Kartoon Studios (TOON) risk factors, FY2025 10-K

Kartoon Studios's FY2025 10-K, filed Mar 31, 2026, lists 34 risk factors in 7 groups. Against the prior year's 31: 7 new, 4 dropped, 11 substantially reworded.

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Risk factors listed
347 groups
New this year
7vs 31 last year
Dropped
4since the prior 10-K
Substantially reworded
11of those kept
Section length
9k wordsItem 1A

What the changes say

  • Kartoon Studios faces substantial going concern doubts with $763.8 million in accumulated deficits and $2.9 million in cash.

What changed since the prior 10-K

New

  • NewRISKS RELATING TO OUR FINANCIAL POSITION

    We must raise additional capital to fund our operations in order to continue as a going concern

    We face substantial doubt about our ability to continue as a going concern due to an accumulated deficit of $763.8 million.

  • NewRISKS RELATING TO OUR FINANCIAL POSITION

    Limits on our ability to sell securities under the October 2025 Purchase Agreement may make it difficult for us to procure additional financing. If we are not able to obtain sufficient capital, we may not be able to continue our growth

    The October 2025 Purchase Agreement restricts our future fundraising transactions and grants the investor participation rights in subsequent financings.

  • NewRISKS RELATING TO OUR BUSINESS AND INDUSTRY

    The loss of one or more significant customers could have a material adverse effect on us

    Four customers accounted for 81.9% of our total consolidated revenue during 2025, creating high revenue concentration risk.

  • NewRISKS RELATED TO INFLATION, INTEREST RATES, AND OTHER ADVERSE ECONOMIC CONDITIONS

    Changes in U.S. trade policy, including current and proposed tariffs on foreign-produced content, could adversely impact our business operations, particularly due to our reliance on animation production services based in Canada and Asia

    Proposed U.S. tariffs on foreign-produced films could increase our animation production costs in Canada and Asia.

  • NewRISKS RELATED TO REGULATORY MATTERS

    A shutdown of the U.S. federal government may adversely affect our business

    U.S. federal government shutdowns could delay SEC reviews and disrupt our public offerings and regulatory compliance.

  • NewRISKS RELATING TO BEING A PUBLIC COMPANY

    In the past, we identified material weaknesses in our internal controls. If we fail to develop, implement and maintain an effective system of internal control over financial reporting, the accuracy and timing of our financial reporting in future periods may be adversely affected

    We remediated past material weaknesses in our internal controls over financial reporting, but future failures could harm our financial accuracy.

  • NewRISKS RELATING TO BEING A PUBLIC COMPANY

    We are a “smaller reporting company,” and the reduced public company reporting and disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investors

    We utilize scaled disclosure requirements as a smaller reporting company, which may make our common stock less attractive to investors.

Dropped

  • DroppedRISKS RELATING TO OUR BUSINESS

    If we are not able to obtain sufficient capital, we may not be able to continue our growth

  • DroppedRISKS RELATING TO OUR BUSINESS

    Based on its assessment, our management concluded that, as of December 31, 2024 our internal control over financial reporting was ineffective due to material weakness resulting from the inadequate design of user access provisioning/deprovisioning controls area

    Need for additional working capital to expand our business.

  • DroppedRISKS RELATING TO OUR BUSINESS

    Loss of key personnel may adversely affect our business

  • DroppedRISKS RELATING TO OUR COMMON STOCK

    If our common stock becomes subject to the penny stock rules, it may be more difficult to sell our common stock

Reworded

  • 85% rewrittenRISKS RELATING TO OUR FINANCIAL POSITION

    We have incurred indebtedness that could adversely affect the profitability of our business operations and financial condition

    Updated production loan facility obligations to $11.8 million and added $16.8 million in tax credit receivables as of December 31, 2025.

    Was: We have incurred indebtedness that could adversely affect our operations and financial condition

  • 81% rewrittenRISKS RELATING TO OUR FINANCIAL POSITION

    The value of our investments is subject to capital markets risk as well as other investment risks, which may adversely affect our results of operations, financial condition or cash flows

    Clarified that our marketable securities portfolio consists of high-grade securities designed to preserve capital rather than generate significant returns.

    Was: The value of our investments is subject to significant capital markets risk related to changes in interest rates and credit spreads as well as other investment risks, which may adversely affect our results of operations, financial condition or cash flows

  • 69% rewrittenRISKS RELATING TO OUR BUSINESS AND INDUSTRY

    We are exposed to investment risk with the ownership of an equity interest in Your Family Entertainment AG

    Updated our YFE ownership stake to 32.5% and added risks from Germany's recession, inflation, and falling household spending.

    Was: We are exposed to investment risk with the acquisition of an equity interest in Your Family Entertainment AG

  • 66% rewrittenRISKS RELATING TO OUR COMMON STOCK

    Our failure to meet the continued listing requirements of NYSE American could result in a delisting of our common stock, which would negatively impact the price of our common stock and our ability to access the capital markets

    Retained the risk regarding NYSE American continued listing requirements with minor stylistic edits.

    Was: Our failure to meet the continued listing requirements of NYSE American could result in a delisting of our common stock

  • 58% rewrittenRISKS RELATING TO OUR COMMON STOCK

    Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline

    Added specific figures showing 53,898,226 freely trading shares and 41,622,504 outstanding warrants as of December 31, 2025.

  • 52% rewrittenRISKS RELATING TO OUR FINANCIAL POSITION

    We have incurred net losses since inception

    Updated 2025 financial figures to $39.4 million in revenues and a $24.5 million net loss.

  • 39% rewrittenRISKS RELATED TO INFLATION, INTEREST RATES, AND OTHER ADVERSE ECONOMIC CONDITIONS

    Changes in the United States, global or regional economic conditions could adversely affect the profitability of our business

    Retained the general economic conditions risk with minor stylistic updates.

  • 32% rewrittenRISKS RELATING TO OUR COMMON STOCK

    We are authorized to issue “blank check” preferred stock without stockholder approval, which could adversely impact the rights of holders of our common stock

    Added specific designations for Series A, Series B, and Series C preferred stock under our blank check authority.

  • 25% rewrittenRISKS RELATED TO INTELLECTUAL PROPERTY, LITIGATION AND CYBERSECURITY

    Protecting and defending against intellectual property claims may have a material adverse effect on our business

  • 23% rewrittenRISKS RELATING TO OUR BUSINESS AND INDUSTRY

    We operate internationally, which exposes us to global economic, financial and political risks

  • 21% rewrittenRISKS RELATING TO OUR BUSINESS AND INDUSTRY

    The failure of others to promote our products may adversely affect our business

All 34 risk factors

Headings as the filing states them, in filing order.

RISKS RELATING TO OUR FINANCIAL POSITION

  1. 01We must raise additional capital to fund our operations in order to continue as a going concernNew
  2. 02We have incurred net losses since inception52% rewritten
  3. 03Limits on our ability to sell securities under the October 2025 Purchase Agreement may make it difficult for us to procure additional financing. If we are not able to obtain sufficient capital, we may not be able to continue our growthNew
  4. 04Our revenues and results of operations may fluctuate from period to period
  5. 05The value of our investments is subject to capital markets risk as well as other investment risks, which may adversely affect our results of operations, financial condition or cash flows81% rewritten
  6. 06We have incurred indebtedness that could adversely affect the profitability of our business operations and financial condition85% rewritten

RISKS RELATING TO OUR BUSINESS AND INDUSTRY

  1. 07The loss of one or more significant customers could have a material adverse effect on usNew
  2. 08Inaccurately anticipating changes and trends in popular culture, media and movies, fashion, or technology can negatively affect our sales
  3. 09We face competition from a variety of content creators that sell similar merchandise and have greater resources than we do
  4. 10The production of our animated content is accomplished through third-party production and animation studios around the world, and any failure of these third parties could negatively impact our business
  5. 11We cannot assure you that our original programming content will appeal to our distributors and viewers or that any of our original programming content will not be cancelled or removed from our distributors’ platforms
  6. 12Failure to successfully market or advertise our products could have an adverse effect on our business, financial condition and results of operations
  7. 13The failure of others to promote our products may adversely affect our business21% rewritten
  8. 14We may not be able to keep pace with technological advances
  9. 15We are exposed to investment risk with the ownership of an equity interest in Your Family Entertainment AG69% rewritten
  10. 16We operate internationally, which exposes us to global economic, financial and political risks23% rewritten
  11. 17A decrease in the fair values of our reporting units may result in future intangible assets impairments

RISKS RELATED TO INTELLECTUAL PROPERTY, LITIGATION AND CYBERSECURITY

  1. 18Protecting and defending against intellectual property claims may have a material adverse effect on our business25% rewritten
  2. 19Failure in our information technology and storage systems could significantly disrupt the operation of our business
  3. 20Our internal computer systems, or those of our collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption and cause our business and reputation to suffer
  4. 21Litigation may harm our business or otherwise distract management

RISKS RELATED TO INFLATION, INTEREST RATES, AND OTHER ADVERSE ECONOMIC CONDITIONS

  1. 22Changes in the United States, global or regional economic conditions could adversely affect the profitability of our business39% rewritten
  2. 23Changes in U.S. trade policy, including current and proposed tariffs on foreign-produced content, could adversely impact our business operations, particularly due to our reliance on animation production services based in Canada and AsiaNew

RISKS RELATED TO REGULATORY MATTERS

  1. 24Changes in foreign, state and local tax incentives may increase the cost of original programming content to such an extent that they are no longer feasible
  2. 25Changes in, or interpretations of, tax rules and regulations, and changes in geographic operating results, may adversely affect our effective tax rates
  3. 26A shutdown of the U.S. federal government may adversely affect our businessNew
  4. 27Our vendors and licensees may be subject to various laws and government regulations, violation of which could subject these parties to sanctions which could lead to increased costs or the interruption of normal business operations that could negatively impact our financial condition and results of operations

RISKS RELATING TO OUR COMMON STOCK

  1. 28Our stock price may be subject to substantial volatility, and stockholders may lose all or a substantial part of their investment
  2. 29Our failure to meet the continued listing requirements of NYSE American could result in a delisting of our common stock, which would negatively impact the price of our common stock and our ability to access the capital markets66% rewritten
  3. 30We are authorized to issue “blank check” preferred stock without stockholder approval, which could adversely impact the rights of holders of our common stock32% rewritten
  4. 31We do not expect to pay dividends on our common stock in the future and any return on investment may be limited to the value of our common stock
  5. 32Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline58% rewritten

RISKS RELATING TO BEING A PUBLIC COMPANY

  1. 33In the past, we identified material weaknesses in our internal controls. If we fail to develop, implement and maintain an effective system of internal control over financial reporting, the accuracy and timing of our financial reporting in future periods may be adversely affectedNew
  2. 34We are a “smaller reporting company,” and the reduced public company reporting and disclosure requirements applicable to smaller reporting companies may make our common stock less attractive to investorsNew

Other Kartoon Studios 10-Ks

  • FY2024 10-K risk factors
    31 risks

    Kartoon Studios faces continuous operating losses with a 2024 net loss of $20.7 million on revenues of $32.6 million. Internal controls suffered from material weaknesses due to inadequate user access provisioning and deprovisioning controls. Debt obligations include $9.2 million in production loans and a $0.9 million margin loan.

    Filed Mar 31, 2025

About this page

The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.