| 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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Year Ended December 31, |
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2023 |
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2022 |
| Interest Expense (a) |
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$ |
(3,126) |
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$ |
(2,329) |
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| Warrant Expense (b) |
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(12,664) |
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– |
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| Gain on Revaluation of Warrants (c) |
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10,373 |
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557 |
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| Gain on Revaluation of Equity Investment in YFE (d) |
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2,314 |
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1,392 |
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| Realized Loss on Marketable Securities Investments (e) |
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(4,496) |
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(413) |
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| Gain (Loss) on Foreign Exchange (f) |
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641 |
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(2,161) |
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| Interest Income (g) |
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622 |
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1,015 |
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| Loss on Early Lease Termination (h) |
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(258) |
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– |
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| Finance Lease Interest Expense (i) |
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(189) |
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(116) |
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| Gain on Contingent Consideration Revaluation (j) |
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– |
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1,345 |
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| Other (k) |
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978 |
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6 |
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| Other Income (Expense), net |
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$ |
(2,679) |
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$ |
1,625
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(a) |
Interest Expense during the year ended December 31, 2023 primarily consisted of $1.5 million of interest incurred on the margin loan and $1.5 million of interest incurred on production facilities loans and bank indebtedness. |
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(b) |
The Warrant Expense is related to the $12.7 million fair value of Exchange Warrants that were issued during the year ended December 31, 2023 to certain existing warrant holders in exchange for previously issued outstanding warrants. |
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(c) |
The Gain on Revaluation of Warrants during the year ended December 31, 2023 is primarily related to the changes in fair value of the Exchange Warrants of $10.1 million recorded prior to the warrants being reclassified to stockholder’s equity. The decrease in fair value was due to decreases in market price. |
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(d) |
As accounted for using the fair value option, the Gain on Revaluation of Equity Investment in YFE 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. This excludes the impact of foreign currency recorded separately. |
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(e) |
The Realized Loss on Marketable Securities Investments 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 (Loss) on Foreign Exchange during the year ended December 31, 2023 primarily related to the revaluation of the YFE investment, resulting in a gain of $0.5 million due to the EURO weakening against the USD as compared to the prior reporting period when a loss of $1.4 million was recognized. |
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(g) |
Interest Income during the year ended December 31, 2023 primarily consisted of interest income of $0.5 million, net of premium amortization expense, recorded for the investments in marketable securities, respectively. |
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(h) |
The Loss on Early Lease Termination is due to early termination of the Lyndhurst, NJ office lease, effective August 1, 2023. The loss includes fees of $0.2 million and the write-down of assets and liabilities resulting in a net $0.1 million loss. |
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(i) |
The Finance Lease Interest Expense represents the interest portion of the finance lease obligations for equipment purchased under an equipment lease line. |
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(j) |
The Gain on Contingent Consideration Revaluation recorded during the year ended December 31, 2022 is related to the write-off of the contingent earn-out liability related to the earn-out arrangement with the sellers of the Beacon entities acquired during 2021 due to cancellation of the arrangement. |
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(k) |
The Company wrote-off a liability in the amount of $0.9 million that had legally expired during the fourth quarter of 2023 under the statute of limitations on debt collection, resulting in an increase in other income at December 31, 2023. |
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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Year Ended December 31, |
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2022 |
| Total Revenues |
$ |
80,404 |
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| Net Loss Attributable to Kartoon Studios, Inc. |
$ |
(44,617) |
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| Net Loss per Share (Basic and Diluted) |
$ |
(1.42) |
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| Weighted Average Shares Outstanding (Basic and Diluted) |
31,388,277 |
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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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