Kartoon Studios(TOON) - 2023 Q1 - Quarterly Report

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].