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20. Subsequent Events | 9 Months Ended
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Sep. 30, 2020
Subsequent Events [Abstract] |
Subsequent Events | Note 20: Subsequent Events On October 15, 2020, the Company issued to an individual and his management company $500,000 in cash, 1,000,000 shares of the Company’s common stock at $1.44 per share and 1,000,000 warrants to purchase shares of Common Stock at $1.39 per share for his involvement with the production and distribution of a television series being developed by the Company. The shares become freely tradable, 50% upon the six-month anniversary of issuance and 50% upon one year of issuance. The cash and 50% of the share value are being paid an issued as an advance payment against participation amounts that will become due the individual upon performance of the series. The warrants have a 10-year term and. The warrants become immediately exercisable in whole upon the earlier of May 21, 2021 or the first date the series is exhibited on television or is otherwise available for viewing through a streaming service or otherwise on the internet. The Company anticipates the warrants will become exercisable by December 31, 2020. The warrants were valued at $1,260,269 using the Black-Scholes option pricing model. The warrants were issued as an advance payment against participation amounts that will become due to the individual upon the performance of the series. The warrants are being accounted as non-employee compensation expense which will be recorded as prepaid publicity expense over the expected exercise period. On October 28, 2020, the Company, entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain investors (the “Investors”), pursuant to which the Company agreed to issue and sell, in a registered direct offering by the Company directly to the Investors (the “Offering”), an aggregate of 37,400,000 shares (the “Shares”) of Common Stock, and warrants (“Investor Warrants”) to purchase up to 37,400,000 shares of our Common Stock (“Investor Warrant Shares”). The purchase price was $1.55 per fixed combination of one share of common stock and a warrant to purchase one share of common stock, for gross proceeds of approximately $57.9 million before deducting the placement agent fees and offering expenses. The Company intends to use the net proceeds of the Offering for certain accretive future acquisitions, and for our operations, including, but not limited to, the development, production, distribution and marketing of animated content, including the recently announced Shaq’s Garage, and associated licensed merchandise and general working capital. The Investor Warrants have an exercise price of $1.55 per share and are exercisable immediately on the date of issuance, and at any time thereafter up to five years from the initial issuance date. A holder will not have the right to exercise any portion of the Investor 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 Investor 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 Offering closed on October 30, 2020. The Special Equities Group, a division of Bradley Woods & Co. Ltd., acted as placement agent and will receive (i) a cash fee of approximately $4.1 million and (ii) warrants (“Placement Agent Warrants” and together with Investor Warrants, the “Warrants”) to purchase 2,618,000 shares of Common Stock . The Placement Agent Warrants have the same form and terms as the Investor Warrants. In addition, the Company will pay the placement agent a cash fee equal to 7% of the aggregate gross proceeds from the exercise of any Warrants. The Company also reimbursed the lead Investor for $25,000 of its legal fees and expenses incurred in connection with the Offering. On November 15, 2020, the Company entered into a binding letter of intent (the “Letter of Intent”) with ChizComm Ltd., a corporation organized in Canada (“ChizComm Canada”), and ChizComm USA Corp., a New Jersey corporation (“ChizComm USA” and, together with ChizComm Canada, “ChizComm”). The Company expects to acquire 100% of the equity interests of ChizComm in exchange for (i) $8.5 million in cash and (ii) $3.5 million of shares of the Company’s unregistered common stock, at a per share price equal to the closing price of the Company’s common stock on the day prior to the closing of the acquisition, for a total $12 million transaction value (the “Transaction Value”). As detailed in the Letter of Intent, $2 million of the Transaction Value would be allocated to the acquisition of 2 million new subscribers for the Company’s Kartoon Channel!. Further, ChizComm would be entitled to additional consideration of up to $8 million if the Company meets certain milestones following the acquisition, as set out in the Letter of Intent. The Company expects to negotiate and execute definitive agreements with ChizComm and to consummate the transactions contemplated in the Letter of Intent in the first fiscal quarter of 2021.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6842918&loc=SL6314017-165662 + Details
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