KARTOON STUDIOS, INC. 10-Q

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 March 31, 2025

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: 001-37950

KARTOON STUDIOS, INC.

(Exact name of registrant as specified in its charter)

Nevada	20-4118216
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

190 N. Canon Drive, 4^th FL

Beverly Hills, CA 90210

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: 310-273-4222

______________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	TOON	The NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer	o
Non-accelerated filer x	Smaller reporting company	x
	Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 14, 2025, the registrant had 47,793,720 shares of common stock outstanding.

Kartoon Studios, Inc.

FORM 10-Q

Table of Contents

PART I - FINANCIAL INFORMATION		Page Number

Item 1. Financial Statements
Condensed Consolidated Balance Sheets at March 31, 2025 (unaudited) and December 31, 2024		3
Unaudited Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2025 and 2024		4
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three Months ended March 31, 2025 and 2024		5
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three Months ended March 31, 2025 and 2024		6
Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2025 and 2024		7
Notes to Unaudited Condensed Consolidated Financial Statements		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		30

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		35

Item 4. Controls and Procedures.		35

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.		37

Item 1A. Risk Factors.		39

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		40

Item 3. Defaults Upon Senior Securities.		40

Item 4. Mine Safety Disclosures.		40

Item 5. Other Information.		40

Item 6. Exhibits.		41

SIGNATURES		42

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

Kartoon Studios, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except for share data)


	As of
	March 31, 2025		December 31, 2024
	(Unaudited)
ASSETS
Current Assets:
Cash	$	2,263	$	7,879
Restricted Cash		509		506
Investments in Marketable Securities (amortized cost of $3,283 and $2,116, respectively)		3,226		2,029
Accounts Receivable (net of allowance of $204 and $239, respectively)		7,562		11,982
Tax Credits Receivable (net of allowance of $210 and $187, respectively)		8,326		10,295
Notes and Accounts Receivable from Related Party		400		–
Other Receivable		1,488		1,367
Prepaid Expenses and Other Assets		1,354		606
Total Current Assets		25,128		34,664

Noncurrent Assets:
Property and Equipment, net		1,921		2,053
Operating Lease Right-of-Use Assets, net		5,654		5,847
Finance Lease Right-of-Use Assets, net		217		278
Notes and Accounts Receivable from Related Party		–		1,352
Film and Television Costs, net		3,462		2,621
Tax Credits Receivable (net of allowance of $433 and $421, respectively)		2,458		2,384
Investment in Your Family Entertainment AG		13,444		16,429
Intangible Assets, net		19,300		19,722
Other Assets		117		117
Total Assets	$	71,701	$	85,467

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	5,963	$	11,954
Participations Payable		1,044		1,427
Accrued Expenses		1,738		405
Accrued Salaries and Wages		1,668		1,213
Deferred Revenue		6,147		5,997
Margin Loan		415		900
Production Facilities, net		7,376		9,220
Current Portion of Operating Lease Liabilities		1,071		1,002
Current Portion of Finance Lease Liabilities		204		249
Due to Related Party		8		8
Other Current Liabilities		1,201		1,065
Total Current Liabilities		26,835		33,440

Noncurrent Liabilities:
Deferred Revenue		3,369		3,371
Operating Lease Liabilities, Net Current Portion		5,082		5,359
Finance Lease Liabilities, Net Current Portion		36		54
Deferred Tax Liability, net		1,280		1,301
Warrant Liability		5,030		5,477
Other Noncurrent Liabilities		12		5
Total Liabilities		41,644		49,007

Commitments and Contingencies (Note 19)				–

Stockholders’ Equity:
Preferred Stock, 10,000,000 shares authorized, 0 shares issued and outstanding as of March 31, 2025 and December 31, 2024		–		–
0% Series A Convertible Preferred Stock, $0.001 par value, 6,000 shares authorized, 0 shares issued and outstanding as of March 31, 2025 and December 31, 2024		–		–
Series B Preferred Stock, $0.001 par value, 0 shares authorized, 0 shares issued and outstanding as of March 31, 2025 and December 31, 2024		–		–
Series C Preferred Stock, $0.001 par value, 50,000 shares authorized, 0 shares issued and outstanding as of March 31, 2025 and December 31, 2024		–		–
Common Stock, $0.001 par value, 190,000,000 and 190,000,000 shares authorized, 47,861,379 and 46,285,078 shares issued and 47,785,248 and 46,209,081 outstanding as of March 31, 2025 and December 31, 2024, respectively		48		45
Additional Paid-in Capital		778,055		777,930

SEC Form 10-Q filed by Kartoon Studios Inc.