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

10-Q 1 csse-20230331x10q.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 March 31, 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 W Warrants	CSSEW	OTC Markets
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 May11, 2023 totaled 29,235,269 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		21,580,763
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 March 31, 2023 and December 31, 2022	3

	Condensed Consolidated Statements of Operations for three months ended March 31, 2023 and 2022	4

	Condensed Consolidated Statements of Comprehensive Loss for three months ended March 31, 2023 and 2022	5

	Condensed Consolidated Statements of Stockholders' Equity for three months ended March 31, 2023 and 2022	6

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 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	33

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	45

ITEM 4.	Controls and Procedures	45

	PART II - OTHER INFORMATION

ITEM 1.	Legal Proceedings	46

ITEM 1A.	Risk Factors	46

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46

ITEM 3.	Defaults Upon Senior Securities	46

ITEM 4.	Mine Safety Disclosures	46

ITEM 5.	Other Information	46

ITEM 6.	Exhibits	47

SIGNATURES		48

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1: Financial Statements

Chicken Soup for the Soul Entertainment, Inc.

Condensed Consolidated Balance Sheets


	March 31,		December 31,
	2023		2022
	(unaudited)
ASSETS
Cash, cash equivalents and restricted cash	$	5,467,393	$	18,738,395
Accounts receivable, net of allowance for doubtful accounts of $1,592,078 and $1,277,597, respectively		149,938,518		113,963,425
Prepaid expenses and other current assets		11,757,709		13,196,180
Operating lease right-of-use assets		15,429,760		16,315,342
Content assets, net		115,036,955		126,090,508
Intangible assets, net		297,808,803		305,425,709
Goodwill		260,969,417		260,748,057
Other assets, net		27,797,720		29,401,793
Total assets	$	884,206,275	$	883,879,409

LIABILITIES AND EQUITY
Accounts payable	$	54,414,979	$	50,960,682
Accrued expenses		94,160,793		87,817,015
Due to affiliated companies		5,292,617		3,778,936
Programming obligations		61,591,834		55,883,788
Film library acquisition obligations		31,191,155		39,750,121
Accrued participation costs		45,911,280		28,695,713
Debt, net		499,643,035		479,653,611
Contingent consideration		7,066,699		7,311,949
Put option obligation		6,650,000		11,400,000
Operating lease liabilities		17,104,784		18,079,469
Other liabilities		21,775,004		20,800,186
Total liabilities		844,802,180		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; 5,113,527 and 4,496,345 shares issued and outstanding, respectively; redemption value of $127,838,175 and $112,408,625, respectively		511		450
Class A common stock, $.0001 par value, 140,000,000 shares authorized; 17,621,244 and 15,621,562 shares issued, 15,198,402 and 13,198,720 shares outstanding, respectively		1,761		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		373,720,902		355,185,280
Deficit		(306,329,579)		(247,752,446)
Accumulated other comprehensive income		(41,708)		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		39,186,740		79,317,224
Noncontrolling interests		217,355		430,715
Total equity		39,404,095		79,747,939
Total liabilities and equity	$	884,206,275	$	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 March 31,
	2023		2022
Net revenues	$	109,599,293	$	29,206,197
Costs and expenses
Operating		96,306,368		22,575,408
Selling, general and administrative		32,763,551		12,816,520
Amortization and depreciation		11,183,717		1,648,258
Management and license fees		7,852,141		2,920,620
Total costs and expenses		148,105,777		39,960,806
Operating loss		(38,506,484)		(10,754,609)

Interest expense		16,666,259		1,310,459
Other non-operating income, net		(694,690)		(201,792)
Loss before income taxes and preferred dividends		(54,478,053)		(11,863,276)
Income tax provision		1,214,151		20,000
Net loss before noncontrolling interests and preferred dividends		(55,692,204)		(11,883,276)
Net loss attributable to noncontrolling interests		(127,662)		(38,385)
Net loss attributable to Chicken Soup for the Soul Entertainment, Inc.		(55,564,542)		(11,844,891)
Less: preferred dividends		3,012,591		2,282,069
Net loss available to common stockholders	$	(58,577,133)	$	(14,126,960)

Net loss per common share:
Basic and diluted	$	(2.76)	$	(0.92)
Weighted-average common shares outstanding:
Basic and diluted		21,249,105		15,331,743

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 March 31,
	2023		2022
Net loss	$	(55,692,204)	$	(11,883,276)
Other comprehensive income (loss):
Foreign currency translation adjustments		(174,934)		(1,604)
Comprehensive loss attributable to noncontrolling interests		85,698		1,015
Comprehensive loss	$	(55,781,440)	$	(11,883,865)

See accompanying notes to unaudited condensed consolidated financial statements.

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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 options exercised																							—
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

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents


	Preferred Stock			Common Stock												Subsidiary
				Class A				Class B				Additional				convertible
		Par				Par				Par		Paid-In				Preferred		Treasury		Noncontrolling
	Shares	Value		Shares		Value		Shares		Value		Capital		Deficit		Stock		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										933,047
Share based compensation - common stock													63,750										63,750
Issuance of preferred stock, net	52,060		5										1,288,734										1,288,739
Purchase of treasury stock																			(8,584,102)				(8,584,102)
Acquisition of subsidiary noncontrolling interest					84,000		8						(2,200,008)										(2,200,000)
Locomotive business combination																					144,118		144,118
1091 business combination	80,000		8		375,000		38						5,283,705										5,283,751
Net loss attributable to noncontrolling interests																					(38,385)		(38,385)
Other comprehensive loss, net																	(1,604)						(1,604)
Comprehensive loss attributable to noncontrolling interests																	1015				(1,015)		—
Dividends on preferred stock															(2,282,069)								(2,282,069)
Net loss															(11,844,891)								(11,844,891)
Balance, March 31, 2022 (unaudited)	3,830,378	$	383		9,423,330	$	945		7,654,506	$	766	$	245,978,573	$	(150,589,204)	$	(18)	$	(21,786,509)	$	756,571	$	74,361,507

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

Chicken Soup for the Soul Entertainment, Inc

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Three Months Ended March 31,
	2023		2022
Cash flows from Operating Activities:
Net loss	$	(55,692,204)	$	(11,883,276)
Adjustments to reconcile net loss to net cash used in operating activities:

Share-based compensation		914,571		996,797
Content asset amortization		27,250,602		4,878,232
Amortization of deferred financing and debt discount costs		1,188,451		149,069
Amortization and depreciation of intangibles, property and equipment		11,183,717		2,004,073
Bad debt and video return expense		1,157,703		581,834
Non-cash payment of management and licensing fees		3,450,000		—
Deferred income taxes		1,179,597		—
Changes in operating assets and liabilities:
Trade accounts receivable		(37,132,796)		(1,915,460)
Prepaid expenses and other assets		2,044,671		(950,440)
Content assets		(9,273,675)		(24,906,339)
Accounts payable, accrued expenses and other payables		21,676,983		1,638,507
Film library acquisition and programming obligations		(50,920)		8,394,383
Accrued participation costs		17,215,567		5,795,134
Other liabilities		(1,179,464)		2,170,050
Net cash used in operating activities		(16,067,197)		(13,047,436)
Cash flows from Investing Activities:
Expenditures for property and equipment		(441,300)		(612,813)
Business combination, net of cash acquired		—		(6,672,474)
Increase in due from affiliated companies		—		(684,946)
Net cash used in investing activities		(441,300)		(7,970,233)
Cash flows from Financing Activities:
Principal payments on debt		—		(22,130)
Repurchase of common stock		—		(8,584,102)
Payment of contingent consideration		(245,250)		(2,100,195)
Payment of put option obligation		(4,750,000)		—
Acquisition of noncontrolling interests		—		(750,000)
Payments of revolving loan		(353,984)		—
Payments on capital leases		(572,056)		—
Payments on film acquisition advances		(3,463,791)		—
Proceeds from issuance of Class A common stock		3,514,032		—
Proceeds from issuance of preferred stock		10,657,282		1,288,739
Proceeds from revolving loan		—		4,350,014
Proceeds from film acquisition advances		—		6,796,000
Increase (decrease) in due to affiliated companies		1,513,681		(489,959)
Dividends paid to preferred stockholders		(2,887,485)		(2,255,888)
Net cash provided (used) by financing activities		3,412,429		(1,767,521)
Effect of foreign exchanges on cash, cash equivalents and restricted cash		(174,934)		(1,604)
Net decrease in cash, cash equivalents and restricted cash		(13,271,002)		(22,786,794)
Cash, cash equivalents and restricted cash at beginning of period		18,738,395		44,286,105
Cash, cash equivalents and restricted cash at end of the period	$	5,467,393	$	21,499,311

Supplemental data:
Cash paid for interest	$	1,811,376	$	1,151,636
Non-cash investing activities:
Property and equipment in accounts payable and accrued expenses	$	1,292,717

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

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