Kartoon Studios(US:TOON)2023-08-14 21:05Revenue 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].