Quarterly report [Sections 13 or 15(d)]

Segment Reporting

v3.25.1
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.