10-Q
RLJ ENTERTAINMENT, INC. filed this Form 10-Q on 11/09/2017
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RLJ Entertainment, Inc.

 

Notes To Consolidated Financial Statements

(Unaudited)

 

that were not included in the computation of diluted net loss per common share as the effect would be anti-dilutive. For the nine months ended September 30, 2017 and 2016, we had weighted average unvested shares of 1.5 million and 0.4 million respectively, of compensatory stock options and restricted share-based awards that were not included in the computation of diluted net loss per common share as the effect would be anti-dilutive.

When dilutive, we include in our computation of diluted loss per share the number of shares of common stock that is acquirable upon conversion of the preferred stock by applying the as-converted method per ASC 260, Earnings per Share. For the three and nine months ended September 30, 2017 and 2016, we excluded 5.9 million and 11.2 million shares of common stock that are acquirable upon conversion of the preferred stock as they were anti-dilutive.

 

 

NOTE 12. STATEMENTS OF CASH FLOWS

Supplemental Disclosures

 

 

 

Nine Months Ended September 30,

 

(In thousands)

 

2017

 

 

2016

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$

1,592

 

 

$

4,911

 

Income taxes

 

$

30

 

 

$

35

 

Reclassification of deferred financing costs from prepaid

   expenses and other assets to debt, net of discounts

 

$

 

 

$

832

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Accretion on preferred stock

 

$

959

 

 

$

3,763

 

Preferred stock and derivative liability converted

   into common stock

 

$

 

 

$

1,232

 

Common stock issued to AMC as payment for

   prior year interest expense

 

$

158

 

 

$

 

Conversion of preferred stock into shares of common

 

$

19,592

 

 

$

 

Exercise of AMC warrant and reduction of senior debt

 

$

2,847

 

 

$

 

Interest payable on subordinated notes converted to

   principal

 

$

 

 

$

72

 

Capital expenditures accrued for in accounts payable and

   accrued liabilities

 

$

369

 

 

$

357

 

 

 

NOTE 13. COMMITMENTS AND CONTINGENCIES

In the normal course of business, we are subject to proceedings, lawsuits and other claims, including proceedings under government laws and regulations relating to content ownership, copyright and employment matters. While it is not possible to predict the outcome of these matters, it is the opinion of management, based on consultations with legal counsel, that the ultimate disposition of known proceedings will not have a material adverse impact on our financial position, results of operations or liquidity. Accordingly, we record a charge to earnings based on the probability of settlement and determination of an estimated amount. These charges were not material to our results.

 

 

NOTE 14. RELATED PARTY TRANSACTIONS

Equity Investment in Affiliate

During the nine months ended September 30, 2017 and 2016, we paid ACL $0.1 million and $3.2 million, respectively, for distribution rights for three titles, two of which were released as of December 31, 2016 and one which was released in 2017. As we recognize revenues from these titles, and all other titles, we amortize our content advances resulting in the recognition of content amortization and royalty expense. For the nine months ended September 30, 2017, we recognized content amortization and royalty expense of $0.2 million and none during the three months ended September 30, 2017. For the three and nine months ended

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