Core Points - Kartoon Studios announced a new production titled "Kartoon Studio's Winnie-The-Pooh" and secured $30 million in nondilutive production financing led by Catalyst Venture Partners [1] - The company has a diverse IP portfolio that includes original animated content featuring well-known brands and personalities [2] - In 2022, Kartoon Studios acquired WOW! Unlimited Media and became the largest shareholder in Your Family Entertainment AG, enhancing its position in the animation industry [3] - The company's digital distribution network, Toon Media Networks, includes Kartoon Channel!, Frederator Network, and Ameba, providing extensive reach across various platforms [4]

BEVERLY HILLS, Calif., June 24, 2024 (GLOBE NEWSWIRE) -- Following Kartoon Studios' (NYSE:TOON) landmark announcement last week regarding the 2025 Christmas Eve premiere of "Kartoon Studio's Winnie-The-Pooh," the company today announced a team of proven executives to drive the development, production, retail, and global distribution strategy for the property. The development, production, and growth of the property is funded by a non-dilutive production financing of $30 million, led by Catalyst Venture Partn ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 21, 2024 KARTOON STUDIOS, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation Nevada 001-37950 20-4118216 (Commission File Number) (I.R.S. Employer Identification No.) 190 N. Canon Drive, 4th Fl., Beverly Hills, CA 90210 (Address of princ ...

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2024, highlighting decreased revenues but a significantly improved net loss due to lower impairment charges Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $41,011 | $57,109 | | **Total Assets** | **$93,330** | **$111,436** | | **Total Current Liabilities** | $34,885 | $45,640 | | **Total Liabilities** | $46,856 | $58,175 | | **Total Stockholders' Equity** | **$46,474** | **$53,261** | Condensed Consolidated Statement of Operations Highlights (in thousands, except per share data) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | **Total Revenues** | **$6,078** | **$14,189** | | Total Operating Expenses | $12,372 | $36,185 | | Loss from Operations | $(6,294) | $(21,996) | | **Net Loss Attributable to Kartoon Studios, Inc.** | **$(7,045)** | **$(23,828)** | | Net Loss per Share (Basic & Diluted) | $(0.20) | $(0.74) | Condensed Consolidated Statement of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | $3,845 | $(5,165) | | Net Cash Provided by Investing Activities | $2,560 | $14,648 | | Net Cash Used in Financing Activities | $(7,891) | $(12,157) | | **Net Decrease in Cash** | **$(1,332)** | **$(2,667)** | | **Ending Cash** | **$2,763** | **$4,765** | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's structure, IP holdings, liquidity assessment, and a post-quarter capital raise, alongside segment performance - The company is a **global content and brand management company** that creates, produces, licenses, and broadcasts multimedia animated content for children, owning **significant IP**, including a controlling interest in **Stan Lee Universe, LLC**[27](index=27&type=chunk)[31](index=31&type=chunk) - Despite a **net loss of $7.1 million** for the quarter and an accumulated deficit of **$725.6 million**, management has concluded that the company has **sufficient marketable securities and investments** to fund operations for the **next 12 months**[42](index=42&type=chunk) - Subsequent to the quarter end, on **April 23, 2024**, the company completed an initial closing of a **registered direct offering**, selling **3.9 million shares** of common stock and **100,000 pre-funded warrants** for aggregate gross proceeds of approximately **$4.0 million**[34](index=34&type=chunk)[127](index=127&type=chunk) Revenue and Net Loss by Operating Segment (in thousands) | Segment | Revenue Q1 2024 | Revenue Q1 2023 | Net Loss Q1 2024 | Net Loss Q1 2023 | | :--- | :--- | :--- | :--- | :--- | | Content Production & Distribution | $5,192 | $13,233 | $(6,739) | $(23,274) | | Media Advisory & Advertising Services | $886 | $956 | $(306) | $(554) | | **Total** | **$6,078** | **$14,189** | **$(7,045)** | **$(23,828)** | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) This section analyzes Q1 2024 financial results, noting a significant revenue decrease offset by reduced operating expenses due to non-recurring impairment charges, and discusses liquidity [Business Overview and Strategy](index=31&type=section&id=MD%26A%20-%20Business%20Overview%20and%20Strategy) This section outlines the company's strategic focus across its four business segments, emphasizing content distribution scaling, production efficiency, Stan Lee IP leverage, and media advisory expansion - Content Distribution: Focus on **scaling networks** like Kartoon Channel! and Frederator, and using **AI tools** to **reduce operating costs** such as dubbing and video upscaling[133](index=133&type=chunk) - Production Services: Mainframe Studios is adopting a more **flexible approach** by collaborating with **outsource partners** and utilizing **AI to streamline processes**[134](index=134&type=chunk) - Licensing & Royalties: The company sees **significant potential** in its **Stan Lee assets** to drive both digital and physical consumer products[135](index=135&type=chunk) [Results of Operations](index=32&type=section&id=MD%26A%20-%20Results%20of%20Operations) Q1 2024 total revenue decreased by 57% to $6.1 million, primarily due to a 72% decline in Production Services, while total operating expenses decreased by 66% due to non-recurring impairment charges Revenue by Segment (in thousands) | Revenue Source | Q1 2024 | Q1 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Production Services | $2,763 | $9,886 | $(7,123) | (72)% | | Content Distribution | $2,329 | $3,301 | $(972) | (29)% | | Licensing & Royalties | $100 | $46 | $54 | 117% | | Media Advisory & Advertising Services | $886 | $956 | $(70) | (7)% | | **Total Revenue** | **$6,078** | **$14,189** | **$(8,111)** | **(57)%** | Operating Expenses (in thousands) | Expense Category | Q1 2024 | Q1 2023 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Marketing and Sales | $444 | $245 | $199 | 81% | | Direct Operating Costs | $4,325 | $11,285 | $(6,960) | (62)% | | General and Administrative | $7,603 | $9,225 | $(1,622) | (18)% | | Impairment of Property and Equipment | $– | $120 | $(120) | (100)% | | Impairment of Intangible Assets | $– | $4,023 | $(4,023) | (100)% | | Impairment of Goodwill | $– | $11,287 | $(11,287) | (100)% | | **Total Expenses** | **$12,372** | **$36,185** | **$(23,813)** | **(66)%** | [Liquidity and Capital Resources](index=34&type=section&id=MD%26A%20-%20Liquidity%20and%20Capital%20Resources) As of March 31, 2024, the company held $2.8 million in cash and $9.4 million in marketable securities, with improved operating cash flow, and management believes these resources are sufficient for the next twelve months - As of March 31, 2024, the company had cash of **$2.8 million** and available-for-sale marketable securities with a fair value of **$9.4 million**[147](index=147&type=chunk)[148](index=148&type=chunk) - Working capital was **$6.1 million** as of March 31, 2024, compared to **$11.5 million** as of December 31, 2023, with the decrease primarily due to a **decrease in the cash and marketable security position**[152](index=152&type=chunk) Comparison of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net Cash Provided by (Used in) Operating Activities | $3,845 | $(5,165) | | Net Cash Provided by Investing Activities | $2,560 | $14,648 | | Net Cash Used in Financing Activities | $(7,891) | $(12,157) | [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) As a "smaller reporting company," the company is exempt from providing quantitative and qualitative disclosures about market risk - As a "**smaller reporting company**," the company is **not required** to provide quantitative and qualitative disclosures about market risk[167](index=167&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded disclosure controls were effective, but internal controls over financial reporting were not due to identified material weaknesses, for which a remediation plan is underway - Management concluded that disclosure controls and procedures were **effective** for the quarter ended March 31, 2024[168](index=168&type=chunk) - Management concluded that internal controls over financial reporting were ***not* effective** as of March 31, 2024, due to identified **material weaknesses**[172](index=172&type=chunk) - Material weaknesses identified include: **inadequate design of user access controls and segregation of duties**; **lack of specialized experts for income tax**; and **inappropriate application of accounting standards for warrant modifications**[173](index=173&type=chunk)[176](index=176&type=chunk) - A **remediation plan is in process**, which includes enhancing review procedures, reorganizing the accounting team, implementing new financial systems, and improving documentation and oversight[174](index=174&type=chunk)[177](index=177&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings.) The company is involved in several legal proceedings, including a securities class action lawsuit with a recent appellate reversal, related stayed derivative lawsuits, and a separate short-swing profits action - In a **securities class action lawsuit**, an **Appellate Court affirmed in part and reversed in part** a prior dismissal, remanding the matter to the U.S. District Court for further proceedings on the plaintiffs' remaining claims[183](index=183&type=chunk) - Several **stockholder derivative lawsuits remain stayed** pending the outcome of the securities class action[184](index=184&type=chunk) - The company is a **nominal defendant** in an action seeking recovery of alleged **short-swing profits** from certain investors under Section 16(b) of the Exchange Act, and **discovery is now open** after the court denied a motion to dismiss[185](index=185&type=chunk) [Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors.) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023 - There have been **no material changes** to the Risk Factors set forth in the company's Annual Report on Form 10-K for the year ended December 31, 2023[187](index=187&type=chunk) [Other Disclosures (Items 2-6)](index=40&type=section&id=Other%20Disclosures%20%28Items%202-6%29) This section confirms no unregistered equity sales, no defaults on senior securities, no mine safety disclosures, and no Rule 10b5-1 trading arrangement changes by directors or officers - Item 2: **No unregistered sales of equity securities** and use of proceeds[188](index=188&type=chunk) - Item 3: **No defaults upon senior securities**[189](index=189&type=chunk) - Item 5: During the quarter, **none of the Company's directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement**[191](index=191&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number: 000-54389 KARTOON STUDIOS, INC. (Exact name of registrant as specified in its charter) (State or other juris ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number: 000-54389 KARTOON STUDIOS, INC. (Exact name of registrant as specified in its charter) (State or ot ...

Revenue Performance - Total revenue for the three months ended June 30, 2023, was $11,038,000, a decrease of 50% compared to $22,124,000 for the same period in 2022[272]. - Production Services revenue decreased by 30% to $7,033,000 from $10,018,000 year-over-year, primarily due to the completion of various productions[272][273]. - Content Distribution revenue fell by 65% to $3,012,000 from $8,529,000, attributed to fewer content deliveries in 2023 compared to the previous year[272][275]. - Licensing & Royalties revenue plummeted by 96% to $103,000 from $2,495,000, indicating a significant decline in licensing activities[272]. - Media Advisory & Advertising Services revenue decreased by 18% to $890,000 from $1,082,000, reflecting a slight downturn in advertising services[272]. - Total revenue for the six months ended June 30, 2023, increased by 7% to $25.227 million, compared to $23.563 million for the same period in 2022[282]. - Production Services revenue rose by 69% to $16.919 million for the six months ended June 30, 2023, driven by six full months of revenue recognition from Wow[282]. Expense Management - Total expenses decreased by 36% to $19.601 million for the three months ended June 30, 2023, compared to $30.725 million in the same period of 2022[278]. - General and Administrative expenses decreased by 45% to $8.370 million for the three months ended June 30, 2023, primarily due to the absence of $4.5 million in acquisition fees from the prior year[281]. - Direct Operating Costs decreased by 35% to $9.541 million for the three months ended June 30, 2023, compared to $14.648 million in the same period of 2022[278]. - The company recorded an impairment charge of $11.287 million for goodwill during the six months ended June 30, 2023[293]. Cash and Liquidity - As of June 30, 2023, cash and cash equivalents were $4.8 million, a decrease of $2.6 million from December 31, 2022[296]. - Available-for-sale marketable securities decreased by $34.2 million to $49.5 million as of June 30, 2023, due to sales and maturities[297]. - 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 from sales and maturities of marketable securities[298]. - As of June 30, 2023, the company had current assets of $91.6 million and current liabilities of $77.2 million, resulting in working capital of $14.4 million, a decrease of $14.2 million from $28.6 million as of December 31, 2022[301]. - The company incurred interest expense on loans of $1.3 million for the six months ended June 30, 2023, compared to $0.2 million for the same period in 2022[298]. - The company had cash, cash equivalents, and restricted cash of $4.8 million as of June 30, 2023, down from $7.8 million as of June 30, 2022[303]. - The company has material cash requirements totaling approximately $67.2 million over the next five years, with about $38.4 million potentially due within one year if margin loans are called[310]. Corporate Actions - The company transferred its listing to NYSE American on June 26, 2023, trading under the new symbol "TOON" after voluntarily delisting from Nasdaq[260]. - A reverse stock split of 1-for-10 was executed on February 10, 2023, reducing the number of authorized common shares from 400 million to 40 million[270]. - The company is seeking shareholder approval for proposals to increase authorized shares and allow the issuance of additional shares upon warrant exercises at the annual meeting on August 25, 2023[271]. Employee and Organizational Information - As of June 30, 2023, the company employed 512 full-time employees and 44 independent contractors, focusing on a culture of diversity, equity, and inclusion[263]. Financial Covenants - The company was in technical violation of two financial covenants as of June 30, 2023, but continued to make regular principal and interest payments on time[299]. Noncash Expenses - The company reported net noncash expenses of $30.9 million for the six months ended June 30, 2023, compared to $11.9 million for the same period in 2022, with a significant increase attributed to warrant incentive expenses and impairment expenses[305]. Capital Expenditures - As of June 30, 2023, the company had $2.9 million in commitments for capital expenditures related to equipment leases[311].

Revenue Performance - Total revenue for the three months ended March 31, 2023, was $14,189,000, an increase of 885% compared to $1,441,000 for the same period in 2022[242]. - Production Services revenue reached $9,886,000, representing a 100% increase, while Content Distribution revenue surged by 697% to $3,301,000[242][244]. - Licensing & Royalties revenue increased by 12% to $46,000, primarily due to a new licensing agreement for certain Stan Lee Assets[245]. Expense Overview - Total expenses for the three months ended March 31, 2023, were $36,185,000, a 219% increase from $11,361,000 in the same period in 2022[247]. - Direct Operating Costs rose significantly by $11,287,000, primarily due to the acquisitions of Ameba, Wow, and Frederator[250]. - General and Administrative expenses decreased by $1,632,000, mainly due to a reduction in stock-based compensation and professional fees[251]. Employee and Corporate Actions - The company employed 715 full-time employees and 46 independent contractors as of March 31, 2023[233]. - The board of directors approved a 1-for-10 reverse stock split, reducing the number of authorized common stock shares from 400,000,000 to 40,000,000[240]. Content and Programming - The company has access to over 1,600 episodes through its investment in Your Family Entertainment, covering over 60 territories worldwide[227]. - The upcoming animated show "Shaq's Garage," featuring Shaquille O'Neal, is scheduled to debut in the second quarter of 2023[225]. Financial Charges and Cash Flow - The company recorded impairment charges totaling $15.5 million, including $11.3 million in goodwill and $2.8 million in definite-lived intangible assets for the three months ended March 31, 2023[252]. - Interest expense increased significantly to $1.1 million from $55,000, reflecting a 1,873% change year-over-year[253]. - The company reported a net cash used in operating activities of $4.8 million, an improvement of $606,000 compared to the previous year[264]. Cash and Securities - As of March 31, 2023, cash and cash equivalents decreased to $4.8 million, down $2.7 million from December 31, 2022[257]. - The fair value of available-for-sale marketable securities decreased to $69.7 million, a decline of $14.1 million compared to December 31, 2022[258]. - Working capital as of March 31, 2023 was $23.5 million, down from $28.6 million as of December 31, 2022, primarily due to decreased cash and marketable securities[260]. Noncash Expenses and Investments - The company incurred net noncash expenses of $21.4 million for the three months ended March 31, 2023, a significant increase from $0.5 million in the same period last year[265]. - Cash provided by investing activities was $14.6 million, a turnaround from cash used in investing activities of $3.2 million in the prior year[268]. Future Obligations - The company has future minimum purchase obligations of approximately $89.1 million, with about $60.8 million potentially due within one year[270]. - As of March 31, 2023, the margin loan balance was $48.9 million, down from $60.8 million as of December 31, 2022[259].

Acquisition and Partnerships - Genius Brands International, Inc. completed the acquisition of Wow Unlimited Media Inc. for $38.3 million in cash and 1,105,708 shares of common stock[26]. - Genius Brands has access to over 1,600 episodes from Germany's Your Family Entertainment, covering over 60 territories worldwide[19]. - The company produced 52 episodes of the preschool music series Ukulele U for the Canadian Broadcasting Corporation[29]. - The animated series Team Zenko Go! was delivered to Netflix, consisting of 44 episodes[30]. - As of December 31, 2022, the company has partnered with over 50 consumer products licensees and licensed content to over 40 broadcasters in more than 90 countries[51]. Financial Performance - For the year ended December 31, 2022, the company generated net revenues of $62.3 million and incurred a net loss of $44.5 million, compared to net revenues of $7.9 million and a net loss of $126.3 million in the previous year[78]. - Total revenue for the year ended December 31, 2022, was $62.3 million, a 691% increase from $7.9 million in 2021[162]. - Content Distribution revenue increased by 2,146% to $24.7 million, primarily due to acquisitions of Ameba, Wow, and Frederator, contributing an additional $23.9 million[164]. - Licensing & Royalties revenue rose by 77% to $2.8 million, driven by a new licensing agreement for Stan Lee Assets[165]. - Total expenses for 2022 were $106 million, up 48% from $71.6 million in 2021, with Direct Operating Costs increasing by $41.9 million due to acquisitions[167][170]. Stock and Shareholder Information - As of April 12, 2023, approximately 30,018,578 shares of common stock are free trading out of 32,059,657 shares issued and outstanding[138]. - The company underwent a reverse stock split of 1-for-10 on February 10, 2023, to regain compliance with Nasdaq's Minimum Bid Price Requirement[129]. - The company does not expect to pay dividends in the foreseeable future, with any return on investment limited to the appreciation of its common stock[135]. - The company is authorized to issue up to 10,000,000 shares of "blank check" preferred stock, which could adversely impact the rights of common stockholders[134]. - As of April 12, 2023, there were approximately 348 stockholders of record for the common stock[151]. Operational Challenges and Risks - The company has incurred net losses since inception, indicating potential financial instability[71]. - The company faces competition from major players in children's content, including Disney and Nickelodeon, which may affect its market position[50]. - The production of animated content is reliant on third-party studios, and any failures or delays could negatively affect profitability and market delivery[95]. - The company cannot assure that its original programming content will appeal to distributors and viewers, which could jeopardize future revenue streams[96]. - The company is exposed to significant risks due to international operations, including legal, regulatory, economic, and political risks[111]. Financial Obligations and Capital Structure - As of December 31, 2022, the company had production loan facility obligations of approximately $18.3 million and advances of $1.7 million under its senior secured revolving credit facility[118]. - The company also had an outstanding margin loan of $60.8 million secured by marketable investment securities as of December 31, 2022[118]. - The company has future minimum purchase obligations of approximately $103.4 million over the next five years, with about $74.3 million potentially due within one year[189]. - The company incurred indebtedness that could adversely affect its operations and financial condition, limiting its ability to refinance or obtain additional financing[119]. Tax and Regulatory Considerations - The company is subject to various regulations, including the Children's Online Privacy Protection Act (COPPA), which impacts its online distribution practices[52]. - The company is subject to ordinary course audits from the Canada Revenue Agency, which may impact the collectability of tax credit receivables[122]. - Changes in foreign, state, and local tax incentives may increase the cost of original programming, adversely affecting the company's financial condition[121]. - The company relies on refundable tax credits as a key component of production financing, with a normal operating cycle of 12 to 24 months for the collection of these credits[202]. Employee and Corporate Culture - The company employs 743 full-time employees and 57 independent contractors, focusing on a culture of diversity, equity, and inclusion[62]. - The company aims to create positive social impacts through its content, reflecting its commitment to social responsibility and corporate governance[60]. Market and Economic Conditions - Economic conditions, including a decrease in economic activity or increased price levels, could adversely affect demand for the company's products, reducing revenue and earnings[88]. - Revenues and results of operations may fluctuate significantly due to the appeal of content, timing of product releases, and commercial success, which are difficult to predict[82].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________ Commission file number: 000-54389 GENIUS BRANDS INTERNATIONAL, INC. (Exact name of registrant as specified in it ...