Kartoon Studios, Inc. (TOON): auditor change — Kartoon Studios withdraws reliance on 2022-2023 financials; restates due to $1.7M and $3.5M errors

Kartoon Studios, Inc.

Audit committee on 4/3/2024 determined prior 2022 and 2023 interim financials should not be relied upon.
2022 error: understatement of deferred tax liability net of $1.7M with corresponding goodwill increase.
2023 interim error: overstatement of warrant incentive expense of $3.5M in Other Income (Expense) and APIC.
Company will restate financials in 2023 Form 10-K filed concurrently today.
Material weakness in internal control over financial reporting identified; remediation plans underway.

item 4.02

Key facts

Extracted from this filing and checked against the source text.

Auditor Changes SEC 8-K Item 4.01/4.02 confidence 0.9

Kartoon Studios, Inc. reported that prior financial statements should not be relied upon.

Action: non reliance
Auditor: WithumSmith+Brown, PC

Exact text from the filing

onths ended March 31, 2023, three and six months ended June 30, 2023 and the nine months ended September 30, 2023 (the “ Relevant Periods ”) and earning releases and other communications relating to the Relevant Periods should no longer be relied upon with respect to the errors described below and should be restated. The Company identified an error in its Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Loss, Statements of Stockholders' Equity, and Statements of Cash Flow for each of the Relevant Periods and determined that these financial statements should be restated. The misstatement pertaining to the interim and annual periods of 2022 relate to an understatement of Deferred Tax Liability, net of $1.7 million with a corresponding increase to goodwill that were omitted from the Company’s purchase accounting and the misstatement pertaining to the interi

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Source: SEC EDGAR

accession 0001355848-24-000049

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