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Segment Reporting
 3 Months Ended
Mar. 31, 2025
Segment Reporting [Abstract]  
Segment Reporting

Note 21: Segment Reporting

 

ASC Topic 280 Segment Reporting establishes standards for companies to report in their financial statement information about operating segments, products, services, geographic areas, and major customers. Operating segments are defined as components of an enterprise that engage in business activities from which it may recognize revenues and incur expenses, and for which separate financial information is available that is regularly evaluated by the Company’s chief operating decision maker, or group, in deciding how to allocate resources and assess performance.

 

The Company’s chief operating decision maker (“CODM”) uses revenue and net income (loss) to evaluate the profitability and performance of each operating segment. The CODM does not evaluate the operating segments using asset information and it is therefore not disclosed. Segment operating expenses include operating expenses directly attributable to the segment as well as certain shared corporate administration services and other costs which are allocated to the reportable segments, such as legal expenses, human resources expenses, accounting expenses, insurance expenses, and corporate facilities expenses. Segment operating expenses exclude certain non-recurring items and other costs, such as interest expense, interest income, share-based compensation expense, and taxes. The Company’s CODM evaluates the performance of each reportable segment based on segment operating income (loss) because it provides insight to operational leverage and other operational metrics for each segment.

 

The Company has identified two operating segments based on the nature of the products and services offered:

 

Content Production and Distribution segment includes the operations of Kartoon Studios, Inc, Mainframe Studios, and Frederator Studios. These entities are aggregated due to their similar economic characteristics, nature of products and services, production processes, customer types, and distribution methods. This segment is focused on the creation, production, and distribution of animated and live-action content, as well as licensing and royalty revenue from intellectual property.

 

Media Advisory and Advertising Services segment includes The Beacon Media Group and The Beacon Communications Group. These entities provide media advisory and advertising services and marketing services.

 

The CEO (CODM) reviews revenue and net operating results, as allocated based on the nature of the business activity.

 

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

                
   Three Months Ended March 31,
   2025  2024
Total Revenues:          
Content Production and Distribution  $8,637   $5,192 
Media Advisory and Advertising Services   867    886 
Total Revenues  $9,504   $6,078 
           
Net Loss:          
Content Production and Distribution  $(6,026)  $(6,739)
Media Advisory and Advertising Services   (500)   (306)
Total Net Loss Attributable to Kartoon Studios, Inc.  $(6,526)  $(7,045)

 

Geographic Information

 

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

                
   Three Months Ended March 31,
   2025  2024
Total Revenues:          
United States  $4,726   $3,181 
Canada   3,026    140 
United Kingdom   1,712    2,559 
Other   40    198 
Total Revenues  $9,504   $6,078 

 

Additional considerations include the use of segment-level budgets and forecasts created by Mainframe Studios, Frederator and Kartoon Studios at the entity level. The additional financial information prepared by the segment managers is discussed at length in meetings with the CODM. The Company determines that the revenue information reviewed by the CODM, combined with the financial information discussed with the segment managers is sufficiently detailed to allow the CODM to assess each component’s performance and make resource allocation decisions. Kartoon Studios, Frederator and Mainframe Studios are separate entities, although according to ASC 280-10-50-11 all criteria are met in order to present result in aggregation.

 

When evaluating the Company’s performance and making key decisions regarding resource allocation, the CODM reviews several metrics included in net income or loss, which also include the following:

                        
   Three Months Ended March 31, 2025
   Content Production and Distribution  Media Advisory and Advertising  Total
          
Revenue  $8,637   $867   $9,504 
                
Less Operating Expenses:               
Selling, Marketing and Direct Operating Costs   6,791    79    6,870 
General and Administrative Expenses   3,674    1,266    4,940 
Other Expenses   –    –    – 
Segment results:  $(1,828)  $(478)  $(2,306)
                
Reconciliation of net (loss) income:               
Depreciation Expense  $639   $47   $686 
Interest Expense   128    –    128 
Stock Based Compensation   87    –    87 
Tax provision   –    –    – 
Other   3,409    (25)   3,384 
Net Loss Attributable to Non-Controlling Interests   (65)   –    (65)
                
Net Loss Attributable to Kartoon Studios, Inc.  $(6,026)  $(500)  $(6,526)

 

                        
   Three Months Ended March 31, 2024
   Content Production and Distribution  Media Advisory and Advertising  Total
          
Revenue  $5,192   $886   $6,078 
                
Less Operating Expenses:               
Selling, Marketing and Direct Operating Costs   4,757    12    4,769 
General and Administrative Expenses   5,128    1,282    6,410 
Other Expenses   –     5    5 
Segment results:  $(4,693)  $(413)  $(5,106)
                
Reconciliation of net (loss) income:               
Depreciation Expense  $908   $54   $962 
Interest Expense   203    –    203 
Stock Based Compensation   226    –    226 
Tax provision   –    –    – 
Other   728    (161)   567 
Net Loss Attributable to Non-Controlling Interests   (19)   –    (19)
                
Net Loss Attributable to Kartoon Studios, Inc.  $(6,739)  $(306)  $(7,045)

 

All other segment items included in net income or loss are reported on the consolidated statements of operations and described within their respective disclosures.