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): November 12, 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 1.01. | Entry into a Material Definitive Agreement. |
As previously disclosed, on May 14, 2019, Chicken Soup for the Soul Entertainment Inc. (the “Company”) created a joint venture entity, Crackle Plus, LLC (the “JV”) with CPE Holdings, Inc. (“CPEH”), an affiliate of Sony Pictures Television Inc., and, as consideration for contributions made to the JV, the Company received 99,000 units of common equity of the JV (“Common Units”) and CPEH received 1,000 Common Units and 37,000 units of preferred equity of the JV (“Preferred Units”) and certain warrants of the Company. The Amended and Restated Limited Liability Company Operating Agreement of Crackle Plus (“JV Operating Agreement”) provides that from May 14, 2020 to November 14, 2020, CPEH will have the right (i) to convert its all of its Preferred Units into such number of Common Units that will provide CPEH with a 49% interest in the JV (“Conversion Right”) or (ii) to require the Company to purchase all of CPEH’s Common Units and Preferred Units, for cash or the issuance of the Company’s 9.75% Series A Cumulative Redeemable Perpetual Preferred Shares (“Put Option”). Subject to certain limitations, the JV Operating Agreement provides that in the event that CPEH has not exercised the Conversion Right or Put Option Conversion Right on or before November 14, 2020, CPEH shall be deemed to have automatically exercised the Put Option on November 14, 2020.
On November 12, 2020, the Company and CPEH entered into an amendment (“Amendment”) to the JV Operating Agreement to extend the date by which CPEH must exercise the Conversion Right or Put Right by thirty (30) days, from November 14, 2020 to December 14, 2020.
The foregoing description of the Amendment does not purport to be complete, and is qualified in its entirety by reference to the Amendment to the Operating Agreement that is filed as Exhibit 10.1 to this Current Report on Form 8-K.
| Item 7.01. | Regulation FD Disclosure. |
On November 12, 2020, the Company issued a press release announcing the foregoing, a copy of which is furnished as Exhibit 99.1 hereto. The information set forth in this Item 7.01, including the text of the press release attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of such section. Such information shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits: |
| Exhibit No. | Description |
| 10.1 | Amendment to Operating Agreement. |
| 99.1 | Press Release dated November 12, 2020. |
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: November 16, 2020 | CHICKEN SOUP FOR THE SOUL ENTERTAINMENT INC. | ||
| By: | /s/ William J. Rouhana, Jr. | ||
| Name: William J. Rouhana, Jr. | |||
| Title: Chief Executive Officer | |||
Exhibit 10.1
November 10, 2020
Crackle Plus, LLC
132 E. Putnam Avenue, Floor 2
Cos Cob, Connecticut 06807
Attention: Mr. William J. Rouhana, Jr.
Email: wrouhana@chickensoupforthesoul.com
Re: Extension of Exercise Period
Dear Bill:
Reference is hereby made to (a) that certain Amended and Restated Limited Liability Company Agreement (the “LLC Agreement”) dated as of May 14, 2019 by and among Crackle Plus, LLC (the “Company”), Chicken Soup for the Soul Entertainment, Inc. (“CSSE”) and CPE Holdings, Inc., as successor in interest of Crackle, Inc. (“CPE”), and (b) that certain Contribution Agreement (the “Contribution Agreement”), dated as of March 27, 2019, by and among CSSE, CPE and the Company. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the LLC Agreement. The parties hereto acknowledge and agree as follows:
| 1. | Pursuant to Sections 9.03 and 9.04 of the LLC Agreement, during the six (6) month period commencing May 14, 2020 and ending November 14, 2020 (the “Exercise Period”), CPE currently has the right, in its sole discretion, to exercise either the Put Option or the Conversion Right (the “Equity Options”). |
| 2. | CPE is currently considering the Equity Options diligently and in good faith, and has notified the other parties hereto that it would like to extend the Exercise Period by one (1) additional month to end December 14, 2020. The parties hereto hereby agree to extend the Exercise Period by one (1) additional month to end at 5PM NY time on December 14, 2020. |
| 3. | The parties hereto further agree to extend the period during which CPE may request a refund of its reasonable, documented, third-party expenses in accordance with Section 9.5(a) of the Contribution Agreement to end at 5PM NY time on December 14, 2020. |
| 4. | Except as expressly set forth in this Extension of Exercise Period Letter, the terms of the LLC Agreement and the Contribution Agreement shall remain in full force and effect. |
[Signature Page Follows.]
| Sincerely, | |||
| CPE Holdings, Inc. | |||
| By: | /s/ Eric Gaynor | ||
| Name: Eric Gaynor | |||
| Title: Assistant Secretary | |||
Acknowledged and Agreed:
Crackle Plus, LLC
| By: | /s/ William J. Rouhana, Jr. |
Name: William J. Rouhana, Jr.
Title: CEO
Date: November 12, 2020
Chicken Soup for the Soul Entertainment, Inc.
| By: | /s/ William J. Rouhana, Jr. |
Name: William J. Rouhana, Jr.
Title: CEO
Date: November 12, 2020
Exhibit 99.1
 |
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Chicken Soup for the Soul Entertainment and Sony Pictures Television Extend Crackle Plus Option |
COS COB, CT –November 12, 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 the 30-day extension of a key deadline related to Sony Pictures Television’s (SPT) Crackle Plus ownership option.
Pursuant to the Crackle acquisition agreement in May of 2019, Sony Pictures Television was required to decide by November 14, 2020 whether to convert its current ownership of Chicken Soup for the Soul Entertainment’s Crackle Plus subsidiary into 49% of the common ownership of Crackle Plus or into $40 million of Chicken Soup for the Soul Entertainment’s preferred shares. SPT and the company have mutually agreed to an extension to consider these options and potential alternatives, and SPT will now be required to make a decision by December 14, 2020.
“We have always seen a path to an expanded relationship with Sony and we are looking forward to taking this additional time to evaluate opportunities to strengthen our partnership,” said William J. Rouhana Jr, Chairman & CEO of Chicken Soup for the Soul Entertainment.
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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www.cssentertainment.com |
@CSSEntertain |
www.facebook.com/chickensoupforthesoul |
INVESTOR RELATIONS
Taylor Krafchik
Ellipsis
csse@ellipsisir.com
(646) 776-0886
MEDIA CONTACT
Kate Barrette
RooneyPartners LLC
kbarrette@rooneyco.com
(212) 223-0561
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www.cssentertainment.com |
@CSSEntertain |
www.facebook.com/chickensoupforthesoul |