| Schedule of Other Income (Expense) |
Components of Other Income (Expense), Net, are summarized as follows (in thousands):
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Three Months Ended |
Nine Months Ended |
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September 30, 2023 |
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September 30, 2022 |
September 30, 2023 |
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September 30, 2022 |
| Interest Expense (a) |
$ |
(672) |
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$ |
(740) |
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$ |
(2,777) |
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$ |
(1,184) |
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| Warrant Incentive Expense (b) |
– |
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– |
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(16,174) |
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– |
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| Gain on Revaluation of Warrants (c) |
2,797 |
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166 |
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8,999 |
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434 |
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| Gain (Loss) on Revaluation of Equity Investment in YFE (d) |
(2,325) |
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(4,071) |
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1,102 |
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(1,170) |
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| Realized Loss on Marketable Securities Investments (e) |
(1,897) |
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(36) |
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(4,154) |
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(160) |
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| Loss on Foreign Exchange (f) |
(637) |
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(1,336) |
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(282) |
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(2,596) |
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| Interest Income (g) |
95 |
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257 |
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563 |
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759 |
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| Loss on Early Lease Termination (h) |
(232) |
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– |
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(232) |
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– |
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| Finance Lease Interest Expense (i) |
(48) |
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(42) |
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(152) |
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(72) |
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| Other |
11 |
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– |
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37 |
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– |
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Other Expense, net |
$ |
(2,236) |
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$ |
(5,062) |
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$ |
(10,293) |
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$ |
(2,805) |
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(a) |
Interest expense during the three and nine months ended September 30, 2023 primarily consisted of $0.2 million and $1.5 million of interest incurred on the margin loan, respectively, and $0.5 million and $1.3 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 months ended September 30, 2023 is primarily related to the $2.7 million change in fair value as of the end of the current reporting period of the Exchange Warrants and SEG Warrants compared to the fair value as of the end of the prior reporting period due to a decrease in market price. The gain on warrant revaluation during the nine months ended September 30, 2023 is primarily related to the $8.8 million change in fair value as of the end of the current reporting period of the Exchange Warrants and SEG Warrants compared to the fair value as of the issuance date due to a decrease in market price. |
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(d) |
As accounted for using the fair value option, the gain or loss on the YFE investment revaluation, excluding the impact of foreign currency recorded separately, is a result of the increases or decreases in YFE’s stock price as of the current reporting period when compared to the prior reporting 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 loss on foreign currency exchange during the three and nine months ended September 30, 2023 primarily related to the EURO weakening against the USD when compared to the prior reporting period. |
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(g) |
Interest Income during the three and nine months ended September 30, 2023 primarily consisted of interest income of $0.1 million and $0.4 million, net of premium amortization expense, recorded for the investments in marketable securities, respectively. |
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(h) |
The loss on early termination of lease is due to early termination of the Lyndhurst, NJ office lease, effective August 1, 2023. The loss includes fees of $0.1 million and the write-down of assets and liabilities resulting in net, $0.1 million of loss. |
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(i) |
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. |
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| Supplemental Pro Forma Information |
Supplemental pro forma information is as follows:
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Nine Months Ended |
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September 30, 2022 |
| Total Revenues |
$ |
61,346 |
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| Net Loss Attributable to Kartoon Studios, Inc. |
$ |
(28,144) |
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| Net Loss per Share (Basic and Diluted) |
$ |
(0.89) |
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| Weighted Average Shares Outstanding (Basic and Diluted) |
31,613,164 |
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