What changed in this filing

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Item 1A. Risk Factors

2025-11-14 compared with 2025-08-14 · 53 added, 45 removed, 69 unchanged (59% of the section changed)

3 unchanged sentences

our operations in order to continue as a going concern.

As of June 30, 2025,

we had an accumulated deficit of $752.0 million.

As of June 30, 2025, the Company 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 total current liabilities of

$30.4 million.

The Company had negative working capital of $4.9 million as of June 30, 2025, compared to working capital of $1.2

million as of December 31, 2024.

Management has evaluated the significance of these conditions in relation to the Company’s

ability to meet its obligations and concluded, that there is substantial doubt about our ability to continue as a going concern for a

period of at least one year subsequent to the issuance of the accompanying condensed consolidated financial statements.

In order to address

our capital needs, we will need to raise further capital through the sale of equity or debt securities, financing arrangements or by entering

into collaborative, strategic, and/or licensing transactions.

There can be no assurance that the Company will be able to complete any

such financing, collaborative or strategic transactions in a timely manner or on acceptable terms.

If we are unable to improve our liquidity

position, we may not be able to continue as a going concern.

Our ability to continue as a going concern is dependent upon our ability

to generate revenue and raise additional capital.

As of September 30, 2025,

we had an accumulated deficit of $758.5 million and total stockholders’ equity of $24.0 million.

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 total current

liabilities of $32.5 million.

We had negative working capital of $5.4 million as of September 30, 2025, compared to working capital

of $1.2 million as of December 31, 2024.

Subsequent to September 30, 2025, we were successful in raising net proceeds of $6.6 million

in connection with the October Offerings, which closed on October 22, 2025, strengthening our cash position.

Management has evaluated

the significance of these conditions in relation to our ability to meet our obligations and concluded, that there is substantial doubt

about our ability to continue as a going concern for a period of at least one year subsequent to the issuance of the accompanying condensed

consolidated financial statements.

In order to address our capital needs, we will need to raise further capital through the sale of equity

or debt securities, financing arrangements or by entering into collaborative, strategic, and/or licensing transactions.

There can be no

assurance that we will be able to complete any such financing, collaborative or strategic transactions in a timely manner or on acceptable

terms beyond what we completed on October 22, 2025.

Our ability to continue as a going concern is dependent upon our ability to generate

revenue and raise additional capital.

There can be no assurance that we will be successful in accomplishing these objectives.

Without such additional capital, we may be required to curtail or cease operations and be required to realize our assets and discharge

our liabilities other than in the normal course of business which could cause investors to suffer the loss of all or a substantial portion

of their investment.

such additional capital, we may be required to curtail or cease operations and be required to realize our assets and discharge our liabilities

other than in the normal course of business which could cause investors to suffer the loss of all or a substantial portion of their investment.

We have incurred net losses since inception.

1 unchanged sentence

losses and incurred net losses in each fiscal quarter since our inception.

During the three months ended June 30, 2025, we generated

total revenues of $10.3 million and incurred a net loss of $6.3 million, while for the same period the previous year, we generated total

revenue of $8.4 million and incurred a net loss of $5.9 million, respectively.

During the six months ended June 30, 2025, we generated

During the three months ended September 30, 2025, we generated

total revenues of $9.9 million and incurred a net loss of $6.5 million, while for the same period the previous year, we generated total

revenue of $8.7 million and incurred a net loss of $2.1 million, respectively.

For the year ended December 31, 2024, we generated net

revenues of $32.6 million and incurred a net loss attributable to Kartoon Studios Inc.

During the nine months ended September 30, 2025, we

generated total revenues of $29.7 million and incurred a net loss of $19.4 million, while for the same period the previous year, we generated

total revenue of $23.2 million and incurred a net loss of $15.1 million, respectively.

For the year ended December 31, 2024, we generated

net revenues of $32.6 million and incurred a net loss attributable to Kartoon Studios Inc.

of $20.7 million.

These losses, among other things,

have had an adverse effect on our results of operations, financial condition, stockholders’ equity, net current assets and working

These losses, among other

things, have had an adverse effect on our results of operations, financial condition, stockholders’ equity, net current assets and

working capital.

We will need to generate additional

39 unchanged sentences

past, and may in the future, account for a significant portion of our revenues in any one year or over a period of several consecutive

During the three months ended June 30, 2025, we had four customers from which our total revenue exceeded 10% of our total

During the three months ended September 30, 2025, we had four customers from which our total revenue exceeded 10% of our total

condensed consolidated revenue.

These customers collectively accounted for 85.6% of the total revenue.

As of June 30, 2025, we had

two customers whose total accounts receivable exceeded 10% of the total accounts receivable.

These customers accounted for 49.6% of the

total accounts receivable as of June 30, 2025.

The loss of business from a significant customer could have a material adverse effect

on our business, financial condition, results of operations and cash flows.

As of September 30, 2025,

we had four customers whose total accounts receivable exceeded 10% of the total accounts receivable.

These customers accounted for 67.5%

of the total accounts receivable as of September 30, 2025.

The loss of business from a significant customer could have a material

adverse effect on our business, financial condition, results of operations and cash flows.

Offers or availability for sale of a substantial

10 unchanged sentences

us being current in our periodic reports filed with the SEC.

As of June 30, 2025,

As of September 30, 2025,

approximately 46,484,165 shares of common stock of the 48,913,630 shares of common stock issued are outstanding and freely trading.

of June 30, 2025, there were 24,155,943 warrants outstanding.

Lastly, as of June 30, 2025, there are 882,313 shares of common

stock underlying outstanding options granted, 969,995 shares of common stock underlying outstanding restricted stock units (“RSUs”)

of September 30, 2025, there were 24,150,943 warrants outstanding.

Lastly, as of September 30, 2025, there are 973,980 shares

of common stock underlying outstanding options granted, 966,649 shares of common stock underlying outstanding restricted stock units (“RSUs”)

and 9,422,971 shares reserved for issuance under our Kartoon Studios, Inc.

2020 Incentive Plan

Unregistered Sales of Equity Securities and Use of Proceeds

Defaults Upon Senior Securities

Mine Safety Disclosures

Not applicable.

A shutdown of the U.S.

federal government

may adversely affect our business.

A recurring shutdown of the

federal government may adversely affect our business operations and regulatory compliance.

During such shutdowns, while the SEC’s

EDGAR system remains operational, the unavailability of SEC staff to review filings, issue comments, or declare registration statements

effective may delay our ability to complete public offerings, respond to comment letters, or obtain timely regulatory approvals.

delays could impact our access to capital markets, hinder strategic transactions, and create uncertainty around our disclosure obligations.

Additionally, the lack of interpretive guidance or exemptive relief during a shutdown may increase legal and compliance risks.

be no assurance that future shutdowns will not materially affect our operations or financial condition.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors