UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01 | Entry Into a Material Definitive Agreement. |
1. Acquisition of SH2022
On July 7, 2023, Strong Studios, Inc (“Strong Studios”), a wholly-owned subsidiary of Strong Global Entertainment, Inc., entered into the Safehaven 2022, Inc. Stock Purchase Agreement with Unbounded Services LLC, to purchase 510 shares of the common stock of Safehaven 2022, Inc. (“SH2022”), effective as of June 23, 2023. As a result, Strong Studios’ ownership in SH2022 increased from 49% to 100%, and SH2022 became a wholly owned subsidiary of Strong Studios.
2. Transactions with CSSE Companies
On June 30, 2023, SH2022 entered into a purchase agreement (the “Purchase Agreement”) with Screen Media Ventures, LLC (“SMV”), to purchase all of SMV’s right, title and interest in a television series presently entitled “Safehaven,” including all rights acquired by SMV pursuant to that certain distribution agreement dated March 3, 2022 and subsequently amended on May 20, 2022 (the “Distribution Agreement”) between and among SMV, Strong Studios and SH2022. SMV is a subsidiary of Chicken Soup for the Soul Entertainment, Inc. (Nasdaq: CCSE) (“CSSE”).
The purchase price is deemed satisfied by the payment in full by Ravenwood-Productions, LLC (“Ravenwood”) of the amount due as a minimum guarantee due to Bank of Hope (the “Bank”) as described in the discussion of the Management Agreement with Ravenwood below. SMV is entitled to receive no further payments in respect of the “Safehaven” production, provided that, upon Strong Studios’ receipt of $15,000,000 in gross receipts, SMV shall be paid an amount equal to five percent (5%) of the net proceeds up to a maximum of $400,000. The Purchase Agreement is subject to the satisfaction of certain conditions precedent, including the above-mentioned payment by Ravenwood to the Bank, which was made on July 7, 2023, and is retroactively effective as of June 30, 2023.
On June 30, 2023, Strong Studios and Landmark Studio Group, LLC (“Landmark”) signed a second amendment to the assignment and attachment agreement (the “Second Amendment”) to amend the assignment and attachment agreement entered into by Strong Studios, Landmark and FG Group Holdings (as the guarantor; formerly Ballantyne Strong, Inc.) on March 3, 20222. The Second Amendment terminates all interests held by Landmark and its parent, affiliated and subsidiary companies in the “Safehaven” series.
3. Transactions with Ravenwood
On July 7, 2023, and effective as of June 30, 2023, SH2022, Strong Studios and Ravenwood entered into a management agreement (the “Management Agreement”), pursuant to which:
| ● | Ravenwood will promptly advance the amount due to the Bank in respect of the minimum guarantee under the Distribution Agreement, which as of June 30, 2023 was approximately $6.4 million, on the later of June 30, 2023, the complete execution of the Management Agreement, and the satisfaction of the conditions precedent mentioned below. | |
| ● | SH2022, Strong Studios and Ravenwood will enter into a sales agent agreement with an agency to represent and sell the “Safehaven” series. | |
| ● | Each of Ravenwood and Strong Studios will be paid a management commission of 20% and 7%, respectively, of the Net Sales Price of the Series (as defined in the Management Agreement). | |
| ● | All Gross Receipts (as defined by the Management Agreement) shall be distributed according to an agreed waterfall, with the balance to be paid to the named participants, including Strong Studios which will be paid 32.5%. | |
| ● | SH2022 conveys to Ravenwood an undivided 75% interest in all rights in and to the “Safehaven” series, retaining 25% for itself. |
The parties’ obligations under the Management Agreement were subject to the satisfaction of certain conditions precedent, all of which were satisfied by July 7, 2023.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K under the heading “Transactions with CSSE Companies” is incorporated by reference herein.
SIGNATURES
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.
| STRONG GLOBAL ENTERTAINMENT, INC. | ||
| Date: July 7, 2023 | By: | /s/ Todd R. Major |
| Name: | Todd R. Major | |
| Title: | Chief Financial Officer | |