Kartoon Studios to receive $78.5M from litigation settlements

Kartoon Studios (NYSE American: TOON) announced that a U.S. District Court for the Southern District of New York has entered all settlement agreements reached to date in a shareholder action under Section 16(b) of the Securities Exchange Act, known as the "short-swing profit" recovery statute.

The case, Augenbaum v. Anson Investments Master Fund LP et al. (Case No. 1:22-CV-00249-AS), was brought on behalf of Kartoon Studios to recover profits realized from certain transactions in the company's securities. The court's entry of the settlements means the company will receive aggregate payments of approximately $78.5 million, before plaintiff's counsel fees and expenses.

The action remains ongoing against two remaining defendants, meaning additional recoveries are possible.

"This is a watershed moment for Kartoon Studios and, most importantly, for our shareholders," said Andy Heyward, Chairman and CEO. "These recoveries are non-dilutive, and return substantial value directly to the Company and its shareholders."

According to a company statement, Kartoon Studios intends to use the proceeds to accelerate development and commercialization of its intellectual property portfolio, including its Hundred Acre Wood and Stan Lee Universe franchises, as well as to expand its distribution platforms, Kartoon Channel! and Ameba, and pursue opportunities in content production, licensing, and consumer products.

The company stated it does not expect to rely on external financing or issue dilutive equity as a result of the capital infusion from the settlements.

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