PROSPECTUS
Filed pursuant to Rule 424(b)(3)
Registration No. 333-276259
KARTOON STUDIOS, INC.
$75,000,000
Common Stock
Preferred Stock
Warrants
Debt Securities
Rights
Units
This prospectus relates to
the offer and sale, from time to time, by Kartoon Studios, Inc. (“we,” “us” or the “Company”), in
one or more offerings, any combination of common stock (as defined below), preferred stock, warrants, debt securities, rights to purchase
common stock or other securities or units having a maximum aggregate offering price of $75,000,000. When we decide to sell a particular
class or series of securities, we will provide specific terms of the offered securities in a prospectus supplement.
The
prospectus supplements may also add, update or change information contained in or incorporated by reference into this prospectus. However,
no prospectus supplement shall offer a security that is not registered and described in this prospectus at the time of its effectiveness.
You should read this prospectus and any prospectus supplement, as well as the documents incorporated by reference or deemed to be incorporated
by reference into this prospectus, carefully before you invest. This prospectus may not be used to offer or sell our securities unless
accompanied by a prospectus supplement relating to the offered securities.
Our Common Stock is quoted
on the NYSE American LLC (“NYSE American”) under the symbol “TOON.” On January 4, 2024, the last reported sale
price for our Common Stock was $1.37 per share, as reported on the NYSE American. Each prospectus supplement will contain information,
where applicable, as to our listing on the NYSE American or on any other securities exchange of the securities covered by the prospectus
supplement.
These securities may be sold
directly by us, through dealers or agents designated from time to time, to or through underwriters or through a combination of these methods.
We may also describe the plan of distribution for any particular offering of our securities in a prospectus supplement. If any agents,
underwriters or dealers are involved in the sale of any securities in respect of which this prospectus is being delivered, we will disclose
their names and the nature of our arrangements with them in a prospectus supplement. The net proceeds we expect to receive from any such
sale will also be included in a prospectus supplement.
An
investment in our securities involves a high degree of risk. Please carefully read the information under the headings “Risk Factors”
beginning on page 5 of this prospectus, the applicable prospectus supplement and “Item 1A – Risk Factors” of
our most recent Annual Report on Form 10-K and in any Quarterly Report on Form 10-Q that is incorporated by reference in this prospectus
before you invest in our securities.
We may amend or supplement
this prospectus from time to time by filing amendments or supplements as required. You should read the entire prospectus and any amendments
or supplements carefully before you make your investment decision.
Neither the SEC nor any state securities commission
has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
The date of this prospectus is January 5, 2024
TABLE OF CONTENTS
|
PAGE |
ABOUT THIS PROSPECTUS |
1 |
PROSPECTUS SUMMARY |
2 |
RISK FACTORS |
5 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS |
6 |
DIVIDEND POLICY |
8 |
USE OF PROCEEDS |
9 |
DESCRIPTION OF CAPITAL STOCK |
10 |
DESCRIPTION OF WARRANTS |
13 |
DESCRIPTION OF DEBT SECURITIES |
14 |
DESCRIPTION OF RIGHTS |
22 |
DESCRIPTION OF UNITS |
24 |
PLAN OF DISTRIBUTION |
27 |
LEGAL MATTERS |
30 |
EXPERTS |
30 |
INTERESTS OF NAMED EXPERTS AND COUNSEL |
30 |
WHERE YOU CAN FIND MORE INFORMATION |
30 |
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE |
31 |
ABOUT THIS PROSPECTUS
This prospectus is part of
a Registration Statement that we filed with the SEC using a “shelf” registration process. Under this shelf registration process,
we may offer from time to time securities having a maximum aggregate offering price of $75,000,000. Each time we offer any type or series
of securities under this prospectus, we will prepare and file with the SEC a prospectus supplement that contains more specific information
about the terms of that offering. We may also authorize one or more free writing prospectuses to be provided to you that may contain material
information relating to these offerings. The prospectus supplement and any related free writing prospectus that we may authorize
to be provided to you may also add, update or change information contained in this prospectus or the documents incorporated herein by
reference. You should read carefully both this prospectus, any prospectus supplement and any related free writing prospectuses we have
authorized for use in connection with a specific offering, together with additional information described below under the heading “Where You Can Find More Information,” before buying any of the securities being offered.
This prospectus does not contain
all the information provided in the Registration Statement we filed with the SEC. For further information about us or our securities offered
hereby, you should refer to that Registration Statement, which you can obtain from the SEC as described below under “Where You Can Find More Information.”
We have not authorized anyone
to provide any information other than that contained or incorporated by reference in this prospectus or in any applicable prospectus supplement
or any applicable free writing prospectus that we have authorized. We take no responsibility for and can provide no assurance as to the
reliability of any other information that others may give you. The securities offered hereby are not being offered in any jurisdiction
where the offer is not permitted. You should not assume that the information contained in or incorporated by reference in this prospectus
is accurate as of any date other than the respective dates of such document. Our business, financial condition, results of operations
and prospects may have changed since those dates.
We may sell securities through
underwriters or dealers, through agents, directly to purchasers or through any combination of these methods. We and our agents reserve
the sole right to accept or reject in whole or in part any proposed purchase of securities. The prospectus supplement, which we will prepare
and file with the SEC each time we offer securities, will set forth the names of any underwriters, agents or others involved in the sale
of securities, and any applicable fee, commission or discount arrangements with them. See “Plan of Distribution.”
Unless the context otherwise
indicates, references in this prospectus to, “Kartoon,” “the Company,” “we,” “our,” or
“us” mean Kartoon Studios, Inc., a Nevada corporation.
PROSPECTUS
SUMMARY
This prospectus summary highlights certain
information about our company and other information contained elsewhere in this prospectus or in documents incorporated by reference.
This summary does not contain all of the information that you should consider before making an investment decision. You should carefully
read the entire prospectus, any prospectus supplement, including the matters set forth under the section of this prospectus entitled “Risk
Factors” and the financial statements and related notes and other information that we incorporate by reference herein, including
our Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q, before making an investment decision.
Overview
Kartoon Studios, Inc. (formerly
known as Genius Brands International, Inc.; “we,” “us,” “our,” or the “Company”) is a
global content and brand management company that creates, produces, licenses, and broadcasts timeless and educational, multimedia animated
content for children. Led by experienced industry personnel, we distribute our content primarily on streaming platforms and television
and licenses properties for a broad range of consumer products based on our characters. We are a “work for hire” producer
for many of the streaming outlets and animated content intellectual property (“IP”) holders. In the children’s media
sector, our portfolio features “content with a purpose” for toddlers to tweens, providing enrichment as well as entertainment.
With the exception of selected WOW Unlimited Media Inc. ("Wow") titles, our programs, along with licensed programs, are being
broadcast in the United States on our wholly-owned advertisement supported video on demand (“AVOD”) service, its free ad supported
TV (“FAST”) channels and subscription video on demand (“SVOD”) outlets, Kartoon Channel! and Ameba. These streaming
services are available on Apple TV, Apple iOS, Android TV, Android mobile, Amazon Prime, Amazon Fire, Tubi, Roku, Comcast, Cox, Dish/Sling,
Xumo, Pluto, Samsung Smart TVs, LG Smart TVs, as well as YouTube and YouTube Kids, among other platforms. Our in-house owned and produced
animated shows include Stan Lee’s Superhero Kindergarten starring Arnold Schwarzenegger, Llama Llama starring Jennifer Garner, Rainbow
Rangers, KC Pop Quiz and Shaq’s Garage starring Shaquille O’Neal. Our library titles include the award-winning Baby Genius,
adventure comedy Thomas Edison’s Secret Lab®, and Warren Buffett’s Secret Millionaires Club, created with and starring
iconic investor Warren Buffett, Team Zenko Go!, Reboot, Bee & PuppyCat: Lazy in Space and Castlevania.
We also license our programs
to other services worldwide, in addition to the operation of our own channels, including but not limited to Netflix, HBO Max, Paramount+,
Nickelodeon, and satellite, cable and terrestrial broadcasters around the world.
Through our investments in
Germany’s Your Family Entertainment AG (“YFE”), a publicly traded company on the Frankfurt Stock Exchange (RTV-Frankfurt),
we have gained access to one of the largest animation catalogues in Europe with over 50 titles consisting of over 1,600 episodes, and
a global distribution network which currently covers over 60 territories worldwide.
Through the ownership of Wow,
we established an affiliate relationship with Mainframe Studios, which is one of the largest animation producers in the world. In addition,
Wow owns Frederator Networks Inc. (“Frederator”) and its Channel Frederator Network, the largest animation focused multi-channel
network on YouTube with over 2,500 channels.
We have rights to a select
amount of valuable IP, including among them a controlling interest in Stan Lee Universe, LLC (“SLU”), through which we control
the name, likeness, signature, and all consumer product and IP rights to Stan Lee (the “Stan Lee Assets”).
We also own Beacon Media Group,
LLC and Beacon Communications, Ltd. (collectively, “Beacon”), a leading North American marketing and media agency and its
first-class media research, planning and buying division. Beacon represents over 30 major toy companies, including Playmobile, Bandai
Toys, Bazooka and Moose Toys.
In addition, we own the Canadian
company Ameba Inc. (“Ameba”), which distributes SVOD service for kids and has become the focal point of revenue growth for
TOON Media Networks’ subscription offering.
We and our affiliates provide
world class animation production studios a catalogue representing thousands of hours of premium global content for children, a broadcast
system for delivering that content and an in-house consumer products licensing infrastructure to fully exploit the content.
On June 23, 2023, the Company
was renamed Kartoon Studios, Inc. On June 26, 2023, we transferred our listing to NYSE American LLC (“NYSE American”). In
connection with listing on NYSE American, we voluntarily delisted from the Nasdaq Capital Market. Our stock began trading on NYSE American
under the new symbol “TOON” on June 26, 2023.
Historically, the Company
has incurred net losses. For the three months ended September 30, 2023 and September 30, 2022, the Company reported net losses
of $15.5 million and $11.2 million, respectively. For the nine months ended September 30, 2023 and September 30, 2022, the Company
reported net losses of $55.5 million and $29.1 million, respectively. The Company reported net cash used in operating activities of $20.2
million and $24.0 million for the nine months ended September 30, 2023 and September 30, 2022, respectively. As of September 30,
2023, the Company had an accumulated deficit of $696.9 million and total stockholders’ equity of $74.0 million. As of September 30,
2023, the Company had current assets of $61.4 million, including cash of $3.9 million and marketable securities of $16.2 million,
and current liabilities of $49.6 million. The Company had working capital of $11.8 million as of September 30, 2023, compared to
working capital of $28.6 million as of December 31, 2022. Management has evaluated the significance of these conditions in relation
to the Company’s ability to meet its obligations and noted the Company has sufficient marketable securities and investments to fund
operations for the next 12 months. In addition, the Company has the ability to reduce operating costs and use equity and equity-linked
instruments to pay for services and compensation.
The Securities We May Offer
This prospectus is part of a Registration Statement
that we filed with the SEC utilizing a shelf registration process. Under this shelf registration process, we may sell any combination
of:
|
· |
Common stock; |
|
|
|
|
· |
Preferred stock; |
|
|
|
|
· |
Warrants; |
|
|
|
|
· |
Debt securities, in one or more series; |
|
|
|
|
· |
Right to purchase common stock or other securities; and/or |
|
|
|
|
· |
Units |
In one or more offerings up to a total dollar
amount of $75,000,000. This prospectus provides you with a general description of the securities we may offer. Each time we sell securities,
we will provide a prospectus supplement that will contain specific information about the terms of that specific offering and include a
discussion of any risk factors or other special considerations that apply to those securities. The prospectus supplement may also add,
update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement together
with the additional information described under the heading “Where You Can Find More Information.”
Use of Proceeds
Except as described in any
applicable prospectus supplement or in any free writing prospectuses we have authorized for use in connection with a specific offering,
we currently intend to use the net proceeds from the sale of the securities offered by us hereunder, if any, for working capital and general
corporate purposes. We will set forth in the applicable prospectus supplement or free writing prospectus our intended use for the net
proceeds received from the sale of any securities sold pursuant to the prospectus supplement or free writing prospectus.
NYSE Listing
Our Common Stock is listed on the NYSE American
under the symbol “TOON.”
Corporate Information
We were incorporated in California
on January 3, 2006 and reincorporated in Nevada in October 2011. We commenced operations in January 2006, assuming all of the rights and
obligations of our then Chief Executive Officer, under an Asset Purchase Agreement between us and Genius Products, Inc., in which we obtained
all rights, copyrights, and trademarks to the brands “Baby Genius,” “Kid Genius,” “123 Favorite Music”
and “Wee Worship,” and all then existing productions under those titles. In October 2011, we (i) changed our domicile to Nevada
from California, and (ii) changed our name to Genius Brands International, Inc. from Pacific Entertainment Corporation (the “Reincorporation”).
In connection with the Reincorporation, we changed our trading symbol from “PENT” to “GNUS.” In June 2023, we
changed our name to Kartoon Studios, Inc. from Genius Brands International, Inc. along with our trading symbol “GNUS” to “TOON.”
Our principal executive office
is located at 190 N. Canon Drive, 4th Floor, Beverly Hills, California 90210, and our phone number is (310) 273-4222. Our website address
is http://www.kartoonstudios.com/. The inclusion of our website address does not include or incorporate by reference into this
prospectus supplement or the accompanying prospectus any information on, or accessible through, our website. Our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, together with amendments to these reports, are available on
the “Investors” section of our website, free of charge, as soon as reasonably practicable after such material is electronically
filed with, or furnished to, the SEC.
RISK FACTORS
Investing in our securities
involves risk. The prospectus supplement applicable to a particular offering of securities will contain a discussion of the risks applicable
to an investment in Kartoon and to the particular types of securities that we are offering under that prospectus supplement. Before making
an investment decision, you should carefully consider the risks described under “Risk Factors” in the applicable prospectus
supplement together with all of the other information contained or incorporated by reference in the prospectus supplement or appearing
or incorporated by reference in this prospectus. You should also consider the risks, uncertainties and assumptions discussed under “Part I—Item 1A—Risk
Factors” of our most recent Annual Report on Form 10-K as may be amended, supplemented or superseded from time to time by other reports we file with the SEC in the future. Our business, financial
condition or results of operations could be materially adversely affected by any of these risks. The trading price of our securities could
decline due to any of these risks, and you may lose all or part of your investment.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, each prospectus
supplement and the documents incorporated by reference into this prospectus and each prospectus supplement contain “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, that relate to future events or our future financial performance and involve known and unknown risks, uncertainties
and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future
results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Such forward-looking
statements concern our anticipated results and progress of our operations in future periods, planned exploration and, if warranted, development
of our properties, plans related to our business and other matters that may occur in the future. These statements relate to analyses and
other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.
All statements contained herein that are not clearly historical in nature are forward-looking, and the words “anticipate,”
“believe,” “expect,” “estimate,” “may,” “will,” “could,” “leading,”
“intend,” “contemplate,” “shall” and similar expressions are generally intended to identify forward-looking
statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could
cause actual events or results to differ from those expressed or implied by the forward-looking statements. The section in this prospectus
entitled “Risk Factors” and the sections in our periodic reports, including the section in our most recent Annual Report
on Form 10-K entitled “Business,” and the section in such Form 10-K and any future Quarterly Report on Form 10-Qs incorporated
herein by reference entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
as well as other sections in this prospectus and the documents or reports incorporated by reference into this prospectus, discuss some
of the factors that could contribute to these differences. Forward-looking statements in this prospectus, each prospectus supplement,
and the documents incorporated by reference herein and therein include, but are not limited to, statements with respect to:
| · | our ability to generate revenue or achieve profitability; |
| | |
| · | our ability to obtain additional financing on acceptable terms, if at all; |
| | |
| · | fluctuations in the results of our operations from period to period; |
| | |
| · | general economic and financial conditions; the adverse effects of
public health epidemics, including the recent coronavirus outbreak, on our business, results of operations and financial condition; |
| | |
| · | our ability to anticipate changes in popular culture, media and movies, fashion and technology; |
| | |
| · | competitive pressure from other distributors of content and within the retail market; |
| | |
| · | our reliance on and relationships with third-party production and animation studios; |
| | |
| · | our ability to market and advertise our products; |
| | |
| · | our reliance on third-parties to promote our products; |
| | |
| · | our ability to keep pace with technological advances; |
| · | performance of our information technology and storage systems; |
| | |
| · | a disruption or breach of our internal computer systems; |
| | |
| · | our ability to retain key personnel; |
| | |
| · | our ability to successfully identify appropriate acquisition targets, successfully acquire identified
targets and successfully integrate the business of acquired companies; |
| | |
| · | the impact of federal, state or local regulations on us or our vendors and licensees; |
| | |
| · | our ability to protect and defend against litigation, including intellectual property claims; |
| | |
| · | the volatility of our stock price; |
| | |
| · | the marketability of our stock; |
| | |
| · | our broad discretion to invest or spend the proceeds of our financings in ways with which our stockholders
may not agree and may have limited ability to influence; and; |
| | |
| · | other risks and uncertainties set forth herein and in the documents incorporated by reference herein under
the heading “Risk Factors.” |
Any or all of our forward-looking
statements in this prospectus may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown
risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Actual results may vary materially from those set
forth in forward-looking statements. The uncertainties that may cause differences include, but are not limited to: our need for additional
funds to finance our operations; our history of losses; anticipated continuing losses and uncertainty of future financing; market acceptance
of our services; the sufficiency of our existing capital resources; competition from other companies; the risk of technological obsolescence;
uncertainties related to our ability to obtain intellectual property protection for our technology; and dependence on officers, directors
and other individuals.
We will not update forward-looking
statements, whether as a result of new information, future events or otherwise, unless required by law. You are advised to consult any
further disclosures we make in our reports to the SEC, including our reports on Forms 10-K, 10-Q and 8-K. Our filings list various important
factors that could cause actual results to differ materially from expected results. We note these factors for investors as permitted by
the Private Securities Litigation Reform Act of 1995. You should understand that it is not possible to predict or identify all such factors.
Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
DIVIDEND POLICY
We have never declared or
paid dividends on our Common Stock and we do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. Payment
of cash dividends, if any, in the future will be at the discretion of our board of directors and will depend on applicable law and then-existing
conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and
other factors our board of directors may deem relevant. We currently intend to retain all available funds and any future earnings to fund
the development and growth of our business.
USE OF PROCEEDS
Unless otherwise indicated
in the applicable prospectus supplement, we intend to use any net proceeds from the sale of securities under this prospectus for our operations
and for other general corporate purposes, including, but not limited to, the development, production, and distribution of animated content
and associated licensed merchandise, general working capital and possible future acquisitions. We have not determined the amounts we plan
to spend on any of the areas listed above or the timing of these expenditures. As a result, our management will have broad discretion
to allocate the net proceeds, if any, we receive in connection with securities offered pursuant to this prospectus for any purpose. Additional
information on the use of net proceeds from an offering of securities covered by this prospectus may be set forth in the prospectus supplement
relating to the specific offering.
DESCRIPTION OF CAPITAL STOCK
The following sections constitute a summary
as of the date of this prospectus and do not purport to be a complete description of our capital stock. We will describe in the applicable
prospectus supplement relating to a particular offering the specific terms of the securities offered by that prospectus supplement. We
will indicate in the applicable prospectus supplement if the terms of the securities differ from the terms we have summarized below. We
will also include in the prospectus supplement information, where applicable, material United States federal income tax considerations
relating to the securities.
General
The following description
of common stock of the Company (the “Common Stock”) and preferred stock of the Company (the “preferred stock”),
together with the additional information we include in any applicable prospectus supplement, summarizes the material terms and provisions
of the common stock and preferred stock that we may offer under this prospectus but is not complete. For the complete terms of our common
stock and preferred stock, please refer to our articles of incorporation, as may be amended from time to time (the “Articles of
Incorporation”) any certificates of designation for our preferred stock, that may be authorized from time to time, and our amended
and restated bylaws, as amended from time to time (the “Bylaws”). The Nevada General Corporation Law may also affect the terms
of these securities. While the terms we have summarized below will apply generally to any future common stock or preferred stock that
we may offer, we will describe the specific terms of any series of these securities in more detail in the applicable prospectus supplement.
If we so indicate in a prospectus supplement, the terms of any common stock or preferred stock we offer under that prospectus supplement
may differ from the terms we describe below.
As of January 4, 2024, our
authorized capital stock consists of 200,000,000 shares of capital stock, of which 190,000,000 are shares of Common Stock, par value $0.001
per share (of which 35,180,532 were issued and 35,256,005 were outstanding), and 10,000,000 are shares of preferred stock, par value $0.001
per share (of which 1 was issued and outstanding.) The authorized and unissued shares of Common Stock and preferred stock are available
for issuance without further action by our stockholders, unless such action is required by applicable law or the rules of any stock exchange
on which our securities may be listed. Unless approval of our stockholders is so required, our board of directors will not seek stockholder
approval for the issuance and sale of our common stock.
Common Stock
The holders of our Common
Stock are entitled to one vote per share. In addition, the holders of our Common Stock will be entitled to receive ratably such dividends,
if any, as may be declared by our Board of Directors out of legally available funds; however, the current policy of our Board of Directors
is to retain earnings, if any, for operations and growth. Upon liquidation, dissolution or winding-up, the holders of our Common Stock
will be entitled to share ratably in all assets that are legally available for distribution. The holders of our Common Stock will have
no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of our Common Stock will
be subject to, and may be adversely affected by, the rights of the holders of any series of preferred stock, which may be designated solely
by action of our board of directors and issued in the future.
Our Common Stock is listed
on the NYSE American under the symbol “TOON.”
Preferred Stock
Our Board of Directors is
authorized, subject to any limitations prescribed by law, without further vote or action by our stockholders, to issue from time to time
shares of preferred stock in one or more series. Each series of preferred stock will have such number of shares, designations, preferences,
voting powers, qualifications and special or relative rights or privileges as shall be determined by our Board of Directors, which may
include, among others, dividend rights, voting rights, liquidation preferences, conversion rights and preemptive rights.
Series A Convertible Preferred Stock
We have designated six thousand
(6,000) shares of preferred stock as Series A Convertible Preferred Stock (“Series A Preferred Stock”). Each share of Series
A Preferred Stock is convertible into shares of our Common Stock based on a conversion calculation equal to the Base Amount divided by
the conversion price. The Base Amount is defined as the sum of (i) the aggregate stated value of the Series A Preferred Stock to be converted
and (ii) all unpaid dividends thereon. The stated value of each share of the Series A Preferred Stock is $1,000 and the conversion price
is currently $0.21 per share, subject to adjustment in the event of stock splits, dividends and recapitalizations.
We are prohibited from effecting
a conversion of the Series A Preferred Stock to the extent that as a result of such conversion, the holder would beneficially own more
than 9.99% in the aggregate of the issued and outstanding shares of our Common Stock, calculated immediately after giving effect to the
issuance of shares of Common Stock upon conversion of the Series A Preferred Stock. The shares of Series A Preferred Stock possess no
voting rights except as required by law.
Nevada Anti-Takeover Law and Certain Charter
and Bylaw Provisions
Some features of the Nevada
Revised Statutes, which are further described below, may have the effect of deterring third parties from making takeover bids for control
of our company or may be used to hinder or delay a takeover bid. This would decrease the chance that our stockholders would realize a
premium over market price for their shares of Common Stock as a result of a takeover bid.
Acquisition of Controlling Interest
The Nevada Revised Statutes
contain provisions governing acquisition of a controlling interest of a Nevada corporation. These provisions provide generally that any
person or entity that acquires a certain percentage of the outstanding voting shares of a Nevada corporation may be denied voting rights
with respect to the acquired shares, unless the holders of a majority of the voting power of the corporation, excluding shares as to which
any of such acquiring person or entity, an officer or a director of the corporation, or an employee of the corporation exercises voting
rights, elect to restore such voting rights in whole or in part. These provisions apply whenever a person or entity acquires shares that,
but for the operation of these provisions, would bring voting power of such person or entity in the election of directors within any of
the following three ranges:
| · | 20% or more but less than 33 1/3%; |
| | |
| · | 33 1/3% or more but less than or equal to 50%; or |
| | |
| · | more than 50%. |
The stockholders or board
of directors of a corporation may elect to exempt the stock of the corporation from these provisions through adoption of a provision to
that effect in the articles of incorporation or bylaws of the corporation.
These provisions are applicable
only to a Nevada corporation, which:
| · | has 200 or more stockholders of record, at least 100 of whom have addresses in Nevada appearing on the
stock ledger of the corporation; and |
| | |
| · | does business in Nevada directly or through an affiliated corporation. |
On November 20, 2013, we amended
our bylaws to provide that the provisions of NRS 78.378 and 78.3793 (“Acquisition of a Controlling Interest”) shall not apply
to the Company or to any acquisition of a controlling interest in the Company by any existing or future stockholder.
Combination with Interested Stockholder
The Nevada Revised Statutes
contain provisions governing combination of a Nevada corporation that has 200 or more stockholders of record with an interested stockholder. As
of January 4, 2024, we had 188 stockholders of record, not including persons or entities that hold our stock in nominee or “street
name” through various brokerage firms.
A corporation affected by
these provisions may not engage in a combination within two years after the interested stockholder first became an interested stockholder,
unless either (i) the combination or transaction by which the interested stockholder first became an interested stockholder is approved
by the board of directors before the interested stockholder first became an interested stockholder, or (ii) the combination is approved
by the board of directors and by the affirmative vote of the corporation’s stockholders representing at least 60% of the outstanding
voting power of the corporation not beneficially owned by the interested stockholder or the interested stockholder’s affiliates.
Generally, if approval is not obtained, then after the expiration of the two-year period, the business combination may be consummated
with the approval of the board of directors of the combination or transaction by which the interested stockholder first became an interested
stockholder before the person became an interested stockholder, or a majority of the voting power held by disinterested stockholders,
or if the consideration to be received per share by disinterested stockholders is at least equal to the highest of:
| · | the highest price per share paid by the interested stockholder within the two years immediately preceding the date of the announcement
of the combination or within two years immediately before, or in the transaction in which he, she or it became an interested stockholder,
whichever is higher; |
| | |
| · | the market value per share on the date of announcement of the combination or the date the person became an interested stockholder,
whichever is higher; or |
| | |
| · | if higher for the holders of preferred stock, the highest liquidation value of the preferred stock, if any. |
Generally, these provisions
define an interested stockholder as a person who is the beneficial owner, directly or indirectly, of 10% or more of the voting power of
the outstanding voting shares of a corporation. Generally, these provisions define combination to include any merger or consolidation
with an interested stockholder, or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a
series of transactions, with an interested stockholder of assets of the corporation having:
| · | an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation; |
| | |
| · | an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares
of the corporation; or |
| | |
| · | representing 10% or more of the earning power or net income of the corporation. |
Articles of Incorporation and Bylaws
Pursuant to our Articles of
Incorporation, the existence of authorized but unissued common stock and undesignated preferred stock may enable our board of directors
to make more difficult or to discourage an attempt to obtain control of our Company by means of a merger, tender offer, proxy contest
or otherwise, and thereby to protect the continuity of management. If, in the due exercise of its fiduciary obligations, the board
of directors were to determine that a takeover proposal was not in our best interest, such shares could be issued by the board of directors
without stockholder approval in one or more transactions that might prevent or render more difficult or costly the completion of the takeover
transaction by diluting the voting or other rights of the proposed acquirer or insurgent stockholder group, by putting a substantial voting
block in institutional or other hands that might undertake to support the position of the incumbent board of directors, by effecting an
acquisition that might complicate or preclude the takeover, or otherwise.
In addition, our Articles
of Incorporation grants our board of directors broad power to establish the rights and preferences of authorized and unissued shares of
preferred stock. The issuance of shares of preferred stock could decrease the amount of earnings and assets available for distribution
to holders of shares of common stock. The issuance also may adversely affect the rights and powers, including voting rights, of those
holders and may have the effect of delaying, deterring or preventing a change in control of our Company.
DESCRIPTION OF WARRANTS
The following description,
together with the additional information we may include in any applicable prospectus supplements, summarizes the material terms and provisions
of the warrants that we may offer under this prospectus and the related warrant agreements and warrant certificates. For the avoidance
of doubt, this section relates only to new warrants that we may issue and not any of our outstanding warrants, and we refer to such new
warrants in this prospectus for the sake of simplicity as “warrants.”
While the terms summarized
below will apply generally to any warrants that we may offer, we will describe the particular terms of any series of warrants in more
detail in the applicable prospectus supplement. If we indicate in the prospectus supplement, the terms of any warrants offered under that
prospectus supplement may differ from the terms described below. Specific warrant agreements will contain additional important terms and
provisions and will be incorporated by reference as an exhibit to the registration statement, which includes this prospectus.
General
We may issue warrants for the
purchase of Common Stock, preferred stock or debt securities, in one or more series. We may issue warrants independently or together with
Common Stock, preferred stock and/or debt securities, and the warrants may be attached to or separate from these securities.
We plan to evidence each series
of warrants by warrant certificates that we will issue under a separate warrant agreement. We will enter into the warrant agreement with
a warrant agent. We will indicate the name and address of the warrant agent in the applicable prospectus supplement relating to a particular
series of warrants.
We will describe in the applicable
prospectus supplement the terms of the series of warrants, including:
| · | the offering price and aggregate number of warrants offered; |
| | |
| · | the currency for which the warrants may be purchased; |
| | |
| · | if applicable, the designation and terms of the securities with which the warrants are issued and the
number of warrants issued with each such security or each principal amount of such security; |
| | |
| · | if applicable, the date on and after which the warrants and the related securities will be separately
transferable; |
| | |
| · | the number of shares of common stock purchasable upon the exercise of one warrant and the price at which
these shares may be purchased upon such exercise; |
| | |
| · | the effect of any merger, consolidation, sale or other disposition of our business on the warrant agreement
and the warrants; |
| | |
| · | the terms of any rights to redeem or call the warrants; |
| | |
| · | any provisions for changes to or adjustments in the exercise price or number of securities issuable upon
exercise of the warrants; |
| | |
| · | the periods during which, and places at which, the warrants are exercisable; |
| | |
| · | the manner of exercise; |
| | |
| · | the dates on which the right to exercise the warrants will commence and expire; |
| | |
| · | the manner in which the warrant agreement and warrants may be modified; |
| | |
| · | if applicable, a discussion of certain material U.S. federal income tax considerations of holding or exercising
the warrants; and |
| | |
| · | any other specific terms, preferences, rights or limitations of or restrictions on the warrants. |
DESCRIPTION OF DEBT SECURITIES
The following description, together with the
additional information we include in any applicable prospectus supplements, summarizes the material terms and provisions of the debt securities
that we may offer under this prospectus. While the terms we have summarized below will generally apply to any future debt securities we
may offer under this prospectus, we will describe the particular terms of any debt securities that we may offer in more detail in the
applicable prospectus supplement. The terms of any debt securities we offer under a prospectus supplement may differ from the terms we
describe below. As of the date of this prospectus, we have no outstanding registered debt securities.
We will issue senior notes
under a senior indenture, which we will enter into with the trustee to be named in the senior indenture. We will issue subordinated
notes under a subordinated indenture, which we will enter into with the trustee to be named in the subordinated indenture. We have filed
forms of these documents as exhibits to the registration statement of which this prospectus is a part. We use the term “indentures”
to refer to both the senior indenture and the subordinated indenture.
The indentures will be qualified
under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). We use the term “debenture trustee”
to refer to either the senior trustee or the subordinated trustee, as applicable.
The following summaries of
material provisions of the senior notes, the subordinated notes and the indentures are subject to, and qualified in their entirety by
reference to, all the provisions of the indenture applicable to a particular series of debt securities. We urge you to read the applicable
prospectus supplements related to the debt securities that we sell under this prospectus, as well as the complete indentures that contain
the terms of the debt securities. Except as we may otherwise indicate, the terms of the senior and the subordinated indentures are identical.
General
The terms of each series
of debt securities will be established by or pursuant to a resolution of our board of directors and set forth or determined in the manner
provided in an officers’ certificate or by a supplemental indenture. Debt securities may be issued in separate series without limitation
as to aggregate principal amount. We may specify a maximum aggregate principal amount for the debt securities of any series. The particular
terms of each series of debt securities will be described in a prospectus supplement relating to such series, including any pricing supplement.
The prospectus supplement will set forth:
| · | the title; |
| | |
| · | the principal amount being offered, and, if a series, the total amount authorized and the total amount outstanding; |
| | |
| · | any limit on the amount that may be issued; |
| | |
| · | whether or not we will issue the series of debt securities in global form and, if so, the terms and who the depositary will be; |
| | |
| · | the maturity date; |
| | |
| · | whether and under what circumstances, if any, we will pay additional amounts on any debt securities held by a person who is not a
U.S. person for tax purposes, and whether we can redeem the debt securities if we have to pay such additional amounts; |
| | |
| · | the annual interest rate, which may be fixed or variable, or the method for determining the rate, the date interest will begin to
accrue, the dates interest will be payable and the regular record dates for interest payment dates or the method for determining such
dates; |
| | |
| · | whether or not the debt securities will be secured or unsecured, and the terms of any secured debt; |
| | |
| · | the terms of the subordination of any series of subordinated debt; |
| · | the place where payments will be payable; |
| | |
| · | restrictions on transfer, sale or other assignment, if any; |
| | |
| · | our right, if any, to defer payment of interest and the maximum length of any such deferral period; |
| | |
| · | the date, if any, after which, the conditions upon which, and the price at which we may, at our option, redeem the series of debt
securities pursuant to any optional or provisional redemption provisions, and any other applicable terms of those redemption provisions; |
| | |
| · | the date, if any, on which, and the price at which we are obligated, pursuant to any mandatory sinking fund or analogous fund provisions
or otherwise, to redeem, or at the holder’s option to purchase, the series of debt securities and the currency or currency unit
in which the debt securities are payable; |
| | |
| · | whether the indenture will restrict our ability and/or the ability of our subsidiaries to, among other things: |
| | |
| · | incur additional indebtedness; |
| | |
| · | issue additional securities; |
| | |
| · | create liens; |
| | |
| · | pay dividends and make distributions in respect of our capital stock and the capital stock of our subsidiaries; |
| | |
| · | redeem capital stock; |
| | |
| · | place restrictions on our subsidiaries’ ability to pay dividends, make distributions or transfer assets; |
| | |
| · | make investments or other restricted payments; |
| | |
| · | sell or otherwise dispose of assets; |
| | |
| · | enter into sale-leaseback transactions; |
| | |
| · | engage in transactions with stockholders and affiliates; |
| | |
| · | issue or sell stock of our subsidiaries; or |
| | |
| · | effect a consolidation or merger; |
| | |
| · | whether the indenture will require us to maintain any interest coverage, fixed charge, cash flow-based, asset-based or other financial
ratios; |
| · | a discussion of any material or special U.S. federal income tax considerations applicable to the debt securities; |
| | |
| · | information describing any book-entry features; |
| | |
| · | provisions for a sinking fund purchase or other analogous fund, if any; |
| | |
| · | whether the debt securities are to be offered at a price such that they will be deemed to be offered at an “original issue discount”
as defined in paragraph (a) of Section 1273 of the Internal Revenue Code; |
| | |
| · | the procedures for any auction and remarketing, if any; |
| | |
| · | the denominations in which we will issue the series of debt securities, if other than denominations of $1,000 and any integral multiple
thereof; |
| | |
| · | if other than dollars, the currency in which the series of debt securities will be denominated; and |
| | |
| · | any other specific terms, preferences, rights or limitations of, or restrictions on, the debt securities, including any events of
default that are in addition to those described in this prospectus or any covenants provided with respect to the debt securities that
are in addition to those described above, and any terms that may be required by us or advisable under applicable laws or regulations or
advisable in connection with the marketing of the debt securities. |
Conversion or Exchange Rights
We will set forth in the prospectus
supplement the terms on which a series of debt securities may be convertible into or exchangeable for Common Stock or other securities
of ours or a third party, including the conversion or exchange rate, as applicable, or how it will be calculated, and the applicable conversion
or exchange period. We will include provisions as to whether conversion or exchange is mandatory, at the option of the holder or at our
option. We may include provisions pursuant to which the number of our securities or the securities of a third party that the holders of
the series of debt securities receive upon conversion or exchange would, under the circumstances described in those provisions, be subject
to adjustment, or pursuant to which those holders would, under those circumstances, receive other property upon conversion or exchange,
for example in the event of our merger or consolidation with another entity.
Consolidation, Merger or Sale
The indentures in the forms
initially filed as exhibits to the registration statement of which this prospectus is a part do not contain any covenant that restricts
our ability to merge or consolidate, or sell, convey, transfer or otherwise dispose of all or substantially all of our assets. However,
any successor of ours or the acquirer of such assets must assume all of our obligations under the indentures and the debt securities.
If the debt securities are convertible for our other securities, the person with whom we consolidate or merge or to whom we sell all of
our property must make provisions for the conversion of the debt securities into securities that the holders of the debt securities would
have received if they had converted the debt securities before the consolidation, merger or sale.
Events of Default Under the Indenture
The following are events of default under the
indentures in the forms initially filed as exhibits to the registration statement with respect to any series of debt securities that we
may issue:
| · | if we fail to pay interest when due and payable and our failure continues for 90 days and the time for
payment has not been extended or deferred; |
| | |
| · | if we fail to pay the principal, sinking fund payment or premium, if any, when due and payable and the
time for payment has not been extended or delayed; |
| | |
| · | if we fail to observe or perform any other covenant contained in the debt securities or the indentures,
other than a covenant specifically relating to another series of debt securities, and our failure continues for 90 days after we receive
notice from the debenture trustee or holders of at least 25% in aggregate principal amount of the outstanding debt securities of the applicable
series; and |
| | |
| · | if specified events of bankruptcy, insolvency or reorganization occur. |
If an event of default with respect to debt securities
of any series occurs and is continuing, other than an event of default specified in the last bullet point above, the debenture trustee
or the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series, by notice to us in writing,
and to the debenture trustee if notice is given by such holders, may declare the unpaid principal of, premium, if any, and accrued interest,
if any, due and payable immediately. If an event of default specified in the last bullet point above occurs with respect to us, the principal
amount of and accrued interest, if any, of each issue of debt securities then outstanding shall be due and payable without any notice
or other action on the part of the debenture trustee or any holder.
The holders of a majority in principal amount
of the outstanding debt securities of an affected series may waive any default or event of default with respect to the series and its
consequences, except defaults or events of default regarding payment of principal, premium, if any, or interest, unless we have cured
the default or event of default in accordance with the indenture. Any waiver shall cure the default or event of default.
Subject to the terms of the indentures, if an
event of default under an indenture shall occur and be continuing, the debenture trustee will be under no obligation to exercise any of
its rights or powers under such indenture at the request or direction of any of the holders of the applicable series of debt securities,
unless such holders have offered the debenture trustee reasonable indemnity. The holders of a majority in principal amount of the outstanding
debt securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available
to the debenture trustee, or exercising any trust or power conferred on the debenture trustee, with respect to the debt securities of
that series, provided that:
| · | the direction so given by the holder is not in conflict with any law or the applicable indenture; and |
| | |
| · | subject to its duties under the Trust Indenture Act, the debenture trustee need not take any action that
might involve it in personal liability or might be unduly prejudicial to the holders not involved in the proceeding. |
A holder of the debt securities of any series
will only have the right to institute a proceeding under the indentures or to appoint a receiver or trustee, or to seek other remedies
if:
| · | the holder has given written notice to the debenture trustee of a continuing event of default with respect
to that series; |
| | |
| · | the holders of at least 25% in aggregate principal amount of the outstanding debt securities of that series
have made written request, and such holders have offered reasonable indemnity, to the debenture trustee to institute the proceeding as
trustee; and |
| | |
| · | the debenture trustee does not institute the proceeding and does not receive from the holders of a majority
in aggregate principal amount of the outstanding debt securities of that series other conflicting directions within 90 days after the
notice, request and offer. |
These limitations do not apply to a suit instituted
by a holder of debt securities if we default in the payment of the principal, premium, if any, or interest on, the debt securities.
We will periodically file statements with the
debenture trustee regarding our compliance with specified covenants in the indentures.
Modification of Indenture; Waiver
We and the debenture trustee may change an indenture without the consent
of any holders with respect to specific matters, including:
| · | to fix any ambiguity, defect or inconsistency in the indenture; |
| | |
| · | to comply with the provisions described above under “Consolidation, Merger or Sale”; |
| | |
| · | to comply with any requirements of the SEC in connection with the qualification of any indenture under the Trust Indenture Act; |
| | |
| · | to evidence and provide for the acceptance of appointment hereunder by a successor trustee; |
| | |
| · | to provide for uncertificated debt securities and to make all appropriate changes for such purpose; |
| | |
| · | to add to, delete from, or revise the conditions, limitations and restrictions on the authorized amount, terms or purposes of issuance,
authorization and delivery of debt securities or any series, as set forth in the indenture; |
| | |
| · | to provide for the issuance of and establish the form and terms and conditions of the debt securities of any series as provided under
“General” to establish the form of any certifications required to be furnished pursuant to the terms of the indenture or any
series of debt securities, or to add to the rights of the holders of any series of debt securities; |
| | |
| · | to add to our covenants such new covenants, restrictions, conditions or provisions for the protection of the holders, to make the
occurrence, or the occurrence and the continuance, of a default in any such additional covenants, restrictions, conditions or provisions
an event of default, or to surrender any of our rights or powers under the indenture; or |
| | |
| · | to change anything that does not materially adversely affect the interests of any holder of debt securities of any series. |
In addition, under the indentures, the rights
of holders of a series of debt securities may be changed by us and the debenture trustee with the written consent of the holders of at
least a majority in aggregate principal amount of the outstanding debt securities of each series that is affected. However, we and the
debenture trustee may only make the following changes with the consent of each holder of any outstanding debt securities affected:
| · | extending the fixed maturity of the series of debt securities; |
| | |
| · | reducing the principal amount, reducing the rate of or extending the time of payment of interest, or reducing
any premium payable upon the redemption of any debt securities; or |
| | |
| · | reducing the percentage of debt securities, the holders of which are required to consent to any amendment,
supplement, modification or waiver. |
Discharge
Each indenture provides that we can elect to be
discharged from our obligations with respect to one or more series of debt securities, except that the following obligations survive until
the maturity date or the redemption date:
| · | register the transfer or exchange of debt securities of the series; |
| | |
| · | replace stolen, lost or mutilated debt securities of the series; |
| | |
| · | maintain paying agencies; |
| | |
| · | hold monies for payment in trust; and |
| | |
| · | appoint any successor trustee; |
and the following obligations survive the maturity date or the redemption
date:
| · | recover excess money held by the debenture trustee; and |
| | |
| · | compensate and indemnify the debenture trustee. |
In order to exercise our
rights to be discharged, we must deposit with the debenture trustee money or government obligations sufficient to pay all the principal
of, any premium, if any, and interest on, the debt securities of the series on the dates payments are due.
Form, Exchange and Transfer
We will issue the debt securities
of each series only in fully registered form without coupons and, unless we otherwise specify in the applicable prospectus supplement,
in denominations of $1,000 and any integral multiple thereof. The indentures provide that we may issue debt securities of a series in
temporary or permanent global form and as book-entry securities that will be deposited with, or on behalf of, The Depository Trust Company,
New York, New York, known as DTC, or another depositary named by us and identified in a prospectus supplement with respect to that series.
At the option of the holder,
subject to the terms of the indentures and the limitations applicable to global securities described in the applicable prospectus supplement,
the holder of the debt securities of any series can exchange the debt securities for other debt securities of the same series, in any
authorized denomination and of like tenor and aggregate principal amount.
Subject to the terms of the
indentures and the limitations applicable to global securities set forth in the applicable prospectus supplement, holders of the debt
securities may present the debt securities for exchange or for registration of transfer, duly endorsed or with the form of transfer endorsed
thereon duly executed if so required by us or the security registrar, at the office of the security registrar or at the office of any
transfer agent designated by us for this purpose. Unless otherwise provided in the debt securities that the holder presents for transfer
or exchange, we will make no service charge for any registration of transfer or exchange, but we may require payment of any taxes or other
governmental charges.
We will name in the applicable
prospectus supplement the security registrar, and any transfer agent in addition to the security registrar, that we initially designate
for any debt securities. We may at any time designate additional transfer agents or rescind the designation of any transfer agent or approve
a change in the office through which any transfer agent acts, except that we will be required to maintain a transfer agent in each place
of payment for the debt securities of each series.
If we elect to redeem the debt securities of any
series, we will not be required to:
| · | issue, register the transfer of, or exchange any debt securities of any series being redeemed in part
during a period beginning at the opening of business 15 days before the day of mailing of a notice of redemption of any debt securities
that may be selected for redemption and ending at the close of business on the day of the mailing; or |
| | |
| · | register the transfer of or exchange any debt securities so selected for redemption, in whole or in part,
except the unredeemed portion of any debt securities we are redeeming in part. |
Information Concerning the Debenture Trustee
The debenture trustee, other
than during the occurrence and continuance of an event of default under an indenture, undertakes to perform only those duties as are specifically
set forth in the applicable indenture. Upon an event of default under an indenture, the debenture trustee must use the same degree of
care as a prudent person would exercise or use in the conduct of his or her own affairs. Subject to this provision, the debenture trustee
is under no obligation to exercise any of the powers given it by the indentures at the request of any holder of debt securities unless
it is offered reasonable security and indemnity against the costs, expenses and liabilities that it might incur.
Payment and Paying Agents
Unless we otherwise indicate
in the applicable prospectus supplement, we will make payment of the interest on any debt securities on any interest payment date to the
person in whose name the debt securities, or one or more predecessor securities, are registered at the close of business on the regular
record date for the interest.
We will pay principal of and
any premium and interest on the debt securities of a particular series at the office of the paying agents designated by us, except that,
unless we otherwise indicate in the applicable prospectus supplement, we may make interest payments by check that we will mail to the
holder or by wire transfer to certain holders. Unless we otherwise indicate in a prospectus supplement, we will designate the corporate
office of the debenture trustee in the State of Nevada as our sole paying agent for payments with respect to debt securities of each series.
We will name in the applicable prospectus supplement any other paying agents that we initially designate for the debt securities of a
particular series. We will maintain a paying agent in each place of payment for the debt securities of a particular series.
All money we pay to a paying
agent or the debenture trustee for the payment of the principal of or any premium or interest on any debt securities that remains unclaimed
at the end of two years after such principal, premium or interest has become due and payable will be repaid to us, and the holder of the
debt security thereafter may look only to us for payment thereof.
Governing Law
The indentures and the debt
securities will be governed by and construed in accordance with the laws of the State of Nevada, except to the extent that the Trust Indenture
Act is applicable.
Subordination of Subordinated Debt Securities
The subordinated debt securities
will be subordinate and junior in priority of payment to certain of our other indebtedness to the extent described in a prospectus supplement.
The indentures in the forms initially filed as exhibits to the registration statement of which this prospectus is a part do not limit
the amount of indebtedness that we may incur, including senior indebtedness or subordinated indebtedness, and do not limit us from issuing
any other debt, including secured debt or unsecured debt.
DESCRIPTION OF RIGHTS
The complete terms of the rights will be contained
in the rights agreements we enter into with rights agents. These documents will be included or incorporated by reference as exhibits to
the registration statement of which this prospectus is a part. You should read the rights agreements and any related documents. You also
should read the prospectus supplement, which will contain additional information and which may update or change some of the information
below.
This section describes the
general terms of the rights to purchase Common Stock or other securities that we may offer to stockholders using this prospectus. Further
terms of the rights will be stated in the applicable prospectus supplement (or applicable free writing prospectus). The following description
and any description of the rights in a prospectus supplement (or applicable free writing prospectus) may not be complete and is subject
to and qualified in its entirety by reference to the terms of any agreement relating to the rights.
Rights may be issued independently
or together with any other security and may or may not be transferable. As part of any rights offering, we may enter into a standby underwriting
or other arrangement under which the underwriters or any other person would purchase any securities that are not purchased in such rights
offering. If we issue rights, each series of rights will be issued under a separate rights agreement to be entered into between us and
a bank or trust company, as rights agent, that will be named in the applicable prospectus supplement. Further terms of the rights will
be stated in the applicable prospectus supplement. The rights agent will act solely as our agent and will not assume any obligation to
any holders of rights certificates or beneficial owners of rights. The rights agreements and rights certificates will be filed with the
SEC as an exhibit to the registration statement of which this prospectus is a part or as an exhibit to a filing incorporated by reference
in the registration statement. See “Where You Can Find Additional Information” for information on how to obtain copies of
the rights agreements and rights certificates.
The prospectus supplement
relating to any rights we offer will describe the specific terms of the offering and the rights, including the record date for stockholders
entitled to the rights distribution, the number of rights issued and the number of shares of Common Stock that may be purchased upon exercise
of the rights, the exercise price of the rights, the date on which the rights will become effective and the date on which the rights will
expire, and any applicable U.S. federal income tax considerations.
In general, a right entitles
the holder to purchase for cash a specific number of shares of Common Stock or other securities at a specified exercise price. The rights
are normally issued to stockholders as of a specific record date, may be exercised only for a limited period of time and become void following
the expiration of such period. If we determine to issue rights, we will accompany this prospectus with a prospectus supplement that will
describe, among other things:
| · | the record date for stockholders entitled to receive the rights; |
| | |
| · | the number of shares of Common Stock or other securities that may be purchased upon exercise of each right; |
| | |
| · | the exercise price of the rights; |
| | |
| · | the terms for changes to or adjustments in the exercise price, if any; |
| | |
| · | whether the rights are transferable; |
| | |
| · | the period during which the rights may be exercised and when they will expire; |
| | |
| · | the steps required to exercise the rights; |
| · | whether the rights include “oversubscription rights” so that the holder may purchase more
securities if other holders do not purchase their full allotments; |
| | |
| · | whether we intend to sell the shares of Common Stock or other securities that are not purchased in the
rights offering to an underwriter or other purchaser under a contractual “standby” commitment or other arrangement; |
| | |
| · | our ability to withdraw or terminate the rights offering; |
| | |
| · | any material United States federal income tax consequences; and |
| | |
| · | other material terms, including terms relating to transferability, exchange, exercise or amendment of
the rights. |
If fewer than all of the
rights issued in any rights offering are exercised, we may offer any unsubscribed securities directly to persons other than stockholders,
to or through agents, underwriters or dealers or through a combination of such methods, including pursuant to standby arrangements, as
described in the applicable prospectus supplement. After the close of business on the expiration date, all unexercised rights will become
void.
DESCRIPTION OF UNITS
We may issue units comprised
of shares of Common Stock, shares of preferred stock, debt securities, rights and warrants to purchase Common Stock in any combination.
We may issue units in such amounts and in as many distinct series as we wish. This section outlines certain provisions of the units that
we may issue. If we issue units, they will be issued under one or more unit agreements to be entered into between us and a bank or other
financial institution, as unit agent. The information described in this section may not be complete in all respects and is qualified entirely
by reference to the unit agreement with respect to the units of any particular series. The specific terms of any series of units offered
will be described in the applicable prospectus supplement. If so described in a particular supplement, the specific terms of any series
of units may differ from the general description of terms presented below. We urge you to read any prospectus supplement related to any
series of units we may offer, as well as the complete unit agreement and unit certificate that contain the terms of the units. If we issue
units, forms of unit agreements and unit certificates relating to such units will be incorporated by reference as exhibits to the registration
statement, which includes this prospectus.
Each unit that we may issue
will be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit will
have the rights and obligations of a holder of each included security. The unit agreement under which a unit is issued may provide that
the securities included in the unit may not be held or transferred separately, at any time or at any time before a specified date.
The applicable prospectus supplement may describe:
| · | the designation and terms of the units and of the securities comprising the units, including whether and
under what circumstances those securities may be held or transferred separately; |
| | |
| · | any provisions of the governing unit agreement; |
| | |
| · | the price or prices at which such units will be issued; |
| | |
| · | the applicable U.S. federal income tax considerations relating to the units; |
| | |
| · | any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities
comprising the units; and |
| | |
| · | any other terms of the units and of the securities comprising the units. |
The provisions described in
this section, as well as those described under “Description of Capital Stock,” “Description of Debt Securities”
and “Description of Warrants” will apply to the securities included in each unit, to the extent relevant and as may
be updated in any prospectus supplements. We may issue units in such amounts and in as many distinct series as we wish. This section summarizes
terms of the units that apply generally to all series. Most of the financial and other specific terms of a particular series of units
will be described in the applicable prospectus supplement.
Unit Agreements
We will issue the units under
one or more unit agreements to be entered into between us and a bank or other financial institution, as unit agent. We may add, replace
or terminate unit agents from time to time. We will identify the unit agreement under which each series of units will be issued and the
unit agent under that agreement in the applicable prospectus supplement.
The following provisions will generally apply to all unit agreements
unless otherwise stated in the applicable prospectus supplement:
Modification Without Consent
We and the applicable unit agent may amend any unit or unit agreement
without the consent of any holder:
| · | to cure any ambiguity in any provisions of the governing unit agreement that differ from those described below; |
| | |
| · | to correct or supplement any defective or inconsistent provision; or |
| | |
| · | to make any other change that we believe is necessary or desirable and will not adversely affect the interests of the affected holders
in any material respect. |
We do not need any approval
to make changes that affect only units to be issued after the changes take effect. We may also make changes that do not adversely affect
a particular unit in any material respect, even if they adversely affect other units in a material respect. In those cases, we do not
need to obtain the approval of the holder of the unaffected unit; we need only obtain any required approvals from the holders of the affected
units.
Modification With Consent
We may not amend any particular unit or a unit
agreement with respect to any particular unit unless we obtain the consent of the holder of that unit, if the amendment would:
| · | impair any right of the holder to exercise or enforce any right under a security included in the unit if the terms of that security
require the consent of the holder to any changes that would impair the exercise or enforcement of that right; or |
| | |
| · | reduce the percentage of outstanding units or any series or class the consent of whose holders is required to amend that series or
class, or the applicable unit agreement with respect to that series or class, as described below. |
Any other change to a particular unit agreement
and the units issued under that agreement would require the following approval:
| · | if the change affects only the units of a particular series issued under that agreement, the change must be approved by the holders
of a majority of the outstanding units of that series; or |
| | |
| · | if the change affects the units of more than one series issued under that agreement, it must be approved by the holders of a majority
of all outstanding units of all series affected by the change, with the units of all the affected series voting together as one class
for this purpose. |
These provisions regarding
changes with majority approval also apply to changes affecting any securities issued under a unit agreement, as the governing document.
In each case, the required
approval must be given by written consent.
Unit Agreements Will Not be Qualified Under
Trust Indenture Act
No unit agreement will be
qualified as an indenture, and no unit agent will be required to qualify as a trustee, under the Trust Indenture Act. Therefore, holders
of units issued under unit agreements will not have the protections of the Trust Indenture Act with respect to their units.
Mergers and Similar Transactions Permitted;
No Restrictive Covenants or Events of Default
The unit agreements will not
restrict our ability to merge or consolidate with, or sell our assets to, another corporation or other entity or to engage in any other
transactions. If at any time we merge or consolidate with, or sell our assets substantially as an entirety to, another corporation or
other entity, the successor entity will succeed to and assume our obligations under the unit agreements. We will then be relieved of any
further obligation under these agreements.
The unit agreements will not
include any restrictions on our ability to put liens on our assets, nor will they restrict our ability to sell our assets. The unit agreements
also will not provide for any events of default or remedies upon the occurrence of any events of default.
Form, Exchange and Transfer
We will issue each unit in
global (i.e., book-entry) form only. Units in book-entry form will be represented by a global security registered in the name of a depositary,
which will be the holder of all the units represented by the global security. Those who own beneficial interests in a unit will do so
through participants in the depositary’s system, and the rights of these indirect owners will be governed solely by the applicable
procedures of the depositary and its participants. We will describe book-entry securities, and other terms regarding the issuance and
registration of the units in the applicable prospectus supplement.
Each unit and all securities comprising the unit will be issued in
the same form.
If we issue any units in registered, non-global form, the following
will apply to them:
| · | The units will be issued in the denominations stated in the applicable prospectus supplement. Holders
may exchange their units for units of smaller denominations or combined into fewer units of larger denominations, as long as the total
amount is not changed. |
| | |
| · | Holders may exchange or transfer their units at the office of the unit agent. Holders may also replace
lost, stolen, destroyed or mutilated units at that office. We may appoint another entity to perform these functions or perform them ourselves. |
| | |
| · | Holders will not be required to pay a service charge to transfer or exchange their units, but they may
be required to pay for any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange, and any
replacement, will be made only if our transfer agent is satisfied with the holder’s proof of legal ownership. The transfer agent
may also require an indemnity before replacing any units. |
| | |
| · | If we have the right to redeem, accelerate or settle any units before their maturity, and we exercise
our right as to less than all those units or other securities, we may block the exchange or transfer of those units during the period
beginning 15 days before the day we mail the notice of exercise and ending on the day of that mailing, in order to freeze the list of
holders to prepare the mailing. We may also refuse to register transfers of or exchange any unit selected for early settlement, except
that we will continue to permit transfers and exchanges of the unsettled portion of any unit being partially settled. We may also block
the transfer or exchange of any unit in this manner if the unit includes securities that are or may be selected for early settlement. |
Only the depositary will
be entitled to transfer or exchange a unit in global form, since it will be the sole holder of the unit.
Payments and Notices
In making payments and giving
notices with respect to our units, we will follow the procedures as described in the applicable prospectus supplement.
PLAN OF DISTRIBUTION
We may sell the securities
described herein, from time to time, in one or more offerings, by a variety of methods, including the following:
| · | on any national securities exchange or quotation service on which our securities may be listed at the
time of sale, including the NYSE American; |
| | |
| · | in the over-the-counter market; |
| | |
| · | in transactions otherwise than on such exchange or in the over-the-counter market, which may include privately
negotiated transactions and sales directly to one or more purchasers; |
| | |
| · | through one or more agents, including an “at the market” offering within the meaning of Rule
415(a)(4) under the Securities Act; |
| | |
| · | through ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| | |
| · | through purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| | |
| · | to or through underwriters, broker-dealers, agents, in privately negotiated transactions, or any combination
of these methods; |
| | |
| · | through short sales; |
| | |
| · | through the writing or settlement of options or other hedging transactions, whether through an options
exchange or otherwise; |
| | |
| · | by pledge to secure debts or other obligations; |
| | |
| · | block trades in which the broker-dealer so engaged will attempt to sell the securities as agent but may
position and resell a portion of the block as principal to facilitate the transaction, or crosses in which the same broker acts as agent
on both sides of the trade; |
| | |
| · | a combination of any of these methods; or |
| | |
| · | by any other method permitted pursuant to applicable law. |
We may sell the securities
to or through one or more underwriters or dealers (acting as principal or agent), through agents, or directly to one or more purchasers.
We may distribute the securities from time to time in one or more transactions:
| · | at a fixed price or prices, which may be changed; |
| | |
| · | at market prices prevailing at the time of sale; |
| | |
| · | at prices related to such prevailing market prices; |
| | |
| · | at varying prices determined at the time of sale; or |
| | |
| · | at negotiated prices. |
We
will describe the terms of the offering of the securities and the specific plan of distribution in a prospectus supplement or supplements
to this prospectus, any related free writing prospectus that we may authorize to be provided to you, an amendment to the registration
statement of which this prospectus is a part or other filings we make with the SEC under the Exchange Act that are incorporated by reference.
Such description may include, to the extent applicable:
| · | the name or names of any underwriters, dealers, agents or other purchasers; |
| | |
| · | the purchase price of the securities or other consideration therefor, and the proceeds, if any, we will
receive from the sale; |
| | |
| · | any options to purchase additional shares or other options under which underwriters, dealers, agents or
other purchasers may purchase additional securities from us; |
| | |
| · | any agency fees or underwriting discounts and other items constituting agents’ or underwriters’
compensation; |
| | |
| · | any public offering price; |
| | |
| · | any discounts or concessions allowed or reallowed or paid to dealers; and |
| | |
| · | any securities exchange or market on which the securities may be listed. |
Only underwriters named
in the prospectus supplement will be underwriters of the securities offered by the prospectus supplement.
If
underwriters are used in the sale, they will acquire the securities for their own account and may resell the securities from time to time
in one or more transactions at a fixed public offering price or at varying prices determined at the time of sale. The obligations of the
underwriters to purchase the securities will be subject to the conditions set forth in the applicable underwriting agreement. We may offer
the securities to the public through underwriting syndicates represented by managing underwriters or by underwriters without a syndicate.
Subject to certain conditions, the underwriters will be obligated to purchase all of the securities offered by the prospectus supplement,
other than securities covered by any option to purchase additional shares or other option. If a dealer is used in the sale of securities,
we, or an underwriter, will sell the securities to the dealer, as principal. The dealer may then resell the securities to the public at
varying prices to be determined by the dealer at the time of resale. To the extent required, we will set forth in the prospectus supplement
the name of the dealer and the terms of the transaction. Any public offering price and any discounts or concessions allowed or reallowed
or paid to dealers may change from time to time. We may use underwriters, dealers or agents with whom we have a material relationship.
We will describe in the prospectus supplement, naming the underwriter, dealer or agent, the nature of any such relationship.
We
may sell securities directly or through agents we designate from time to time. If required by applicable law, we will name any agent involved
in the offering and sale of securities and we will describe any commissions payable to the agent in the prospectus supplement. Unless
the prospectus supplement states otherwise, the agent will act on a best-efforts basis for the period of its appointment.
We
may provide agents, dealers and underwriters with indemnification against civil liabilities, including liabilities under the Securities
Act, or contribution with respect to payments that the agents or dealers or underwriters may make with respect to these liabilities. Agents,
dealers and underwriters or their affiliates may engage in transactions with, or perform services for us in the ordinary course of business.
We
may engage in at-the-market offerings into an existing trading market in accordance with rule 415(a)(4) under the Securities Act. In addition,
we may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately
negotiated transactions. If the applicable prospectus supplement so indicates, in connection with those derivatives, the third parties
may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so,
the third party may use securities pledged by us or borrowed from us, or others to settle those sales or to close out any related open
borrowings of Common Stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings
of our Common Stock. In addition, we may loan or pledge securities to a financial institution or other third party that in turn may sell
the securities using this prospectus and an applicable prospectus supplement. Such financial institution or other third party may transfer
its economic short position to investors in our securities or in connection with a concurrent offering of other securities.
All
securities we may offer, other than the Common Stock, will be new issues of securities with no established trading market. Any underwriters
may make a market in these securities, but will not be obligated to do so and may discontinue any market making at any time without notice.
We cannot guarantee the liquidity of the trading markets for any securities.
Any
underwriter may be granted an option to purchase additional shares, and engage in stabilizing transactions, short-covering transactions
and penalty bids in accordance with Regulation M under the Exchange Act. An underwriter’s option to purchase additional shares involves
sales in excess of the offering size, which create a short position. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum price. Syndicate-covering or other short-covering transactions involve
purchases of the securities, either through exercise of the option to purchase additional shares or in the open market after the distribution
is completed, to cover short positions. Penalty bids permit the underwriters to reclaim a selling concession from a dealer when the securities
originally sold by the dealer are purchased in a stabilizing or covering transaction to cover short positions. Those activities may cause
the price of the securities to be higher than it would otherwise be. If commenced, the underwriters may discontinue any of the activities
at any time.
Any underwriters, dealers
or agents that are qualified market makers on the NYSE American may engage in passive market making transactions in our Common Stock on
the NYSE American in accordance with Regulation M under the Exchange Act, during the business day prior to the pricing of the offering,
before the commencement of offers or sales of the Common Stock. Passive market makers must comply with applicable volume and price limitations
and must be identified as passive market makers. In general, a passive market maker must display its bid at a price not in excess of the
highest independent bid for such security; if all independent bids are lowered below the passive market maker’s bid, however, the
passive market maker’s bid must then be lowered when certain purchase limits are exceeded. Passive market making may stabilize the
market price of the securities at a level above that which might otherwise prevail in the open market and, if commenced, may be discontinued
at any time.
LEGAL
MATTERS
Unless otherwise indicated
in the applicable prospectus supplement, the validity of the securities offered hereby will be passed upon for us by Flangas Law Group.
Certain legal matters will be reviewed by Reed Smith LLP. If the validity of the securities offered hereby in connection with offerings
made pursuant to this prospectus are passed upon by counsel for the underwriters, dealers or agents, if any, such counsel will be named
in the prospectus supplement relating to such offering.
EXPERTS
Baker Tilly US, LLP, independent
registered public accounting firm, has audited our financial statements included in our Annual Report on Form 10-K for the year ended
December 31, 2022 (which report expresses an unqualified opinion), which is incorporated by reference in this prospectus and elsewhere
in this Registration Statement. Our financial statements are incorporated by reference in reliance on Baker Tilly US, LLP’s report,
given on their authority as experts in accounting and auditing.
INTERESTS OF NAMED EXPERTS
AND COUNSEL
Reed Smith LLP, outside counsel
to the Company, beneficially owns 400,000 shares of Common Stock pursuant to an executed retainer letter agreement.
WHERE
YOU CAN FIND MORE INFORMATION
We are a public company and
file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the
public at the SEC’s web site at http://www.sec.gov, and on our web site at http://www.kartoonstudios.com. Our SEC filings may also
be inspected and copied at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549-1004. The public may obtain
information about the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The information contained on our web
site is not included or incorporated by reference into this prospectus. In addition, our Common Stock is listed for trading on NYSE American
under the symbol “TOON.”
This prospectus is only part
of a Registration Statement on Form S-3 that we have filed with the SEC under the Securities Act, and therefore omits certain information
contained in the Registration Statement. We have also filed exhibits and schedules with the Registration Statement that are excluded from
this prospectus, and you should refer to the applicable exhibit or schedule for a complete description of any statement referring to any
contract or other document. You may:
| · | obtain a copy from the SEC upon payment of the fees prescribed by the SEC, or |
| | |
| · | obtain a copy from the SEC’s web site or our web site. |
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to “incorporate
by reference” information that we file with them. Incorporation by reference allows us to disclose important information to you
by referring you to those other documents. The information incorporated by reference is an important part of this prospectus, and information
that we file later with the SEC will automatically update and supersede this information. This prospectus omits certain information contained
in the registration statement, as permitted by the SEC. You should refer to the registration statement and any prospectus supplement filed
hereafter, including the exhibits, for further information about us and the securities we may offer pursuant to this prospectus. Statements
in this prospectus regarding the provisions of certain documents filed with, or incorporated by reference in, the registration statement
are not necessarily complete and each statement is qualified in all respects by that reference. Copies of all or any part of the registration
statement, including the documents incorporated by reference or the exhibits, may be obtained upon payment of the prescribed rates at
the offices of the SEC listed above in “Where You Can Find More Information.” The documents we are incorporating by reference
are:
|
· |
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed on April 13, 2023; |
|
· |
Our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023, June 30, 2023 and September 30, 2023, filed on May 22, 2023, August 14, 2023 and November 17, 2023, respectively. |
|
· |
Our Current Reports on Form 8-K (other than information furnished
rather than filed) filed on, February 10,
2023, March 1, 2023, April
3, 2023, April 14, 2023, May
26, 2023, June 13, 2023, June
27, 2023, July 3, 2023, August
28, 2023, September 25,
2023, October 3, 2023, October
27, 2023, November 3, 2023, November
14, 2023 and December 15,
2023; |
|
· |
The description of our common stock contained in Exhibit 4.13 in our Form 10-K for the fiscal year ended December 31, 2019 filed on March 30, 2020. |
Any statement contained in
this prospectus or in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified
or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or any other subsequently filed
document that is deemed to be incorporated by reference into this prospectus modifies or supersedes the statement. Any statement so modified
or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
We also incorporate by reference
into this prospectus any future filings made by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, except for
information “furnished” under Items 2.02 or 7.01 on Form 8-K or other information “furnished” to the SEC which
is not deemed filed and not incorporated in this prospectus, until the termination of the offering of securities described in the applicable
prospectus supplement.
You may request, orally or
in writing, a copy of any or all of the documents incorporated herein by reference. These documents will be provided to you at no cost,
by calling us at (310) 273-4222 or by writing to us at the following address:
Kartoon Studios, Inc.
190 N. Canon Drive, 4th Floor
Beverly Hills, CA 90210
Attn: Brian Parisi
You should rely only on information
contained in, or incorporated by reference into, this prospectus and any prospectus supplement. We have not authorized anyone to provide
you with information different from that contained in this prospectus or incorporated by reference in this prospectus. We are not making
offers to sell the securities in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make such offer or solicitation.
Kartoon Studios, Inc.
$75,000,000
Common Stock
Preferred Stock
Warrants
Debt Securities
Rights
Units
PROSPECTUS
January 5, 2024
Grafico Azioni Genius Brands (NASDAQ:GNUS)
Storico
Da Nov 2024 a Dic 2024
Grafico Azioni Genius Brands (NASDAQ:GNUS)
Storico
Da Dic 2023 a Dic 2024