Short-selling season appears to be on for troubled Chicken Soup for the Soul Entertainment, with Next TV receiving anonymous "tips" late this past week from the finance community about the company's latest NT-10Q filing.
For those of us without formal business educations, NT-10Q is the document a company files to the SEC when it deems itself unable to assemble its normal 10-Q quarterly earnings.
And for investors who had hoped the forbearance agreement Chicken Soup announced earlier this month might signal a turnaround, the document contained yet more bad news.
Also read: Chicken Soup Reports $637 Million Loss for 2023, Preps Investors for Bankruptcy
In the filing, the company tells the SEC that assembling first-quarter earnings data "would have diverted the attention" from Chicken's Soup's effort to convert equity, generate $175 million of cash, and forestall payments to key lenders through the summer.
Oh, and one other thing -- first quarter net revenue came in at $27 million, down 75% year over year.
The NT-10Q followed an April 1 NT-10K filing, in which Chicken Soup initially demurred on its its Q4/full-2023 earnings, stating that it had too much "turnover" in its accounting department to assemble an earnings report.
Chicken Soup ran into trouble following its 2022 purchase of Redbox, from which plans to parlay the DVD-rental kiosk empire into a robust AVOD business never worked out. (CSSE investors can partly thank the ad-supported streaming gold rush, and the resulting inventory glut, for that result. Sharply increased interest rates on that debt didn't help, either.)
With Chicken Soup's stock price holding stubbornly steady at 33 cents per share through May, the short sellers will undoubtedly be pleased we once again wrote about the company's troubles.
Tools we may be here. But in business trade journalism, a 75% quarterly revenue drop is a 75% quarterly revenue drop.
