| Acquisition Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations |
Note 6 – Acquisition Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations
| (a) |
Reflects an adjustment to reflect ₩45.0 million of transaction costs incurred by K Wave that are not included in the historical financial statements of K Wave and Hansol. |
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| (b) |
The following table summarizes the estimated fair values of Hansol’s identifiable intangible assets acquired through
business combination and determined through purchase price allocation and their estimated useful lives including the amortization for
the periods presented calculated on a straight-line basis (in thousands). |
| Schedule of estimated fair values |
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Estimated
Fair Value |
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Estimated Useful
Life (years) |
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|
Amortization Expense -
Year Ended
December 31,
2025 |
|
| Customer relationships |
|
₩ |
|
|
2,457,000 |
|
|
9.8 |
|
₩ |
|
|
250,714 |
|
| Backlog |
|
|
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|
2,884,000 |
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|
5 |
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|
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|
576,800 |
|
| Technology |
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|
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|
4,716,000 |
|
|
7 |
|
|
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|
673,714 |
|
| Brand |
|
|
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1,643,000 |
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|
Indefinite |
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|
- |
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| Other intangible assets |
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|
|
|
1,022,547 |
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|
5 |
|
|
|
|
246,414 |
|
| Total |
|
₩ |
|
|
12,722,547 |
|
|
|
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|
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|
1,747,642 |
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| Historical amortization |
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|
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|
246,414 |
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| Incremental
amortization |
|
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|
₩ |
|
|
1,501,228 |
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| (c) |
Reflects the non-controlling interest related to the historical financial statements of Hansol and the pro forma amortization expense of intangible assets. |
| (d) |
Reflects the pro forma tax expense on the amortization of the intangible assets in (B) above, the interest expense recognized on the bank loan in (C) below, the loss on the disposal of Bitcoin in (F) below and the reversal of interest expense on the convertible notes in (G) below, based on the 22% corporate income tax rate. |
| (e) |
Reflects the interest expense recognized on the bank loan as described in (F) above, giving effect to the business combination as if it had occurred on January 1, 2025. |
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| (f) |
Reflects the loss on the disposal of Bitcoin. |
| (g) |
Reflects the reversal of the interest expense on the convertible notes, giving effect to the business combination as if it had occurred on January 1, 2025. |
| (h) |
Reflects the adjustment to record the recission of the Play Co. Ltd. Securities
purchase agreement. The pro forma reflects the removal of Play Co. Ltd.’s revenue and expenses, including non-controlling interest.
The Company recognized a gain on deconsolidation equal to the excess of (i) the fair value of the consideration received—consisting
of the forgiven liabilities of K Enter Holdings, Inc.—over the sum of (ii) the carrying amounts of the subsidiary's assets (including
any goodwill) and liabilities at the date control was lost and (iii) the carrying amount of any non-controlling interests. |
| Schedule of Play Company and
its subsidiaries | |
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| | |
Derecognized
net asset (liabilities) at their carrying amounts | | |
Derecognized
non-controlling interests at their carrying amounts | | |
Fair
value of considerations received | | |
Gain
on deconsolidation | |
| Play Company and
its subsidiaries | |
| 34,250,514 | | |
| (13,070,905 | ) | |
| 65,267,395 | | |
| 44,087,786 | |
| (i) |
Reflects the adjustment to record the recission of the Solaire Partners’ securities purchase agreement. The pro forma adjustment reflects the removal of Solaire Partners’ revenue and expenses together with the elimination of the related non-controlling interest. The Company recognized a gain on deconsolidation equal to the excess of (i) the fair value of the consideration received—consisting of K Wave Media shares measured at their closing price on June 30, 2026—over the sum of (ii) the carrying amounts of the subsidiary's assets (including any goodwill) and liabilities at the date control was lost. |
| Schedule of solaire partners | |
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Derecognized
net asset (liabilities) at their carrying amounts | | |
Derecognized
non-controlling interests at their carrying amounts | | |
Fair
value of considerations received | | |
Gain
on deconsolidation | |
| Solaire Partners | |
| (999,714 | ) | |
| - | | |
| 1,680,427 | | |
| 2,680,141 | |
|