Note 2: Restatement of Financial Statements

The Company restated its financial statements to amend its Consolidated Balance Sheet as of June 30, 2019, related to the corrections disclosed in the December 31, 2018 Form 10-K/A. In connection with the restatement, the Company re-calculated the income tax provision for the three and six months ended June 30, 2019, and the Company determined using an estimated annual effective tax rate to calculate the income tax provision was appropriate, compared to the discrete year-to-date calculation of income tax expense or benefit used in prior interim periods and in the original Form 10-Q. See Note 9 – Income Taxes. The Consolidated Statements of Operations for the three and six months ended June 30, 2019, were restated to reflect the re-calculated income tax provision primarily resulting from using an estimated annual effective tax rate, a reduction in other income, net for additional interest expense related to uncertain tax positions, and the reversal of amortization expense related to the Marketing Services long-lived assets impairment disclosed in the Form 10-K/A. See Note 7 – Goodwill and Intangible Assets. The use of an estimated annual effective tax rate in determining the income tax provision and a correction to the calculation of uncertain tax positions resulted in adjustments to other accrued expense, deferred income taxes, net, and other liabilities in the Consolidated Balance Sheet as of June 30, 2019.

In addition, the Company determined that a new line of business associated with its acquisition of Cubic Creative, Inc. on April 1, 2019, where the Company acted as an agent was incorrectly accounted for in the original Form 10-Q. See Note 4 – Acquisitions. In the three and six months ended June 30, 2019, revenue and expense were immaterially overstated by the same amount, resulting in no impact to operating income (loss), net income (loss), retained earnings or earnings per share. The Company corrected this error and the restated Consolidated Statements of Operations for the three and six months ended June 30, 2019, reflect the associated reduction in advertising and marketing services revenue and in other production, distribution and operating costs.

The table below sets forth the impact of the restatement on the Consolidated Statements of Operations (unaudited).



	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	As Previously Reported		Adjustment		As Restated		As Previously Reported		Adjustment			As Restated
Net Operating Revenue:
Advertising and marketing services	$	25,920	$	(620)	$	25,300	$	49,961	$	(620)		$	49,341
Total net operating revenue		47,735		(620)		47,115		94,324		(620)			93,704
Operating Costs and Expense:
Other production, distribution and operating costs	$	24,465	$	(620)	$	23,845	$	46,649	$	(620)		$	46,029
Amortization		200		(60)		140		400		(184)			216
Total operating costs and expense		24,940		(680)		24,260		75,581		(804)			74,777
Operating income		22,795		60		22,855		18,743		184			18,927
Other income, net		1,161		(28)		1,133		2,058		(96)			1,962
Income Before Income Taxes		23,956		32		23,988		20,801		88			20,889
Income tax provision		7,095		365		7,460		6,952		(456)			6,496
Net Income		16,861		(333)		16,528		13,849		544			14,393

Per Share Basis
Net income
Basic and diluted	$	0.78	$	(0.01)	$	0.77	$	0.64	$	0.03	$		0.67

The table below sets forth the impact of the restatement on the Consolidated Statements of Comprehensive Income (Loss) (unaudited).



	Three Months Ended June 30, 2019						Six Months Ended June 30, 2019
	As Previously Reported		Adjustment		As Restated		As Previously Reported		Adjustment		As Restated
Net Income	$	16,861	$	(333)	$	16,528	$	13,849	$	544	$	14,393
Total Comprehensive Income		16,923		(333)		16,590		13,974		544		14,518

The table below sets forth the impact of the restatement on the Consolidated Balance Sheet (unaudited).



	June 30, 2019
	As Previously Reported		Adjustment		As Restated
Assets
Intangible assets, net	$	3,384	$	(2,786)	$	598
Goodwill		15,566		(13,973)		1,593
Total assets		170,990		(16,759)		154,231
Liabilities and Shareholders’ Equity
Other accrued expense	$	4,430	$	671	$	5,101
Total current liabilities		30,820		671		31,491
Deferred income taxes, net		—		1,718		1,718
Other liabilities		4,679		96		4,775
Total liabilities		90,393		2,485		92,878
Accumulated deficit		(363,381)		(19,244)		(382,625)
Total shareholders’ equity		80,597		(19,244)		61,353
Total liabilities and shareholders’ equity		170,990		(16,759)		154,231

The table below sets forth the impact of the restatement on the Consolidated Statement of Cash Flows (unaudited).



	Six Months Ended June 30, 2019
	As Previously Reported		Adjustment		As Restated
Operating Activities
Net income	$	13,849	$	544	$	14,393
Adjustments to reconcile net income used for operating activities:
Depreciation and amortization	$	5,119	$	(184)	$	4,935
Deferred income taxes		6,417		(1,127)		5,290
Changes in working capital and other operating assets and liabilities, net of acquisitions:
Other accrued expenses	$	338	$	767	$	1,105