Kartoon Studios Inc. — financial distress indicators
Financial-health summary
Kartoon Studios Inc.'s reported numbers place it in the 'Weak' financial-health band (distress score 50/100). The main indicators are losses in each of the last 3 years, operations consume cash and ohlson o-score signals likely failure. Independently, the Ohlson accounting model puts its 1-year failure probability at 97% and the market-implied (Merton) default probability is 1.6%. In its favour: cash on hand covers all debt (net-cash balance sheet).
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Net income negative in 3 of 3 fiscal years.
Persistent losses erode equity and the capacity to absorb shocks.
Operating cash flow negative in 3 of the last 3 years.
A business that cannot fund itself from operations depends on external capital to survive.
O-score 3.50 → model probability 97%.
Ohlson (1980) logit model of 1-year corporate failure; O > 0 (p > 50%) is the original failure cut-off.
Current ratio is 0.98.
Short-term obligations exceed short-term resources — the company relies on rolling over credit.
Last price $0.55.
Below the $1 minimum-bid listing standard (Nasdaq Rule 5550(a)(2) / NYSE 802.01C); sustained breach leads to delisting and loss of capital-market access.
0 severe and 1 moderate distress-related headlines in the last 6 months.
Headlines are corroborating evidence only; they are weighted lightly and never drive a flag alone.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- Cash on hand covers all debt (net-cash balance sheet).
- Revenue still growing (+21% YoY).
📰 Recent news scan
- dilutKartoon Studios Receives Initial $39.2 Million Non-Dilutive Cash Payment from Previously Announced Litigation SettlementsYahoo Finance · 2026-07-14
- Kartoon Studios Issues Letter to Shareholders Highlighting Strategic Transformation and Next Phase of GrowthYahoo Finance · 2026-09-08
- Kartoon Studios Q2 Earnings Jump on One-Time Gain, Revenues Fall Y/YYahoo Finance · 2026-08-28
- Kartoon Studios to Participate in the Lytham Partners 2026 Consumer & Technology Investor Summit on August 18, 2026Yahoo Finance · 2026-08-18
- Kartoon Studios Reports Second Quarter 2026 Financial Results and Accelerates Strategic TransformationYahoo Finance · 2026-08-14
- TOON Sells Channel Business to Sharpen Focus on IP MonetizationYahoo Finance · 2026-07-20
⚖️ U.S. legal pathway — Title 11, U.S. Code
Which chapter would apply?
- Chapter 11 — reorganisation. Management usually stays in control as debtor-in-possession; the automatic stay (§362) halts collection; a plan must meet the best-interests test (§1129(a)(7)) and the absolute priority rule (§1129(b)) — creditors are paid before shareholders, who are frequently wiped out.
- Chapter 7 — liquidation. A trustee sells assets and distributes proceeds by statutory priority (§§507, 726).
- Subchapter V (“Chapter 5”) is a fast track for small-business debtors under a statutory debt cap, but SEC-reporting companies are excluded (§101(51D)) — so it rarely applies to listed companies.
What typically triggers a filing
- Payment default or covenant breach lenders will not waive; a debt maturity that cannot be refinanced.
- Auditor going-concern doubt (ASC 205-40 / PCAOB AS 2415) — often itself a default trigger in loan agreements.
- Creditors can force a case with an involuntary petition (§303) if debts are not paid as they come due.
- Delisting after sustained sub-$1 prices or equity deficits cuts off equity funding.
Transactions shortly before filing can be clawed back (preferences — 90 days, §547; fraudulent transfers — 2 years, §548).
Frequently asked questions
What do Kartoon Studios Inc.'s financial-health indicators show?
As of 2026-10-08, Kartoon Studios Inc.'s public financial data places it in the 'Weak' band with a distress score of 50/100, driven by losses in each of the last 3 years, operations consume cash and ohlson o-score signals likely failure. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Kartoon Studios Inc.'s financial distress score?
50/100 ('Weak'). Ohlson O-score 3.5 (model 1-year failure probability 97%). Merton distance-to-default 2.14 σ (model default probability 1.6%).
What works in Kartoon Studios Inc.'s favour?
Cash on hand covers all debt (net-cash balance sheet). Revenue still growing (+21% YoY).
How are shareholders treated if a company enters insolvency?
In a Chapter 11 reorganisation the absolute priority rule pays secured lenders, then unsecured creditors, before shareholders — so existing shares are usually cancelled or heavily diluted. In Chapter 7 the company is liquidated and shareholders rarely recover anything.
Other Telecom & Media companies with distress indicators
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- K Wave Media Ltd. (KWM)Very weak 100/100
- Reading International, Inc. (RDIB)Very weak 100/100
- SurgePays, Inc. (SURG)Very weak 100/100
- Upexi, Inc. (UPXI)Very weak 100/100
Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.