The non-cash interest expense of $11.6 million is a result of the amortization of the remaining debt discount of $11.0 million and deferred finance fees of $0.6 million recorded in connection with the Tengram Convertible Notes. The debt discount was a result of the beneficial conversion feature the Company recorded at the inception of the Tengram Convertible Notes, which were not issued at an actual cash discount to the face amount of the notes.
Net loss on a GAAP basis was approximately $21.5 million for the three months ended March 31, 2013, or $2.96 per share, as compared to approximately $0.4 million, or approximately $0.18 per share, in the prior year quarter.
Gary Klein, Sequential's CFO, stated, "Our financial results for the first quarter are not reflective of our business going forward as they do not include any revenue and benefit related to the Ellen Tracy and Caribbean Joe acquisitions, which closed on the last day of the quarter, and include only two months of revenue related the Heelys acquisition, which closed on January 24 th of this year. We expect our margins and profitability to improve for the balance of the year as we begin to recognize the revenues associated with these acquisitions. Furthermore, we expect the revenue to be weighted to the fourth quarter as a normal reflection of the timing of our licensees' businesses."
Yehuda Shmidman, Sequential's CEO, commented, "We are very pleased with Sequential's start to 2013. In the first quarter, we strengthened our balance sheet with an equity raise, we doubled our portfolio with the acquisition of three new brands, and we overhauled our internal brand management team. Looking ahead, Sequential's six brands are expected to generate close to $25 million of royalty revenue on a twelve-month forward looking basis from over 50 licensees. With this core brand management platform in place, we are optimistic about our opportunities to grow our portfolio both organically and through new brand acquisitions." Mr. Shmidman added, "Sequential has gone through a complete transformation over this past year, and with that process now fully behind us, we are truly excited about our future ahead as a leading brand management organization."