The U.S. District Court for the Southern District of New York has entered all settlement agreements reached to date in the shareholder action Augenbaum v. Anson Investments Master Fund LP et al. (Case No. 1:22-CV-00249-AS). Pursuant to those settlements, the Company will receive aggregate settlement payments of approximately $78.5 million, before plaintiff's counsel fees and expenses.

The action was brought on behalf of the Company under Section 16(b) of the Securities Exchange Act, commonly known as the "short-swing profit" recovery statute, seeking to recover profits realized from certain transactions in the Company's securities. With the Court's latest ruling, all settlement agreements reached to date with settling defendants have now been entered. The action remains ongoing against the two remaining defendants.

The settlements represent a significant milestone in Kartoon Studios' financial evolution. The aggregate recovery materially strengthens the Company's balance sheet, providing a substantial capital base to execute and accelerate its children and family intellectual property-driven growth strategy without reliance on external financing, or dilution.

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

"For years, we have invested in building a platform supported by a portfolio of world-class children and family based intellectual property. This enhanced financial position will enable us to accelerate the commercialization of our flagship franchises, including Hundred Acre Wood and the Stan Lee Universe, while also pursuing strategic opportunities that were previously beyond our reach," concluded Heyward.

The Company intends to deploy its enhanced financial resources to accelerate the development, commercialization, and monetization of its owned intellectual property portfolio; expand and strengthen its distribution platforms, including Kartoon Channel! and Ameba; and pursue strategic growth opportunities across content production, licensing, consumer products, and related initiatives. The Company intends to deploy these proceeds with the same financial discipline that has significantly reduced operating expenses and improved its operating results, supporting its continued progress toward sustained positive cash flow.