| Supplemental Financial Statement Information |
Supplemental Financial Statement Information Other Income (Expense), Net
Components of Other Income (Expense), Net, are summarized as follows (in thousands):
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Three Months Ended |
Six Months Ended |
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June 30, 2023 |
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June 30, 2022 |
June 30, 2023 |
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June 30, 2022 |
| Interest Expense (a) |
$ |
(1,020) |
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$ |
(388) |
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$ |
(2,105) |
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$ |
(443) |
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| Warrant Incentive Expense (b) |
(16,174) |
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– |
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(16,174) |
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– |
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| Gain on Revaluation of Warrants (c) |
6,063 |
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227 |
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6,202 |
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269 |
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| Gain (Loss) on Revaluation of Equity Investment in YFE (d) |
4,322 |
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(2,494) |
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3,427 |
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2,901 |
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| Realized Loss on Marketable Securities Investments (e) |
(720) |
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(44) |
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(2,257) |
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(123) |
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| Gain (Loss) on Foreign Exchange (f) |
35 |
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(1,073) |
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355 |
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(1,262) |
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| Interest Income (g) |
158 |
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253 |
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468 |
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501 |
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| Finance Lease Interest Expense (h) |
(54) |
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(30) |
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(104) |
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(30) |
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| Other |
2 |
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– |
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3 |
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– |
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| Other Income (Expense) |
$ |
(6,368) |
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$ |
(3,161) |
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$ |
(8,080) |
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$ |
2,256
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(a) |
Interest expense during the three and six months ended June 30, 2023 primarily consisted of $0.6 million and $1.3 million of interest incurred on the margin loan, respectively, and $0.4 million and $0.8 million, respectively, of interest incurred on production facilities loans and bank indebtedness assumed as part of the Wow Acquisition.
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(b) |
The Warrant Incentive Expense is related to the $12.7 million fair value of Exchange Warrants that were issued during the three months ended June 30, 2023 to certain existing warrant holders in exchange for previously issued outstanding warrants and $3.5 million recorded as the incremental expense of the 2021 Warrants immediately before and after the repricing. |
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(c) |
The gain on warrant revaluation during the three and six months ended June 30, 2023 is primarily related to the $6.0 million change in fair value as of the end of the reporting period of the Exchange and SEG Warrants compared to the fair value at issuance date. |
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(d) |
As accounted for using the fair value option, the gain on the YFE investment revaluation during the three and six months ended June 30, 2023, excluding the impact of foreign currency recorded separately, is a result of an increase in YFE’s stock price as of June 30, 2023 when compared to the three and six months ended prior period. |
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(e) |
The net realized loss on marketable securities reflects the loss that will not be recovered from the investments due to selling securities and issuers' prepayments of principals on certain mortgage-backed securities. |
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(f) |
The gain on foreign currency exchange during the three and six months ended June 30, 2023 primarily related to the EURO weakening against the USD compared to the three and six months ended prior period. |
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(g) |
Interest Income during the three and six months ended June 30, 2023 primarily consisted of cash interest received of $0.3 million and $0.7 million from the investments in marketable securities, respectively, net of premium amortization expense of $0.2 million and $0.3 million, respectively. |
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(h) |
The finance lease interest expense represents the interest portion of the finance lease obligations assumed as part of the Wow Acquisition for equipment purchased under an equipment lease line. Prior to the acquisition of Wow, finance leases did not exist. |
Supplemental Pro forma information
On January 13, 2022, the Company completed the acquisition of Ameba, at which Ameba’s financial information was consolidated into the Company’s financials.
On April 6, 2022, the Company completed the acquisition of Wow. Wow’s financial information was consolidated into the Company’s financials starting April 1, 2022.
The following unaudited supplemental pro forma information summarizes the Company’s results of operations as if the Company completed the Wow and Ameba acquisitions at the beginning of the annual period 2022, when acquired (in thousands, except for share and per share data):
Supplemental pro forma information is as follows:
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Three Months Ended |
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Six Months Ended |
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June 30, 2022 |
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June 30, 2022 |
| Total Revenues |
$ |
22,124 |
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41,667 |
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| Net Loss Attributable to Kartoon Studios, Inc. |
$ |
(13,343) |
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(16,926) |
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| Net Loss per Share (Basic and Diluted) |
$ |
(0.42) |
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$ |
(0.55) |
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| Weighted Average Shares Outstanding (Basic and Diluted) |
31,551,991 |
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30,968,201 |
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The unaudited pro forma combined financial information is presented for informational purposes only and is not intended to represent or be indicative of the combined results of operations or financial position that the Company would have reported had the acquisitions been completed as of the date and for the periods presented and should not be taken as representative of the Company’s consolidated results of operations or financial condition following the acquisition. In addition, the unaudited pro forma combined financial information is not intended to project the future financial position or results of operations of the combined company. The unaudited pro forma financial information was prepared using the acquisition method of accounting under existing US GAAP.
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