Redbox Owner Receives Nasdaq Delisting Warning for Not Filing Quarterly Fiscal Result

Chicken Soup for the Soul Entertainment, parent of Redbox, Nov. 22 announced it has received notice from the Nasdaq indicating it is not in compliance with the stock trading board’s listing rules.

Specifically, Nasdaq said Chicken Soup has not filed its Form 10-Q for the fiscal period ended Sept. 30, 2023, with the Securities and Exchange Commission (“SEC”). The Notice does not immediately affect the listing or trading of the company’s securities. According to Nasdaq, the Chicken Soup was required to file Form 10-Q by Nov. 14, 2023.

Under Nasdaq rules, Chicken Soup has 60 calendar days from receipt of the notice to submit a plan to regain compliance. If Nasdaq accepts the plan, then it may grant an exception of up to 180 calendar days (May 20, 2024) to regain compliance. If Nasdaq does not accept Chicken Soup’s plan, it can appeal the decision to a Nasdaq hearings panel.

Chicken Soup said it is working diligently to complete the Form 10-Q and anticipates filing the Form 10-Q as soon as possible. Separately, the company’s stock valuation currently sits at 29 cents per share, well below Nasdaq’s $1-per-share minimum.

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Cineverse Announces 1-For-20 Reverse Stock Split, Looking to Meet Nasdaq Share Price Minimum

Cineverse (formerly Cinedigm) June 8 announced that its board of directors — at a special May 30 meeting — has approved a 1-for-20 reverse stock split of the streaming video operator and home entertainment distributor’s common stock. The reverse split will go into effect on June 9.

With Cineverse’s shares trading well below the $1 Nasdaq minimum for some time, the reverse split decreases the total number of shares of common stock outstanding and proportionately increases the market price of the common stock in order to meet the continued listing requirements of The Nasdaq Capital Market. The company’s common stock will continue to trade under the symbol “CNVS.”

As a result of the consolidation, every 20 shares of common stock issued and outstanding will be automatically reclassified into one new share of common stock. The move does not modify any rights or preferences of the shares of the common stock.

Cineverse shares are down about 14% in early trading priced at 26 cents per share. On June 9, if that share price remained, it would elevate to $5.20 per share based on the combination of 20 previous shares of common stock priced at 26 cents each.

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Cinedigm Looking for Nasdaq Extension of Company Stock Listing

Cinedigm April 11 disclosed it is looking for a second reprieve from Nasdaq regarding its listing as a publicly traded stock. The Los Angeles-based streaming video network operator and home entertainment distributor had been given 180 days to raise its stock price above the mandatory minimum $1-per-share price by April 3.

That deadline passed with Cinedigm unable to increase its share price to the mandatory minimum threshold.

The company is now requesting a hearing before the Nasdaq panel at which it will present its plan of compliance and request a further extension. The panel has the discretion to grant Cinedigm an additional 180 calendar days from April 5 to regain compliance. This request will automatically stay any delisting or suspension action pending the issuance of a final decision by the panel and the expiration of any further extension granted by the panel.

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Should Cinedigm’s stock be delisted, the company could have more difficulty obtaining outside funding, including issuing new shares to the market to establish new financial initiatives.

Cinedigm’s share price closed April 11 at 45 cents per share. The company ended its most-recent fiscal period with net income of nearly $5 million on revenue of almost $28 million.

Redbox Stock Prices Surges, Possibly Threatening the Chicken Soup for the Soul Acquisition

Driven by social media investors and internet chatter, shares of Redbox Entertainment exploded June 13 in midday trading, surging more than 22% to $18.20 per share as day traders swapped more than 40 million shares — double the peak daily tally.

Similar to the fuss made a few years ago when social media investors sent shares of GameStop and AMC Theatres on wild rollercoaster valuations, scuttlebutt about Redbox on the Reddit WallStreetBets investing forum reportedly surged 400% in the past 24 hours.

Morningstar reported that short interest in Redbox shares reached almost 38% of the float, or the total number of shares that are available for public investors to buy and sell.

The buzz could impact Redbox’s acquisition by Chicken Soup for the Soul Entertainment, which had agreed to buy the legacy kiosk disc vendor based on a valuation of $375 million — not the current $700+ million value.

Regardless, Michael Pachter, media analyst with Wedbush Securities in Los Angeles, contends the entire scenario defies logic. He believes meme investors think that Redbox is worth nearly $1 billion, which includes debt.

“The stock might be up on that, but if my reading is correct, the meme traders are making a huge mistake,” Pachter said in a recent email.

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Redbox Stock on Wild Run Day After Going Public

Redbox, the venerable kiosk disc rental company transitioning to digital entertainment distribution, Oct. 26 saw its shares up more than 96% at $23.39 per share in early trading — the day after going public on the Nasdaq exchange. Shares fell minutes later to around $19 and then $17 after opening at $11.75 per share, with trading volume above 7.6 million shares and climbing.

Redbox Entertainment Inc. is the new corporate identity following the company’s previously-announced merger with Seaport Global Acquisition Corp., a special purpose acquisition company, or SPAC.

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At launch, Redbox had more than 45 million shares outstanding, including a majority held by former owner Apollo Capital Management, which acquired the disc vendor from Outerwall in 2016 for $1.6 billion.

With Ringing of the Bell, Redbox Officially a Public Company

CEO Galen Smith travelled to New York’s famed Times Square to ring the opening bell on the Nasdaq  stock exchange Monday (Oct. 25) morning, marking Redbox’s official debut as a publicly traded company.

“It was amazing, it was a huge highlight,” Smith told Media Play News in an interview shortly after the ceremony. “This is something I’ve wanted to do for years. I started working on taking Redbox public back when I was a banker in 2008, so to be actually here and doing this feels like a truly incredible day.”

Rather than going the long and tedious IPO route, Redbox became Redbox Entertainment Inc. — with its common stock and warrants trading under the ticker symbols “RDBX” and “RDBXW,” respectively — through a merger with Seaport Global Acquisition Corp., a publicly traded special purpose acquisition company.

“We felt it was going to be the most efficient way to bring the company to market,” Smith said. “Our business is in transition, moving from physical only to multi-channel and multi-platform, so it allowed us to have a platform to really tell our story.”

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The story, of course, is a digital transformation to bulk up Redbox’s digital offerings — digital movie sales and rentals; free live TV, both on demand and ad-supported; and, down the road, selling subscriptions to streaming services — while using the company’s more than 40,000 disc-rental kiosks as a marketing tool to further facilitate the consumer transition from physical to digital.

“We have this incredible business with a very loyal customer base that absolutely loves movies,” Smith said. “They still love renting movies at our kiosks, but as we know consumers are shifting to digital, and we want to create an opportunity for them to make it easy by having all those opportunities in one place — free live TV, TVOD, and on demand — and then as part of this transition we’re going through we also will be adding subscription channels.

“And then you have this single plane of glass, a single window, with single billing, that makes it incredibly easy for consumers to access all of this entertainment. And having this incredible billboard through our kiosks creates an amazing opportunity that really allows us to serve our customer base.”

See more photos of Redbox’s Nasdaq ceremony

Redbox’s digital transformation, ambitious as it might be, is fully on track, Smith said. “We’re making a lot of progress,” he said. “We’ve set some important goals and objectives, and we keep running and chasing after that. We’re pleased with the momentum, but we think there’s a huge opportunity and we want to seize that opportunity. We still have a long way to go.”

Redbox’s over-arching goal, Smith said, is to create a one-stop destination for entertainment. “And we’re going to get there by constantly bringing in more titles for ad-supported free live TV, as well as more channels — we’d love to get 200 or so channels; continuing to expand the functionality of TVOD; and, with subscriptions, it’s really important for us to get those deals done and make that content available to consumers.”

Through the business combination with Seaport Global, Smith said, Redbox raised nearly $90 million in cash. “Part of it went to pay down debt, and the other part we’re investing in the business, in four key areas,” he said. “First, we’re building up our channels platform. Second, we’re leaning into advertising. Right now we have this really creative program with Roku selling discounted bundles for Redbox digital. You get that when you buy a Roku streaming device at Walmart. Third, we’re going to license more content for our ad-supported service, both on demand and free live TV. And then we’re going to continue to build up Redbox Entertainment, the titles we’ve been distributing — we’re going to bring in more and more of those.”

 

Trans World Entertainment Switching Nasdaq Markets

As expected, fiscally-challenged Trans World Entertainment Corp. is taking its stock from the Nasdaq Global Market to the Nasdaq Capital Market, effective July 18.

The corporate parent to home entertainment retailer For Your Entertainment (f.y.e.) made the switch to avoid exceeding a 180-day grace period granted by Nasdaq to bring its stock above the minimum $1-per-share threshold.

Trans World, which is affecting a 1-for-20 shares reverse stock split on Aug. 15, now has another 180-period until Jan. 13, 2020 to bring its share price above the $1 minimum valuation.

The reverse stock split is primarily intended to bring TWEC into compliance with the minimum average closing share price requirement for maintaining its listing on the Nasdaq Capital Market. The company’s common stock will continue to trade under the symbol “TWMC”.

The split will reduce the number of shares of outstanding common stock from approximately 36,258,839 million shares to approximately 1,812,941 million shares.

TWEC shares closed July 16 at 28 cents per share. The company has a market capitalization of just $10.3 million.

MoviePass Lost More Money Than Originally Reported

In another blow to fiscally-challenged theatrical ticket subscription service MoviePass, parent Helios and Matheson Analytics March 12 issued a revised financial statement revealing the service lost millions more than originally reported.

HMNY said its revised third-quarter (ended Sept. 30, 2018) net loss topped $146.6 million — nearly 7% more than a net loss of $137 million originally reported. For nine months of the fiscal year, HMNY lost $256.3 million, 3.8% more than a loss of $246.7 million.

HMNY attributed the error to overstatement of subscription revenue, including $700,000 of revenue from terminated MoviePass subscriptions by Costco; false recognition of about $5.9 million of revenue from certain suspended subscriptions that had not yet been consented to by subscribers.

The company also identified a non-cash error related to the accounting of derivative securities, which resulted in an understatement of net loss of approximately $2.9 million. HMNY said the error underscored a “material weakness” relating to subscription management.

CEO Ted Farnsworth and CFO Stuart Benson said measures have been taken to avoid future accounting issues, including implementation of software upgrades to provide “real-time” information for managing and accounting for subscriptions, including subscriptions that are terminated or in a suspended state.

“Members of the company’s management have discussed the matters with Rosenberg Rich Baker Berman, P.A., [HMNY’s] accounting firm,” Benson wrote in the filing.

HMNY, which had its stock delisted by Nasdaq for failing to meet the $1 minimum share value, has struggled to sustain the MoviePass business  model that enabled subscribers daily access to a theatrical screening for $9.95 monthly fee.

 

Report: MoviePass Parent Expected to Delist

With its stock flatlining at a penny per share, Helios & Matheson Analytics — parent of fiscally-challenged theatrical ticket service MoviePass — is expected to delist from Nasdaq.

Bloomberg, citing market data, said HMNY could delist as early as the end of the business day on Feb. 12 — resuming trading as an over-the-counter stock.

HMNY spun-off MoviePass in January in an attempt to jumpstart investor confidence after the pioneering $9.95 monthly over-the-top ticket service resonated with consumers at the expense of a stable business model.

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Successive fiscal quarters generated fiscal losses in the hundreds of millions, compounded by the launch of a competing ticket service from AMC Theatres that resulted in a free-falling HMNY stock.

While MoviePass Films continues to produce low-budget movies, MoviePass took another PR hit when Variety reported that a senior executive recently hired to help turn the service around had been charged in 2010 with stealing thousands of dollars from a previous employer.