Kartoon Studios, Inc.
For the period ended Sep 30, 2025. Filed Nov 14, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 14, 2025
TOON$0.50+2.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-14.
0001683168-25-006078
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001683168-25-008374
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 67 previous paragraphs and 73 current paragraphs.
32 unchanged; 32 reworded; 9 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Recent Events
Current report
Registered Direct Offering and Concurrent Private Placement
Current report
On October 20, 2025, we entered into a securities purchase agreement (the “Purchase Agreement”) with an institutional investor (the “Purchaser”), pursuant to which we agreed to issue to the Purchaser, (i) in a registered direct offering (the “Registered Direct Offering”), 3,000,000 shares (the “Shares”) of our common stock, par value $0.001 per share (the “Common Stock”), and pre-funded warrants (“Pre-Funded Warrants”) to purchase up to 6,903,049 shares of Common Stock (the “Pre-Funded Warrant Shares”), and (ii) in a concurrent private placement pursuant to the Purchase Agreement (the “Concurrent Private Placement” and, together with the Registered Direct Offering, the “October Offerings”), common warrants (the “Common Warrants”) to purchase an aggregate of up to 9,903,049 shares of Common Stock (the “Common Warrant Shares”), with an exercise price of $0.738. The October Offerings closed on October 22, 2025 (the “Closing Date”), and we received aggregate gross proceeds of approximately $7.3 million in connection therewith, excluding any proceeds that may be received upon the exercise of the Common Warrants and before deducting placement agent fees and other offering expenses payable by us. Each Share and privately placed Common Warrant was sold at a public offering price of $0.738. Each Pre-Funded Warrant and privately placed Common Warrant was sold at a public offering price of $0.737.
Current report
The Shares, Pre-Funded Warrants and Pre-Funded Warrant Shares were offered by the Company pursuant to a shelf registration statement on Form S-3 (File No. 333-276259), which was declared effective by the Securities and Exchange Commission (the “Commission”) on January 5, 2024 (the “Registration Statement”). The Common Warrants and the Common Warrant Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and were instead offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and/or Rule 506(b) promulgated thereunder.
Current report
Pursuant to the terms of the Purchase Agreement, until January 31, 2026, we agreed that neither we nor any of our subsidiaries will issue (or enter into any agreement to issue) any shares of Common Stock or Common Stock Equivalents (as defined in the Purchase Agreement) or file any registration statement or any amendment or supplement thereto, subject to certain limited exceptions, including (i) the prospectus supplement relating to the Registered Direct Offering, (ii) the Resale Registration Statement (as defined below). We further agreed, subject to limited exceptions, for a period from the date of the Purchase Agreement until October 20, 2027, not to issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents involving a Variable Rate Transaction (as defined in the Purchase Agreement), provided however that commencing October 20, 2026, we are allowed to enter into, and issue shares pursuant to, an “at the market” offering.
Current report
Dawson James Securities Inc. acted as the exclusive placement agent (the “Placement Agent”) on a “reasonable best efforts” basis, in connection with the October Offerings and received a cash fee of 7% of the aggregate gross proceeds paid to us for the securities sold in the October Offerings and reimbursement of certain out-of-pocket expenses of $75,000. The placement agent is also entitled to receive a cash fee of 7% of the gross proceeds received from the exercise of any Common Warrants. As additional compensation to the Placement Agent, in connection with the October Offerings, we issued to the Placement Agent or its designees, warrants (the “Placement Agent Warrants”) to purchase an aggregate of 693,213 shares of Common Stock (the “Placement Agent Warrant Shares”) with substantially the same terms as the Common Warrants, except that they have an exercise price per share equal to $0.8118. The Placement Agent Warrants were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and/or Rule 506(b) promulgated thereunder.
Current report
Pursuant to the Purchase Agreement, we agreed to file, as soon as practicable (and in any event within thirty (30) calendar days of the date of the Purchase Agreement), a registration statement (the “Resale Registration Statement”) providing for the resale by the Purchaser of the Common Warrant Shares. In addition, we will use commercially reasonable efforts to cause the Resale Registration Statement to become effective within ninety (90) days following the Closing Date and to keep the Resale Registration Statement effective at all times until the Purchaser does not own any Common Warrants or Common Warrant Shares.
Current report
Three Months and Nine Months Ended September 30, 2025
Current report
Three Months and Nine Months Ended September 30, 2024
Removed paragraphs (3)
Previous report
Three Months and Six Months Ended June 30, 2025
Previous report
Three Months and Six Months Ended June 30, 2024
Previous report
In parallel, management also plans to preserve liquidity, as needed, by implementing cost saving measures. For example, subsequent to the period ending June 30, 2025, in order to improve liquidity, we sold certain assets, including CARES Act Employee Retention Tax Credit receivables and 1,500,000 YFE shares. While management is taking these steps to improve liquidity, due to the uncertainty surrounding the successful execution and timing of these plans, substantial doubt continues to exist regarding our ability to meet our obligations as they become due within one year after the date the accompanying condensed consolidated financial statements are issued.
Reworded paragraphs (32)
Previous wording
The following discussion and analysis of our results of operations, financial condition and liquidity and capital resources should be read in conjunction with our financial statements and related notes for the three and six months ended June 30, 2025 and 2024. Certain statements made or incorporated by reference in this report and our other filings with the Securities and Exchange Commission, in our press releases and in statements made by or with the approval of authorized personnel constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are subject to the safe harbor created thereby. Forward-looking statements reflect intent, belief, current expectations, estimates or projections about, among other things, our industry, management’s beliefs, and future events and financial trends affecting us. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will” and variations of these words or similar expressions are intended to identify forward looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward looking statements. Although we believe the expectations reflected in any forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. These differences can arise as a result of the risks described in the section entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 31, 2025 (“The 2024 Annual Report”), and elsewhere in this report, as well as other factors that may affect our business, results of operations, or financial condition. Forward-looking statements in this report speak only as of the date hereof, and forward-looking statements in documents incorporated by reference speak only as of the date of those documents. Unless otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, we cannot assure you that the forward-looking statements contained in this report will, in fact, transpire.
Current wording
The following discussion and analysis of our results of operations, financial condition and liquidity and capital resources should be read in conjunction with our financial statements and related notes for the three and nine months ended September 30, 2025 and 2024. Certain statements made or incorporated by reference in this report and our other filings with the Securities and Exchange Commission, in our press releases and in statements made by or with the approval of authorized personnel constitute forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and are subject to the safe harbor created thereby. Forward-looking statements reflect intent, belief, current expectations, estimates or projections about, among other things, our industry, management’s beliefs, and future events and financial trends affecting us. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “may,” “will” and variations of these words or similar expressions are intended to identify forward looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward looking statements. Although we believe the expectations reflected in any forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. These differences can arise as a result of the risks described in the section entitled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 31, 2025 (“The 2024 Annual Report”), and elsewhere in this report, as well as other factors that may affect our business, results of operations, or financial condition. Forward-looking statements in this report speak only as of the date hereof, and forward-looking statements in documents incorporated by reference speak only as of the date of those documents. Unless otherwise required by law, we undertake no obligation to publicly update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, we cannot assure you that the forward-looking statements contained in this report will, in fact, transpire.
Previous wording
We believe the licensing and royalties business presents the most significant long-term growth opportunity. Strategic emphasis is being placed on the commercialization of the Stan Lee intellectual property portfolio, with a focus on both digital and physical consumer products. We intend to expand the use of our broader IP catalog in licensing programs beginning throughout 2025 and beyond.
Current wording
We believe the licensing and royalties business presents the most significant long-term growth opportunity. Strategic emphasis is being placed on the commercialization of the Stan Lee intellectual property portfolio and the launch of theHundred Acre Wood: Winnie & Friendsproperty, with a focus on both digital and physical consumer products, as well as location-based fan experiences. We intend to expand the use of our broader IP catalog in licensing programs beginning throughout 2026 and beyond.
Previous wording
Production Services revenue was generated specifically by Mainframe Studios providing animation production services. Revenue for production services is recognized over time on a percentage of completion basis, therefore, as the projects are still in progress, we recognize revenue based upon the proportion of costs incurred cumulatively to total expected costs. Consequently, less revenue is recognized during the periods in which the projects are near completion or completed. Revenue for the three months ended June 30, 2025 was higher than the Mainframe Studios’ production services revenue recognized during three months ended June 30, 2024 primarily due to the number of active projects in the current quarter.
Current wording
Production Services revenue was generated specifically by Mainframe Studios providing animation production services. Revenue for production services is recognized over time on a percentage of completion basis, therefore, as the projects are still in progress, we recognize revenue based upon the proportion of costs incurred cumulatively to total expected costs. Consequently, less revenue is recognized during the periods in which the projects are near completion. Revenue for the three months ended September 30, 2025 was 45% higher than Mainframe Studios’ production services revenue recognized during the three months ended September 30, 2024 primarily due to several ongoing projects progressing into more advanced production stages, resulting in higher revenue recognized under the percentage-of-completion method.
Previous wording
Revenue related to Content Distribution on AVOD and SVOD, including advertising sales for the three months ended June 30, 2025, decreased by 17% as compared to the three months ended June 30, 2024. The decrease of $0.4 million was due to a decrease in Frederator’s creator network revenue from YouTube driven by overall less viewership as compared to the prior year period.
Current wording
Revenue related to Content Distribution on AVOD and SVOD, including advertising sales for the three months ended September 30, 2025, decreased by 24% as compared to the three months ended September 30, 2024. The decrease of $0.6 million was due to a decrease in Frederator’s creator network revenue from YouTube driven by overall less viewership as compared to the prior year period.
Previous wording
Revenue related to Licensing and Royalties for the three months ended June 30, 2025 increased by 219% as compared to the three months ended June 30, 2024 primarily due to higher amounts earned from our existing license deals related to our consumer products agreements and music licensing agreements. Additionally, we executed new licensing agreements related to Stan Lee Universe, LLC assets.
Current wording
Revenue related to Licensing and Royalties for the three months ended September 30, 2025 increased by 97% as compared to the three months ended September 30, 2024 primarily due to higher amounts earned from our existing license deals related to our consumer products agreements, music licensing agreements, and certain new executed licensing agreements related to Stan Lee Universe, LLC assets.
Previous wording
Revenue generated by Media Advisory and Advertising services for the six months ended June 30, 2025 decreased by 2% as compared to the six months ended June 30, 2024 primarily due to lower net renewal activity and media purchases from clients.
Current wording
Revenue generated by Media Advisory and Advertising services for the three months ended September 30, 2025 decreased by 36% as compared to the three months ended September 30, 2024 primarily due to lower net renewal activity and media purchases from clients and due to tariffs imposed on toy manufacturers adversely affecting certain clients’ marketing budgets, resulting in delayed media spending.
Previous wording
The decrease in Marketing and Sales expenses for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily due to a decrease in advertising efforts aimed at promoting the Kartoon Studios branding.
Current wording
The decrease in Marketing and Sales expenses for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily due to lower corporate advertising spending.
Previous wording
Direct Operating Costs during the three months ended June 30, 2025 consisted of salaries and related expenses for animation production services employees of Mainframe Studios and Frederator. The remainder of Direct Operating Costs consisted of creator network channel expenses, content licensing, and production costs, including participation expenses related to profit-sharing obligations with various animation studios, post-production studios, writers, directors, musicians, and other creative talent, as well as amortization and any write-downs of film and television costs. The increase during the three months ended June 30, 2025 was primarily due to an increase in salary costs and headcount included in Production Services related to new projects that advanced in the current quarter compared to the same period of the prior year.
Current wording
Direct Operating Costs during the three months ended September 30, 2025 consisted of salaries and related expenses for animation production services employees of Mainframe Studios. The remainder of Direct Operating Costs consisted of creator network channel expenses, content licensing, and production costs, including participation expenses related to profit-sharing obligations with various animation studios, post-production studios, writers, directors, musicians, and other creative talent, as well as amortization and any write-downs of film and television costs. The increase during the three months ended September 30, 2025 was primarily due to an increase in salary costs and headcount included in Production Services related to new projects that advanced in the current quarter compared to the same period of the prior year.
Previous wording
The decrease in General and Administrative expenses for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024 was primarily due to a decrease of $0.5 million in professional fees reflecting lower legal expenses and reduced use of external consulting services, a decrease of $0.1 million in depreciation expense related to the property and equipment impairment recorded in prior year and a net reduction of $0.1 million in overhead costs primarily due to cost-saving initiatives.
Current wording
The increase in General and Administrative expenses for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily due to an increase of $0.3 million in professional fees reflecting the timing of legal insurance reimbursements in the current quarter compared to the prior year quarter, an increase of $0.3 million in general and administrative expenses, offset by a decrease of $0.1 million in depreciation expense related to the property and equipment impairment recorded in prior year, and a decrease of $0.1 million of stock-based compensation expense due to vested awards fully recognized.
Previous wording
Our summary results for the six months ended June 30, 2025 and 2024 are below:
Current wording
Our summary results for the nine months ended September 30, 2025 and 2024 are below:
Previous wording
Production Services revenue was generated specifically by Mainframe Studios providing animation production services. Revenue for production services is recognized over time on a percentage of completion basis, therefore, as the projects are still in progress, we recognize revenue based upon the proportion of costs incurred cumulatively to total expected costs. Consequently, less revenue is recognized during the periods in which the projects are near completion or completed. Revenue for the six months ended June 30, 2025 was higher than the Mainframe Studios’ production services revenue recognized during six months ended June 30, 2024 primarily due to the number of active projects in the current quarter.
Current wording
Production Services revenue was generated specifically by Mainframe Studios providing animation production services. Revenue for production services is recognized over time on a percentage of completion basis, therefore, as the projects are still in progress, we recognize revenue based upon the proportion of costs incurred cumulatively to total expected costs. Consequently, less revenue is recognized during the periods in which the projects are near completion. Revenue for the nine months ended September 30, 2025 was 65% higher than the Mainframe Studios’ production services revenue recognized during nine months ended September 30, 2024 primarily due to several ongoing projects progressing into more advanced production stages, resulting in higher revenue recognized under the percentage-of-completion method.
Previous wording
Revenue related to Content Distribution on AVOD and SVOD, including advertising sales for the six months ended June 30, 2025, decreased by 16% as compared to the six months ended June 30, 2024. The decrease of $0.8 million was due to a decrease of $0.6 million in Frederator’s creator network revenue from YouTube driven by overall less viewership as compared to the prior year period, and a decrease in Kartoon Studios’ content distribution revenue of $0.2 million related to lower volume of licensing agreements signed by theKartoon Channel! Worldwide division for the broadcast of the channel.
Current wording
Revenue related to Content Distribution on AVOD and SVOD, including advertising sales for the nine months ended September 30, 2025, decreased by 18% as compared to the nine months ended September 30, 2024. The decrease of $1.2 million was due to a decrease of $1.1 million in Frederator’s creator network revenue from YouTube driven by overall less viewership as compared to the prior year period, and a decrease in Kartoon Studios’ content distribution revenue of $0.1 million related to lower volume of licensing agreements signed by theKartoon Channel! Worldwide division for the broadcast of the channel.
Previous wording
Revenue related to Licensing and Royalties for the six months ended June 30, 2025 increased by 34% as compared to the six months ended June 30, 2024 primarily due to higher amounts earned from our existing license deals related to our consumer products agreements and music licensing agreements. Additionally, we executed new licensing agreements related to Stan Lee Universe, LLC assets.
Current wording
Revenue related to Licensing and Royalties for the nine months ended September 30, 2025 increased by 3% as compared to the nine months ended September 30, 2024 primarily due to higher amounts earned from our existing license deals related to our consumer products agreements, music licensing agreements, and certain new executed licensing agreements related to Stan Lee Universe, LLC assets.
Previous wording
Revenue generated by Media Advisory and Advertising services for the three months ended June 30, 2025 decreased by 3% as compared to the three months ended June 30, 2024 primarily due to lower net renewal activity and media purchases from clients.
Current wording
Revenue generated by Media Advisory and Advertising services for the nine months ended September 30, 2025 decreased by 18% as compared to the nine months ended September 30, 2024 primarily due to lower net renewal activity and media purchases from clients, which were impacted by the new U.S. tariffs legislative uncertainty.
Previous wording
The decrease in Marketing and Sales expenses for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily due to a decrease in advertising efforts aimed at promoting the Kartoon Studios branding.
Current wording
The decrease in Marketing and Sales expenses for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily due to lower corporate advertising spending.
Previous wording
Direct Operating Costs during the six months ended June 30, 2025 consisted of salaries and related expenses for animation production services employees of Mainframe Studios and Frederator. The remainder of Direct Operating Costs consisted of creator network channel expenses, content licensing, and production costs, including participation expenses related to profit-sharing obligations with various animation studios, post-production studios, writers, directors, musicians, and other creative talent, as well as amortization and any write-downs of film and television costs. The increase during the six months ended June 30, 2025 was primarily due to an increase in salary costs and headcount included in Production Services related to new projects that began in the current year compared to the same period of the prior year.
Current wording
Direct Operating Costs during the nine months ended September 30, 2025 consisted of salaries and related expenses for animation production services employees of Mainframe Studios. The remainder of Direct Operating Costs consisted of creator network channel expenses, content licensing, and production costs, including participation expenses related to profit-sharing obligations with various animation studios, post-production studios, writers, directors, musicians, and other creative talent, as well as amortization and any write-downs of film and television costs. The increase during the nine months ended September 30, 2025 was primarily due to an increase in salary costs and headcount included in Production Services related to new projects that began in the current year compared to the same period of the prior year.
Previous wording
The decrease in General and Administrative expenses for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024 was primarily due to a decrease of $1.2 million in professional fees reflecting lower legal expenses and reduced use of external consulting services, decrease of $0.7 million in overhead costs primarily due to cost-saving initiatives, decrease of $0.4 million in depreciation expense related to the property and equipment impairment recorded in prior year, and a $0.3 million decrease in share-based compensation expense.
Current wording
The decrease in General and Administrative expenses for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily due to a decrease of $1.0 million in professional fees reflecting lower legal expenses including legal insurance reimbursements and reduced use of external consulting services, decrease of $0.7 million in salaries and wages, decrease of $0.4 million in depreciation expense related to the property and equipment impairment recorded in prior year, a $0.4 million decrease in share-based compensation expense due to vested awards fully recognized, a decrease of $0.1 million in rent expense due to currency translation of our foreign office rent expense, offset by an increase of $0.5 million in certain expenses related to a production that did not meet capitalization criteria.
Previous wording
During the three months ended June 30, 2025, we reassessed our nonfinancial assets, including our definite-lived intangible assets, our indefinite-lived intangible assets for impairment. As a result, we concluded that impairment charges to those assets were not required. Furthermore, we concluded that no indicators of impairment or triggering events were identified during the period.
Current wording
During the nine months ended September 30, 2025, we reassessed our nonfinancial assets, including our definite-lived intangible assets, our indefinite-lived intangible assets for impairment. As a result, we concluded that impairment charges to those assets were not required. Furthermore, we concluded that no indicators of impairment or triggering events were identified during the period.
Previous wording
Components of Other Expense, net, are summarized as follows (in thousands):
Current wording
Components of Other Income (Expense), net, are summarized as follows (in thousands):
Previous wording
As of June 30, 2025, the Company had cash and restricted cash of $2.6 million, which decreased by $5.8 million as compared to December 31, 2024. The decrease was primarily due to cash used in operating activities of $6.3 million, cash used in financing activities of $0.3 million, reduction of $0.5 million in the value of our cash due to changes in foreign exchange rates, offset by cash provided by investing activities of $1.3 million. The cash used in operating activities was primarily due to net loss of $12.9 million and net change in operating asset and liabilities of $2.9 million, partially offset by net change in non-cash adjustments of $9.5 million. The cash used in financing activities was primarily due to payments of lease obligations of $0.2 million and repayments of the production facilities and margin loan, net of proceeds from each, resulting in net cash used of $0.1 million. The cash provided by investing activities of $1.3 million was primarily due to proceeds from the sale and maturities of marketable securities of $3.2 million, offset by the investment in marketable securities of $1.8 million.
Current wording
As of September 30, 2025, we had cash and restricted cash of $1.4 million, which decreased by $7.0 million as compared to December 31, 2024. The decrease was primarily due to cash used in operating activities of $11.8 million and the effect of exchange rate of $0.3 million, offset by cash provided by financing activities of $2.8 million and cash provided by investing activities of $2.4 million. The cash used in operating activities was primarily due to net loss of $19.4 million and net change in operating asset and liabilities of $6.0 million, partially offset by net change in non-cash adjustments of $13.6 million. The cash provided by financing activities was primarily due to net proceeds from production facilities of $2.8 million, cash proceeds from partial disposal of YFE investment of $0.8 million and proceeds from ERTC sale of $0.5 million, offset by net repayment of margin loan of $1.0 million and payments of lease obligations of $0.3 million. The cash provided by investing activities of $2.4 million was primarily due to proceeds from the sale and maturities of marketable securities of $3.8 million and proceeds from the settlement of the Note Receivable of $0.4 million, offset by the investment in marketable securities of $1.8 million and the purchase of new property and equipment of $0.1 million.
Previous wording
As of June 30, 2025, we held available-for-sale marketable securities with a fair value of $0.7 million, a decrease of $1.3 million as compared to December 31, 2024, due to a sale of securities during the six months ended June 30, 2025. The available-for-sale securities consist of government debt securities and are also available as a source of liquidity.
Current wording
As of September 30, 2025, we did not hold any available-for-sale marketable securities, and the decrease in available-for-sale marketable securities of $2.0 million as compared to December 31, 2024, was due to a sale of securities during the nine months ended September 30, 2025.
Previous wording
As of June 30, 2025, we had total current assets of $25.5 million, including cash of $2.1 million, restricted cash of $0.5 million and marketable securities of $0.7 million, and our total current liabilities were $30.4 million. We had negative working capital of $4.9 million as of June 30, 2025 as compared to working capital of $1.2 million as of December 31, 2024. Thedecreaseof$6.1 millionwas due to a decrease of $9.2 million in current assets and a decrease of $3.1 million in current liabilities compared to the prior period. A decrease in current assets is primarily driven by a decrease of $5.8 million in cash, a decrease of $4.9 million in accounts receivable and a decrease of $1.3 million in marketable securities investments, offset by an increase of $2.0 million in production tax credit receivable position, an increase $0.7 million in prepaid balance and an increase of $0.1 million in other receivables. The decrease in current liabilities is primarily driven by a decrease of $5.2 million in accounts payable, a decrease of $0.8 million in margin loan balance, a decrease of $0.3 million in accrued participation cost balance and a decrease of $0.3 million in other current liabilities, offset by an increase by $1.4 million in production facilities, an increase of $0.9 million in accrued expenses, an increase of $0.7 million in accrued salaries, and an increase of $0.5 million in deferred revenue balance.
Current wording
As of September 30, 2025, we had total current assets of $27.1 million, including cash of $0.9 million and restricted cash of $0.5 million, and our total current liabilities were $32.5 million. We had negative working capital of $5.4 million as of September 30, 2025 as compared to working capital of $1.2 million as of December 31, 2024. Thedecreaseof$6.6 millionwas due to a decrease of $7.5 million in current assets and a decrease of $0.9 million in current liabilities compared to the balances as of December 31, 2024. A decrease in current assets is primarily driven by a decrease of $7.0 million in cash, a decrease of $3.3 million in accounts receivable, and a decrease of $2.0 million in marketable securities investments, offset by an increase of $4.2 million in production tax credit receivable position and an increase $0.6 million in prepaid balance. The decrease in current liabilities is primarily driven by a decrease of $3.7 million in accounts payable, a decrease of $0.9 million in margin loan balance, a decrease of $0.5 million in accrued participation cost balance, a decrease of $0.5 million in deferred revenue balance, and a decrease of $0.3 million in other current liabilities, offset by an increase by $3.3 million in production facilities, an increase of $1.1 million in accrued expenses, and an increase of $0.6 million in accrued salaries.
Previous wording
During the six months ended June 30, 2025, we met our immediate cash requirements through existing cash balances. Additionally, we used equity and equity-linked instruments to pay for services and compensation.
Current wording
During the nine months ended September 30, 2025, we met our immediate cash requirements through existing cash balances. Additionally, we used equity and equity-linked instruments to pay for services and compensation.
Previous wording
Based on our current expected level of operating expenditures and the cash and cash equivalents on hand at June 30, 2025, management concludes that there is substantial doubt about our ability to continue as a going concern for a period of at least twelve months subsequent to the issuance of the accompanying condensed consolidated financial statements. Historically, we have financed our operations primarily through revenue generated from operations, loans and sales of our securities, and we expect to continue to seek and obtain additional capital in a similar manner. In order to address our capital needs, we intend to consider multiple alternatives, including, but not limited to, the sale of equity or debt securities, financing arrangements or entering into collaborative, strategic, and/or licensing transactions. We do not have any committed sources of financing at this time, and it is uncertain whether any additional funding will be available when we need it on terms that will be acceptable to us, or at all. Our ability to sell securities registered on our registration statement on Form S-3 is limited until such time that the market value of our voting securities held by non-affiliates is $75 million or more. In addition, the number of shares of Common Stock and securities convertible or exercisable for Common Stock that we can sell, under certain circumstances, will be limited by NYSE American rules and regulations. If we are able to raise funds by selling additional shares of Common Stock or other securities convertible into Common Stock, the ownership interest of our existing shareholders will be diluted. The issuance of debt can result in restrictive covenants that limit operations. There can be no assurance that we will be able to complete any such financing, collaborative or strategic transaction in a timely manner or on acceptable terms. As a result, we may have to significantly limit our operations and its business, financial condition and results of operations would be materially harmed.
Current wording
Based on our current expected level of operating expenditures and the cash and cash equivalents on hand at September 30, 2025, management concludes that there is substantial doubt about our ability to continue as a going concern for a period of at least twelve months subsequent to the issuance of the accompanying condensed consolidated financial statements. Historically, we have financed our operations primarily through revenue generated from operations, loans and sales of our securities, and we expect to continue to seek and obtain additional capital in a similar manner. Subsequent to September 30, 2025, we were successful in raising net proceeds of $6.6 million in connection with the October Offerings, which closedon October 22, 2025, strengthening our cash position. In order to address our capital needs, we intend to consider multiple alternatives, including, but not limited to, the sale of equity or debt securities, financing arrangements or entering into collaborative, strategic, and/or licensing transactions. We do not have any committed sources of financing at this time, and it is uncertain whether any additional funding will be available when we need it on terms that will be acceptable to us, or at all. Our ability to sell securities registered on our registration statement on Form S-3 is limited until such time that the market value of our voting securities held by non-affiliates is $75 million or more. In addition, the number of shares of Common Stock and securities convertible or exercisable for Common Stock that we can sell, under certain circumstances, will be limited by NYSE American rules and regulations. If we are able to raise funds by selling additional shares of Common Stock or other securities convertible into Common Stock, the ownership interest of our existing shareholders will be diluted. The issuance of debt can result in restrictive covenants that limit operations. There can be no assurance that we will be able to complete any such financing, collaborative or strategic transaction in a timely manner or on acceptable terms. As a result, we may have to significantly limit our operations and its business, financial condition and results of operations would be materially harmed.
Previous wording
Comparison of Cash Flows for the Six Months Ended June 30, 2025 and June 30, 2024
Current wording
Comparison of Cash Flows for the Nine Months Ended September 30, 2025 and September 30, 2024
Previous wording
Our total cash as of June 30, 2025 and June 30, 2024 was $2.1 million and $7.9 million, respectively.
Current wording
Our total cash as of September 30, 2025 and September 30, 2024 was $0.9 million and $7.9 million, respectively.
Previous wording
Items necessary to reconcile from net loss to cash used in operating activities included net non-cash expenses of $9.5 million for the six months ended June 30, 2025 as compared to net non-cash expenses of $4.8 million for the six months ended June 30, 2024. The majority of the increase of $4.7 million was primarily due to loss of $6.5 million on the revaluation of our equity investment in YFE securities and a loss of $1.3 million relating to Related Party Notes Receivable settlement agreement, and a net loss of $0.3 million related to revaluation of the warrants. The increase is offset by an increase of $2.4 million of FX impact on the value of the equity investment in YFE, a decrease of $0.4 million in amortization of Right-of-Use assets, a decrease of $0.3 million in stock-based compensation expense and a decrease of $0.3 million in realized loss on marketable securities due to the lower sales of our marketable securities prior to their maturity date.
Current wording
Items necessary to reconcile net loss to cash used in operating activities included net non-cash expenses of $13.6 million for the nine months ended September 30, 2025 as compared to net non-cash expenses of $5.9 million for the nine months ended September 30, 2024. The majority of the increase of $7.7 million was primarily due to an increase of $7.3 million on the loss of our equity investment in YFE securities revaluation, a loss of $1.5 million related to partial disposal of YFE shares, and a loss of $1.2 million related to accounts payable and note receivable debt settlement transactions. The increase is offset by an increase of $1.5 million of FX gain on the value of the equity investment in YFE, a decrease of $0.6 million in amortization of Right-of-Use assets primarily due to concluded equipment lease agreements, a decrease of $0.5 million in realized loss on marketable securities due to the lower sales of our marketable securities prior to their maturity date, and a decrease of $0.4 million in stock-based compensation expense due to completed vesting.
Previous wording
The decrease in net change in operating asset and liability activities used by operating activities of $2.9 million as of June 30, 2025, compared to the net change in operating asset and liability activities provided by operating activities of $5.5 million as of June 30, 2024, was due to a decrease of $8.8 million in operating assets activity and a increase of $0.4 million in operating liabilities activity. A decrease of in operating assets activity was primarily due to a decrease of $6.9 million in net receipts tax credits during the current year related to completed projects and an increase of $1.5 million in net Film and Television Cost expenditures, a decrease of $0.3 million in accounts receivable net receipts and a decrease of $0.2 million in prepaid expenses, offset by a increase of $0.1 million in outstanding balance of other receivable. An increase in operating liability activity was primarily due to a decrease in accounts payable of $1.4 million due to certain legal expenditures being subject to extended payment terms related to potential insurance recovery, an decrease of $0.6 million in accrued salaries and wages, a decrease of $0.5 million in accrued expenses, offset by a increase of $1.5 million in deferred revenue, representing more cash received in advance for projects not yet recognized, and an increase of $0.6 million in accrued production costs.
Current wording
The decrease in net change in operating asset and liability activities used by operating activities of $6.0 million as of September 30, 2025, compared to the net change in operating asset and liability activities provided by operating activities of $8.1 million as of September 30, 2024, was primarily due to an increase of $14.0 million in operating assets activity. An increase of in operating assets activity was primarily due to an decrease of $10.4 million in net receipts tax credits during the current year related to completed projects, a decrease of $2.8 million in accounts receivable net receipts, an increase of $1.9 million in net film and television cost expenditures, an increase of $0.4 million in prepaid expenses, offset by a net decrease of $1.4 million in other receivables representing expected ERTC claims recorded in prior period but not yet collected. Net changes in operating liabilities activity had an immaterial effect on the operating cashflow as of September 30, 2025, however the management notes that certain material fluctuations occurred within specific accounts that offset each other. These changes include a net decrease of $2.5 million in deferred revenue representing revenue recognition for the advances already received, a decrease of $0.4 million in accrued production costs and higher lease liability payments by $0.2 million, offset by a decrease of $1.8 million accounts payable disbursements, an increase of $0.7 million in accrued salaries and wages and an increase of $0.7 million in accrued expenses.
Previous wording
The decrease in cash provided by investing activities of $4.2 million was primarily due to a decrease in proceeds from the sales and maturities of marketable securities of $2.4 million during the six months ended June 30, 2025 reflecting fewer sales during the current period. In addition, we made a purchase of additional securities of $1.8 million during the six months ended June 30, 2025.
Current wording
The decrease in cash provided by investing activities of $5.5 million was primarily due to a decrease in proceeds from the sales and maturities of marketable securities of $4.2 million during the nine months ended September 30, 2025 reflecting fewer sales during the current period. In addition, we made a purchase of additional securities of $1.8 million and received proceeds of $0.4 million related to note receivable settlement during the nine months ended September 30, 2025.
Previous wording
The decrease in cash used in financing activities of $4.5 million was primarily due to a decrease in repayments of our production facilities of $5.2 million, an increase of $0.9 million in proceeds drawn from the production facilities, a decrease of bank indebtedness repayment of $2.6 million and a decrease in lease payments of $0.2 million, offset by a decrease in proceeds from financing of $3.3 million, and a decrease in borrowings from our margin loan of $1.1 million during the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.
Current wording
The increase in cash provided by financing activities of $9.3 million was primarily due to a decrease in repayments of our production facilities and margin loan of $10.1 million, a decrease of bank indebtedness repayment of $2.3 million, a receipt of $0.8 million in proceeds from Sale of Equity Investment in Your Family Entertainment AG, a decrease in lease payments of $0.7 million, and a receipt of $0.5 million proceeds from ERTC sale transaction, offset by a decrease in proceeds from financing of $3.3 million, and a decrease in borrowings from our margin loan and production facilities of $1.8 million, net, during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.
Previous wording
We have entered into arrangements that contractually obligate us to make payments that will affect our liquidity and cash flows in future periods. Our material cash requirements from known contractual and other obligations primarily relate to our debt and lease obligations and our employment and consulting contracts. The aggregate amount of future minimum purchase obligations under these agreements over the period of next five years is approximately $27.1 million as of June 30, 2025, of which $16.2 million could be owed within one year. Included in the amount that could be due within one year is the margin loan current balance of $0.1 million and production facilities of $10.7 million.
Current wording
We have entered into arrangements that contractually obligate us to make payments that will affect our liquidity and cash flows in future periods. Our material cash requirements from known contractual and other obligations primarily relate to our debt and lease obligations and our employment and consulting contracts. The aggregate amount of future minimum purchase obligations under these agreements over the period of next five years is approximately $32.8 million as of September 30, 2025, of which $16.4 million could be owed within one year. Included in the amount that could be due within one year is the production facilities balance of $12.7 million.
Previous wording
As of June 30, 2025, we had $0.5 million in commitments for capital expenditures, related to equipment leases.
Current wording
As of September 30, 2025, we had $0.4 million in commitments for capital expenditures, related to equipment leases.