Kartoon Studios, Inc.

Previous wording

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. 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.

Current wording

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.

Previous wording

We have a history of operating 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 total revenues of $19.8 million and incurred a net loss of $12.9 million, while for the same period the previous year, we generated total revenue of $14.5 million and incurred a net loss of $13.0 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 capital.

Current wording

We have a history of operating losses and incurred net losses in each fiscal quarter since our inception. 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. 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 capital.

Previous wording

A few customers have in the 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 years. During the three months ended June 30, 2025, we had four customers from which our total revenue exceeded 10% of our total condensed consolidated revenue. These customers collectively accounted for 85.9% 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.

Current wording

A few customers have in the 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 years. 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 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.

Previous wording

As of June 30, 2025, approximately 45,527,508 shares of common stock of the 47,906,569 shares of common stock issued are outstanding and freely trading. As 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”) and 11,413,442 shares reserved for issuance under our Kartoon Studios, Inc. 2020 Incentive Plan

Current wording

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. As 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