standard valuation inputs. Refer to Note 16 for additional details. The investment in YFE is also revalued at the end of each reporting period based on the trading price of YFE (Level 1). Refer to Note 4 for additional details. Upon the acquisition of Wow, foreign currency forward contracts that are not traded in active markets were assumed. These are fair valued using observable forward exchange rates at the measurement dates and interest rates corresponding to the maturity of the contracts (Level 2). The fair values of the AFS securities are generally based on quoted market prices, where available. These fair values are obtained primarily from third-party pricing services, which generally use Level 1 or Level 2 inputs for the determination of fair value to facilitate fair value measurements and disclosures. Level 2 securities primarily include corporate securities, securities from states, municipalities and political subdivisions, mortgage-backed securities, United States Government securities, foreign government securities, and certain other asset-backed securities. For securities not actively traded, the pricing services may use quoted market prices of comparable instruments or a variety of valuation techniques, incorporating inputs that are currently observable in the markets for similar securities. The following table summarizes the marketable securities measured at fair value by level within the fair value hierarchy as of June 30, 2023 (in thousands): Level 1 Level 2 Total Fair Value Marketable investments: Corporate Bonds $ 18,299  $ –  $ 18,299  U.S. Treasury 15,367  –  15,367  U.S. agency and government sponsored securities –  6,343  6,343  U.S. states and municipalities –  9,489  9,489  Total $ 33,666  $ 15,832  $ 49,498  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 FASB ASC 320, Investments – Debt and Equity Securities. An allowance for credit loss was not recorded for the marketable securities as of June 30, 2023 and December 31, 2022. Refer to Note 5 for additional details. Financial and nonfinancial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs and include the Company’s goodwill, intangible assets and film and television costs. Recently Adopted Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 replaces the “incurred loss” credit losses framework with a new accounting standard that requires management's measurement of the allowance for credit losses to be based on a broader range of reasonable and supportable information for lifetime credit loss estimates. The new model, referred to as the current expected credit loss (“CECL”) model, applies to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. The CECL model does not apply to AFS debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. ASU No. 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. On October 16, 2019, the FASB approved a proposal to change the effective date of ASU No. 2016-13 for smaller reporting companies, such as the Company, delaying the effective date to fiscal years beginning after December 31, 2022, including interim periods within those fiscal periods. Early adoption is permitted for interim and annual reporting periods. The Company has adopted the ASU as of January 1, 2023. The adoption of this ASU resulted in updated disclosures within our financial statements, but did not impact the financial statements. Refer to Note 5 for additional details.

v3.23.2

Variable Interest Entity	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Variable Interest Entity	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 and six months ended June 30, 2023, SLU generated an insignificant amount of net income. The Company's net investment as of June 30, 2023 of $0.8 million remained the same as compared to December 31, 2022. There were no changes in facts and circumstances that occurred during the six months ended June 30, 2023 that would result in a re-evaluation of the VIE assessment.

v3.23.2

Investment in Equity Interest	6 Months Ended
	Jun. 30, 2023
Equity Method Investments and Joint Ventures [Abstract]
Investment in Equity Interest	Investment in Equity InterestAs of June 30, 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 June 30, 2023, the fair value of the investment was determined to be $20.0 million recorded within noncurrent assets on the Company’s condensed consolidated balance sheets. The fair value as of June 30, 2023 increased by $3.7 million, as compared to December 31, 2022. The increase is comprised of the net impact of an increase in YFE’s stock price, resulting in a gain in fair value of $3.4 million, and the effect of remeasuring the investment balance from the EURO to USD, resulting in a gain of $0.3 million. The total change in fair value is recorded within Other Income (Expense), Net on the Company’s condensed consolidated statement of operations. As of June 30, 2023 and December 31, 2022, the Company’s ownership in YFE was 44.8%.

v3.23.2

Marketable Securities	6 Months Ended
	Jun. 30, 2023
Marketable Securities [Abstract]
Marketable Securities	Marketable Securities The Company classifies and accounts for its marketable debt securities as AFS and the securities are stated at fair value. On January 1, 2023, the Company adopted ASU 2016-13 Measurement of Credit Losses on Financial Instruments (Topic 326), which replaced the legacy GAAP other-than-temporary impairment (“OTTI”) model with a credit loss model. The credit loss model applicable to AFS debt securities requires the recognition of credit losses through an allowance account but retains the concept from the OTTI model that credit losses are recognized once securities become impaired. The adoption of the ASU did not have a material impact on the Company's financial statements. The investments in marketable securities had an adjusted cost basis of $53.1 million and a market value of $49.5 million as of June 30, 2023. The balances consisted of the following securities (in thousands): Adjusted Cost Unrealized Gain/(Loss) Fair Value Corporate Bonds $ 19,594  $ (1,295) $ 18,299  U.S. Treasury 16,355  (988) 15,367  U.S. Agency and Government Sponsored Securities 6,899  (556) 6,343  U.S. States and Municipalities 10,265  (776) 9,489  Total $ 53,113  $ (3,615) $ 49,498  The investments in marketable securities as of December 31, 2022 had an adjusted cost basis of $90.3 million and a market value of $83.7 million. The balances consisted of the following securities (in thousands): Adjusted Cost Unrealized Gain/(Loss) Fair Value Corporate Bonds $ 40,823  $ (2,579) $ 38,244  U.S. Treasury 20,869  (1,313) 19,556  Mortgage-Backed 5,980  (606) 5,374  U.S. Agency and Government Sponsored Securities 10,781  (1,221) 9,560  U.S. States and Municipalities 11,801  (895) 10,906  Asset-Backed 67  (1) 66  Total $ 90,321  $ (6,615) $ 83,706  The Company holds 31 AFS securities, all of which were in an unrealized loss position and have been in an unrealized loss position for a period greater than twelve months as of June 30, 2023. The AFS securities held by the Company as of December 31, 2022 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 June 30, 2023 and December 31, 2022, 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 $0.7 million and $2.3 million were recognized in earnings during the three and six months ended June 30, 2023, respectively, primarily due to selling securities prior to maturity to prevent further market condition losses on the securities. In addition, realized losses of $44,241 and $123,292 were recognized during the three and six months ended June 30, 2022, respectively, due to prepayments of principal on certain mortgage-backed securities. The contractual maturities of the Company’s marketable investments as of June 30, 2023 were as follows (in thousands): Fair Value Due within 1 year $ 13,821  Due after 1 year through 5 years 35,677  Total $ 49,498  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.

v3.23.2

Property and Equipment, Net	6 Months Ended
	Jun. 30, 2023
Property, Plant and Equipment [Abstract]
Property and Equipment, Net	Property and Equipment, Net The Company has property and equipment as follows (in thousands): June 30, 2023 December 31, 2022 Furniture and Equipment $ 180  $ 224  Computer Equipment 212  315  Leasehold Improvements 2,259  2,273  Software 184  263  Production Equipment —  23  Property and Equipment, Gross 2,835  3,098  Less Accumulated Depreciation (572) (530) Foreign Currency Translation Adjustment (127) (168) Property and Equipment, Net $ 2,136  $ 2,400  During the three months ended June 30, 2023 and 2022, the Company recorded depreciation expense of $0.1 million and $0.2 million, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded depreciation expense of $0.2 million for both respective periods. During the three months ended March 31, 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 groups property and equipment assets was written down to zero and an Impairment of Property and Equipment of $119,727 was recorded within Operating Expenses in the condensed consolidated statement of operations.

v3.23.2

Right of Use Leased Asset	6 Months Ended
	Jun. 30, 2023
Right Of Use Leased Asset
Right of Use Leased Asset	Right of Use Leased Asset Right of use asset consisted of the following (in thousands): June 30, 2023 December 31, 2022 Office Lease Assets $ 10,313  $ 10,313  Equipment Lease Assets 5,144  3,928  Right Of Use Asset, Gross 15,457  14,241  Accumulated Amortization (4,091) (2,587) Foreign Currency Translation Adjustment (617) (810) Right Of Use Asset, Net $ 10,749  $ 10,844  Refer to Note 19 for details on the Company’s lease commitments. As of June 30, 2023, the weighted-average lease term for the Company’s operating leases was 87 months and the weighted-average discount rate was 10.5%. As of December 31, 2022, the weighted-average lease term for operating leases was 93 months and the weighted-average discount rate was 10.4%. Operating lease costs during the three and six months ended June 30, 2023 were $0.7 million and $0.8 million, respectively, recorded within General and Administrative Expenses on the Company’s condensed consolidated statement of operations. During the three and six months ended June 30, 2023 the Company recorded finance lease costs of $0.6 million and $1.2 million, respectively, comprised of ROU amortization of $0.5 million and $1.1 million, respectively, recorded within General and Administrative Expenses on the Company’s condensed consolidated statement of operations and accretion of interest expense of $53,533 and $103,727, respectively, recorded within Other Income (Expense) on the Company’s condensed consolidated statement of operations. Lease costs during the three and six months ended June 30, 2022 were $0.6 million and $0.7 million, respectively, recorded within General and Administrative Expenses on the Company’s condensed consolidated statement of operations.

v3.23.2

Film and Television Costs, Net	6 Months Ended
	Jun. 30, 2023
Other Industries [Abstract]
Film and Television Costs, Net	Film and Television Costs, Net The following table highlights the activity in Film and Television Costs as of June 30, 2023 and December 31, 2022 (in thousands): Film and Television Costs, Net as of December 31, 2021 $ 2,940  Additions to Film and Television Costs 18,364  Disposals (11) Film Amortization Expense & Impairment Losses (12,996) Foreign Currency Translation Adjustment (517) Film and Television Costs, Net as of December 31, 2022 7,780  Additions to Film and Television Costs 734  Disposals (7) Film Amortization Expense (474) Foreign Currency Translation Adjustment 67  Film and Television Costs, Net as of June 30, 2023 $ 8,100

v3.23.2

Intangible Assets, Net and Goodwill	6 Months Ended
	Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets, Net and Goodwill	Intangible Assets, Net and Goodwill Intangible Assets, Net The Company had the following intangible assets (in thousands) with their weighted average remaining amortization period (in years): Intangible Assets, Net Weighted Average Remaining Amortization Period June 30, 2023 December 31, 2022 Customer Relationships 7.0 $ 17,325  $ 17,325  Digital Networks 14.8 803  3,537  Trade Names 67.9 10,360  11,783  Technology – –  293  Other Intangible Assets (a) – –  325  Intangible Assets, Gross 28,488  33,263  Less Accumulated Amortization (2,752) (2,398) Foreign Currency Translation Adjustment (1,320) (1,698) Intangible Assets, Net $ 24,416  $ 29,167  _______________________ (a)Represents the remaining unamortized logo and website intangible assets related to the merger with A Squared. During the three months ended June 30, 2023 and 2022, the Company recorded intangible asset amortization expense of $0.5 million and $0.9 million, respectively. During the six months ended June 30, 2023 and 2022, the Company recorded intangible asset amortization expense of $1.1 million and $0.7 million, respectively. Pursuant to ASC 350-30, General Intangibles Other than Goodwill, the Company reviews its intangible assets periodically to determine if the value should be retired or impaired due to recent events. During the three months ended March 31, 2023, due to changes in the Company’s financial projections, the Company reassessed its definite and indefinite- lived intangible asset values to determine whether impairments existed. As a result, 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 due to a decrease in an asset group’s estimated undiscounted cash flows. In addition, due to a decrease in its estimated present value of cash flows, it was determined that the Frederator tradename, an indefinite-lived intangible asset, was impaired by $1.3 million. The Company did not incur any impairment charges during the six months ended June 30, 2022. Expected future amortization of intangible assets subject to amortization as of June 30, 2023 is as follows (in thousands): Fiscal Year: 2023 1,051  2024 2,098  2025 2,098  2026 2,098  2027 2,098  Thereafter 8,933  Total $ 18,376  As of June 30, 2023, $6.0 million of the Company’s intangible assets related to the acquired trade names from the Wow acquisition have indefinite lives and are not subject to amortization. Goodwill In 2013, the Company recognized $10.4 million in goodwill as a result of its merger with A Squared, which was allocated to the Content Production and Distribution reporting unit. During the first quarter of 2021, the Company recognized $9.7 million in goodwill as a result of its acquisition of Beacon, which was allocated to its Media Advisory and Advertising Services reporting unit. As a result of the Ameba Acquisition during the first quarter of 2022 and the Wow Acquisition during the second quarter of 2022, the Company recorded goodwill of $1.5 million, including a tax basis step-up of $0.8 million and $21.4 million, respectively. The goodwill resulting from the Ameba and Wow Acquisitions was allocated to the Content Production and Distribution reportable segment. As Wow's functional currency is the CAD, goodwill changes each period due to currency exchange differences. As of December 31, 2022, the goodwill allocated to the Company’s Media Advisory and Advertising Services reporting unit was written down to zero due to impairment. During the three months ended March 31, 2023, the Company reassessed its remaining goodwill allocated to the Content Production and Distribution reporting unit for impairment. As a result, the Company recorded an Impairment of Goodwill of $11.3 million within Operating Expenses in its condensed consolidated statement of operations. Included in the goodwill impairment was $0.9 million of goodwill allocated to Ameba. Due to the write-off of Ameba’s intangible assets and goodwill, the deferred income tax liability balance of $0.7 million, recorded as of December 31, 2022 as part of the estimated underlying tax basis of the acquired assets, was reversed and recorded as an income tax benefit on the condensed consolidated statement of operations during the six months ended June 30, 2023. The Company did not incur any impairment charges during the six months ended June 30, 2022. The following table summarizes the changes in the carrying amount of goodwill by reporting unit (in thousands): Content Production & Distribution Media Advisory & Advertising Services Total Goodwill as of December 31, 2022 $ 31,807  $ –  $ 31,807  Goodwill Impairment (11,287) –  (11,287) Foreign Currency Translation Adjustment 332  –  332  Goodwill as of June 30, 2023 $ 20,852  $ –  $ 20,852

v3.23.2

Deferred Revenue	6 Months Ended
	Jun. 30, 2023
Revenue from Contract with Customer [Abstract]
Deferred Revenue	Deferred RevenueAs of June 30, 2023 and December 31, 2022, the Company had total short term and long term deferred revenue of $8.3 million and $12.4 million, respectively. The decrease in deferred revenue is primarily related to productions on various shows nearing completion of the project as of June 30, 2023, compared to the progress as of December 31, 2022. 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.

v3.23.2

Margin Loan	6 Months Ended
	Jun. 30, 2023
Debt Instruments [Abstract]
Margin Loan	Margin LoanThe Company borrowed an additional $8.6 million from its investment margin account during the six months ended June 30, 2023 and repaid $41.8 million primarily with cash received from sales and maturities of marketable securities. During the six months ended June 30, 2023, the borrowed amounts were primarily used for operational costs. The interest rates for the borrowings fluctuate based on the Federal Funds Rate plus 0.65%. The weighted average interest rates were 0.67% and 1.66% on average margin loan balances of $44.2 million and $27.1 million as of June 30, 2023 and December 31, 2022, respectively. The Company incurred interest expense on the loan of $0.6 million and $0.2 million during the three months ended June 30, 2023 and June 30, 2022, respectively. The Company incurred interest expense on the loan of $1.3 million and $0.2 million during the six months ended June 30, 2023 and June 30, 2022, 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. As of June 30, 2023 and December 31, 2022, the Company’s margin loan balances were $27.6 million and $60.8 million, respectively.

v3.23.2

Bank Indebtedness and Production Facilities	6 Months Ended
	Jun. 30, 2023
Debt Instruments [Abstract]
Bank Indebtedness and Production Facilities	Bank Indebtedness and Production Facilities Upon the acquisition of Wow, the Company assumed certain credit facilities (together the “Facilities”). The Facilities are comprised of the following: Revolving Demand Facility On December 15, 2022, the Company amended the revolving demand facility. Draws of up to $8.0 million CAD (previously $5.0 million CAD) under the revolving demand facility can be made in Canadian or US dollars at the option of the Company by way of bank prime rate loans, Canadian Bankers’ Acceptances, Secured Overnight Financing Rate (“SOFR”) or letters of credit. Canadian or US dollar bank prime borrowings bear interest at a rate equal to bank prime plus 2.00% per annum.          For other draws under the revolving facility, the respective loans bear interest at a rate equal to Canadian Bankers’ Acceptances or SOFR plus 3.75% per annum. As of June 30, 2023 and December 31, 2022, the Company had an outstanding balance of $4.8 million USD ($6.3 million CAD) and $1.7 million USD ($2.4 million CAD), 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. Equipment Lease Line On March 17, 2023, the Company amended the terms of its equipment lease line. Under the equipment lease line, the Company may borrow up to $4.0 million CAD (previously $4.3 million CAD). Each 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 3.94% to 7.18% with remaining lease terms of 2 - 37 months. As of June 30, 2023 and December 31, 2022, the Company has drawn down a total of $2.0 million USD ($2.6 million CAD) and $2.4 million USD ($3.3 million CAD), respectively, under the equipment lease line. As of June 30, 2023 and December 31, 2022, the outstanding balances, net of repayments, were included within current and noncurrent Finance Lease Liabilities on the Company’s condensed consolidated balance sheets. Treasury Risk Management Facility Advances of up to $500,000 CAD available under the treasury risk management facility are subject to market rates as determined by the lender’s treasury department or derivatives group at the time of the drawdown request. The maximum term for foreign exchange forward contracts and interest rate swaps is one year. The treasury risk management facility is payable on demand at anytime. As of June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022, the Company had an outstanding balance of $17.8 million USD ($22.5 million CAD), including $0.8 million USD ($1.1 million CAD) of interest and $18.3 million USD ($24.8 million CAD), including $1.1 million USD ($1.5 million CAD) of interest, respectively, recorded as Production Facilities, net within current liabilities on the Company’s condensed consolidated balance sheets. Equipment Lease Facility Separate from the equipment lease line described above, the Company 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 $1.4 million CAD in total. Each equipment lease is for a term of three years and will have specific financing terms such as finance amount and the bank’s lease base rate. The outstanding balance as of June 30, 2023 and December 31, 2022, net of repayments, was $0.5 million USD ($0.7 million CAD) for both respective periods and is 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, revolving equipment lease line and treasury risk management facility that have an aggregate total outstanding balance of $6.7 million USD ($8.9 million CAD). The Company was in technical violation of two financial covenants requiring a minimum fixed charge ratio and a maximum senior funded debt to EBITDA ratio as of June 30, 2023. 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 treasury risk management facility can be called at anytime by the lender as per the original terms of the facilities. The risk of the lender demanding repayment can be deemed greater due to the breach of covenants, however, at the time the financial statements were available for issuance, the lender has not provided the Company with a formal notification of a covenant breach. As of December 31, 2022, the Company met all required financial and non-financial covenants.

v3.23.2

Stockholders’ Equity	6 Months Ended
	Jun. 30, 2023
Equity [Abstract]
Stockholders’ Equity	Stockholders’ Equity Common Stock On February 6, 2023, the Company’s board of directors approved a 1-for-10 reverse stock split of the Company’s outstanding shares of common stock. The reverse stock split was effected on February 10, 2023 at 5:00 p.m. Eastern time. At the effective time, every 10 issued and outstanding shares of the Company’s common stock were converted into one share of common stock. Any fractional shares of common stock resulting from the reverse stock split were rounded up to the nearest whole post-split share and no shareholders received cash in lieu of fractional shares. The par value of each share of common stock remained unchanged. The reverse stock split proportionately reduced the number of shares of authorized common stock from 400,000,000 to 40,000,000 shares. The reverse stock split also applied to common stock issuable upon the exercise of the Company’s then outstanding warrants and stock options. The reverse stock split did not affect the authorized preferred stock of 10,000,000 shares. Unless noted, all references to shares of common stock and per share amounts contained in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect a 1-for-10 reverse stock split. As of June 30, 2023, the total number of authorized shares of common stock was 40,000,000. As of June 30, 2023 and December 31, 2022, there were 35,054,573 and 31,918,552 shares of common stock outstanding, respectively. During the six months ended June 30, 2023, the Company issued 404,251 shares of common stock for services. Included in the issued shares were 400,000 shares of common stock valued at $1.0 million, or $2.47 per share, issued to the Company's lawyers and recorded as a prepaid retainer fee within Prepaid Expenses and Other Assets on the condensed consolidated balance sheet. The prepaid fee is reduced as the Company incurs lawyer fees. As of June 30, 2023, the remaining prepaid expense balance was $0.7 million. 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 our shareholders, 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 shareholders, 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 are exchangeable into shares of the Company’s common stock in accordance with their terms. Holders of the ExchangeCo shares are 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. 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 grants the Voting Trustee that number of votes at the meetings of the Company’s shareholders 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 is 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, will not exercise voting rights with respect to the applicable shares. As of June 30, 2023 and December 31, 2022, there were 0 shares of Series A Convertible Preferred Stock outstanding. As of June 30, 2023 and December 31, 2022, there was 1 share of Series B Preferred Stock outstanding. Treasury Stock During the six months ended June 30, 2023, 5,865 shares of common stock with a cost of $15,930 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.

v3.23.2

Stock Options	6 Months Ended
	Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]
Stock Options	Stock Options On September 18, 2015, the Company adopted the Kartoon Studios, Inc. 2015 Incentive Plan (the “2015 Plan”). The total number of shares that can be issued under the 2015 Plan is 216,767 shares. On September 1, 2020, the Company adopted the Kartoon Studios, Inc. 2020 Incentive Plan (the “2020 Plan”). On August 4, 2020, the Board of Directors voted to adopt the 2020 Plan. The shares available for issuance under the 2020 Plan were approved by shareholders on August 27, 2020. The 2020 Plan as approved by the shareholders increased 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. The following table summarizes the stock option activity during the six months ended June 30, 2023: Number of Shares Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Outstanding at December 31, 2022 1,351,421 6.49 $ 15.09  Granted – – $ –  Exercised – – $ –  Forfeited/Cancelled (118,964) 6.71 $ 15.52  Expired (17,016) – $ 29.95  Outstanding at June 30, 2023 1,215,441 6.01 $ 14.84  Unvested at June 30, 2023 236,637 5.47 $ 9.95  Vested and exercisable June 30, 2023 978,804 6.14 $ 16.03  During the six months ended June 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 June 30, 2023 and 2022, the Company recognized $0.3 million and $0.4 million, respectively, in share-based compensation expense related to stock options. During the six months ended June 30, 2023 and 2022, the Company recognized $0.7 million and $0.8 million, respectively, in share-based compensation expense related to stock options. The unrecognized share-based compensation expense as of June 30, 2023 was $0.6 million which will be recognized through the second quarter of 2025 assuming the underlying grants are not cancelled or forfeited. The outstanding shares as of June 30, 2023 had an aggregated intrinsic value of zero. Restricted Stock Units During the six months ended June 30, 2023, the Company granted 34,431 fully vested RSUs to the Company’s board members and consultants, with a fair market value of $0.1 million. The RSUs expire five years from the date of grant. An aggregate of 303,076 shares of common stock were issued during the six months ended June 30, 2023 as a result of vested RSUs. The following table summarizes the Company’s RSU activity during the six months ended June 30, 2023: Restricted Stock Units Weighted- Average Remaining Contractual Life Weighted- Average Grant Date Fair Value per Share Unvested at December 31, 2022 1,151,944 3.41 $ 13.67  Granted 34,431 4.88 $ 2.89  Vested (83,799) 3.83 $ 8.93  Forfeited/Cancelled – – $ –  Unvested at June 30, 2023 1,102,576 2.91 $ 13.74  During the six months ended June 30, 2023, upon termination of certain employees, the Company accelerated the vesting of any unvested shares held by such employees pursuant to their employment agreements. This resulted in 27,576 shares becoming immediately vested and issued on the separation dates and $0.1 million in expense recognized by the Company. During the three months ended June 30, 2023 and 2022, the Company recognized $0.4 million and $3.9 million, respectively, in share-based compensation expense related to RSUs. During the six months ended June 30, 2023 and 2022, the Company recognized $0.9 million and $7.9 million, respectively, in share-based compensation expense related to RSU awards. The unvested share-based compensation as of June 30, 2023 was $0.9 million which will be recognized through the second quarter of 2025 assuming the underlying grants are not cancelled or forfeited. The total fair value of shares vested during the six months ended June 30, 2023 was $0.8 million.

v3.23.2

Restricted Stock Units	6 Months Ended
	Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]
Restricted Stock Units	Stock Options On September 18, 2015, the Company adopted the Kartoon Studios, Inc. 2015 Incentive Plan (the “2015 Plan”). The total number of shares that can be issued under the 2015 Plan is 216,767 shares. On September 1, 2020, the Company adopted the Kartoon Studios, Inc. 2020 Incentive Plan (the “2020 Plan”). On August 4, 2020, the Board of Directors voted to adopt the 2020 Plan. The shares available for issuance under the 2020 Plan were approved by shareholders on August 27, 2020. The 2020 Plan as approved by the shareholders increased 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. The following table summarizes the stock option activity during the six months ended June 30, 2023: Number of Shares Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Outstanding at December 31, 2022 1,351,421 6.49 $ 15.09  Granted – – $ –  Exercised – – $ –  Forfeited/Cancelled (118,964) 6.71 $ 15.52  Expired (17,016) – $ 29.95  Outstanding at June 30, 2023 1,215,441 6.01 $ 14.84  Unvested at June 30, 2023 236,637 5.47 $ 9.95  Vested and exercisable June 30, 2023 978,804 6.14 $ 16.03  During the six months ended June 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 June 30, 2023 and 2022, the Company recognized $0.3 million and $0.4 million, respectively, in share-based compensation expense related to stock options. During the six months ended June 30, 2023 and 2022, the Company recognized $0.7 million and $0.8 million, respectively, in share-based compensation expense related to stock options. The unrecognized share-based compensation expense as of June 30, 2023 was $0.6 million which will be recognized through the second quarter of 2025 assuming the underlying grants are not cancelled or forfeited. The outstanding shares as of June 30, 2023 had an aggregated intrinsic value of zero. Restricted Stock Units During the six months ended June 30, 2023, the Company granted 34,431 fully vested RSUs to the Company’s board members and consultants, with a fair market value of $0.1 million. The RSUs expire five years from the date of grant. An aggregate of 303,076 shares of common stock were issued during the six months ended June 30, 2023 as a result of vested RSUs. The following table summarizes the Company’s RSU activity during the six months ended June 30, 2023: Restricted Stock Units Weighted- Average Remaining Contractual Life Weighted- Average Grant Date Fair Value per Share Unvested at December 31, 2022 1,151,944 3.41 $ 13.67  Granted 34,431 4.88 $ 2.89  Vested (83,799) 3.83 $ 8.93  Forfeited/Cancelled – – $ –  Unvested at June 30, 2023 1,102,576 2.91 $ 13.74  During the six months ended June 30, 2023, upon termination of certain employees, the Company accelerated the vesting of any unvested shares held by such employees pursuant to their employment agreements. This resulted in 27,576 shares becoming immediately vested and issued on the separation dates and $0.1 million in expense recognized by the Company. During the three months ended June 30, 2023 and 2022, the Company recognized $0.4 million and $3.9 million, respectively, in share-based compensation expense related to RSUs. During the six months ended June 30, 2023 and 2022, the Company recognized $0.9 million and $7.9 million, respectively, in share-based compensation expense related to RSU awards. The unvested share-based compensation as of June 30, 2023 was $0.9 million which will be recognized through the second quarter of 2025 assuming the underlying grants are not cancelled or forfeited. The total fair value of shares vested during the six months ended June 30, 2023 was $0.8 million.

v3.23.2

Warrants	6 Months Ended
	Jun. 30, 2023
Warrants and Rights Note Disclosure [Abstract]
Warrants	Warrants The following table summarizes the activity in the Company’s outstanding warrants during the six months ended June 30, 2023: Warrants Outstanding Number of Shares Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Balance at December 31, 2022 4,433,593 3.37 $ 22.50  Granted 4,784,909 5.16 $ 2.50  Exercised (2,311,550) 2.59 $ 23.70  Expired (4,000) – $ 30.00  Forfeitures (50,000) 7.69 $ 13.90  Balance at June 30, 2023 6,852,952 4.54 $ 8.19  Exercisable June 30, 2023 2,068,043 3.10 $ 21.35  Exercisable December 31, 2022 4,433,593 4.77 $ 22.50  The warrants to purchase shares of the Company’s common stock outstanding as of June 30, 2023 and December 31, 2022 had a total value of $39.2 million and $73.3 million, respectively. As of June 30, 2023, 89,286 liability classified derivative warrants to purchase shares of the Company’s common stock remained outstanding and are revalued each reporting period. As of June 30, 2023, the warrants were revalued at $0.1 million, resulting in a decrease of $0.2 million in liability as compared to December 31, 2022. The change in value was recorded within Other Income (Expense), Net on the condensed consolidated statements of operations and Gain on Warrant Revaluation within the condensed consolidated statement of cash flows. The fair value of the outstanding derivative warrants was determined by using the Black-Scholes option pricing model (“BSM”) based on the following assumptions: Exercise Price $ 2.10  Dividend Yield 0  % Volatility 151  % Risk-free interest rate 4.71  % Expected Life of Warrants 1.7 years On February 16, 2023, the Company received a notification of exercise from the holder of the remaining 50,000 warrants with a put option. The put option was exercised for a fixed rate of $250,000. Warrant Exchange On June 26, 2023, the Company entered into warrant exercise inducement offer letters (the “Letter Agreements”) with certain holders of the warrants issued by the Company in January 2021 that had an exercise price of $23.70 per share and were exercisable for an aggregate of 2,311,550 shares of the Company’s common stock (the “2021 Warrants”). Pursuant to the Letter Agreements, the exercising holders and the Company agreed that, subject to any applicable beneficial ownership limitations, the holders would exercise all of their 2021 Warrants for shares of the Company’s common stock at a reduced exercise price of $2.50 per share of common stock in exchange for the issuance of new unregistered warrants (the “Exchange Warrants”) to purchase up to an aggregate of 4,623,100 shares of common stock, equal to 200% of the number of common stock underlying the 2021 Warrants. The aggregate number of shares of common stock issuable pursuant to the Exchange Warrants, together with the shares of common stock issued pursuant to the repriced 2021 Warrants, exceeds 19.99% of the outstanding shares of common stock of the Company (determined as of the date of, and without regard for, the issuance of the Exchange Warrants and the shares issued upon exercise of the repriced 2021 Warrants). In addition, upon issuance of the Exchange Warrants, the Company will not have a sufficient number of underlying common stock that would be required to deliver based on its existing outstanding shares and commitments and the maximum number of shares that would be required to be delivered upon exercise of the Exchange Warrants. The Company is holding its annual shareholder meeting on August 25, 2023, during which the shareholders will be asked to (a) approve an amendment to the articles of incorporation to increase the authorized shares of common stock from 40,000,000 shares to 190,000,000 shares with a corresponding increase in the total number of authorized shares of capital stock of the Company from 50,000,000 shares to 200,000,000 shares (the “Share Increase Proposal”) and (b) approve, in accordance with 713(A) of the NYSE American Company Guide, the issuance of more than 19.99% of the Company’s outstanding common stock upon the exercise of the Warrants (the “Warrant Exercise Proposal” and together with the Share Increase Proposal, the “Proposals” and the “Shareholder Approvals”). Pursuant to the Letter Agreements, the Company filed a registration statement on Form S-3 covering the resale of the shares of common stock issuable upon the exercise of the Warrants on July 26, 2023, which registration statement is currently pending with the Securities and Exchange Commission (“SEC”). The Exchange Warrants have an exercise price of $2.50 per share and a term of five years from the date of the Shareholder Approvals. Consequently, the exercise of the Exchange Warrants in full is subject to Shareholder Approvals. If the Company does not obtain the Shareholder Approvals during the 2023 annual meeting, the Company has agreed to call a meeting of shareholders every 90 days thereafter to seek shareholder approval until the Shareholder Approvals are obtained. The exercise price and number of shares of common stock issuable upon exercise is subject to appropriate adjustment in the event of stock dividends and stock splits, subsequent equity sales, subsequent rights offerings, pro rata distributions and certain fundamental transactions affecting the shares of common stock. A holder will not have the right to exercise any portion of the Exchange Warrant if the holder would beneficially own in excess of 4.99% (or, at the election of the holder, 9.99%) of the outstanding common stock immediately after exercise, except that upon notice from the holder to the Company, the holder may increase or decrease the beneficial ownership limitation up to 9.99% of the number of shares of common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Exchange Warrants, provided that any increase in such beneficial ownership limitation shall not be effective until 61 days following notice from the holder to the Company. The Company received approximately $5.8 million in gross proceeds recorded as an increase to Additional Paid-in Capital. The Special Equities Group, a division of Bradley Woods & Co. Ltd. (“SEG”), acted as warrant solicitation agent and received a cash fee of $0.4 million, equal to 7.0% of the total gross proceeds, and warrants with a value of $0.4 million on the issuance date to purchase up to 161,809 of the Company’s common stock at $2.50 per share (the “SEG Warrants”). In addition, through issuance of the Company’s common stock, the Company paid lawyer fees of $0.1 million for costs directly attributable to the warrant re-pricing and exchange. The total issuance costs of $0.9 million were netted against the proceeds received and recorded as a reduction to Additional Paid in Capital on the Company's condensed consolidated balance sheet. As the 2021 Warrants were repriced prior to exercising, the Company utilized ASC 815 to account for the modification. As per ASC 815, an entity shall treat a modification of the terms or conditions or an exchange of a freestanding equity classified written call option as an exchange of the original instrument for a new instrument. The effect of a modification or an exchange shall be measured as the excess, if any, of the fair value of the modified or exchanged instrument over the fair value of that instrument immediately before it is modified or exchanged (the “incremental expense”). The Company calculated the fair value of the 2021 Warrants exercised immediately before the repricing using the Black-Scholes option pricing model (“BSM”). The calculation used the original exercise price of $23.70 per share and the BSM assumptions as of June 26, 2023 to calculate the fair value immediately before the repricing and calculated the fair value of the 2021 Warrants exercised utilizing the modified exercise price of $2.50 per share and the same BSM assumptions as of June 26, 2023. The resulting difference of $3.5 million, was recorded as an incremental expense as a Warrant Incentive Expense within Other Income (Expense), Net on the condensed consolidated statement of operations and as an increase to Additional Paid-in Capital on the condensed consolidated balance sheet as of June 30, 2023. The fair value of the aggregate total of 4,784,909 Exchange Warrants and the SEG Warrants (collectively, the “Warrants”) on the issuance date of June 26, 2023 was determined to be $13.1 million, or $2.74 per share, as calculated using the BSM based on the following assumptions: June 26, 2023 Market Price $ 3.30  Exercise Price $ 2.50  Dividend Yield 0  % Volatility 110  % Risk-free interest rate 3.96  % Expected Life of Warrants 5.0 years The fair value of the Exchange Warrants of $12.7 million was recorded as a Warrant Incentive Expense within Other Income (Expense), Net on the condensed consolidated statement of operations. The fair value of the SEG Warrants was recorded as a reduction to Additional Paid-in Capital on the condensed consolidated balance sheet. Per review of ASC 815 to determine the classification of the Warrants as either assets or liabilities the Company must evaluate whether it has a sufficient number of authorized and unissued shares at the classification assessment date to control settlement by delivering shares. As noted above, when taking into consideration the Company’s existing outstanding common stock and future commitments to issue common stock prior to the issuance of the Warrants, the Company does not have a sufficient number of common stock underlying its commitments, when including the Warrants, with a calculated deficit of 4,240,784 shares as of June 26, 2023. In addition, ASC 815 states that if an entity could be required to obtain shareholder approval to increase the entity’s authorized shares to net share or physically settle a contract, share settlement is not controlled by the entity, therefore would be liability classified. As the Company does not have a sufficient number of authorized and unissued shares required to be delivered upon settlement of equity instruments and is required to obtain the Shareholder Approvals to increase the authorized shares, the settlement is not considered controlled by the Company. Consequently, the Warrants are required to be classified as a liability and revalued at each reporting period end date. The fair value of the Warrants as of June 30, 2023 was determined to be $7.1 million, or $1.48 per share, using the BSM based on the following assumptions: June 30, 2023 Market Price $ 1.91  Exercise Price $ 2.50  Dividend Yield 0  % Volatility 110  % Risk-free interest rate 4.13  % Expected Life of Warrants 5.0 years The value of the Warrants decreased by $6.0 million as of June 30, 2023 compared to the issuance date of June 26, 2023. The change in fair value reduced the initial warrant liability balance to $7.1 million and the change in fair value was recorded as a gain within Other Income (Expense), Net on the condensed consolidated statement of operations.

v3.23.2

Supplemental Financial Statement Information	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Supplemental Financial Statement Information	Supplemental Financial Statement Information Other Income (Expense), Net Components of Other Income (Expense), Net, are summarized as follows (in thousands): Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Interest Expense (a) $ (1,020) $ (388) $ (2,105) $ (443) Warrant Incentive Expense (b) (16,174) –  (16,174) –  Gain on Revaluation of Warrants (c) 6,063  227  6,202  269  Gain (Loss) on Revaluation of Equity Investment in YFE (d) 4,322  (2,494) 3,427  2,901  Realized Loss on Marketable Securities Investments (e) (720) (44) (2,257) (123) Gain (Loss) on Foreign Exchange (f) 35  (1,073) 355  (1,262) Interest Income (g) 158  253  468  501  Finance Lease Interest Expense (h) (54) (30) (104) (30) Other 2  –  3  –  Other Income (Expense) $ (6,368) $ (3,161) $ (8,080) $ 2,256  (a) Interest expense during the three and six months ended June 30, 2023 primarily consisted of $0.6 million and $1.3 million of interest incurred on the margin loan, respectively, and $0.4 million and $0.8 million, respectively, of interest incurred on production facilities loans and bank indebtedness assumed as part of the Wow Acquisition. (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 and $3.5 million recorded as the incremental expense of the 2021 Warrants immediately before and after the repricing. (c) The gain on warrant revaluation during the three and six months ended June 30, 2023 is primarily related to the $6.0 million change in fair value as of the end of the reporting period of the Exchange and SEG Warrants compared to the fair value at issuance date. (d) As accounted for using the fair value option, the gain on the YFE investment revaluation during the three and six months ended June 30, 2023, excluding the impact of foreign currency recorded separately, is a result of an increase in YFE’s stock price as of June 30, 2023 when compared to the three and six months ended prior 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 gain on foreign currency exchange during the three and six months ended June 30, 2023 primarily related to the EURO weakening against the USD compared to the three and six months ended prior period. (g) Interest Income during the three and six months ended June 30, 2023 primarily consisted of cash interest received of $0.3 million and $0.7 million from the investments in marketable securities, respectively, net of premium amortization expense of $0.2 million and $0.3 million, respectively. (h) The finance lease interest expense represents the interest portion of the finance lease obligations assumed as part of the Wow Acquisition for equipment purchased under an equipment lease line. Prior to the acquisition of Wow, finance leases did not exist. Supplemental Pro forma information On January 13, 2022, the Company completed the acquisition of Ameba, at which Ameba’s financial information was consolidated into the Company’s financials. On April 6, 2022, the Company completed the acquisition of Wow. Wow’s financial information was consolidated into the Company’s financials starting April 1, 2022. The following unaudited supplemental pro forma information summarizes the Company’s results of operations as if the Company completed the Wow and Ameba acquisitions at the beginning of the annual period 2022, when acquired (in thousands, except for share and per share data): Supplemental pro forma information is as follows: Three Months Ended Six Months Ended June 30, 2022 June 30, 2022 Total Revenues $ 22,124  41,667  Net Loss Attributable to Kartoon Studios, Inc. $ (13,343) (16,926) Net Loss per Share (Basic and Diluted) $ (0.42) $ (0.55) Weighted Average Shares Outstanding (Basic and Diluted) 31,551,991  30,968,201  The unaudited pro forma combined financial information is presented for informational purposes only and is not intended to represent or be indicative of the combined results of operations or financial position that the Company would have reported had the acquisitions been completed as of the date and for the periods presented and should not be taken as representative of the Company’s consolidated results of operations or financial condition following the acquisition. In addition, the unaudited pro forma combined financial information is not intended to project the future financial position or results of operations of the combined company. The unaudited pro forma financial information was prepared using the acquisition method of accounting under existing US GAAP.

v3.23.2

Income Taxes	6 Months Ended
	Jun. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	Income Taxes The Company accounts for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”), 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 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 financial statements. As part of the Ameba purchase price allocation, a $0.7 million deferred tax liability was previously recorded. Due to the impairment write-off of the related intangible assets, the deferred income tax liability was reversed and recorded as an income tax benefit during the six months ended June 30, 2023. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operation in the provision for income taxes. As of June 30, 2023 and December 31, 2022, the Company had no accrued interest or penalties related to uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and in the states of California, Massachusetts and New Jersey and will start filing in New York. The Company is currently subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities since inception of the Company. The Company is subject to U.S. income taxes on a stand-alone basis. The Company, the Beacon Media Group (formerly ChizComm) and Wow file separate stand-alone tax returns in each jurisdiction in which they operate. Beacon Communications, Wow and Ameba are corporations operating in Canada and are subject to Canadian income taxes on their stand-alone taxable income.

v3.23.2

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Commitments and Contingencies The following is a schedule of future minimum contractual obligations as of June 30, 2023 (in thousands): 2023 2024 2025 2026 2027 Thereafter Total Operating Leases $ 829  $ 1,724  $ 1,773  $ 1,791  $ 1,564  $ 4,695  $ 12,376  Finance Leases 946  1,089  600  232  –  –  2,867  Employment Contracts 2,536  1,094  427  –  –  –  4,057  Consulting Contracts 1,696  784  –  –  –  –  2,480  Debt 32,368  17,794  –  –  –  –  50,162  $ 38,375  $ 22,485  $ 2,800  $ 2,023  $ 1,564  $ 4,695  $ 71,942  Leases On January 30, 2019, the Company entered into an operating lease for 5,838 square feet of general office space at 190 N. Canon Drive, Suite 400, Beverly Hills, CA 90210 pursuant to a 96-month lease that commenced on August 1, 2019. The Company pays rent of $0.4 million annually, subject to annual escalations of 3.5%. On February 1, 2021, as part of the ChizComm Acquisition, the Company assumed an operating lease that was entered into on May 19, 2019 for 6,845 square feet of general office space located at 245 Fairview Mall Drive, Suites 202 and 301, Toronto, Ontario M2J 4T1 pursuant to an 84-month lease which commenced on October 1, 2019. The Company pays rent of $95,830 annually, subject to annual escalations of 5% to 7%. On March 2, 2021, the Company entered into an operating lease for 4,765 square feet of general office space located at 1050 Wall Street West, Suite 665, Lyndhurst NJ, 07071 pursuant to an 89-month lease which commenced on October 1, 2021. The Company pays rent of $115,154 annually, subject to annual escalations of 2.5%. On April 6, 2022, as part of the Wow Acquisition, the Company assumed an operating lease for 45,119 square feet of general office space located at 2025 West Broadway, Suite 200, Vancouver, B.C., V6J 1Z6. The right of use asset and lease liability were revalued on the acquisition date based on the remaining lease term of 117 months with payments of $81,769 per month, subject to escalations of 7% each of the third and fifth years. The lease liability and right of use asset were determined to be $6.6 million, utilizing a discount rate of 11.5%. As part of the assumed office lease, the Company also assumed a parking lease for 80 parking spaces. The parking lease was also revalued utilizing the 11.5% discount rate. With a remaining lease term of 117 months, paying $6,091 per month, the ROU asset and lease liability were determined to be $0.5 million as of the acquisition date and recorded within current and noncurrent Operating Lease Liabilities on the Company's condensed consolidated balance sheet upon acquisition. Also, as part of the Wow Acquisition, the Company assumed various equipment finance leases, the majority of which are under Master Line of Credit Agreements with certain banking institutions. As the rates were implicit in the leases, the Company determined that the carrying value of the leases as of the acquisition date equaled the fair value. With the implicit rates in the leases ranging from 3.7% to 14.5%, remaining lease terms of 10-33 months and monthly payments of $1,346-$57,362, the finance lease obligations were determined to be $3.5 million as of the Wow Acquisition date and recorded as current and noncurrent Finance Lease Liabilities on the Company’s condensed consolidated balance sheet upon consolidation. The present value discount of the minimum operating lease payments above was $3.7 million as of June 30, 2023. 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.

v3.23.2

Related Party Transactions	6 Months Ended
	Jun. 30, 2023
Related Party Transactions [Abstract]
Related Party Transactions	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 six months ended June 30, 2023 and June 30, 2022, Mr. Heyward earned and was paid $0.3 million and $0.6 million in executive producer fees, respectively. Mr. Heyward also earned his $55,000 quarterly bonus during each of the quarters in 2023 and 2022. An unpaid balance of $55,000 is recorded as Due to Related Party on the Company's condensed consolidated balance sheet. 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 six months ended June 30, 2023 and June 30, 2022, Mr. Heyward has not earned royalties from musical compositions. Pursuant to his employment agreement dated April 7, 2022, Michael Hirsh, CEO of Wow and its Frederator and Mainframe Studio subsidiaries, is entitled to an executive producer fee of $12,400 per one-half hour for each episode of any audio-visual production produced by Wow and any of its subsidiaries during the term of his employment, up to 52 episodes per year. During the six months ended June 30, 2023 and June 30, 2022, Mr. Hirsh has not earned executive producer fees under the employment agreement. 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-length industry standard royalty on all sales made by AHAA utilizing the licensed content. During the six months ended June 30, 2023 and June 30, 2022, Mr. Heyward has not earned royalties from this agreement. On September 30, 2021, the Company entered into a Loan Agreement and Promissory Note with POW in the amount of $1,250,000, accruing simple interest at the annualized rate of 9%. The loan accrued interest of $0.2 million and $0.1 million as of June 30, 2023 and December 31, 2022, respectively, recorded with the principal balance within Note Receivable from Related Party on the Company’s condensed consolidated balance sheets. In addition, pursuant to its joint venture with POW and formation of the entity Stan Lee Universe, LLC, the Company included within Note Receivable from Related Party the amount owed to the Company related to the 50% non-controlling interest held by POW. POW has since repaid the loan during April 2023. On July 19, 2022, the Company entered into a Shareholder Loan Agreement with YFE in the amount of 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 entire principal sum was required to be remitted to YFE within five days of the effective date. The principal plus interest must be repaid by no later than June 30, 2026. The loan accrued interest of USD $44,701 as of June 30, 2023 recorded with the principal balance within Note Receivable from Related Party on the Company’s condensed consolidated balance sheet. On December 1, 2021, the Company entered into an Independent Contractor Agreement for a term of two years with F&M Film and Medien Beteiligungs GmbH (“F&M”), a company controlled by Dr. Stefan Piëch. Pursuant to the agreement, F&M would receive $150,000 annually, paid on a semi-monthly basis. In addition, F&M was granted 30,000 of the Company's RSUs that would vest in three six-month intervals beginning on December 1, 2021. 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 payment is $395 and recorded to Other Income in the Company's condensed consolidated statement of operations.

v3.23.2

Segment Reporting	6 Months Ended
	Jun. 30, 2023
Segment Reporting [Abstract]
Segment Reporting	Segment ReportingThe Company’s 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 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): Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Total Revenues: Content Production & Distribution $ 10,148  $ 21,042  $ 23,381  $ 21,496  Media Advisory & Advertising Services 890  1,082  1,846  2,067  Total Revenue $ 11,038  $ 22,124  $ 25,227  $ 23,563  Net Loss: Content Production & Distribution $ (14,697) $ (12,823) $ (38,905) $ (16,860) Media Advisory & Advertising Services (533) (520) (1,087) (1,012) Total Net Loss $ (15,230) $ (13,343) $ (39,992) $ (17,872) Geographic Information The following table provides information about disaggregated revenue by geographic area (in thousands): Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Total Revenues: United States $ 7,362  $ 15,441  $ 16,001  $ 15,993  Canada 1,871  5,709  5,426  6,596  United Kingdom 1,747  974  3,591  974  Other 58  —  209  —  Total Revenue $ 11,038  $ 22,124  $ 25,227  $ 23,563

v3.23.2

Subsequent Events	6 Months Ended
	Jun. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsOn August 2, 2023, the Company's subsidiary, 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 $98,185 in consideration of terminating the lease, which is to be paid in four equal installments, starting on the cease-use date of August 1, 2023. If the Company fails to pay the any installment within five days of being due, Beacon Media would be responsible for the full exposure on the lease of $0.6 million. As of June 30, 2023, the lease had a remaining ROU asset balance of $0.5 million and an operating lease liability balance of $0.6 million. Beacon Media Group has also agreed to waive reimbursement of the security deposit in the amount of $26,208 and leave the furniture and fixtures and any leasehold improvements that had a carrying value of $88,569 as of June 30, 2023. On the Effective Date, the Company will write off the ROU asset, lease liability and deposit and record the difference as a loss of $104,704 within Other Income (Expense), Net on the condensed consolidated statement of operations. In addition, the Company will dispose of the fixed assets by writing them down to zero and recording it the carrying value as a Loss on Fixed Asset Disposal on the condensed consolidated statement of operations. During July 2023, the Company sold AFS marketable securities and received proceeds of $27.0 million, including accrued interest received on the sold securities, and incurred a realized loss of $1.5 million. The proceeds were used to pay down $27.0 million of the margin loan.

v3.23.2

Summary of Significant Accounting Policies (Policies)	6 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”). The accompanying condensed consolidated financial statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to state fairly the Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Loss, Statements of Stockholders’ Equity, and Statements of Cash Flows for all periods presented.
Reclassification	Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations.
Correction of Immaterial Misstatement in Prior Period Financial Statements	Out-of-Period Adjustment The Company identified an error in the Company’s condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2023 and balance sheet for the period ended March 31, 2023. The Company’s deferred tax liability, and net loss for the period ended March 31, 2023, are overstated by $705,000. In accordance with Staff Accounting Bulletin (“SAB”) No. 99, “Materiality,” and SAB No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” The Company believes that the impact of the error was not material to the financial statements for the three months ended March 31, 2023, based on an evaluation of both quantitative and qualitative factors. As a result, the Company determined that correcting the prior period financial statements for such an immaterial error would not require the Form 10-Q for the three months ended March 31, 2023 to be amended. The Company has elected to record an out-of-period adjustment and record the amount in the condensed consolidated balance sheet as of June 30, 2023, the condensed consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2023, the condensed consolidated statement of cash flow for the six months ended June 30, 2023 and the condensed consolidated statements of stockholders’ equity for the three months ended June 30, 2023. The Company does not believe recording the amount in the condensed consolidated statement of operations and comprehensive loss for the three months ended June 30, 2023 has a material impact on the Company’s results of operations.
Segments	Segments The Company determines its operating segments on the same basis that it assesses performance and makes operating decisions. The Company principally operates in two distinct business segments: the Content Production & Distribution Segment, which produces and distributes children’s content, and the Media Advisory & Advertising Services Segment, which provides media and advertising services. These segments are reflective of how the Company’s Chief Operating Decision Maker (“CODM”) reviews operating results for the purposes of allocating resources and assessing performance. The Company has identified its Chief Executive Officer as the CODM. The segments are organized around the products and services provided to customers and represent the Company’s reportable segments. The accounting policies for each segment are the same as for the Company as a whole. Refer to Note 21 for additional information.
Principles of Consolidation and Basis of Presentation	Principles of Consolidation and Basis of Presentation The Company’s condensed consolidated financial statements include the accounts of Kartoon Studios, Inc. and its wholly-owned subsidiaries. The Company consolidates all majority-owned subsidiaries and variable interest entities where the Company has been determined to be the primary beneficiary. The interests in a variable interest entity which the Company does not control are recorded as non-controlling interests. Non-consolidated investments are accounted for using the equity method or the fair value option and recorded at fair value with changes recognized within Other Income (Expense), Net on the condensed consolidated statements of operations and comprehensive income (loss). All significant intercompany accounts and transactions have been eliminated upon consolidation.
Business Combinations	Business Combinations The Company accounts for transactions that are classified as business combinations in accordance with the Financial Accounting Standards Boards’ (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”). Once a business is acquired, the Company allocates the fair value of the purchase consideration to the tangible assets, liabilities, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. As required, preliminary fair values are determined upon acquisition, with the final determination of the fair values being completed within the one-year measurement period from the date of acquisition. The valuation of acquired assets and assumed liabilities requires significant judgment and estimates, especially with respect to intangible assets. The valuation of intangible assets requires that the Company use valuation techniques such as the income approach. The income approach includes the use of a discounted cash flow model, which includes discounted cash flow scenarios and requires significant estimates such as future expected revenue, expenses, capital expenditures and other costs, and discount rates. The Company estimates the fair value based upon assumptions that management believes to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. Acquisition-related expenses and any related restructuring costs are recognized separately from the business combination and are expensed as incurred.
Variable Interest Entities	Variable Interest Entities The Company holds an interest in Stan Lee University, LLC (“SLU”), an entity that is considered a variable interest entity (“VIE”). The variable interest relates to 50% ownership in the entity that is comprised of the Stan Lee Assets and that requires additional financial support from the Company to continue operations. The Company is considered the primary beneficiary and is required to consolidate the VIE. In evaluating whether the Company has the power to direct the activities of a VIE that most significantly impact its economic performance, the Company considers the purpose for which the VIE was created, the importance of each of the activities in which it is engaged and the Company’s decision-making role, if any, in those activities that significantly determine the entity’s economic performance as compared to other economic interest holders. This evaluation requires consideration of all facts and circumstances relevant to decision-making that affects the entity’s future performance and the exercise of professional judgment in deciding which decision-making rights are most important. In determining whether the Company has the right to receive benefits or the obligation to absorb losses that could potentially be significant to the VIE, the Company evaluates all of its economic interests in the entity, regardless of form (debt, equity, management and servicing fees, and other contractual arrangements). This evaluation considers all relevant factors of the entity’s design, including: the entity’s capital structure, contractual rights to earnings (losses), subordination of the Company’s interests relative to those of other investors, contingent payments, as well as other contractual arrangements that have the potential to be economically significant. The evaluation of each of these factors in reaching a conclusion about the potential significance of the Company’s economic interests is a matter that requires the exercise of professional judgment. The Company continuously assesses whether it is the primary beneficiary of a variable interest entity as changes to existing relationships or future transactions may result in the Company consolidating its collaborators or partners.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
Foreign Currency	Foreign Currency The Company considers the U.S. dollar (“USD”) to be its functional currency for its United States and certain Canadian based operations. The Canadian dollar (“CAD”) is the functional currency of Wow, a wholly-owned subsidiary of the Company. Accordingly, the financial information is translated from CAD to USD for inclusion in the Company’s condensed consolidated financial statements. Revenue and expenses are translated at average exchange rates prevailing during the period, and assets and liabilities are translated at exchange rates in effect at the balance sheet date. Resulting translation adjustments are included as a component of Accumulated Other Comprehensive Income (Loss), net in stockholders’ equity. Foreign exchange transaction gains and losses are included in Other Income (Expense), Net on the condensed consolidated statements of operations.
Foreign Currency Forward Contracts	Foreign Currency Forward Contracts The Company’s wholly-owned subsidiary, Wow, is exposed to fluctuations in various foreign currencies against its functional currency, the Canadian dollar. Wow uses foreign currency derivatives, specifically foreign currency forward contracts (“FX forwards”), to manage its exposure to fluctuations in the CAD-USD exchange rates. FX forwards involve fixing the foreign currency exchange rate for delivery of a specified amount of foreign currency on a specified date. The FX forwards are typically settled in CAD for their fair value at or close to their settlement date. The Company does not currently designate any of the FX forwards under hedge accounting and therefore reflects changes in fair value as unrealized gains or losses immediately in earnings as part of the revenue generated from the transactions hedged. The Company does not hold or use these instruments for speculative or trading purposes. Per FASB ASC 815-10-45, Derivatives and Hedging, the Company has elected an accounting policy to offset the fair value amounts recognized for eligible forward contract derivative instruments. Therefore, the Company presents the asset or liability position of the FX forwards that are with the same counterparty net as either an asset or liability in its condensed consolidated balance sheets.
Cash and Cash Equivalents	Cash and Cash EquivalentsThe Company considers all highly liquid debt instruments with initial maturities of three months or less to be cash equivalents.
Allowance for Doubtful Accounts	Allowance for Doubtful AccountsAccounts receivables are presented on the condensed consolidated balance sheets, net of estimated uncollectible amounts. The carrying amounts of trade accounts receivable and unbilled accounts receivable represent the maximum credit risk exposure of these assets. On a quarterly basis, in accordance with FASB ASC 326, Measurement of Credit Losses on Financial Instruments (“ASC 326”), the Company evaluates the collectability of outstanding accounts receivable balances to determine an allowance for doubtful accounts that reflects its best estimate of the lifetime expected credit losses. The allowance for credit loss is based on an assessment of past events, current economic conditions, and forecasts of future events. Individual uncollectible accounts are written off against the allowance when collection of the individual accounts appears doubtful.The Company limits its exposure to this credit risk through a credit approval process and credit monitoring procedures. In addition, Wow’s contracts with customers usually require upfront and milestone payments throughout the production process. The Company’s customer base is mainly comprised of major Canadian, American, and worldwide studios, distributors, broadcasters, toy companies and AVOD and SVOD platforms that have been customers for several years.
Tax Credits Receivable	Tax Credits Receivable The Canadian federal government and certain provincial governments in Canada provide programs that are designed to assist film and television production in the form of refundable tax credits or other incentives. Estimated amounts receivable in respect of refundable tax credits are recorded as an offset to the related production operating cost, or to investment in film and television costs when the conditions for eligibility of production assistance based on the government’s criteria are met, the qualifying expenditures are made and there is reasonable assurance of realization. Determination of when and if the conditions of eligibility have been met is based on management’s judgment, and the amount recognized is based on management’s estimates of qualifying expenditures. The ultimate collection of previously recorded estimates is subject to ordinary course audits from the CRA and provincial agencies. Changes in administrative policies by the CRA or subsequent review of eligibility documentation may impact the collectability of these estimates. The Company continuously reviews the results of these audits to determine if any circumstances arise that in management’s judgment would result in a previously recognized amount to be considered no longer collectible. The Company classifies the tax credits receivable as current based on their normal operating cycle. Government assistance, in the form of refundable tax credits, is relied upon as a key component of production financing. These amounts are claimed from the CRA through the submission of income tax returns and can take up to 18 to 24 months from the date of the first tax credit dollar being earned to being received. As this financing is fundamental to the Company’s ability to produce animated productions and generate revenue in the normal course of business, the normal operating cycle for such assets is considered to be a 12 to 24-month period, or the time it takes for the CRA to assess and refund the tax credits earned.
Marketable Debt Securities	Marketable Debt Securities The Company purchases high quality, investment grade securities from diverse issuers. Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date. Currently, the Company classifies its investments in marketable securities as available-for-sale (“AFS”) and records these investments at fair value. The securities are available to support current operations and, accordingly, the Company classifies the investments as current assets without regard to their contractual maturity. Unrealized gains or losses on available-for-sale securities for which the Company expects to fully recover the amortized cost basis are recognized in Accumulated Other Comprehensive Income (Loss), a component of stockholders’ equity. Gains and losses as a result of sales of securities are reclassified from previously unrealized gains and losses on AFS securities in Accumulated Other Comprehensive Income (Loss) to Other Income (Expense), Net, in the condensed consolidated statements of operations. On a quarterly basis, the Company reviews its AFS securities to assess declines in fair value for credit losses. For each AFS security with an amortized cost that exceeds its fair value, the Company first determines if it intends to sell or is more-likely-than-not required to sell the debt security before the expected recovery of its amortized cost. If it intends to sell or will more-likely-than-not be required to sell the security, the Company recognizes the impairment as a credit loss in the condensed consolidated statements of operations by writing down the security’s amortized cost to its fair value. For AFS securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss. The portion of the decline in fair value that is due to factors other than a credit loss is recognized in Accumulated Other Comprehensive Income (Loss) as an unrealized loss. The Company reports accrued interest receivable separately from the AFS securities and has elected not to measure an allowance for credit losses for accrued interest receivables. Uncollectible accrued interest is written off when the Company determines that no additional interest payments will be received.Interest earned on investment securities is reported in interest income, net of applicable adjustments for accretion of discounts and amortization of premiums accounted for over the life of the security or, in the case of callable securities, through the first call date, using the level yield method, with no prepayment anticipated.
Equity-Method Investments	Equity-Method Investments When the Company does not have a controlling financial interest in an entity but can exert significant influence over the entity’s operating and financial policies, the investment is accounted for either (i) under the equity method of accounting or (ii) at fair value by electing the fair value option available under U.S. GAAP. Significant influence generally exists when the firm owns 20% to 50% of the entity’s common stock or in-substance common stock. In general, the Company accounts for investments acquired at fair value. See Note 4 for further information about the Company’s investment in YFE’s equity securities accounted for under the fair value option.
Property and Equipment	Property and Equipment Property and equipment are recorded at cost. Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the assets, which range from two to seven years. Maintenance, repairs, and renewals, which neither materially add to the value of the assets nor appreciably prolong their lives, are charged to expense as incurred. Gains and losses from any dispositions of property and equipment are reflected in the condensed consolidated statement of operations. Whenever events or circumstances change, an assessment is made as to whether there has been impairment to the value of long-lived assets by determining whether projected undiscounted cash flows generated by the applicable asset exceed its net book value as of the assessment date. During the first quarter of 2023, the Company performed an interim review of its long-lived assets due to decreases in the Company's market value. There were not any events or circumstances that required the Company to reassess its assets during the three months ended June 30, 2023. Refer to Note 6 for details.
Right of Use Leased Assets	Right of Use Leased Assets The Company determines at contract inception whether the arrangement is a lease based on its ability to control a physically distinct asset and determines the classification of the lease as either operating or finance under FASB ASC 842, Leases (“ASC 842”). For all leases, the Company combines all components of the lease including related nonlease components as a single component. Operating leases are reflected as Operating Lease Right of Use (“ROU”) Assets and Operating Lease Liabilities and finance leases are reflected as Finance Lease ROU assets and Finance Lease Liabilities on the condensed consolidated balance sheets. Lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s operating leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company estimates the incremental borrowing rate to reflect the profile of collateralized borrowing over the expected term of the leases based on the information available on the lease commencement date or for leases existing upon the date of initial adoption of ASC 842, the date of adoption. The implicit rates within the Company’s existing finance leases are determinable and therefore used to determine the present value of finance lease payments. The operating lease ROU assets also include any lease payments made prior to lease commencement date and excludes lease incentives. Specific lease terms used in computing the ROU assets and lease liabilities may include options to extend or terminate the lease when the Company is reasonably certain that it will exercise the option. The Company will reassess expected lease terms based on changes in circumstances that indicate options may be more or less likely to be exercised. Lease expense is recognized on a straight-line basis over the lease term within General and Administrative Expenses on the condensed consolidated statements of operations. Lease incentives are recognized as a reduction to the lease expense on a straight-line basis over the underlying lease term. Refer to Notes 7 and 19 for details of the Company’s leases.
Film and Television Costs	Film and Television Costs The Company capitalizes production costs for episodic series produced in accordance with FASB ASC 926-20, Entertainment-Films - Other Assets - Film Costs. Accordingly, production costs are capitalized at actual cost and amortized using the individual-film-forecast method, whereby these costs are amortized, and participations costs are accrued based on the ratio of the current period’s revenues to management’s estimate of ultimate revenue expected to be recognized from each production. Productions in Development Capitalized development costs are reclassified to productions in progress once the project is approved and physical production of the film or television program commences. Development costs include the costs of acquiring film rights to books, scripts or original screenplays and the third-party costs to adapt such projects, including visual development and design. Advances or contributions received from third parties to assist in development are deducted from these costs. Productions in Progress For the Company’s film and television programs in progress, capitalized costs include all direct production and financing costs incurred during production that are expected to provide future economic benefit to the Company. Borrowing costs and depreciation are capitalized to the cost of a film or television program until substantially all of the activities necessary to prepare the film or television program for its use intended by management are complete. Completed Productions Completed productions are carried at the cost of proprietary film and television programs which have been produced by the Company or to which the Company has acquired distribution rights, less accumulated amortization and accumulated impairment losses. Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results. In addition, in the normal course of business, some titles are more successful or less successful than anticipated. Management reviews the ultimate revenue and cost estimates on a title-by-title basis, when an event or change in circumstances indicates that the fair value of the production may be less than its unamortized cost. This may result in a change in the rate of amortization of film costs and participations and/or a write-down of all or a portion of the unamortized costs of the film or television production to its estimated fair value. An impairment charge is recorded in the amount by which the unamortized costs exceed the estimated fair value. These write-downs are included in amortization expense within Direct Operating Expenses on the condensed consolidated statements of operations. All capitalized costs that exceed the initial market firm commitment revenue are expensed in the period of delivery of the episodes. Additionally, for episodic series, from time to time, the Company develops additional content, improved animation and bonus songs/features for its existing content. After the initial release of the episodic series, the costs of significant improvement to existing products are capitalized while routine and periodic alterations to existing products are expensed as incurred.
Goodwill and Intangible Assets	Goodwill and Intangible Assets Goodwill represents the excess of purchase price over the estimated fair value of net assets acquired in business combinations accounted for by the acquisition method. In accordance with FASB ASC 350, Intangibles Goodwill and Other, goodwill and certain intangible assets are presumed to have indefinite useful lives and are thus not amortized, but subject to an impairment test annually or more frequently if indicators of impairment arise. The Company completes the annual goodwill and indefinite-lived intangible asset impairment tests at the end of each fiscal year. To test for goodwill impairment, the Company may elect to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit, of which the Company has two, is less than its carrying value. If impairment is indicated in the qualitative assessment, or, if management elects to initially perform a quantitative assessment of goodwill, the impairment test uses a one-step approach. The fair value of a reporting unit is compared with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Changes in future results, assumptions, and estimates after the measurement date may lead to an outcome where additional impairment charges would be required in future periods. Specifically, actual results may vary from the Company’s forecasts and such variations may be material and unfavorable, thereby triggering the need for future impairment tests where the conclusions may differ in reflection of prevailing market conditions. Further, continued adverse market conditions could result in the recognition of additional impairment if the Company determines that the fair values of its reporting units have fallen below their carrying values. Intangible assets have been acquired, either individually or with a group of other assets, and were initially recognized and measured based on fair value. Annual amortization of these intangible assets is computed based on the straight-line method over the remaining economic life of the asset. During the first quarter of 2023, the Company performed an interim review of its long-lived assets due to decreases in the Company’s market value. There were not any events or circumstances that required the Company to reassess its assets during the three months ended June 30, 2023. Refer to Note 9 for details.
Debt and Attached Equity-Linked Instruments	Debt and Attached Equity-Linked Instruments The Company measures issued debt on an amortized cost basis, net of debt premium/discount and debt issuance costs amortized using the effective interest rate method or the straight-line method when the latter does not lead to materially different results. The Company analyzes freestanding equity-linked instruments including warrants attached to debt to determine whether the instrument meets the definition of the derivative and whether it is considered indexed to the Company’s own stock. If the instrument is not considered indexed to the Company’s stock, it is classified as an asset or liability recorded at fair value. If the instrument is considered indexed to the Company’s stock, the Company analyzes additional equity classification requirements per FASB ASC 815-40, Contract’s in Entity’s Own Equity. When the requirements are met, the instrument is recorded as part of the Company’s equity, initially measured based on its relative fair value with no subsequent re-measurement. When the equity classification requirements are not met, the instrument is recorded as an asset or liability and is measured at fair value with subsequent changes in fair value recorded in earnings. When required, the Company also considers the bifurcation guidance for embedded derivatives per ASC 815-15, Embedded Derivatives.
Treasury stock	Treasury stock The Company records the repurchase of shares of its common stock at cost on the trade date of the transaction. These shares are considered treasury stock, which is a reduction to stockholders’ equity. Treasury stock is included in authorized and issued shares but excluded from outstanding shares.
Revenue Recognition	Revenue Recognition The Company accounts for revenue according to standard FASB ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenue is measured based on the consideration specified in a contract with a customer. Revenue is recognized when a customer obtains control of the products or services in a contract. Judgment is required in determining the timing of whether the transfer of control occurs at a point in time or over time and is discussed below. The Company evaluates each contract to identify separate performance obligations as a contract with a customer may have one or more performance obligations. Consideration in a contract with multiple performance obligations is allocated to the separate performance obligations based on their stand-alone selling prices. If a stand-alone selling price is not determinable, the Company estimates the stand-alone selling price using an adjusted market assessment approach. The Company’s main sources of revenue are derived from animation production services provided to third parties, the sale of licenses for the distribution of films and television programs, advertising revenues, and merchandising and licensing sales. The Company has identified the following material and distinct performance obligations: •Providing animation production services. •Licensing rights to exploit Functional Intellectual Property (“functional IP” is defined as intellectual property that has significant standalone functionality, such as the ability to be played or aired. Functional IP derives a substantial portion of its utility from its significant standalone functionality). •Licensing rights to exploit Symbolic Intellectual Property (“symbolic IP” is intellectual property that is not functional as it does not have significant standalone use and substantially all of the utility of symbolic IP is derived from its association with the entity’s past or ongoing activities, including its ordinary business activities, such as the Company’s licensing and merchandising programs associated with its animated content). •Providing media and advertising services to clients. •Fixed and variable fee advertising and subscription-based revenue generated from the Kartoon Studios Kartoon Channel!, the Frederator owned and operated YouTube channels and revenues generated from the operation of its multi-channel network on YouTube. •Options to renew or extend a contract at fixed terms (while this performance obligation is not significant for the Company’s current contracts, it could become significant in the future). •Options on future seasons of content at fixed terms (while this performance obligation is not significant for the Company’s current contracts, it could become significant in the future). Production Services Animation Production Services For revenue from animation production services, the customer controls the output throughout the production process. Each production is made to an individual customer’s specifications and if the contract is terminated by the customer, the Company is entitled to be reimbursed for any costs incurred to date, and for any prepaid commitments made, plus the agreed contractual mark-up. Revenue and the associated costs of such contracts are recognized over time on a percentage of completion basis - i.e., as the project is being produced, prior to it being delivered to the customer. The percentage-of-completion is calculated based upon the proportion of costs incurred cumulatively to total expected costs. Changes in revenue recognized as a result of adjustments to total expected costs are recognized in profit or loss on a prospective basis. Invoices related to these projects are issued based on the achievement of milestones during the project or other contractual terms. The difference between contractual payments received and revenue recognized is recorded as deferred revenue when receipts exceed revenue. When revenue exceeds milestone billings, the Company recognizes this difference as unbilled accounts receivable within other receivables on the Company’s condensed consolidated balance sheet. Unbilled accounts receivables are transferred to accounts receivable when the Company has an unconditional right to consideration. When the outcome of an arrangement cannot be estimated reliably, revenue is recognized only to the extent of the expenses incurred that are recoverable. Content Distribution Film and Television Licensing The Company recognizes revenue related to licensed rights to exploit functional IP in two ways; for minimum guarantees, the Company recognizes fixed revenue upon delivery of content and the start of the license period and for functional IP contracts with a variable component, the Company estimates revenue such that it is probable there will not be a material reversal of revenue in future periods. The Company recognizes revenue related to licensed rights to exploit symbolic IP substantially similarly to functional IP. Although it has a different recognition pattern from functional IP, the valuation method is substantially the same, depending on the nature of the license. Invoices related to these projects are issued based on the achievement of milestones during the project or other contractual terms. The difference between contractual payments received and revenue recognized is recorded as deferred revenue when receipts exceed revenue. When revenue exceeds milestone billings, the Company recognizes this difference as unbilled accounts receivable within other receivables on the Company’s condensed consolidated balance sheet. Unbilled accounts receivables are transferred to accounts receivable when the Company has an unconditional right to consideration. Advertising revenues The Company sells advertising and subscriptions on its wholly-owned AVOD service, Kartoon Channel!, and its SVOD distribution outlets, Kartoon Channel! Kidaverse, and Ameba TV. Advertising sales are generated in the form of either flat rate promotions or advertising impressions served. For flat rate promotions with a fixed term, revenue is recognized when all five revenue recognition criteria under ASC 606 are met. For impressions served, the Company delivers a certain minimum number of impressions on the channel to the advertiser for which the advertiser pays a contractual cost per mille impressions (“CPM”). Impressions served are reported on a monthly basis, and revenue is reported in the month the impressions are served. For subscription-based revenue, revenue is recognized when a customer downloads the mobile device application and their credit card is charged. Upon the acquisition of Wow, the Company generates advertising revenue from Frederator’s owned and operated YouTube channels as well as revenues generated from the operation of its multi-channel network on YouTube. Revenue is recognized when services are provided in accordance with the Company’s agreement with YouTube, the price is fixed or determinable, and collection of the related receivable is probable. Receivables are usually collectable within 30 days. Licensing & Royalties Merchandising and licensing The Company enters into merchandising and licensing agreements that allow licensees to produce merchandise utilizing certain of the Company’s intellectual property. For minimum guaranteed amounts that make up a contract, revenue is recognized over time, over the term of the license period commencing on the date at which the licensees can use and benefit from the licensed content. Variable consideration in excess of non-refundable guaranteed amounts, such as royalties and other contractual payments are recognized as revenue when the amounts are known and become due provided collectability is reasonably assured. Invoices are issued based on the contractual terms of an agreement and are usually payable within 30-45 days. Product Sales The Company recognizes revenue related to product sales when the Company completes its performance obligation, which is when the goods are transferred to the buyer. Media Advisory & Advertising Services Media and Advertising Services The Company provides media and advertising services to clients. Revenue is recognized when the services are performed. When the Company purchases advertising for clients on linear and across digital and streaming platforms and receives a commission, the commissions are recognized as revenue in the month the advertising is displayed. Gross Versus Net Revenue Presentation The Company evaluates individual arrangements with third parties to determine whether the Company acts as principal or agent under the terms. To the extent that the Company acts as the principal in an arrangement, revenues are reported on a gross basis, resulting in revenues and expenses being classified in their respective financial statement line items. To the extent that the Company acts as the agent in an arrangement, revenues are reported on a net basis, resulting in revenues being presented net of any expenses incurred in providing agency services. Determining whether the Company acts as principal or agent is based on an evaluation of which party has substantial risks and rewards of ownership under the terms of an arrangement. The most significant factors that the Company considers include identification of the primary obligor, as well as which party has credit risk, general and inventory risk and the latitude or ability in establishing prices.
Direct Operating Costs	Direct Operating Costs Direct operating costs include costs of the Company’s product sales, non-capitalizable film costs, film and television cost amortization expense, impairment expenses related to film and television costs, and participation expense related to agreements with various animation studios, post-production studios, writers, directors, musicians or other creative talent with which the Company is obligated to share net profits of the properties on which they have rendered services. Upon the acquisition of Wow, the Company also includes the salaries and related service production employee costs of Wow as part of its direct operating costs.
Share-Based Compensation	Share-Based Compensation The Company issues stock-based awards to employees and non-employees that are generally in the form of stock options or restricted stock units (“RSUs”). Share-based compensation cost is recorded for all options and RSUs based on the grant-date fair value of the award. The fair value of stock options is estimated at the date of grant using the Black-Scholes-Merton (“BSM”) option pricing model, which requires management to make assumptions with respect to the fair value on the grant date. The assumptions are as follows: (i) the expected term assumption of the award is based on the Company’s historical exercise and post-vesting behavior (ii) the expected volatility assumption is based on historical and implied volatilities of the Company’s common stock calculated based on a period of time generally commensurate with the expected term of the award; (iii) the risk-free interest rates are based on the implied yield available on U.S. treasury zero-coupon issues with an equivalent expected term; (iv) and the expected dividend yields of the Company’s stock are based on history and expectations of future dividends payable. In the case of RSUs, the fair value is calculated based on the Company’s underlying common stock on the date of grant. The Company recognizes compensation expense over the requisite service period ratably, using the graded attribution method, which is in-substance, recognizing multiple awards based on the vesting schedule. The Company has elected to account for forfeitures when they occur. The Company issues authorized shares available for issuance under the Company’s 2015 Incentive Plan and the Company’s 2020 Incentive Plan upon employees’ exercise of their stock options.
Debt Issuance Costs	Debt Issuance CostsDebt issuance costs relate to the issuance of Wow’s Production Facilities and are recorded as a reduction to the carrying amount of debt and amortized to interest expense using the effective interest method over the respective terms of the facilities. Debt issuance costs directly attributable to the acquisition or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time the assets are substantially ready for their intended use or sale.
Earnings Per Share	Earnings Per Share Basic earnings (loss) per share of common stock (“EPS”) is calculated by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted EPS is calculated by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding, plus the assumed exercise of all dilutive securities using the treasury stock or “as converted” method, as appropriate. During periods of net loss, all common stock equivalents are excluded from the diluted EPS calculation because they are antidilutive.
Income Taxes	Income Taxes Deferred income tax assets and liabilities are recognized based on differences between the financial statement and tax basis of assets and liabilities using presently enacted tax rates. At each balance sheet date, the Company evaluates the available evidence about future taxable income and other possible sources of realization of deferred tax assets and records a valuation allowance that reduces the deferred tax assets to an amount that represents management’s best estimate of the amount of such deferred tax assets that more likely than not will be realized.
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 $100,000 CAD. As of June 30, 2023 and December 31, 2022, the Company had 14 and 12 bank deposit accounts with an aggregate uninsured balance of $3.1 million and $3.4 million, respectively. The Company has a managed account with a financial institution. The managed account maintains its investments in marketable securities of $49.5 million and $83.7 million as of June 30, 2023 and December 31, 2022, 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 June 30, 2023 and December 31, 2022, 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 June 30, 2023, the Company had four customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 81.2% of the total revenue. During the six months ended June 30, 2023, the Company had three customers, whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 71.4% of the total revenue. As of June 30, 2023, the Company had four customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 70.4% of the total accounts receivable as of June 30, 2023. During the three months ended June 30, 2022, the Company had five customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 81.3% of the total revenue. During the six months ended June 30, 2022, the Company had five customers whose total revenue exceeded 10% of the total consolidated revenue. These customers accounted for 76.3% of the total revenue. As of June 30, 2022, the Company had four customers whose total accounts receivable exceeded 10% of the total accounts receivable. These customers accounted for 65.0% of the total accounts receivable as of June 30, 2022. 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 bad debt.
Fair value of Financial Instruments	Fair value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: •Level 1 - Observable inputs such as quoted prices for identical instruments in active markets; •Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and •Level 3 - Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. The carrying amounts of cash, restricted cash, receivables, payables, accrued liabilities, bank indebtedness and the margin loan approximate fair value due to the short-term nature of the instruments. The Company used the fair values of the liability-classified derivative warrants revalued at the end of each reporting period determined using the BSM model (Level 2) with standard valuation inputs. Refer to Note 16 for additional details. The investment in YFE is also revalued at the end of each reporting period based on the trading price of YFE (Level 1). Refer to Note 4 for additional details. Upon the acquisition of Wow, foreign currency forward contracts that are not traded in active markets were assumed. These are fair valued using observable forward exchange rates at the measurement dates and interest rates corresponding to the maturity of the contracts (Level 2). The fair values of the AFS securities are generally based on quoted market prices, where available. These fair values are obtained primarily from third-party pricing services, which generally use Level 1 or Level 2 inputs for the determination of fair value to facilitate fair value measurements and disclosures. Level 2 securities primarily include corporate securities, securities from states, municipalities and political subdivisions, mortgage-backed securities, United States Government securities, foreign government securities, and certain other asset-backed securities. For securities not actively traded, the pricing services may use quoted market prices of comparable instruments or a variety of valuation techniques, incorporating inputs that are currently observable in the markets for similar securities. 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 FASB ASC 320, Investments – Debt and Equity Securities. An allowance for credit loss was not recorded for the marketable securities as of June 30, 2023 and December 31, 2022.Financial and nonfinancial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs and include the Company’s goodwill, intangible assets and film and television costs.
Recently Adopted Accounting Pronouncements	Recently Adopted Accounting Pronouncements In June 2016, the FASB issued Accounting Standards Update ("ASU") No. 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326). ASU 2016-13 replaces the “incurred loss” credit losses framework with a new accounting standard that requires management's measurement of the allowance for credit losses to be based on a broader range of reasonable and supportable information for lifetime credit loss estimates. The new model, referred to as the current expected credit loss (“CECL”) model, applies to: (1) financial assets subject to credit losses and measured at amortized cost, and (2) certain off-balance sheet credit exposures. This includes, but is not limited to, loans, leases, held-to-maturity securities, loan commitments, and financial guarantees. The CECL model does not apply to AFS debt securities. For AFS debt securities with unrealized losses, entities will measure credit losses in a manner similar to what they do today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities. The ASU also simplifies the accounting model for purchased credit-impaired debt securities and loans. ASU No. 2016-13 also expands the disclosure requirements regarding an entity’s assumptions, models, and methods for estimating the allowance for loan and lease losses. On October 16, 2019, the FASB approved a proposal to change the effective date of ASU No. 2016-13 for smaller reporting companies, such as the Company, delaying the effective date to fiscal years beginning after December 31, 2022, including interim periods within those fiscal periods. Early adoption is permitted for interim and annual reporting periods. The Company has adopted the ASU as of January 1, 2023. The adoption of this ASU resulted in updated disclosures within our financial statements, but did not impact the financial statements.

v3.23.2

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2023
Accounting Policies [Abstract]
Schedule of marketable security measured at fair value	The following table summarizes the marketable securities measured at fair value by level within the fair value hierarchy as of June 30, 2023 (in thousands): Level 1 Level 2 Total Fair Value Marketable investments: Corporate Bonds $ 18,299  $ –  $ 18,299  U.S. Treasury 15,367  –  15,367  U.S. agency and government sponsored securities –  6,343  6,343  U.S. states and municipalities –  9,489  9,489  Total $ 33,666  $ 15,832  $ 49,498

v3.23.2

Marketable Securities (Tables)	6 Months Ended
	Jun. 30, 2023
Marketable Securities [Abstract]
Summary of marketable securities	The balances consisted of the following securities (in thousands): Adjusted Cost Unrealized Gain/(Loss) Fair Value Corporate Bonds $ 19,594  $ (1,295) $ 18,299  U.S. Treasury 16,355  (988) 15,367  U.S. Agency and Government Sponsored Securities 6,899  (556) 6,343  U.S. States and Municipalities 10,265  (776) 9,489  Total $ 53,113  $ (3,615) $ 49,498  The balances consisted of the following securities (in thousands): Adjusted Cost Unrealized Gain/(Loss) Fair Value Corporate Bonds $ 40,823  $ (2,579) $ 38,244  U.S. Treasury 20,869  (1,313) 19,556  Mortgage-Backed 5,980  (606) 5,374  U.S. Agency and Government Sponsored Securities 10,781  (1,221) 9,560  U.S. States and Municipalities 11,801  (895) 10,906  Asset-Backed 67  (1) 66  Total $ 90,321  $ (6,615) $ 83,706
Summary of investments classified by contractual maturity date	The contractual maturities of the Company’s marketable investments as of June 30, 2023 were as follows (in thousands): Fair Value Due within 1 year $ 13,821  Due after 1 year through 5 years 35,677  Total $ 49,498

v3.23.2

Property and Equipment, Net (Tables)	6 Months Ended
	Jun. 30, 2023
Property, Plant and Equipment [Abstract]
Schedule of property and equipment, net	The Company has property and equipment as follows (in thousands): June 30, 2023 December 31, 2022 Furniture and Equipment $ 180  $ 224  Computer Equipment 212  315  Leasehold Improvements 2,259  2,273  Software 184  263  Production Equipment —  23  Property and Equipment, Gross 2,835  3,098  Less Accumulated Depreciation (572) (530) Foreign Currency Translation Adjustment (127) (168) Property and Equipment, Net $ 2,136  $ 2,400

v3.23.2

Right of Use Leased Asset (Tables)	6 Months Ended
	Jun. 30, 2023
Right Of Use Leased Asset
Schedule of right of use asset	Right of use asset consisted of the following (in thousands): June 30, 2023 December 31, 2022 Office Lease Assets $ 10,313  $ 10,313  Equipment Lease Assets 5,144  3,928  Right Of Use Asset, Gross 15,457  14,241  Accumulated Amortization (4,091) (2,587) Foreign Currency Translation Adjustment (617) (810) Right Of Use Asset, Net $ 10,749  $ 10,844

v3.23.2

Film and Television Costs, Net (Tables)	6 Months Ended
	Jun. 30, 2023
Other Industries [Abstract]
Schedule of film and television costs activity	The following table highlights the activity in Film and Television Costs as of June 30, 2023 and December 31, 2022 (in thousands): Film and Television Costs, Net as of December 31, 2021 $ 2,940  Additions to Film and Television Costs 18,364  Disposals (11) Film Amortization Expense & Impairment Losses (12,996) Foreign Currency Translation Adjustment (517) Film and Television Costs, Net as of December 31, 2022 7,780  Additions to Film and Television Costs 734  Disposals (7) Film Amortization Expense (474) Foreign Currency Translation Adjustment 67  Film and Television Costs, Net as of June 30, 2023 $ 8,100

v3.23.2

Intangible Assets, Net and Goodwill (Tables)	6 Months Ended
	Jun. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of intangible asset	The Company had the following intangible assets (in thousands) with their weighted average remaining amortization period (in years): Intangible Assets, Net Weighted Average Remaining Amortization Period June 30, 2023 December 31, 2022 Customer Relationships 7.0 $ 17,325  $ 17,325  Digital Networks 14.8 803  3,537  Trade Names 67.9 10,360  11,783  Technology – –  293  Other Intangible Assets (a) – –  325  Intangible Assets, Gross 28,488  33,263  Less Accumulated Amortization (2,752) (2,398) Foreign Currency Translation Adjustment (1,320) (1,698) Intangible Assets, Net $ 24,416  $ 29,167  _______________________ (a)Represents the remaining unamortized logo and website intangible assets related to the merger with A Squared.
Summary of expected future intangible asset amortization	Expected future amortization of intangible assets subject to amortization as of June 30, 2023 is as follows (in thousands): Fiscal Year: 2023 1,051  2024 2,098  2025 2,098  2026 2,098  2027 2,098  Thereafter 8,933  Total $ 18,376
Schedule of goodwill	The following table summarizes the changes in the carrying amount of goodwill by reporting unit (in thousands): Content Production & Distribution Media Advisory & Advertising Services Total Goodwill as of December 31, 2022 $ 31,807  $ –  $ 31,807  Goodwill Impairment (11,287) –  (11,287) Foreign Currency Translation Adjustment 332  –  332  Goodwill as of June 30, 2023 $ 20,852  $ –  $ 20,852

v3.23.2

Stock Options (Tables)	6 Months Ended
	Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]
Schedule of stock option activity	The following table summarizes the stock option activity during the six months ended June 30, 2023: Number of Shares Weighted- Average Remaining Contractual Life Weighted- Average Exercise Price Outstanding at December 31, 2022 1,351,421 6.49 $ 15.09  Granted – – $ –  Exercised – – $ –  Forfeited/Cancelled (118,964) 6.71 $ 15.52  Expired (17,016) – $ 29.95  Outstanding at June 30, 2023 1,215,441 6.01 $ 14.84  Unvested at June 30, 2023 236,637 5.47 $ 9.95  Vested and exercisable June 30, 2023 978,804 6.14 $ 16.03

v3.23.2

Restricted Stock Units (Tables)	6 Months Ended
	Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]
Schedule of restricted stock units	The following table summarizes the Company’s RSU activity during the six months ended June 30, 2023: Restricted Stock Units Weighted- Average Remaining Contractual Life Weighted- Average Grant Date Fair Value per Share Unvested at December 31, 2022 1,151,944 3.41 $ 13.67  Granted 34,431 4.88 $ 2.89  Vested (83,799) 3.83 $ 8.93  Forfeited/Cancelled – – $ –  Unvested at June 30, 2023 1,102,576 2.91 $ 13.74

v3.23.2

Warrants (Tables)	6 Months Ended
	Jun. 30, 2023
Warrants and Rights Note Disclosure [Abstract]
Schedule of warrant activity	The following table summarizes the activity in the Company’s outstanding warrants during the six months ended June 30, 2023: Warrants Outstanding Number of Shares Weighted Average Remaining Contractual Life Weighted Average Exercise Price Per Share Balance at December 31, 2022 4,433,593 3.37 $ 22.50  Granted 4,784,909 5.16 $ 2.50  Exercised (2,311,550) 2.59 $ 23.70  Expired (4,000) – $ 30.00  Forfeitures (50,000) 7.69 $ 13.90  Balance at June 30, 2023 6,852,952 4.54 $ 8.19  Exercisable June 30, 2023 2,068,043 3.10 $ 21.35  Exercisable December 31, 2022 4,433,593 4.77 $ 22.50
Schedule of assumptions for warrant activity	The fair value of the outstanding derivative warrants was determined by using the Black-Scholes option pricing model (“BSM”) based on the following assumptions: Exercise Price $ 2.10  Dividend Yield 0  % Volatility 151  % Risk-free interest rate 4.71  % Expected Life of Warrants 1.7 years The fair value of the aggregate total of 4,784,909 Exchange Warrants and the SEG Warrants (collectively, the “Warrants”) on the issuance date of June 26, 2023 was determined to be $13.1 million, or $2.74 per share, as calculated using the BSM based on the following assumptions: June 26, 2023 Market Price $ 3.30  Exercise Price $ 2.50  Dividend Yield 0  % Volatility 110  % Risk-free interest rate 3.96  % Expected Life of Warrants 5.0 years The fair value of the Warrants as of June 30, 2023 was determined to be $7.1 million, or $1.48 per share, using the BSM based on the following assumptions: June 30, 2023 Market Price $ 1.91  Exercise Price $ 2.50  Dividend Yield 0  % Volatility 110  % Risk-free interest rate 4.13  % Expected Life of Warrants 5.0 years

v3.23.2

Supplemental Financial Statement Information (Tables)	6 Months Ended
	Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of other income (expense)	Components of Other Income (Expense), Net, are summarized as follows (in thousands): Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Interest Expense (a) $ (1,020) $ (388) $ (2,105) $ (443) Warrant Incentive Expense (b) (16,174) –  (16,174) –  Gain on Revaluation of Warrants (c) 6,063  227  6,202  269  Gain (Loss) on Revaluation of Equity Investment in YFE (d) 4,322  (2,494) 3,427  2,901  Realized Loss on Marketable Securities Investments (e) (720) (44) (2,257) (123) Gain (Loss) on Foreign Exchange (f) 35  (1,073) 355  (1,262) Interest Income (g) 158  253  468  501  Finance Lease Interest Expense (h) (54) (30) (104) (30) Other 2  –  3  –  Other Income (Expense) $ (6,368) $ (3,161) $ (8,080) $ 2,256  (a) Interest expense during the three and six months ended June 30, 2023 primarily consisted of $0.6 million and $1.3 million of interest incurred on the margin loan, respectively, and $0.4 million and $0.8 million, respectively, of interest incurred on production facilities loans and bank indebtedness assumed as part of the Wow Acquisition. (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 and $3.5 million recorded as the incremental expense of the 2021 Warrants immediately before and after the repricing. (c) The gain on warrant revaluation during the three and six months ended June 30, 2023 is primarily related to the $6.0 million change in fair value as of the end of the reporting period of the Exchange and SEG Warrants compared to the fair value at issuance date. (d) As accounted for using the fair value option, the gain on the YFE investment revaluation during the three and six months ended June 30, 2023, excluding the impact of foreign currency recorded separately, is a result of an increase in YFE’s stock price as of June 30, 2023 when compared to the three and six months ended prior 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 gain on foreign currency exchange during the three and six months ended June 30, 2023 primarily related to the EURO weakening against the USD compared to the three and six months ended prior period. (g) Interest Income during the three and six months ended June 30, 2023 primarily consisted of cash interest received of $0.3 million and $0.7 million from the investments in marketable securities, respectively, net of premium amortization expense of $0.2 million and $0.3 million, respectively. (h) The finance lease interest expense represents the interest portion of the finance lease obligations assumed as part of the Wow Acquisition for equipment purchased under an equipment lease line. Prior to the acquisition of Wow, finance leases did not exist.
Supplemental pro forma information	Supplemental pro forma information is as follows: Three Months Ended Six Months Ended June 30, 2022 June 30, 2022 Total Revenues $ 22,124  41,667  Net Loss Attributable to Kartoon Studios, Inc. $ (13,343) (16,926) Net Loss per Share (Basic and Diluted) $ (0.42) $ (0.55) Weighted Average Shares Outstanding (Basic and Diluted) 31,551,991  30,968,201

v3.23.2

Commitments and Contingencies (Tables)	6 Months Ended
	Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Schedule of future minimum lease payments	The following is a schedule of future minimum contractual obligations as of June 30, 2023 (in thousands): 2023 2024 2025 2026 2027 Thereafter Total Operating Leases $ 829  $ 1,724  $ 1,773  $ 1,791  $ 1,564  $ 4,695  $ 12,376  Finance Leases 946  1,089  600  232  –  –  2,867  Employment Contracts 2,536  1,094  427  –  –  –  4,057  Consulting Contracts 1,696  784  –  –  –  –  2,480  Debt 32,368  17,794  –  –  –  –  50,162  $ 38,375  $ 22,485  $ 2,800  $ 2,023  $ 1,564  $ 4,695  $ 71,942

v3.23.2

Segment Reporting (Tables)	6 Months Ended
	Jun. 30, 2023
Segment Reporting [Abstract]
Schedule of segment information by revenues and net earnings	The following table presents the revenue and net earnings within the Company's two operating segments (in thousands): Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Total Revenues: Content Production & Distribution $ 10,148  $ 21,042  $ 23,381  $ 21,496  Media Advisory & Advertising Services 890  1,082  1,846  2,067  Total Revenue $ 11,038  $ 22,124  $ 25,227  $ 23,563  Net Loss: Content Production & Distribution $ (14,697) $ (12,823) $ (38,905) $ (16,860) Media Advisory & Advertising Services (533) (520) (1,087) (1,012) Total Net Loss $ (15,230) $ (13,343) $ (39,992) $ (17,872)
Schedule of segments by geographic area	The following table provides information about disaggregated revenue by geographic area (in thousands): Three Months Ended Six Months Ended June 30, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Total Revenues: United States $ 7,362  $ 15,441  $ 16,001  $ 15,993  Canada 1,871  5,709  5,426  6,596  United Kingdom 1,747  974  3,591  974  Other 58  —  209  —  Total Revenue $ 11,038  $ 22,124  $ 25,227  $ 23,563

v3.23.2

Organization and Business - Narrative (Details) $ / shares in Units, $ in Millions		3 Months Ended		6 Months Ended		12 Months Ended
	Feb. 06, 2023 shares	Jun. 30, 2023 USD ($) violation $ / shares shares	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) episode territory title channel company violation $ / shares shares	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) $ / shares shares	Aug. 25, 2023 shares	Aug. 24, 2023 shares	Jun. 30, 2023 CAD ($) violation shares	Jun. 26, 2023 $ / shares shares	Jun. 25, 2023 shares	Feb. 05, 2023 shares	Jan. 31, 2021 $ / shares shares
Offsetting Assets [Line Items]
Reverse stock split ratio	0.10
Common stock, shares authorized (in shares) | shares	40,000,000	40,000,000		40,000,000		40,000,000			40,000,000			400,000,000
Preferred stock, shares authorized (in shares) | shares		10,000,000		10,000,000					10,000,000
Common stock, shares outstanding (in shares) | shares		35,054,573		35,054,573		31,918,552			35,054,573	35,067,298	32,755,748
Common stock, shares, issued (in shares) | shares		35,054,573		35,054,573		31,918,552			35,054,573
Cash and cash equivalents		$ 4,839,000		$ 4,839,000		$ 7,432,000
Net decrease in cash, cash equivalents and restricted cash				2,593,000	$ 2,244,000
Net cash used in financing activities				27,941,000	(56,593,000)
Net cash used in operating activities				10,587,000	17,544,000
Proceeds from sale and maturity of marketable securities				34,169,000	5,536,000
Marketable investments		49,498,000		49,498,000		83,706,000
Available for sale, decrease during period				34,200,000
Margin loan balance		27,613,000		27,613,000		60,810,000
Line of credit		$ 6,700,000		$ 6,700,000					$ 8.9
Debt instrument, covenant compliance, number of violations | violation		2		2					2
Net losses		$ 15,230,000	$ 13,343,000	$ 39,992,000	17,872,000
Accumulated deficit		681,435,000		681,435,000		641,443,000
Stockholders' equity		87,500,000		87,500,000
Current assets		91,611,000		91,611,000		139,525,000
Marketable securities		49,498,000		49,498,000		83,706,000
Current liabilities		77,187,000		77,187,000		110,908,000
Working capital		$ 14,400,000		$ 14,400,000		$ 28,600,000
Forecast
Offsetting Assets [Line Items]
Common stock, shares authorized (in shares) | shares							190,000,000
Capital stock, authorized (in shares) | shares							200,000,000	50,000,000
Warrant
Offsetting Assets [Line Items]
Exercise price of warrants (in dollars per share) | $ / shares		$ 8.19		$ 8.19		$ 22.50
2021 Warrants | Warrant
Offsetting Assets [Line Items]
Number of securities called by warrants or rights (in shares) | shares													2,311,550
Exercise price of warrants (in dollars per share) | $ / shares													$ 23.70
Common stock, shares, issued (in shares) | shares										4,784,909
Percentage of outstanding common stock upon exercise of warrants										19.99%
2021 Warrants | Warrant | Forecast
Offsetting Assets [Line Items]
Percentage of outstanding common stock upon exercise of warrants							19.99%
Warrants and rights outstanding term							5 years
Warrant Exercise Inducement Offer Letters | Warrant
Offsetting Assets [Line Items]
Number of securities called by warrants or rights (in shares) | shares										4,623,100
Exercise price of warrants (in dollars per share) | $ / shares										$ 2.50
SEG Warrants | Warrant
Offsetting Assets [Line Items]
Number of securities called by warrants or rights (in shares) | shares										161,809
Exercise price of warrants (in dollars per share) | $ / shares										$ 2.50
Wow
Offsetting Assets [Line Items]
Number of multi channel | channel				2,500
Beacon Media Group
Offsetting Assets [Line Items]
Number of toy companies | company				30
Margin Loan
Offsetting Assets [Line Items]
Proceeds from lines of credit				$ 8,600,000
Repayments of lines of credit				$ 41,800,000
Debt, weighted average interest rate		0.67%		0.67%		1.66%			0.67%
Interest expense, debt		$ 600,000	$ 200,000	$ 1,300,000	$ 200,000
Margin loan balance		$ 27,600,000		27,600,000		$ 60,800,000
Margin Loan | Median
Offsetting Assets [Line Items]
Proceeds from lines of credit				$ 44,200,000		$ 27,100,000
Margin Loan | Federal Funds Rate
Offsetting Assets [Line Items]
Debt instrument, basis spread on variable rate				0.65%
YFE Acquisition | Y F E
Offsetting Assets [Line Items]
Number of titles | title				50
Number of episodes over | episode				1,600
Number of network coverage, territories | territory				60

v3.23.2

Summary of Significant Accounting Policies - Narrative (Details)	3 Months Ended			6 Months Ended
	Jun. 30, 2023 USD ($) account	Mar. 31, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) segment reportingUnit account	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) account
Product Information [Line Items]
Deferred tax liability	$ 0			$ 0		$ 705,000
Net loss	(15,230,000)		$ (13,343,000)	$ (39,992,000)	$ (17,872,000)
Number of operating segments | segment				2
Cash and cash equivalents	4,839,000			$ 4,839,000		7,432,000
Accounts receivable, allowance for doubtful accounts	112,250			112,250		65,421
Tax credits receivable, net, current	25,093,000			25,093,000		26,255,000
Tax credits receivable, allowance for tax credits receivable	400,000			400,000		200,000
Debt securities, available-for-sale, accrued interest	$ 200,000			$ 200,000		$ 300,000
Number of reporting units | reportingUnit				2
Cash, number of accounts with uninsured balance | account	14			14		12
Cash, uninsured amount	$ 3,100,000			$ 3,100,000		$ 3,400,000
Marketable securities	$ 49,498,000			$ 49,498,000		$ 83,706,000
Revision of Prior Period, Error Correction, Adjustment
Product Information [Line Items]
Deferred tax liability		$ 705,000
Net loss		$ 705,000
Revenue Benchmark | Customer Concentration Risk | Four Customers
Product Information [Line Items]
Concentration risk, percentage	81.20%
Revenue Benchmark | Customer Concentration Risk | Three Customers
Product Information [Line Items]
Concentration risk, percentage				71.40%
Revenue Benchmark | Customer Concentration Risk | Five Customers
Product Information [Line Items]
Concentration risk, percentage			81.30%		76.30%
Accounts Receivable | Customer Concentration Risk | Four Customers
Product Information [Line Items]
Concentration risk, percentage				70.40%	65.00%
Minimum
Product Information [Line Items]
Tax credits receivable, recognition period				18 months
Property, plant and equipment, term	2 years			2 years
Maximum
Product Information [Line Items]
Tax credits receivable, recognition period				24 months
Property, plant and equipment, term	7 years			7 years
Animated productions | Minimum
Product Information [Line Items]
Operating cycle				12 months
Animated productions | Maximum
Product Information [Line Items]
Operating cycle				24 months
Merchandising and licensing | Minimum
Product Information [Line Items]
Revenue from contract with customer, payable terms				30 days
Merchandising and licensing | Maximum
Product Information [Line Items]
Revenue from contract with customer, payable terms				45 days
FX Forwards
Product Information [Line Items]
Derivative asset	$ 17,700,000			$ 17,700,000
Derivative liability	(17,700,000)			(17,700,000)
Unrealized gain on derivatives	$ 100,000			$ 200,000
Stan Lee Universe
Product Information [Line Items]
Noncontrolling interest in variable interest entity				50.00%

v3.23.2

Summary of Significant Accounting Policies - Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	$ 49,498	$ 83,706
Corporate Bonds
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	18,299	38,244
U.S. Treasury
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	15,367	19,556
U.S. agency and government sponsored securities
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	6,343	9,560
U.S. states and municipalities
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	9,489	$ 10,906
Level 1
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	33,666
Level 1 | Corporate Bonds
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	18,299
Level 1 | U.S. Treasury
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	15,367
Level 1 | U.S. agency and government sponsored securities
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	0
Level 1 | U.S. states and municipalities
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	0
Level 2
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	15,832
Level 2 | Corporate Bonds
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	0
Level 2 | U.S. Treasury
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	0
Level 2 | U.S. agency and government sponsored securities
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	6,343
Level 2 | U.S. states and municipalities
Debt Securities, Available-for-Sale [Line Items]
Marketable investments	$ 9,489

v3.23.2

Variable Interest Entity - Narrative (Details) - Stan Lee Universe $ in Millions	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)	Jul. 31, 2020 creation
Variable Interest Entity [Line Items]
Number of creations | creation			100
Investments and cash | $	$ 0.8	$ 0.8

v3.23.2

Investment in Equity Interest - Narrative (Details) - YFE Acquisition - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Dec. 31, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ownership percentage	44.80%	44.80%	28.69%
Equity method investment, fair value, gain	$ 3.7
Equity method investment, fair value, stock price impact, gain	3.4
Equity method investment, fair value, foreign currency impact, gain	0.3
Other Noncurrent Assets
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Equity method investments	$ 20.0
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ownership percentage (in shares)	6,857,132

v3.23.2

Marketable Securities - Narrative (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($) security	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) security	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Debt Securities, Available-for-Sale [Line Items]
Amortized cost	$ 53,113,000		$ 53,113,000		$ 90,321,000
Marketable securities	$ 49,498,000		$ 49,498,000		$ 83,706,000
Debt securities, available-for-sale, unrealized loss position, number of positions | security	31		31
Realized loss	$ 700,000	$ 44,241	$ 2,300,000	$ 123,292
Minimum
Debt Securities, Available-for-Sale [Line Items]
Debt securities, available-for-sale, unrealized loss position, period			12 months

v3.23.2

Marketable Securities - Marketable Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-Sale [Line Items]
Adjusted Cost	$ 53,113	$ 90,321
Unrealized Gain/(Loss)	(3,615)	(6,615)
Fair Value	49,498	83,706
Corporate Bonds
Debt Securities, Available-for-Sale [Line Items]
Adjusted Cost	19,594	40,823
Unrealized Gain/(Loss)	(1,295)	(2,579)
Fair Value	18,299	38,244
U.S. Treasury
Debt Securities, Available-for-Sale [Line Items]
Adjusted Cost	16,355	20,869
Unrealized Gain/(Loss)	(988)	(1,313)
Fair Value	15,367	19,556
Mortgage-Backed
Debt Securities, Available-for-Sale [Line Items]
Adjusted Cost		5,980
Unrealized Gain/(Loss)		(606)
Fair Value		5,374
U.S. Agency and Government Sponsored Securities
Debt Securities, Available-for-Sale [Line Items]
Adjusted Cost	6,899	10,781
Unrealized Gain/(Loss)	(556)	(1,221)
Fair Value	6,343	9,560
U.S. States and Municipalities
Debt Securities, Available-for-Sale [Line Items]
Adjusted Cost	10,265	11,801
Unrealized Gain/(Loss)	(776)	(895)
Fair Value	$ 9,489	10,906
Asset-Backed
Debt Securities, Available-for-Sale [Line Items]
Adjusted Cost		67
Unrealized Gain/(Loss)		(1)
Fair Value		$ 66

v3.23.2

Marketable Securities - Contractual Maturities (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Marketable Securities [Abstract]
Due within 1 year	$ 13,821,000
Due after 1 year through 5 years	35,677,000
Total	$ 49,498,000	$ 83,706,000

v3.23.2

Property and Equipment, Net - Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	$ 2,835	$ 3,098
Less Accumulated Depreciation	(572)	(530)
Foreign Currency Translation Adjustment	(127)	(168)
Property and Equipment, Net	2,136	2,400
Furniture and Equipment
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	180	224
Computer Equipment
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	212	315
Leasehold Improvements
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	2,259	2,273
Software
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	184	263
Production Equipment
Property, Plant and Equipment [Line Items]
Property and Equipment, Gross	$ 0	$ 23

v3.23.2

Property and Equipment, Net - Narrative (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Property, Plant and Equipment [Abstract]
Depreciation	$ 100,000		$ 200,000	$ 200,000	$ 200,000
Impairment of property and equipment	$ 0	$ 119,727	$ 0	$ 120,000	$ 0

v3.23.2

Right of Use Leased Asset - Right of use asset (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Lessee, Lease, Description [Line Items]
Right Of Use Asset, Gross	$ 15,457	$ 14,241
Accumulated Amortization	(4,091)	(2,587)
Foreign Currency Translation Adjustment	(617)	(810)
Right Of Use Asset, Net	10,749	10,844
Office Lease Assets
Lessee, Lease, Description [Line Items]
Right Of Use Asset, Gross	10,313	10,313
Equipment Lease Assets
Lessee, Lease, Description [Line Items]
Right Of Use Asset, Gross	$ 5,144	$ 3,928

v3.23.2

Right of Use Leased Asset - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Right Of Use Leased Asset
Operating lease, weighted average remaining lease term	87 months		87 months		93 months
Operating lease, weighted average discount rate, percent	10.50%		10.50%		10.40%
Operating lease, expense	$ 700,000		$ 800,000
Finance lease, cost	600,000		1,200,000
Finance lease, right-of-use asset, amortization	500,000		1,100,000
Finance lease, interest expense	$ 53,533	$ 30,000	$ 103,727	$ 30,000
Lease costs		$ 600,000		$ 700,000

v3.23.2

Film and Television Costs, Net - Activity In Film And Television Costs (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Film and Television Costs, net [Roll Forward]
Film and television costs, beginning balance	$ 7,780	$ 2,940
Additions to Film and Television Costs	734	18,364
Disposals	(7)	(11)
Film Amortization Expense & Impairment Losses	(474)	(12,996)
Foreign Currency Translation Adjustment	67	(517)
Film and television costs, ending balance	$ 8,100	$ 7,780

v3.23.2

Intangible Assets, Net and Goodwill - Intangible Assets, Net (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Indefinite-lived Intangible Assets [Line Items]
Intangible Assets, Gross	$ 28,488	$ 33,263
Less Accumulated Amortization	(2,752)	(2,398)
Foreign Currency Translation Adjustment	(1,320)	(1,698)
Intangible Assets, Net	$ 24,416	29,167
Customer Relationships
Indefinite-lived Intangible Assets [Line Items]
Weighted Average Remaining Amortization Period	7 years
Intangible Assets, Gross	$ 17,325	17,325
Digital Networks
Indefinite-lived Intangible Assets [Line Items]
Weighted Average Remaining Amortization Period	14 years 9 months 18 days
Intangible Assets, Gross	$ 803	3,537
Trade Names
Indefinite-lived Intangible Assets [Line Items]
Weighted Average Remaining Amortization Period	67 years 10 months 24 days
Intangible Assets, Gross	$ 10,360	11,783
Technology
Indefinite-lived Intangible Assets [Line Items]
Intangible Assets, Gross	0	293
Other Intangible Assets
Indefinite-lived Intangible Assets [Line Items]
Intangible Assets, Gross	$ 0	$ 325

v3.23.2

Intangible Assets, Net and Goodwill - Narrative (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Mar. 31, 2021	Dec. 31, 2013
Goodwill [Line Items]
Amortization of intangible assets	$ 500,000		$ 900,000	$ 1,100,000	$ 700,000
Impairment of intangible assets	0	$ 4,000,000	0	4,023,000	0
Goodwill	20,852,000			20,852,000		$ 31,807,000
Impairment of goodwill	0		0	11,287,000	0
Income tax benefit	705,000		0	705,000	0
Content Production & Distribution
Goodwill [Line Items]
Goodwill	20,852,000			20,852,000		31,807,000
Impairment of goodwill		11,300,000		11,287,000
Media Advisory & Advertising Services
Goodwill [Line Items]
Goodwill	$ 0			0		$ 0
Impairment of goodwill				0
GBI and Ameba
Goodwill [Line Items]
Impairment of intangible assets		2,800,000
Frederator | Trade Names
Goodwill [Line Items]
Impairment of intangible assets		1,300,000
Wow
Goodwill [Line Items]
Goodwill, tax basis step-up			21,400,000		21,400,000
Wow | Trade Names
Goodwill [Line Items]
Amortization of intangible assets				$ 6,000,000
A Squared | Content Production & Distribution
Goodwill [Line Items]
Goodwill								$ 10,400,000
Beacon Media Group | Media Advisory & Advertising Services
Goodwill [Line Items]
Goodwill							$ 9,700,000
Ameba and Wow
Goodwill [Line Items]
Goodwill, acquired during period					1,500,000
Ameba
Goodwill [Line Items]
Goodwill, tax basis step-up			$ 800,000		$ 800,000
Impairment of goodwill		$ 900,000

v3.23.2

Intangible Assets, Net and Goodwill - Expected Future Intangible Asset Amortization (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
2023	$ 1,051
2024	2,098
2025	2,098
2026	2,098
2027	2,098
Thereafter	8,933
Total	$ 18,376

v3.23.2

Intangible Assets, Net and Goodwill - Goodwill (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2023	Mar. 31, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Goodwill [Roll Forward]
Goodwill at beginning		$ 31,807,000		$ 31,807,000
Goodwill Impairment	$ 0		$ 0	(11,287,000)	$ 0
Foreign Currency Translation Adjustment				332,000
Goodwill at end	20,852,000			20,852,000
Content Production & Distribution
Goodwill [Roll Forward]
Goodwill at beginning		31,807,000		31,807,000
Goodwill Impairment		(11,300,000)		(11,287,000)
Foreign Currency Translation Adjustment				332,000
Goodwill at end	20,852,000			20,852,000
Media Advisory & Advertising Services
Goodwill [Roll Forward]
Goodwill at beginning		$ 0		0
Goodwill Impairment				0
Foreign Currency Translation Adjustment				0
Goodwill at end	$ 0			$ 0

v3.23.2

Deferred Revenue - Narrative (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Deferred revenue	$ 8.3	$ 12.4

v3.23.2

Margin Loan - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Line of Credit Facility [Line Items]
Margin loan balance	$ 27,613		$ 27,613		$ 60,810
Margin Loan
Line of Credit Facility [Line Items]
Proceeds from lines of credit			8,600
Repayments of lines of credit			$ 41,800
Debt, weighted average interest rate	0.67%		0.67%		1.66%
Interest expense, debt	$ 600	$ 200	$ 1,300	$ 200
Margin loan balance	$ 27,600		27,600		$ 60,800
Margin Loan | Median
Line of Credit Facility [Line Items]
Proceeds from lines of credit			$ 44,200		$ 27,100
Margin Loan | Federal Funds Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate			0.65%

v3.23.2

Bank Indebtedness and Production Facilities - Narrative (Details) $ in Thousands		6 Months Ended
	Mar. 17, 2023 CAD ($)	Jun. 30, 2023 USD ($) violation	Jun. 30, 2023 CAD ($) violation	Mar. 16, 2023 CAD ($)	Dec. 31, 2022 USD ($)	Dec. 31, 2022 CAD ($)	Dec. 15, 2022 CAD ($)	Dec. 14, 2022 CAD ($)
Line of Credit Facility [Line Items]
Bank Indebtedness		$ 4,755			$ 1,741
Line of credit		6,700	$ 8,900,000
Production Facilities, net		$ 17,793			18,282
Debt instrument, covenant compliance, number of violations | violation		2	2
Revolving Demand Facility
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity							$ 8,000,000	$ 5,000,000
Bank Indebtedness		$ 4,800	$ 6,300,000		1,700	$ 2,400,000
Revolving Demand Facility | Prime Rate
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate		2.00%
Revolving Demand Facility | Secured Overnight Financing Rate (SOFR)
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate		3.75%
Equipment Lease Line
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity	$ 4,000,000			$ 4,300,000
Line of credit		$ 2,000	2,600,000		2,400	3,300,000
Equipment Lease Line | Minimum
Line of Credit Facility [Line Items]
Line of credit facility, interest rate during period	3.94%
Lessee, finance lease, term of contract	2 months
Equipment Lease Line | Maximum
Line of Credit Facility [Line Items]
Line of credit facility, interest rate during period	7.18%
Lessee, finance lease, term of contract	37 months
Treasury Risk Management Facility
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity			500,000
Line of credit			0			0
Maximum remaining maturity of foreign currency derivatives		1 year
Production Facilities
Line of Credit Facility [Line Items]
Production Facilities, net		$ 17,800	22,500,000		18,300	24,800,000
Production facilities, interest		$ 800	1,100,000		1,100	1,500,000
Production Facilities | Prime Rate | Minimum
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate		1.00%
Production Facilities | Prime Rate | Maximum
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate		1.25%
Equipment Lease Facility
Line of Credit Facility [Line Items]
Line of credit facility, maximum borrowing capacity			$ 1,400,000
Lessee, finance lease, term of contract		3 years	3 years
Line of credit		$ 500	$ 700,000		$ 500	$ 700,000

v3.23.2

Stockholders’ Equity - Narrative (Details)		3 Months Ended				6 Months Ended
	Feb. 06, 2023 shares	Jun. 30, 2023 USD ($) $ / shares shares	Mar. 31, 2023 USD ($) shares	Jun. 30, 2022 USD ($) shares	Mar. 31, 2022 USD ($) shares	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 26, 2023 shares	Jun. 25, 2023 shares	Feb. 05, 2023 shares	Dec. 31, 2022 USD ($) $ / shares shares	Dec. 31, 2021 shares
Class of Stock [Line Items]
Reverse stock split ratio	0.10
Common stock, shares authorized (in shares)	40,000,000	40,000,000				40,000,000			400,000,000	40,000,000
Preferred stock, shares authorized (in shares)		10,000,000				10,000,000
Common stock, shares outstanding (in shares)		35,054,573				35,054,573	35,067,298	32,755,748		31,918,552
Common stock, shares, issued (in shares)		35,054,573				35,054,573				31,918,552
Common stock, value issued | $		$ 351,000				$ 351,000				$ 319,000
Common stock, par value (in dollars per share) | $ / shares		$ 0.001				$ 0.001				$ 0.001
Preferred stock, par value (in dollars per share) | $ / shares		$ 0.001				$ 0.001
Net of shares withheld for taxes | $		$ 6,000	$ 9,000	$ 0	$ 0
Lawyers
Class of Stock [Line Items]
Common stock, shares, issued (in shares)		400,000				400,000
Common stock, value issued | $		$ 1,000,000				$ 1,000,000
Common stock, par value (in dollars per share) | $ / shares		$ 2.47				$ 2.47
Prepaid expense | $		$ 700,000				$ 700,000
Common Stock
Class of Stock [Line Items]
Common stock, shares outstanding (in shares)		35,054,573	32,113,784	31,723,516	30,436,900	35,054,573				31,918,552	30,337,914
Issuance of common stock for services (in shares)		404,251		73,667	38,620	404,251
Issuance of common stock for vested restricted stock units, net of shares withheld for taxes (in shares)		224,988	78,088	107,241	60,366
Net of shares withheld for taxes | $		$ (29,000)	$ (1,000)	$ (1,000)	$ (1,000)
Treasury Stock
Class of Stock [Line Items]
Issuance of common stock for vested restricted stock units, net of shares withheld for taxes (in shares)		2,165	3,700			5,865
Net of shares withheld for taxes | $		$ 6,000	$ 9,000			$ 15,930
Series A Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)		9,999,999				9,999,999				9,999,999
Preferred stock, par value (in dollars per share) | $ / shares		$ 0.001				$ 0.001				$ 0.001
Preferred stock, shares outstanding (in shares)		0				0				0
Series B Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares authorized (in shares)		1				1				1
Preferred stock, par value (in dollars per share) | $ / shares		$ 0.001				$ 0.001				$ 0.001
Preferred stock, shares outstanding (in shares)		1				1				1

v3.23.2

Stock Options - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Aug. 27, 2020	Sep. 18, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregated intrinsic value	$ 0		$ 0
Share-based Payment Arrangement, Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	300,000	$ 400,000	700,000	$ 800,000
Unrecognized share-based compensation expense	$ 600,000		$ 600,000
Share-based Payment Arrangement, Option | Termination of certain employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested (in shares)			55,816
Vested in period, fair value			$ 100,000
Plan 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized (in shares)						216,767
Plan 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares authorized (in shares)					3,000,000

v3.23.2

Stock Options - Option Activity (Details) - Share-based Payment Arrangement, Option - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Number of Shares
Beginning balance (in shares)	1,351,421
Granted (in shares)	0
Exercised (in shares)	0
Forfeited/Cancelled (in shares)	(118,964)
Expired (in shares)	(17,016)
Ending balance (in shares)	1,215,441	1,351,421
Unvested (in shares)	236,637
Vested and exercisable (in shares)	978,804
Weighted- Average Grant Date Fair Value per Share
Outstanding, term	6 years 3 days	6 years 5 months 26 days
Forfeitures, term	6 years 8 months 15 days
Unvested, term	5 years 5 months 19 days
Vested and exercisable, term	6 years 1 month 20 days
Weighted- Average Exercise Price
Beginning balance (in dollars per share)	$ 15.09
Granted (in dollars per share)	0
Exercised (in dollars per share)	0
Forfeited/Cancelled (in dollars per share)	15.52
Expired (in dollars per share)	29.95
Ending balance (in dollars per share)	14.84	$ 15.09
Unvested options (in dollars per share)	9.95
Vested and exercisable (in dollars per share)	$ 16.03

v3.23.2

Restricted Stock Units - Narrative (Details) - Restricted Stock Units (RSUs) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			34,431
Vested (in shares)			83,799
Share-based compensation expense	$ 0.4	$ 3.9	$ 0.9	$ 7.9
Unrecognized share-based compensation expense	$ 0.9		0.9
Vested, fair value of vested shares			$ 0.8
Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)			34,431
Granted, fair value			$ 0.1
Expiration period			5 years
Shares, issued (in shares)	303,076		303,076
Termination of certain employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vested (in shares)			27,576
Vesting, fair value			$ 0.1

v3.23.2

Restricted Stock Units - RSU Activity (Details) - Restricted Stock Units (RSUs) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Number of Shares
Beginning balance (in shares)	1,151,944
Granted (in shares)	34,431
Vested (in shares)	(83,799)
Forfeited/Cancelled (in shares)	0
Ending balance (in shares)	1,102,576	1,151,944
Weighted- Average Remaining Contractual Life
Outstanding, term	2 years 10 months 28 days	3 years 4 months 28 days
Granted, term	4 years 10 months 17 days
Vested, term	3 years 9 months 29 days
Weighted- Average Grant Date Fair Value per Share
Beginning balance (in dollars per share)	$ 13.67
Granted (in dollars per share)	2.89
Vested (in dollars per share)	8.93
Forfeited/Cancelled (in dollars per share)	0
Ending balance (in dollars per share)	$ 13.74	$ 13.67

v3.23.2

Warrants - Warrant Activity (Details) - Warrant - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Warrants Outstanding Number of Shares
Number of Warrants outstanding beginning balance (in shares)	4,433,593
Granted (in shares)	4,784,909
Exercised (in shares)	(2,311,550)
Expired (in shares)	(4,000)
Forfeitures (in shares)	(50,000)
Number of Warrants outstanding, ending balance (in shares)	6,852,952	4,433,593
Exercisable (in shares)	2,068,043	4,433,593
Weighted Average Remaining Contractual Life
Weighted Average Remaining Contractual Life	4 years 6 months 14 days	3 years 4 months 13 days
Granted, Weighted Average Remaining Contractual Life	5 years 1 month 28 days
Exercised, Weighted Average Remaining Contractual Life	2 years 7 months 2 days
Forfeitures	7 years 8 months 8 days
Exercisable	3 years 1 month 6 days	4 years 9 months 7 days
Weighted Average Exercise Price Per Share
Weighted average exercise price per share, beginning balance (in dollars per share)	$ 22.50
Granted (in dollars per share)	2.50
Exercised (in dollars per share)	23.70
Expired (in dollars per share)	30.00
Forfeitures (in dollars per share)	13.90
Weighted average exercise price per share, ending balance (in dollars per share)	8.19	$ 22.50
Weighted average exercise price per share, exercisable (in dollars per share)	$ 21.35	$ 22.50

v3.23.2

Warrants - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 26, 2023	Feb. 16, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Aug. 25, 2023	Aug. 24, 2023	Feb. 06, 2023	Feb. 05, 2023	Jan. 31, 2021
Class of Warrant or Right [Line Items]
Common stock, shares authorized (in shares)			40,000,000		40,000,000		40,000,000			40,000,000	400,000,000
Proceeds from warrant exchange, gross					$ 5,299	$ 0
Marketing expenses, exchange for stock					1,195	0
Common stock including warrants, deficit (in shares)	4,240,784
Gain on warrant revaluation			$ (6,063)	$ (227)	(6,202)	$ (269)
Forecast
Class of Warrant or Right [Line Items]
Common stock, shares authorized (in shares)								190,000,000
Capital stock, authorized (in shares)								200,000,000	50,000,000
Warrant
Class of Warrant or Right [Line Items]
Warrants and rights outstanding			39,200		$ 39,200		$ 73,300
Warrants issued (in shares)					89,286
Warrants revaluation			$ 100		$ 100
Decrease in liability							$ 200
Class of warrant or right, remaining (in shares)		50,000
Proceeds from warrant exercises, put option		$ 250
Exercise price of warrants (in dollars per share)			$ 8.19		$ 8.19		$ 22.50
Warrant | 2021 Warrants
Class of Warrant or Right [Line Items]
Exercise price of warrants (in dollars per share)												$ 23.70
Number of securities called by warrants or rights (in shares)												2,311,550
Percentage of outstanding common stock upon exercise of warrants	19.99%
Incremental warrant incentive expense	$ 3,500		$ 3,500
Warrant | 2021 Warrants | Forecast
Class of Warrant or Right [Line Items]
Percentage of outstanding common stock upon exercise of warrants								19.99%
Warrants and rights outstanding term								5 years
Warrant | Warrant Exercise Inducement Offer Letters
Class of Warrant or Right [Line Items]
Exercise price of warrants (in dollars per share)	$ 2.50
Number of securities called by warrants or rights (in shares)	4,623,100
Percentage of common stock underlying warrants	200.00%
Warrant | Warrants
Class of Warrant or Right [Line Items]
Warrants and rights outstanding	$ 13,100		$ 7,100		$ 7,100
Exercise price of warrants (in dollars per share)	$ 2.74		$ 1.48		$ 1.48
Number of securities called by warrants or rights (in shares)	4,784,909
Warrants and rights outstanding term	5 years
Gain on warrant revaluation			$ 6,000
Warrant | Exchange Warrants
Class of Warrant or Right [Line Items]
Warrants and rights outstanding	$ 12,700		$ 12,700		$ 12,700
Warrant | Exchange Warrants | Forecast
Class of Warrant or Right [Line Items]
Exercise price of warrants (in dollars per share)								$ 2.50
Percentage of outstanding common stock upon exercise of warrants								9.99%
Warrants and rights outstanding term								5 years
Percentage of ownership in excess								4.99%
Percentage of ownership in excess at election								9.99%
Warrant | SEG Warrants
Class of Warrant or Right [Line Items]
Warrants and rights outstanding	$ 400
Exercise price of warrants (in dollars per share)	$ 2.50
Number of securities called by warrants or rights (in shares)	161,809
Proceeds from warrant exchange, gross	$ 5,800
Warrant solicitation agent fee	$ 400
Percentage of total gross proceeds as solicitation agent fee	7.00%
Marketing expenses, exchange for stock	$ 100
Warrant issuance costs	$ 900

v3.23.2

Warrants - Assumptions (Details) - Warrant - $ / shares		6 Months Ended
	Jun. 26, 2023	Jun. 30, 2023
Class of Warrant or Right [Line Items]
Exercise Price (in dollars per share)		$ 2.10
Dividend Yield		0.00%
Volatility		151.00%
Risk-free interest rate		4.71%
Expected life of warrants		1 year 8 months 12 days
Warrants
Class of Warrant or Right [Line Items]
Market Price (in dollars per share)	$ 3.30	$ 1.91
Exercise Price (in dollars per share)	$ 2.50	$ 2.50
Dividend Yield	0.00%	0.00%
Volatility	110.00%	110.00%
Risk-free interest rate	3.96%	4.13%
Expected life of warrants		5 years

v3.23.2

Supplemental Financial Statement Information - Components Of Other Income (Details) - USD ($)		3 Months Ended		6 Months Ended
	Jun. 26, 2023	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Debt Instrument [Line Items]
Interest Expense		$ (1,020,000)	$ (388,000)	$ (2,105,000)	$ (443,000)
Warrant Incentive Expense		(16,174,000)	0	(16,174,000)	0
Gain on Revaluation of Warrants		6,063,000	227,000	6,202,000	269,000
Gain (Loss) on Revaluation of Equity Investment in YFE		4,322,000	(2,494,000)	3,427,000	2,901,000
Realized Loss on Marketable Securities Investments		(720,000)	(44,000)	(2,257,000)	(123,000)
Gain (Loss) on Foreign Exchange		35,000	(1,073,000)	355,000	(1,262,000)
Interest Income		158,000	253,000	468,000	501,000
Finance Lease Interest Expense		(53,533)	(30,000)	(103,727)	(30,000)
Other Nonoperating Income (Expense)		2,000	0	3,000	0
Other Income (Expense)		(6,368,000)	(3,161,000)	(8,080,000)	2,256,000
Investment income, interest		300,000		700,000
Premium amortization expense		200,000		300,000
Warrant
Debt Instrument [Line Items]
Warrants and rights outstanding		39,200,000		39,200,000		$ 73,300,000
Warrant | Exchange Warrants
Debt Instrument [Line Items]
Warrants and rights outstanding	$ 12,700,000	12,700,000		12,700,000
Warrant | 2021 Warrants
Debt Instrument [Line Items]
Incremental warrant incentive expense	3,500,000	3,500,000
Warrant | Warrants
Debt Instrument [Line Items]
Gain on Revaluation of Warrants		(6,000,000)
Warrants and rights outstanding	$ 13,100,000	7,100,000		7,100,000
Margin Loan
Debt Instrument [Line Items]
Interest expense, debt		600,000	$ 200,000	1,300,000	$ 200,000
Production Facilities Loans and Bank Indebtedness
Debt Instrument [Line Items]
Interest expense, debt		$ 400,000		$ 800,000

v3.23.2

Supplemental Financial Statement Information - Supplemental Pro Forma Information (Details) - Ameba and Wow - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2023
Business Acquisition [Line Items]
Total Revenues	$ 22,124	$ 41,667
Net Loss Attributable to Kartoon Studios, Inc.	$ (13,343)	$ (16,926)
Net Loss per Share (Basic) (in dollars per share)	$ (0.42)	$ (0.55)
Net Loss per Share (Diluted) (in dollars per share)	$ (0.42)	$ (0.55)
Weighted Average Shares Outstanding (Basic) (in shares)	31,551,991	30,968,201
Weighted Average Shares Outstanding (Diluted) (in shares)	31,551,991	30,968,201

v3.23.2

Income Taxes - Narrative (Details) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Operating Loss Carryforwards [Line Items]
Unrecognized tax benefits, income tax penalties and interest accrued	$ 0	$ 0
Ameba Acquisition
Operating Loss Carryforwards [Line Items]
Deferred tax liability	$ 700,000

v3.23.2

Commitments and Contingencies - Minimum Lease Commitments (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Operating lease
2023	$ 829
2024	1,724
2025	1,773
2026	1,791
2027	1,564
Thereafter	4,695
Total	12,376
Finance lease
2023	946
2024	1,089
2025	600
2026	232
2027	0
Thereafter	0
Total	2,867
Contractual obligation
2023	38,375
2024	22,485
2025	2,800
2026	2,023
2027	1,564
Thereafter	4,695
Total	71,942
Employment Contracts
Contractual obligation
2023	2,536
2024	1,094
2025	427
2026	0
2027	0
Thereafter	0
Total	4,057
Consulting Contracts
Contractual obligation
2023	1,696
2024	784
2025	0
2026	0
2027	0
Thereafter	0
Total	2,480
Debt
Contractual obligation
2023	32,368
2024	17,794
2025	0
2026	0
2027	0
Thereafter	0
Total	$ 50,162

v3.23.2

Commitments and Contingencies - Narrative (Details)					6 Months Ended
	Apr. 06, 2022 USD ($) ft² parkingSpace	Mar. 02, 2021 USD ($) ft²	Feb. 01, 2021 USD ($) ft²	Jan. 30, 2019 USD ($) ft²	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Lessee, Lease, Description [Line Items]
ROU asset					$ 8,216,000		$ 8,506,000
Operating lease, weighted average discount rate, percent					10.50%		10.40%
Finance lease monthly payments					$ 1,216,000	$ 442,000
Minimum operating lease payments					3,700,000
Wow
Lessee, Lease, Description [Line Items]
Number of parking lease for parking space | parkingSpace	80
Finance lease, liability	$ 3,500,000
Minimum | Wow
Lessee, Lease, Description [Line Items]
Lessee, finance lease, discount rate	3.70%
Lessee, finance lease, remaining lease term	10 months
Finance lease monthly payments	$ 1,346
Maximum | Wow
Lessee, Lease, Description [Line Items]
Lessee, finance lease, discount rate	14.50%
Lessee, finance lease, remaining lease term	33 months
Finance lease monthly payments	$ 57,362
Beverly Hills, CA
Lessee, Lease, Description [Line Items]
Area of land (in square feet) | ft²				5,838
Lessee, operating lease, term				96 months
Payments for rent				$ 400,000
Operating leases of lessee, annual escalations, percentage				3.50%
Toronto, Ontario | Chiz Comm
Lessee, Lease, Description [Line Items]
Area of land (in square feet) | ft²			6,845
Lessee, operating lease, term			84 months
Payments for rent			$ 95,830
Toronto, Ontario | Minimum | Chiz Comm
Lessee, Lease, Description [Line Items]
Operating leases of lessee, annual escalations, percentage			5.00%
Toronto, Ontario | Maximum | Chiz Comm
Lessee, Lease, Description [Line Items]
Operating leases of lessee, annual escalations, percentage			7.00%
Lyndhurst, NJ
Lessee, Lease, Description [Line Items]
Area of land (in square feet) | ft²		4,765
Lessee, operating lease, term		89 months
Payments for rent		$ 115,154
Operating leases of lessee, annual escalations, percentage		2.50%
ROU asset					500,000
Operating lease, liability					$ 600,000
Vancouver, B.C., Office Space | Wow
Lessee, Lease, Description [Line Items]
Area of land (in square feet) | ft²	45,119
Payments for rent	$ 81,769
Operating leases of lessee, annual escalations, percentage	7.00%
Lessee, operating lease, remaining lease term	117 months
ROU asset	$ 6,600,000
Operating lease, liability	$ 6,600,000
Operating lease, weighted average discount rate, percent	11.50%
Vancouver, B.C., Parking | Wow
Lessee, Lease, Description [Line Items]
Payments for rent	$ 6,091
Lessee, operating lease, remaining lease term	117 months
Operating lease, liability	$ 500,000
Operating lease, weighted average discount rate, percent	11.50%

v3.23.2

Related Party Transactions - Narrative (Details) € in Millions							3 Months Ended		6 Months Ended
	Aug. 25, 2022	Jul. 19, 2022 EUR (€)	Apr. 07, 2022 USD ($) episode	Dec. 01, 2021 USD ($) interval shares	Sep. 30, 2021 USD ($)	Dec. 07, 2020 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($) office
Restricted Stock Units (RSUs)
Related Party Transaction [Line Items]
Granted (in shares) | shares									34,431
Related Party
Related Party Transaction [Line Items]
Other current liabilities							$ 55,000		$ 55,000		$ 2,000
Related Party | Employment Contracts | Chief Executive Officer
Related Party Transaction [Line Items]
Executive producer fee per half hour episode						$ 12,500
Producer fees									300,000	$ 600,000
Quarterly bonus compensation							55,000	$ 55,000
Other current liabilities							55,000		55,000
Royalty percentage	50.00%
Royalty revenue									0	0
Related Party | Employment Contracts | Chief Executive Officer | Wow
Related Party Transaction [Line Items]
Executive producer fee per half hour episode			$ 12,400
Royalty revenue									0	0
Number of annual episodes contacted for | episode			52
Related Party | Merchandising and Licensing Agreement
Related Party Transaction [Line Items]
Royalty revenue									0	$ 0
Related Party | Loan Agreement and Promissory Note | POW
Related Party Transaction [Line Items]
Debt instrument, face amount					$ 1,250,000
Related party transaction, rate					9.00%
Interest receivable, current							200,000		200,000		$ 100,000
Related Party | Loan Agreement and Promissory Note | POW
Related Party Transaction [Line Items]
Noncontrolling interest, ownership percentage by parent					50.00%
Related Party | Shareholder Loan Agreement | Y F E
Related Party Transaction [Line Items]
Related party transaction, rate		5.00%
Interest receivable, current							$ 44,701		$ 44,701
Interest payable, current | €		€ 1.3
Successive interest period		3 months
Principal repayment period		5 days
Related Party | Independent Contractor Agreement | F&M Film and Medien Beteiligungs GmbH
Related Party Transaction [Line Items]
Agreement term				2 years
Amounts of transaction				$ 150,000
Related Party | Independent Contractor Agreement | F&M Film and Medien Beteiligungs GmbH | Restricted Stock Units (RSUs)
Related Party Transaction [Line Items]
Granted (in shares) | shares				30,000
Award intervals | interval				3
Award interval period				6 months
Related Party | Sublease Agreement | Beverly Hills, CA
Related Party Transaction [Line Items]
Number of leased office spaces | office											1
Monthly sublease payment											$ 395

v3.23.2

Segment Reporting - Narrative (Details)	6 Months Ended
	Jun. 30, 2023 segment
Segment Reporting [Abstract]
Number of operating segments	2

v3.23.2

Segment Reporting - Schedule of Segment Information by Revenues and Net Earnings (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Segment Reporting Information [Line Items]
Total Revenue	$ 11,038	$ 22,124	$ 25,227	$ 23,563
Net loss	(15,230)	(13,343)	(39,992)	(17,872)
Content Production & Distribution
Segment Reporting Information [Line Items]
Total Revenue	10,148	21,042	23,381	21,496
Net loss	(14,697)	(12,823)	(38,905)	(16,860)
Media Advisory & Advertising Services
Segment Reporting Information [Line Items]
Total Revenue	890	1,082	1,846	2,067
Net loss	$ (533)	$ (520)	$ (1,087)	$ (1,012)

v3.23.2

Segment Reporting - Disaggregated Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenue	$ 11,038	$ 22,124	$ 25,227	$ 23,563
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenue	7,362	15,441	16,001	15,993
Canada
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenue	1,871	5,709	5,426	6,596
United Kingdom
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenue	1,747	974	3,591	974
Other
Revenues from External Customers and Long-Lived Assets [Line Items]
Total Revenue	$ 58	$ 0	$ 209	$ 0

v3.23.2

Subsequent Events - Narrative (Details)			1 Months Ended	6 Months Ended
	Aug. 02, 2023 USD ($) installment	Jun. 30, 2023 USD ($)	Jul. 31, 2023 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Subsequent Event [Line Items]
ROU asset		$ 8,216,000		$ 8,216,000		$ 8,506,000
Property, plant and equipment, carrying value		2,835,000		2,835,000		$ 3,098,000
Realized loss on marketable securities				2,257,000	$ 123,000
Margin Loan
Subsequent Event [Line Items]
Repayments of lines of credit				41,800,000
Lyndhurst, NJ
Subsequent Event [Line Items]
ROU asset		500,000		500,000
Operating lease, liability		600,000		600,000
Lessee, operating lease, security deposit waiver		26,208
Lyndhurst, NJ | Furniture, Fixtures and Leasehold Improvements
Subsequent Event [Line Items]
Property, plant and equipment, carrying value		$ 88,569		$ 88,569
Subsequent Event
Subsequent Event [Line Items]
Sale of securities			$ 27,000,000
Realized loss on marketable securities			1,500,000
Subsequent Event | Margin Loan
Subsequent Event [Line Items]
Repayments of lines of credit			$ 27,000,000
Subsequent Event | Lyndhurst, NJ
Subsequent Event [Line Items]
Lessee, operating lease, termination expense	$ 98,185
Lessee, operating lease, termination expense, number of installment payments | installment	4
Lessee, operating lease, termination expense, default, number of days late	5 days
Operating lease, liability	$ 600,000
Loss on termination of lease	$ 104,704

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