All right. Hello, everyone, and thank you all for joining us during the Lytham Partners Fall 2026 Investor Conference. My name is Robert Blum, managing partner here at Lytham Partners. Up next, Andy Heyward, Chief Executive Officer, and Brian Parisi, Chief Financial Officer at Kartoon Studios, will be taking us through a brief slide presentation. All right, let's get started. Andy, Brian, welcome. The floor is all yours.
Yeah. Thank you to Lytham Partners. Thank you for this and appreciate it. Yeah, I think we have some really exciting and good news to share with you. I'm Brian Parisi, the CFO of Kartoon Studios, and with me, as you said, is Andy Heyward, the CEO and creative energy of Kartoon Studios. We're in an ever-changing and rapidly changing media and entertainment landscape, and we are shifting our focus to align with that better for future success. We're going to take you through that today, and we have some really exciting elements that we're going to share with you today during the presentation. This one, our lawyers tell me this is necessary and required. This is our disclosure, and we will be talking about forward-looking, or we'll make comments on forward-looking statements, so please take a second to review this.
It's fairly standard, but it'll be important for this presentation. Look, let me get into why we think that we're better positioned for the changing media and entertainment landscape, and there's really a number of things that I think are going to take us there. I think what's most important is Kartoon Studios, we are a micro-cap company in the entertainment space, and we can move quickly and rapidly as the business changes, way more so than some of our larger counterparts and competitors in the business. I think there's really six items that really position us better than others to really capitalize on that shifting landscape.
One is we are making now a deliberate pivot from doing IP work for others and do it ourselves, and actually own the economics of really great intellectual property for its life, versus do it for others and then we move on, and they make all the money, and we are stuck with an okay margin. So we're looking to change that narrative for the company. As part of that, we have a number of tentpoles or anchor franchises that we'll talk about, and we're really excited about the way it's going to fit into today's taste for kids' animation today. The third item is we have our own distribution channels and streaming channels out there, but we're also partnering with the likes of Amazon, that has incredible reach, not only globally, but here in the U.S. We'll talk a little bit more on that.
Number four is our balance sheet is way stronger now than it was before. We just received. Now we have over $40 million of excess cash on our balance sheet today as of our Q2 filing, and we look to deploy that capital in a very constructive and thoughtful way, again, to grow our IP into the future. Our fifth item is we have really focused in on making us a lean organization that can scale quickly and easily without a lot of baggage, financial baggage, as we look to do that. Our costs are down 32% year-over-year, and if you look even from 2025 to 2024, it was a massive reduction as well. We have done a really good job being lean, and then as we scale, we will reap the benefits of that.
Lastly, and we will talk a little bit about that today, is we have a leadership team and an executive team, and really, Andy is built around Kartoon Studios. Not just our board of directors, but our executive team, the people that we have hired. It is really world-class across our experience in media and entertainment. Let me turn this over to Andy to give a little bit more of his background.
Thank you, Brian. I am going to share a little bit, of course, about myself. Before doing that, I do want to embellish a little bit what you said. We have $40 million of cash now. That is going to be going up to $55 million - $60 million of cash as we receive the final amount of our recent settlement that we had in a legal matter in our favor. We have an extraordinary balance sheet, and we also have no long-term debt at all. We are basically a lot of cash, no debt, and it was all non-dilutive cash that came into the company. We are excited about that. Let us talk about what we do, who am I, and our team here. Obviously, we make cartoons, but we do much more than make cartoons.
We create cartoons that we distribute worldwide to broadcasters and streamers, and we do the licensing of the consumer products from those characters. I will go back to the beginning. I began my career working in Hanna-Barbera. I was a young writer working for Joe Barbera, learning my craft. I worked on shows like Scooby-Doo, The Smurfs, The Flintstones, Yogi Bear, Huckleberry Hound, all of the old Hanna-Barbera cartoons. What is notable there is if you see the picture of Fred Flintstone on your screen, Fred Flintstone is a wonderful example. It was created in the 1960s. You can go today to any supermarket anywhere, and you can still buy Pebbles and Bamm-Bamm cereal. You can go to any drugstore and still get Flintstones Vitamins. The point is very simple. When an animated program is successful, the characters lend themselves to merchandising on every possible type of product.
The Flintstones is a great example, but there are endless examples of this, and that is what is the core of our business. We create the cartoons, we distribute them on platforms around the world, and then we license our characters onto products from which we are paid. Okay. Let me tell you a little bit about myself. I've made over 6,000 half hours of cartoons. I think I can say I've done more animated programs than anybody, anywhere. They go back to Inspector Gadget, Alvin and the Chipmunks, Dennis the Menace, Heathcliff, Captain Planet, Ghostbusters, G.I. Joe, Super Mario Bros., Sonic the Hedgehog, Teddy Ruxpin, Strawberry Shortcake, Care Bears, Sabrina the Teenage Witch, The Archies, Teddy Ruxpin, many others. This is what I do. It's all I've ever done my whole career is I make cartoons. I sold my company several years ago to The Walt Disney Company.
I had a period of non-compete, got it back, this and that. When we started Kartoon Studios, we have a simple mission. It's to produce content with a purpose and to deliver it in a manner that kids in today's digital age consume. Having said that, I think we probably want to get to some of the shows that we're doing today and why we are so excited about the shift that Brian spoke to of moving from producing work-for-hire for other parties, to producing wholly owned content and IP that we ourselves take across the entire food chain, and where that is going.
Yeah. No, thank you, Andy. Look, let's give you some context of where we've been and where we're going, and really where the pivot point is. If you look at 2021 through, and 2022, 2023, 2024, 2025, we are in acquisition mode. We built up an infrastructure, and we invested in an infrastructure in the company that really has created a foundation for us to do this pivot in a way that we can scale quickly as the media and entertainment landscape has changed. We bought into Stan Lee's IP. We bought a production studio, a media and marketing business. We bought a catalog in Europe. We've done a lot the last couple of years. But really 2026 is this strategic shift and pivot for us.
Since we also now have the balance sheet and the cash flow to support it, we can start to take that infrastructure, layer on top of it the cash that we have, and again, no debt as Andy said, and we can start investing in IP that's going to be, as we look at 2027 and beyond, is going to be beneficial and accretive for the business on not only the revenue side and the profit, but also for cash flow. Really the biggest strategic shift, and Andy's right, if you look around his screen there, you see all the different characters there. They made a lot of money when they first came out, but they made a whole lot of money years, and in many cases, decades after the fact. His Flintstones example is spot on.
Our shift is going to be where instead of us spending the time and making it for somebody else, whether it's Disney or Netflix or Sony, we're going to take that capital and the knowhow, and we're going to make it ourselves and monetize it over time. That's the model we want to be in. We want to build a real robust IP catalog, and that's the pivot that's going to allow us to do that.
Okay, thank you. Let's talk about how our business works. We go from development to production, to distribution, marketing, and the licensing and merchandising. If we start with development, there's three products you see on screen, and we're going to talk more about them in detail later. I will just say the first one on top is called The Hundred Acre Wood. It's based on A.A. Milne's Winnie- the- Pooh. For those of you who are not familiar with Winnie the Pooh, I will say it is the single most successful entertainment program product of all time. All time? Yes. It's done $80 billion of revenues, more than Star Wars, more than Harry Potter, more than Mickey Mouse, more than The Avengers. You can go down the list, any property you want, it's been the most successful, strongest property ever in the entertainment field.
For us, and we'll get into detail how that came about, that we have it and that we're doing it, but that is a key tent pole for us going forward. Another key tent pole is at the bottom, Stan Lee's Superhero Pets. For those of you who don't know Stan Lee, he is the most successful creator in the history of media. He has 15 of the top 50 movies, I believe, of all time box office were created or co-created by this one man. You could look at the Spider-Man franchise, which by the way, you probably read that Spider-Man movie that just came out now became the most successful box office movie of all time.
He created Spider-Man. He created the X-Men. He created Iron Man. He created The Incredible Hulk. He created Captain America. He created The Fantastic Four. He created The Avengers, and it goes on and on. Everything that was ever done by Marvel came out of this one man's imagination, and we are very fortunate that when he passed away, he left us as the steward of his IP. We own him personally. That means his name, his voice, his signature, his physical likeness, the IP coming from him, and we run his social media, which has over 30 million followers. Then we also have the properties that he left behind. There were over 200 properties that Stan left behind, and we've targeted probably the dozen of those to begin running with. The first one we're going to do is called Stan Lee's Superhero Pets, and it's absolutely adorable.
I can say this because I've been working with them intimately, and Stan. Now you see the process is development. We create the characters, the backstory, the lore, the designs, and we put all of that together. We take it out into production. Then in production, we put it on. We build it. So we say think of it like constructing a house. We're now in the construction mode, and that means hiring writers, voice talent, all of the artists that are necessary, and we bring it to life. Once it's done, then we go to the distribution phase, either on one of our own channels like Kartoon Channel! or Ameba, which we own, and that are growing quite dramatically. I should add, both of them are profitable.
Or we'll work with another third party like Amazon Prime Video or Netflix or Disney+ or any of them, and we work with all of them, and we produce for all of them. Lastly is the marketing, where we take the success of the channel, of the cartoons, and we amplify it, and we bring them into the marketplace, and that leads us to licensing and merchandising. In number three and number five is where we earn money. We earn money when we license the content to a streamer or broadcaster, as in number three, and we earn money in number five when we license the characters from the content onto products like toys, publishing, apparel, video games, backpacks, sleepwear, school supplies, stationery, bedding, party goods, food products, vitamins, pretty much anything that you can think of.
Strawberry Shortcake, which I made several years ago, we started it with one single video. Five years later, we had produced a number of episodes, and we had done $5 billion of retail sales across 300 licensees and over 1,000 SKUs in the marketplace. That's our business. That's what we do. We start off creating and developing characters, producing the characters, distributing them on air, and marketing them into eventually products that sell.
Really what that leads to, all those different verticals that we participate in, is we really have a pyramid of revenue streams coming in. Our production services, our content distribution, our media marketing business, and then our licensing and royalties. This pyramid we want to turn on its head. We want to completely invert it. Everything that Andy is saying is right. You make money in that box three and box five, if you remember the sequence. Our last item here, licensing and royalties, is really our box five. We want to elevate that. We want to create our own IP, keep the content distribution number up, but take that IP and really start to monetize it through the licensing and royalties. So this, if we do it right, this is going to be inverted, this pyramid.
At the top is going to be licensing and royalties, then it's going to work its way down to production services. Really, production services is the area today that's changing extremely rapidly, I think it gives us a huge opportunity to take these creative ideas and go to market faster through AI tools. Again, the owned IP economics is exactly what we said is instead of doing the work, making a 20%, 30% margin, then moving to the next one and losing out on all those revenue streams, this owned franchise, you can see in this box here, we get to capitalize and monetize across all these different revenue and income streams, which is really where our market and strategy is moving to.
Let me share with you why we are so enthusiastic and gung ho about where we are today. Apart from the balance sheet and all the cash that we could possibly need and no debt and all of that stuff going on, we are focused on properties that are pre-sold. They have marquee value. They have an existing brand equity. When we come to the market with Winnie-the-Pooh and Eeyore and Tigger and Piglet, all of these wonderful characters that were created by A.A. Milne, we don't have to explain to anybody who they are because they already have built-in recognition factor. We've put together an extraordinary team working on Hundred Acre Wood. It's led by Linda Woolverton, who was the writer of The Lion King, writer of Beauty and the Beast, writer of Mulan, writer of Tim Burton's Alice in Wonderland, among other.
She's probably the single most successful writer of all time, undoubtedly in animation. She began her career working for me many, many years earlier, writing on Ghostbusters when we made Ghostbusters cartoons a long time ago. We're very excited about Hundred Acre Wood, we went out, we were fortunate when the copyright expired, so it went, quote, in public domain. We acquired the trademark of Hundred Acre Wood, a priceless trademark that enables us to defend and protect all of the IP that we create. That's extraordinarily valuable. We are already in bed with the two most prominent broadcaster retailers that exist. Amazon Prime, which we filed an 8-K about, we haven't even announced it officially, but we did do an 8-K recently, is going to be carrying the show. It'll be an anchor show for them.
Of course, all of the consumer product and licensing that revolves around the world of Amazon will be in there as well. This starts on the air with Amazon Prime February 18th, 2027. We'll be launching 39 episodes that'll be complemented by another for a very prominent streamer/retailer that we will be announcing shortly, that will have a 30-day window of exclusivity before. We start actually on January 18th. Then, of course, we're going to complement this by our regular episodes with a lot of shorts that will be just everywhere across media. They'll be mostly, we'll say, on YouTube, but they'll be on Reels, they'll be on TikTok, there'll be a very robust social media marketing campaign, so that when Hundred Acre Wood is announced and these adorable characters with their yarn-like look, they will be everywhere. Okay. That's our Winnie-the-Pooh Hundred Acre Wood.
Next anchor franchise is coming from our Stan Lee Universe. What makes this special? Everything Stan Lee has touched turns to gold. The recent Spider-Man, as I said, became the single most successful film of all time, just recently in terms of box office. Look at everything Stan has done, from X-Men to Iron Man to Guardians of the Galaxy to the Black Panther to Fantastic Four, on and on and on. All of his characters have been so successful and one of the things that he wanted to do that he felt very strongly about was creating a preschool program. He and I, before he passed, talked at great length about this and outlined what this would be and the idea would be Stan Lee's Superhero Pets.
These are pets that Stan had when he was a youngster and, of course, one night, when he was asleep, there was a terrible storm. Lightning hit his house, and the electricity went through his room, and all of a sudden these pets were imbued with superhero powers. When Stan goes off to school every day, the pets have a life of their own, and they get into adventures. Before Stan gets home from school, the ticking clock, the pets have to be back home, and they are. So it's a really exciting property. It's executed in what we call Stanime, which is sort of our own version of anime, and we think it's going to look wonderful. It's a very unique look, and this will be coming forth shortly with another very prominent broadcaster that we will be announcing in the coming days.
The last thing is Bitcoin Brigade. Of course, everybody is familiar with Bitcoin and how the world of decentralized money has excited so many people. We were asked by a number of our investors, do we have a Bitcoin strategy? Do we have Bitcoin treasury? One thing led to another, and we thought, no. What we do have, though, is the ability to create a world of Bitcoin with a backstory and a lore that takes place in Satoshi City and wonderful, rich, imaginative characters, which we have done, and we have a pilot episode, and we will be bringing that forth this coming year as well. We expect to debut that on Kartoon Channel! So these are three different products for three different target audiences. Of course, Winnie the Pooh is for toddlers, but it's also something that enjoys multigenerational viewing with families and parents.
Stan Lee's Superhero Pets will be for preschool, and Bitcoin Brigade will be for a little bit older viewers. We're very excited about all of these, and these are all things that we own 100%. They're not as we produce Barbie, for example, for Mattel and for Netflix, but we don't own Barbie. So we do own Hundred Acre Wood, we do own Stan Lee's Superhero Pets, and we do own Bitcoin Brigade, and we will reap the benefits of this as we harvest the IP that we've been working hard and long to create and expensively. Now it's ready to go. It's coming out of the field shortly to be harvested.
Let me kind of take it home. Thank you, Andy, for that. That was a great overview of the product. Look, why invest in Kartoon Studios? We feel like we are extremely undervalued in the marketplace today, particularly with our balance sheet and the strategy that we have. There is a number of reasons why. One is we are already executing on this strategy. We already are. We are already creating and developing these anchor and tempo products as we have already talked through. We have the balance sheet to support the shift in strategy. It is very good today, and it is going to be even better next year as we get more cash and capital as a result of the legal settlement. The third one is we have the great franchises that we just talked about. We have the capability to deploy those quickly.
Again, with the infusion of AI production capabilities, we can do it quick and high quality. We already have 2027 slate already laid out starting, yeah, in mid-January. Then also in February with our Hundred Acre Wood. We are going to see that very early and monetized in 2027. We have the pedigree. The last one is we know we have the muscle memory of how to win with our own IP, how to take these concepts and ideas and monetize it across the ecosystem. Again, we feel like we are a really great value for an investor today.
All right. Very good. Andy, Brian, thank you so much for your participation in the conference here today. Thank you to everybody, of course, for watching. If you would like to schedule a meeting with the company, please feel free to reach out to me and my email is blum, B-L-U-M@lythampartners.com. Again, always to learn more about Lytham, make sure you visit our website, stay connected with us on LinkedIn, and YouTube. Again, Andy, Brian, thank you so much for your participation. We hope everyone enjoys the conference.
Thank you.
Thank you.