Quarterly report [Sections 13 or 15(d)]

Stockholders’ Equity and Earnings per Share

v3.26.1
Stockholders’ Equity and Earnings per Share
 6 Months Ended
Jun. 30, 2026
Equity [Abstract]  
Stockholders’ Equity and Earnings per Share

Note 13: Stockholders’ Equity and Earnings per Share

 

Common Stock

 

As of June 30, 2026 and December 31, 2025, the total number of authorized shares of common stock was 190,000,000.

 

As of June 30, 2026 and December 31, 2025, there were 62,204,105 and 54,857,000 shares of common stock outstanding, respectively.

 

During the six months ended June 30, 2026, the Company issued 2,712,865 shares of common stock for services, which included 2,424,146 shares of common stock in connection with immediately vested restricted stock units (RSUs) granted to consultants. During the six months ended June 30, 2025, the Company issued 92,282 shares of common stock for services, which included 92,282 shares of common stock in connection with immediately vested restricted stock units (RSUs) granted to consultants.

 

During the six months ended June 30, 2026, the Company issued 103,833 shares of common stock in connection with vested restricted stock units (RSUs), net of shares withheld for tax obligations, consisting of 97,999 shares related to RSUs that vested during the current period and 5,834 shares related to RSUs that vested in prior periods.

 

During the six months ended June 30, 2025, the Company issued 143,206 shares of common stock in connection with vested restricted stock units (RSUs), net of shares withheld for tax obligations, consisting of 136,808 shares related to RSUs that vested during the current period and 6,398 shares related to RSUs that vested in prior periods.

 

On November 18, 2025, the Company entered into an agreement to engage in a transaction under Section 3(a)(10) of the Securities Act with CCI, to settle an aggregate of $1.0 million of outstanding accounts payable in exchange for issuing 1,695,072 shares of common stock. Under the terms of the agreement, CCI makes payments to the Company’s vendors in cash and, in exchange, the Company issues shares of common stock to CCI. The settlement was valued at 1.75 shares of common stock per $1 of accounts payable, pursuant to the terms of the agreement. The transaction was approved by a court after a public hearing on the fairness of the terms and conditions. During the six months ended June 30, 2026, the Company settled $0.6 million of accounts payable and issued an aggregate of 977,360 shares of common stock to CCI. During the six months ended June 30, 2026, the Company recognized a loss of $0.1 million on the settlement, representing the difference between the carrying value of liabilities extinguished and the fair value of shares issued, included in Other Income (Expense), net, on the Company’s condensed consolidated statements of operations. The transaction was carried out in stages and completed as of June 30, 2026.

 

On April 8, 2026, the Company entered into a new agreement to settle an additional $1.1 million of outstanding accounts payable under Section 3(a)(10) of the Securities Act with CCI, in exchange for issuing 2,001,797 shares of common stock, and to settle additional obligations up to $0.3 million in exchange for issuing 551,250 shares of common stock. The terms were consistent with the original arrangement. The settlement arrangement was carried out in stages and completed as of June 30, 2026. During the three months ended June 30, 2026, the Company recognized a loss of $0.6 million on the settlement, representing the difference between the carrying value of liabilities extinguished and the fair value of shares issued, included in Other Income (Expense), net, on the Company’s condensed consolidated statements of operations.

 

On June 16, 2026, the Company issued 1,000,000 shares of common stock upon the cash exercise of outstanding warrants at an exercise price of $0.57 per share, resulting in gross proceeds of approximately $0.6 million. The shares were issued in accordance with the terms of the underlying warrant agreements.

 

Preferred Stock

 

The Company has 10,000,000 shares of preferred stock authorized with a par value of $0.001 per share including 9,944,000 shares of undesignated preferred stock, 6,000 shares designated as 0% Series A Convertible Preferred Stock and 50,000 shares designated as Series C Preferred Stock. The board of directors is authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time-to-time shares of preferred stock in one or more series. Each series of preferred stock will have such number of shares, designations, preferences, voting powers, qualifications and special or relative rights or privileges as shall be determined by the board of directors, which may include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.

 

As of June 30, 2026 and December 31, 2025, there were 0 shares of Series A Convertible Preferred Stock outstanding. As of June 30, 2026 and December 31, 2025, there were 0 shares of Series B Preferred Stock outstanding. As of June 30, 2026 and December 31, 2025, there were 0 shares of Series C Preferred Stock outstanding.

 

Treasury Stock

 

Upon vesting of restricted stock unit awards, employees may elect to have the Company withhold shares of common stock to cover their tax obligations, which are included as treasury stock outstanding and recorded within Treasury Stock on the condensed consolidated balance sheets. During the six months ended June 30, 2026, no employees elected this option and accordingly no shares were withheld. During the six months ended June 30, 2025, the Company withheld 269 shares of common stock with a cost of $187 to cover taxes owed by certain employees.

 

Earnings (Loss) per Share

 

Basic earnings (loss) per share of common stock (“EPS”) is calculated by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Diluted EPS is calculated by dividing net income (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding, and the assumed exercise of all dilutive securities using the treasury stock method.

 

The 6,903,049 October 2025 Pre-Funded Warrants issued in the October Offerings and outstanding as of June 30, 2026 were included in the calculation of basic and diluted net loss per share.

 

The table below sets forth the Company’s calculated earnings (loss) per share, with net income (loss) presented in thousands:

               
    Three Months Ended June 30,   Six Months Ended June 30,
    2026   2025   2026   2025
                 
Net Income (Loss) Attributable to Kartoon Studios, Inc.   $ 26,985     $ (6,163 )   $ 20,620     $ (12,689 )
Weighted-average shares of common stock outstanding     66,155,559       47,805,923       64,457,474       47,252,544  
Basic earnings (loss) per share   $ 0.41     $ (0.13 )   $ 0.32     $ (0.27 )
                                 
Net Income (Loss) Attributable to Kartoon Studios, Inc.   $ 26,985     $ (6,163 )   $ 20,620     $ (12,689 )
Weighted-average shares of common stock outstanding     66,155,559       47,805,923       64,457,474       47,252,544  
Effect of dilutive warrants and stock-based awards     4,814,429       –       3,726,713       –  
Weighted-average shares of common stock outstanding - diluted     70,969,988       47,805,923       68,184,187       47,252,544  
Diluted earnings (loss) per share   $ 0.38     $ (0.13 )   $ 0.30     $ (0.27 )

 

The following common stock equivalents were excluded from the calculation of diluted net earnings (loss) per share applicable to common stockholders, because including them would have had an anti-dilutive effect:

               
    Three Months Ended June 30,   Six Months Ended June 30,
    2026   2025   2026   2025
Stock Options     839,998       882,313       839,998       882,313  
Restricted Stock Units     843,750       870,417       843,750       870,417  
Warrants     10,824,679       24,155,943       12,482,574       24,155,943  
      12,508,427       25,908,673       14,166,322       25,908,673