Chicken Soup for the Soul Entertainment, Inc. [CSSE] Filings

10-Q 1 csse-20230630x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38125

CHICKEN SOUP FOR THE SOUL ENTERTAINMENT, INC.

(Exact name of registrant as specified in its charter)

Delaware	81-2560811
(State or other jurisdiction of incorporation)	(I.R.S. Employer Identification No.)

132 East Putnam Avenue – Floor 2W, Cos Cob, CT	06807
(Address of Principal Executive Offices)	(Zip Code)

855-398-0443

(Registrant’s Telephone Number, including Area Code)

Not Applicable

Former Name or Former Address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock Common Stock Purchase Warrant	CSSE CSSEL	The Nasdaq Stock Market LLC The Nasdaq Stock Market LLC
9.75% Series A Cumulative Redeemable Perpetual Preferred Stock	CSSEP	The Nasdaq Stock Market LLC
9.50% Notes Due 2025	CSSEN	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class Z Warrants	CSSEZ	OTC Markets

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of Common Stock outstanding as of August 10, 2023 totaled 31,382,275 as follows:

transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ -2 of the Exchange Act). Yes ☐ No ☒ 12,642,428 as follows:
Title of Each Class
Class A Common Stock, $.0001 par value per share		23,727,769
Class B Common Stock, $.0001 par value per share*		7,654,506

*Each share convertible into one share of Class A Common Stock at the direction of the holder at any time.

Table of Contents

Chicken Soup for the Soul Entertainment, Inc.

Table of Contents


		Page
		Number

	PART 1 - FINANCIAL INFORMATION

ITEM 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets at June 30, 2023 and December 31, 2022	3

	Condensed Consolidated Statements of Operations for three and six months ended June 30, 2023 and 2022	4

	Condensed Consolidated Statements of Comprehensive Loss for three and six months ended June 30, 2023 and 2022	5

	Condensed Consolidated Statements of Stockholders' Equity for three and six months ended June 30, 2023 and 2022	6

	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022	8

	Notes to Condensed Consolidated Financial Statements	9

ITEM 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	35

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	50

ITEM 4.	Controls and Procedures	50

	PART II - OTHER INFORMATION

ITEM 1.	Legal Proceedings	51

ITEM 1A.	Risk Factors	51

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

ITEM 3.	Defaults Upon Senior Securities	51

ITEM 4.	Mine Safety Disclosures	51

ITEM 5.	Other Information	51

ITEM 6.	Exhibits	52

SIGNATURES		53

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1: Financial Statements

Chicken Soup for the Soul Entertainment, Inc.

Condensed Consolidated Balance Sheets


	June 30,		December 31,
	2023		2022
	(unaudited)
ASSETS
Cash, cash equivalents and restricted cash	$	6,917,111	$	18,738,395
Accounts receivable, net of allowance for doubtful accounts of $1,872,302 and $1,277,597, respectively		159,316,288		113,963,425
Prepaid expenses and other current assets		9,044,398		13,196,180
Operating lease right-of-use assets		14,549,978		16,315,342
Content assets, net		109,708,725		126,090,508
Intangible assets, net		290,025,906		305,425,709
Goodwill		261,322,774		260,748,057
Other assets, net		27,714,084		29,401,793
Total assets	$	878,599,264	$	883,879,409

LIABILITIES AND EQUITY
Accounts payable	$	65,156,863	$	50,960,682
Accrued expenses		93,694,320		87,817,015
Due to affiliated companies		4,022,477		3,778,936
Programming obligations		58,228,000		55,883,788
Film library acquisition obligations		30,189,206		39,750,121
Accrued participation costs		46,333,084		28,695,713
Debt, net		511,902,350		479,653,611
Contingent consideration		6,866,449		7,311,949
Put option obligation		4,400,000		11,400,000
Operating lease liabilities		16,127,975		18,079,469
Other liabilities		22,868,837		20,800,186
Total liabilities		859,789,561		804,131,470

Commitments and contingencies (Note 15)

Stockholders' Equity:
Series A cumulative redeemable perpetual preferred stock, $.0001 par value, liquidation preference of $25.00 per share, 10,000,000 shares authorized; 5,556,605 and 4,496,345 shares issued and outstanding, respectively; redemption value of $138,915,125 and $112,408,625, respectively		555		450
Class A common stock, $.0001 par value, 140,000,000 shares authorized; 26,003,931 and 15,621,562 shares issued, 23,581,089 and 13,198,720 shares outstanding, respectively		2,579		1,559
Class B common stock, $.0001 par value, 20,000,000 shares authorized; 7,654,506 shares issued and outstanding, respectively		766		766
Additional paid-in capital		396,992,240		355,185,280
Deficit		(350,061,978)		(247,752,446)
Accumulated other comprehensive income		(70,969)		47,528
Class A common stock held in treasury, at cost (2,422,842 and 2,422,842 shares, respectively)		(28,165,913)		(28,165,913)
Total stockholders’ equity		18,697,280		79,317,224
Noncontrolling interests		112,423		430,715
Total equity		18,809,703		79,747,939
Total liabilities and equity	$	878,599,264	$	883,879,409

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Chicken Soup for the Soul Entertainment, Inc.

Condensed Consolidated Statements of Operations

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net revenues	$	79,910,063	$	37,636,947	$	189,509,356	$	66,843,144
Costs and expenses
Operating		65,285,767		31,596,524		161,592,135		54,171,932
Selling, general and administrative		24,556,530		17,373,018		57,320,081		30,189,538
Amortization and depreciation		10,995,085		1,680,443		22,178,802		3,328,701
Management and license fees		4,926,349		3,763,695		12,778,490		6,684,315
Total costs and expenses		105,763,731		54,413,680		253,869,508		94,374,486
Operating loss		(25,853,668)		(16,776,733)		(64,360,152)		(27,531,342)

Interest expense		17,901,099		2,022,770		34,567,358		3,333,229
Other non-operating income, net		(1,370,495)		(279,405)		(2,065,185)		(481,197)
Loss before income taxes and preferred dividends		(42,384,272)		(18,520,098)		(96,862,325)		(30,383,374)
Income tax provision		(1,898,687)		14,000		(684,536)		34,000
Net loss before noncontrolling interests and preferred dividends		(40,485,585)		(18,534,098)		(96,177,789)		(30,417,374)
Net loss attributable to noncontrolling interests		(76,942)		(142,350)		(204,604)		(180,735)
Net loss attributable to Chicken Soup for the Soul Entertainment, Inc.		(40,408,643)		(18,391,748)		(95,973,185)		(30,236,639)
Less: preferred dividends		3,323,756		2,391,442		6,336,347		4,673,511
Net loss available to common stockholders	$	(43,732,399)	$	(20,783,190)	$	(102,309,532)	$	(34,910,150)

Net loss per common share:
Basic and diluted	$	(1.50)	$	(1.39)	$	(4.07)	$	(2.30)
Weighted-average common shares outstanding:
Basic and diluted		29,171,223		14,950,458		25,163,744		15,152,222

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Chicken Soup for the Soul Entertainment, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net loss	$	(40,485,585)	$	(18,534,098)	$	(96,177,789)	$	(30,417,374)
Other comprehensive income (loss):
Foreign currency translation adjustments		(57,251)		(25,008)		(232,185)		(26,612)
Comprehensive loss attributable to noncontrolling interests		27,990		13,712		113,688		14,727
Comprehensive loss	$	(40,514,846)	$	(18,545,394)	$	(96,296,286)	$	(30,429,259)

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Chicken Soup for the Soul Entertainment, Inc

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)


	Preferred Stock			Common Stock												Accumulated
				Class A				Class B				Additional				Other
		Par				Par				Par		Paid-In				Comprehensive		Treasury		Noncontrolling
	Shares	Value		Shares		Value		Shares		Value		Capital		Deficit		Income (Loss)		Stock		Interests			Total
Balance, December 31, 2022 (audited)	4,496,345	$	450		15,621,562	$	1,559		7,654,506	$	766	$	355,185,280	$	(247,752,446)	$	47,528	$	(28,165,913)	$	430,715	$	79,747,939
Share based compensation - stock options													850,821										850,821
Share based compensation - common stock													63,750										63,750
Issuance of common stock, net					359,831		21						1,887,220										1,887,241
Issuance of preferred stock, net	617,182		61										10,657,221										10,657,282
Stock issued under ESPP					8,703		18						156,773										156,791
Lincoln Park					500,000		50						1,469,950										1,470,000
Stock issued as payment for management and licensing fees					1,131,148		113						3,449,887										3,450,000
Dividends on preferred stock															(3,012,591)								(3,012,591)
Net loss attributable to noncontrolling interests																					(127,662)		(127,662)
Other comprehensive loss, net																	(174,934)						(174,934)
Comprehensive loss attributable to noncontrolling interests																	85,698				(85,698)		-
Net loss															(55,564,542)								(55,564,542)
Balance, March 31, 2023 (unaudited)	5,113,527	$	511		17,621,244	$	1,761		7,654,506	$	766	$	373,720,902	$	(306,329,579)	$	(41,708)	$	(28,165,913)	$	217,355	$	39,404,095
Share based compensation - stock options													594,613										594,613
Share based compensation - common stock													63,750										63,750
Issuance of preferred stock, net	443,078		44										6,281,767										6,281,811
Issuance of common stock, net					7,978,888		778						15,099,661										15,100,439
Net loss attributable to noncontrolling interests																					(76,942)		(76,942)
Stock issued as payment for management and licensing fees					403,799		40						1,231,547										1,231,587
Other comprehensive loss, net																	(57,251)						(57,251)
Comprehensive loss attributable to noncontrolling interests																	27,990				(27,990)		-
Dividends on preferred stock															(3,323,756)								(3,323,756)
Net loss															(40,408,643)								(40,408,643)
Balance, June 30, 2023 (unaudited)	5,556,605	$	555		26,003,931	$	2,579		7,654,506	$	766	$	396,992,240	$	(350,061,978)	$	(70,969)	$	(28,165,913)	$	112,423	$	18,809,703

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Preferred Stock

Common Stock

Accumulated

Class A

Class B

Additional

Other

Par

Paid-In

Comprehensive

Treasury

Noncontrolling

Shares

Value

Shares

Value

Shares

Value

Capital

Deficit

Income (Loss)

Stock

Interests

Total

Balance, December 31, 2021 (audited)

3,698,318

370

8,964,330

899

7,654,506

766

240,609,345

(136,462,244)

571

(13,202,407)

651,853

91,599,153

Share based compensation - stock options

933,047

Share based compensation - common stock

63,750

Issuance of preferred stock, net

52,060

1,288,734

1,288,739

Purchase of treasury stock

(8,584,102)

Acquisition of subsidiary noncontrolling interest

84,000

(2,200,008)

(2,200,000)

Locomotive business combination

Chicken Soup for the Soul Entertainment, Inc. [CSSE] Filings
Chicken Soup for the Soul Entertainment, Inc. [CSSEP] Filings
Chicken Soup for the Soul Entertainment, Inc. [CSSEL] Filings
Chicken Soup for the Soul Entertainment, Inc. [CSSEN] Filings
Chicken Soup for the Soul Entertainment, Inc. [CSSEZ] Filings
10-Q	[2023-08-14]
10-Q	[2023-05-15]
10-K	[2023-03-31]
10-Q	[2022-11-14]
10-Q	[2022-08-12]
10-Q	[2022-05-11]
10-K	[2022-03-31]
10-Q	[2021-11-08]
10-Q	[2021-08-11]
10-Q	[2021-05-13]
10-K	[2021-03-31]
S-1	[2021-01-25]
S-1	[2020-12-08]
10-Q	[2020-11-12]
10-Q	[2020-08-13]
S-1	[2020-06-16]
S-1	[2020-06-16]
10-Q	[2020-05-14]
10-K	[2020-03-30]
10-Q	[2019-11-14]
10-Q	[2019-08-14]
S-1	[2019-07-02]
10-Q	[2019-05-15]
10-K	[2019-04-01]
10-Q	[2018-11-14]
10-Q	[2018-08-14]
S-1	[2018-06-13]
10-Q	[2018-05-31]
10-Q	[2018-05-10]
10-K	[2018-03-30]
10-Q	[2017-11-06]
10-Q	[2017-10-02]

Chicken Soup for the Soul Entertainment, Inc. [CSSE] Filings

Chicken Soup for the Soul Entertainment, Inc. [CSSEP] Filings

Chicken Soup for the Soul Entertainment, Inc. [CSSEL] Filings

Chicken Soup for the Soul Entertainment, Inc. [CSSEN] Filings

Chicken Soup for the Soul Entertainment, Inc. [CSSEZ] Filings