Kartoon Studios, Inc. Quarterly report pursuant to sections 13 or 15(d)

Quarterly report pursuant to sections 13 or 15(d)

11. Warrants

11. Warrants

9 Months Ended

Sep. 30, 2013

Warrants and Rights Note Disclosure [Abstract]

The Company has warrants outstanding to purchase up to 543,452 and 5,852,060 shares of our common stock at September 30, 2013 and December 31, 2012, respectively.

In connection with the sale of shares of its common stock in 2010 the Company issued warrants to purchase a total of 471,108 shares of its common stock at $0.40 per share exercisable for a three-year period. As of September 30, 2013, 5,308,608 of these warrants have expired or were cancelled, 5,000,000 of which were cancelled in exchange for 5,000,000 shares of the Company’s common stock (See Note 6).

Either the exercise price or the number of shares purchasable under the warrant may be adjusted in the event of any split of the common stock, reclassification, capital reorganization or change in the outstanding common stock, or declaration of a common stock dividend. In the event of any such adjustment, the Company will notify the holders of the warrants of the exercise price and number of shares purchasable under the warrant following adjustment, the facts requiring the adjustment and the method of calculation of any increase or decrease in price or purchasable shares. No adjustment will be required, however, unless the adjustment would require an increase or decrease in the exercise price of at least 1%.

The following schedule summarizes the changes in the Company’s warrants during the nine months ended September 30, 2013:

	Number of Warrants		Exercise Price per Share		Weighted Average Exercise Price per Share

Balance at December 31, 2012		5,852,060	$	0.33 - 0.40	$	0.34
Warrants Granted		–		–		–
Warrants Exercised		–		–		–
Warrants Expired or Cancelled		(5,308,608)		0.40		0.33
Balance at September 30, 2013		543,452	$	0.33 - 0.40	$	0.35

Exercisable at September 30, 2013		543,452	$	0.33 - 0.40	$	0.35

The following schedule summarizes the outstanding warrants at September 30, 2013:

Number of Warrants Outstanding at September 30, 2013	Number of Warrants Exercisable at September 30, 2013	Expiration Date	Exercise Price

162,500	162,500	2013	$	0.40
380,952	380,952	2017	$	0.33

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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