UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 14, 2020
| Chicken Soup for the Soul Entertainment Inc. |
| (Exact Name of Registrant as Specified in Charter) |
| Delaware | 001-38125 | 81- 2560811 | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 132 E. Putnam Avenue, Floor 2W, Cos Cob, CT | 06807 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (855) 398-0443
| N/A |
| (Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e 4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker symbol(s) | Name of each exchange on which registered |
| Class A Common Stock, $0.0001 par value per share | CSSE | The Nasdaq Stock Market LLC |
| 9.75% Series A Cumulative Redeemable Perpetual Preferred Stock, $0.0001 par value per share | CSSEP | The Nasdaq Stock Market LLC |
| 9.50% Notes due 2025 | CSSEN | The Nasdaq Stock Market LLC |
| ITEM 3.02 | Unregistered Sales of Equity Securities |
As previously disclosed, in connection with the formation of Crackle Plus, the joint venture created pursuant to that certain contribution agreement dated as of March 27, 2019 (the “Contribution Agreement”) between Chicken Soup for the Soul Entertainment Inc. (the “Company”), Crackle Plus, LLC, a Delaware Limited Liability Company (the “JV Entity”), CPE Holdings, Inc. (“CPEH”), a Delaware Corporation and affiliate of Sony Pictures Television Inc. (“SPT”), and Crackle, Inc., a Delaware corporation and wholly owned subsidiary of CPEH (“Crackle”), the Company granted CPEH and its affiliates (including SPT) the right to require the Company to purchase all, but not less than all, of CPEH’s interest in the JV Entity. The Contribution Agreement allows the Company to pay for the interest in the JV Entity through either the issuance of the Company’s 9.75% Series A Cumulative Redeemable Perpetual Preferred Shares (“CSSE Preferred Shares”), or, at the Company’s election, an amount of cash based on the number of CSSE Preferred Shares that would have been issued in payment therefore, using a price per share of $25 (the “Put Option”).
On December 14, 2020, CPEH elected to exercise the Put Option. The Company has 30 days to elect to pay cash in lieu of issuing some or all of the CSSE Preferred Shares. If the Company elects to pay the entire amount by issuing CSSE Preferred Shares, the Company will issue 1,600,000 CSSE Preferred Shares to CPEH. Following the transaction, the Company will own 100% of the outstanding interests of the JV Entity.
In addition, under the terms of the Contribution Agreement, the Company will issue 198,956 CSSE Preferred Shares to CPEH within three business days in lieu of cash reimbursement on certain expenses incurred by CPEH and its affiliates in connection with the joint venture transactions.
Within 90 days of the date of issuance of the CSSE Preferred Shares, the Company will file a registration statement registering the resale under the Securities Act of 1933, as amended, of all CSSE Preferred Shares issued by the Company in connection with the foregoing.
| ITEM 7.01. | Regulation FD Disclosure. |
On December 15, 2020, the Company issued the press release attached to this Current Report as Exhibit 99.1.
The information furnished under this Item 7.01, including the exhibit related thereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any disclosure document of the Company, except as shall be expressly set forth by specific reference in such document.
| ITEM 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit No. | Description |
| 99.1 | Press Release |
| 2 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: December 15, 2020 | CHICKEN SOUP FOR THE SOUL | |
| ENTERTAINMENT INC. | ||
| By: | /s/ William J. Rouhana, Jr. | |
| Name: William J. Rouhana, Jr. | ||
| Title: Chief Executive Officer | ||
Exhibit 99.1
Sony Pictures Television and Chicken Soup for the Soul Entertainment
Strengthen Relationship to Position Company for Further Growth
Sony Obtains Preferred Stock Position, Giving Chicken Soup for the Soul
100% Ownership of Crackle Plus
COS COB, CT – December 15, 2020 – Chicken Soup for the Soul Entertainment Inc. (Nasdaq: CSSE), one of the largest operators of streaming advertising-supported video-on-demand (AVOD) networks, today announced that, pursuant to the terms of the Crackle Plus joint venture agreement entered into in May 2019, Sony Pictures Television (SPT) exercised its option with respect to its ownership stake in Crackle Plus, giving SPT the right to obtain $40 million of preferred stock in Chicken Soup for the Soul Entertainment in exchange for its ownership stake in Crackle Plus. For the next 30 days Chicken Soup for the Soul Entertainment has the right to pay cash in lieu of some or all of the preferred stock. The Company has already determined that it will give Sony some portion in preferred stock. The transaction gives Chicken Soup for the Soul Entertainment 100% ownership and control of Crackle Plus.
“Sony has been an incredible partner for Chicken Soup for the Soul Entertainment and this transaction is the natural next step in our relationship,” said William J. Rouhana Jr, chief executive officer of Chicken Soup for the Soul Entertainment. “We welcome Sony as a large shareholder and look forward to continuing to work closely with them.”
“Chicken Soup for the Soul Entertainment has done a remarkable job integrating Crackle into their business,” said Erik Moreno, EVP Mergers & Acquisitions and Corporate Development for Sony Pictures Entertainment. “We look forward to strengthening our relationship as we move forward.”
Since acquiring Crackle from Sony in May 2019, the management of Chicken Soup for the Soul Entertainment has reduced the network’s cost structure, ramped up ad sales on its owned and operated networks and differentiated the network among other AVOD offerings through its strong complement of original and exclusive content. Additionally, Chicken Soup for the Soul Entertainment has steadily expanded its distribution and production pipeline as well as its content library, which now comprises over 10,800 movies and 22,000 television episodes available for its AVOD networks. The company is now investing in steps to further grow viewership across the Crackle Plus networks.
ABOUT CHICKEN SOUP FOR THE SOUL ENTERTAINMENT
Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CSSE) operates streaming video-on-demand networks (VOD). The company owns a majority stake in Crackle Plus, a company formed with Sony Pictures Television, which owns and operates a variety of ad-supported and subscription-based VOD networks including Crackle, Popcornflix, Popcornflix Kids, Truli, Pivotshare, Españolflix and FrightPix. The company also acquires and distributes video content through its Screen Media subsidiary and produces original long and short-form content through Landmark Studio Group, its Chicken Soup for the Soul Originals division and APlus.com. Chicken Soup for the Soul Entertainment is a subsidiary of Chicken Soup for the Soul, LLC, which publishes the famous book series and produces super-premium pet food under the Chicken Soup for the Soul brand name.
FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements that involve risks and uncertainties. Forward-looking statements are statements that are not historical facts. Such forward-looking statements are subject to risks (including those set forth in the Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 30, 2020) and uncertainties which could cause actual results to differ from the forward-looking statements. The company expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the company’s expectations with respect thereto or any change in events, conditions or circumstances on which any statement is based. Investors should realize that if our underlying assumptions for the projections contained herein prove inaccurate or that known or unknown risks or uncertainties materialize, actual results could vary materially from our expectations and projections.
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INVESTOR RELATIONS
Taylor Krafchik
Ellipsis
csse@ellipsisir.com
(646) 776-0886
MEDIA CONTACT
Kate Barrette
RooneyPartners LLC
kbarrette@rooneyco.com
(212) 223-0561
