UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 12, 2019 (July 8, 2019)
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Cool Holdings, Inc.
(Exact name of registrant as specified in its charter)
Commission File Number: 001-32217
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Maryland |
33-0599368 |
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(State or other jurisdiction of incorporation) |
(IRS Employer Identification No.) |
2001 NW 84th Avenue
Miami, FL 33122
(Address of principal executive offices, including zip code)
(858) 373-1675
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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Common Stock, par value $0.001 per share |
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AWSM |
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NASDAQ Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 1.01 Entry into a Material Definitive Agreement
As previously disclosed on the Current Report on Form 8-K filed on May 9, 2019 by Cool Holdings, Inc. (the “Company”), the Company, Simply Mac, Inc. (“Simply Mac”) and GameStop Corp. (the “Seller”) entered into a stock purchase agreement dated May 9, 2019 (the “Stock Purchase Agreement”), pursuant to which the Company agreed to purchase from the Seller all of the issued and outstanding shares of capital stock of Simply Mac (the “Stock Purchase”). Pursuant to the terms of the Stock Purchase Agreement, as amended by the parties thereto, Seller was entitled to terminate the Stock Purchase Agreement upon written notice to the Company on or before July 2, 2019 if the Company did not deliver to GameStop on or before June 25, 2019 (the “Financing Deadline”) evidence that either (i) the Company had closed on at least $4,000,000 of funding dedicated for the Stock Purchase (the “Financing”) or (ii) the Company had obtained written, fully executed commitments from third-parties, enforceable against such third-parties, to provide for the Financing. The Company did not meet the Financing Deadline, and on July 1, 2019 GameStop delivered a notice to the Company indicating its intention to terminate the Stock Purchase Agreement (the “Termination Notice”).
On July 8, 2019, the Company, Seller and Simply Mac entered into a Letter Agreement to amend the Stock Purchase Agreement, as amended and restated on July 12, 2019 (the “Amendment”). Pursuant to the Amendment, GameStop rescinded and revoked the Termination Notice and confirmed that the Stock Purchase Agreement remains in full force and effect. The Company and GameStop also authorized the release and payment to GameStop of the original $750,000 deposited into escrow as required by the Stock Purchase Agreement, and the parties reduced the total closing consideration for the Stock Purchase from $6.9 million to $3.8 million in cash plus the value of Simply Mac’s inventory at closing, subject to certain working capital, inventory indebtedness and other adjustments. The purchase price applicable to the inventory at closing will be funded in full by a secured promissory note in favor of the Seller..
The Amendment also provided for the additional deposit with the designated escrow agent of $350,000 on or before July 11, 2019 (the “First Escrow Deposit”) as a deposit against the purchase price for the Stock Purchase, and it amended the Financing Deadline and Financing amount to provide that the Company must have closed on at least $2,700,000 of funding dedicated for the Stock Purchase (the “New Financing”) or (ii) the Company has obtained written, fully executed commitments from third-parties, enforceable against such third-parties, to provide for the New Financing (the “New Financing Commitments”), in each case on or before July 12, 2019. The Company has made the First Escrow Deposit, and it has obtained the New Financing Commitments.
The Amendment also requires two more additional escrow deposits of $350,000 each to be deposited with the designated escrow agent as further deposits against the purchase price for the Stock Purchase on or before each of August 12, 2019 (the “Second Escrow Deposit”) and September 12, 2019 (the “Third Escrow Deposit”), in each case only if the Stock Purchase has not closed on or prior to such dates. In the event that the Stock Purchase has not closed on or before August 12, 2019 or September 12, 2019 and the Second Escrow Deposit and Third Escrow Deposit are not made by such dates, respectively, then GameStop shall have the right to terminate the Stock Purchase Agreement upon written notice to the Company on or before August 19, 2019 and September 20, 2019, respectively.
Finally, the Amendment provides that in any event, if the Stock Purchase has not closed on or before September 20, 2019, then GameStop shall have the right to terminate the Stock Purchase Agreement upon written notice to the Company. In the event that the Stock Purchase Agreement is terminated for any of the reasons described above, the First Escrow Deposit, the Second Escrow Deposit and Third Escrow Deposit, to the extent such amounts have been deposited with the escrow agreement prior to such termination, shall be released to the Seller within three days of such termination.
A copy of the Amendment is attached hereto as Exhibit 10.1. The foregoing summary of the terms of the Amendment is subject to, and qualified in its entirety by, Exhibit 10.1.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit |
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Description |
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10.1 |
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Signature
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.
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Cool Holdings, Inc. |
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Date: |
July 12, 2019 |
By: |
/s/ Vernon A. LoForti |
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Vernon A. LoForti |
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Chief Financial Officer |
Exhibit 10.1
July 8, 2019
GameStop Corp.
625 Westport Parkway
Grapevine, TX 76051
Re: Letter Agreement
Ladies and Gentlemen:
This Amended and Restated Letter Agreement amends and restates that certain Letter Agreement dated July 8, 2019 in its entirety to correct certain clerical errors and is effective as of July 8, 2019. Reference is hereby made to that certain letter regarding Termination of Stock Purchase Agreement dated July 1, 2019 from GameStop Corp. (“GameStop”) to Cool Holdings, Inc. (“Cool”) pursuant to which GameStop terminated that certain Stock Purchase Agreement dated May 9, 2019 (the “Agreement”) by and among GameStop, Simply Mac, Inc. (“Simply Mac”) and Cool (the “Termination Notice”). Reference is further hereby made to Section 10.1(f) of the Agreement, as amended, which provides that GameStop shall have the right to terminate the Agreement upon written notice to Cool on or before July 2, 2019 if Cool has not delivered to GameStop on or before June 25, 2019 (the “Financing Deadline”) evidence (i) reasonably satisfactory to the Seller, that the Purchaser has closed on at least $4,000,000 of funding that is dedicated for the closing of the Transactions (as defined in the Agreement) (the “Financing”) or (ii) Cool has obtained written, fully executed third party commitments, in forms reasonably satisfactory to the Seller, providing for the irrevocable and unconditional commitments to the Purchaser, enforceable against such third-parties, to provide for the Financing (“Binding Financing Commitments”). As of the date hereof, Cool has not closed a Financing or obtained the Binding Financing Commitments; however, Cool represents to GameStop that it has obtained non-binding commitments for the Financing and is currently working in good faith on the definitive documentation for the Financing or Binding Financing Commitments with such third-party investors. Capitalized terms not otherwise defined in this letter have the meanings ascribed to them in the Agreement.
As such, and in consideration of the time, effort and expenses to be undertaken by the parties in connection with the continued pursuit of the Transaction, and other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereby agree that the termination of the Agreement pursuant to the Termination Notice is hereby rescinded and the Agreement remains in full force and effect, subject to the modifications set forth in this letter, if, on the date hereof, Cool instructs the Escrow Agent in writing to immediately release the Deposit (in the amount of $750,000) to GameStop and takes all other action required in connection therewith (the “Deposit Release Requirements”). If Cool does not satisfy the Deposit Release Requirements, the Termination Notice shall remain in full force and effect and Cool shall be required to immediately instruct the Escrow Agent to immediately release the Deposit to GameStop.
Subject to Cool’s satisfaction of the Deposit Release Requirements, the parties hereby further agree as follows:
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if Cool does not, on or before Thursday, July 11, 2019, deposit an additional $350,000 with the Escrow Agent, which amount shall be treated as the “Deposit” for all purposes of the Agreement (the “Additional Deposit”), and amend the Deposit Escrow Agreement with the Escrow Agent to reflect the Additional Deposit (the “Additional Deposit Requirements”), then GameStop shall have the right to terminate the Agreement on or before Thursday, July 18, 2019 by written notice to Cool (in accordance with the Agreement), in which case GameStop shall be entitled to pursue all other available remedies under the Agreement, at law or in equity, as a result of such termination; |
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the Transactions, which commitments are enforceable against the third party providers of the funding (clauses (a) and (b), the “New Binding Financing Commitments”), then GameStop shall have the right to terminate the Agreement on or before Thursday, July 18, 2019 by written notice to Cool (in accordance with the Agreement), in which case the Additional Deposit shall be released to GameStop and Cool shall instruct the Escrow Agent in writing to so release the Additional Deposit to GameStop within three (3) days of termination and Cool shall take all other action required in connection therewith (and GameStop shall be entitled to pursue all other available remedies under the Agreement, at law or in equity, as a result of such termination); |
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if Cool obtains the New Binding Financing Commitments and the satisfies the Additional Deposit Requirements, but does not, on or before Monday, August 12, 2019, deposit an additional $350,000 with the Escrow Agent, which amount shall also be treated, together with the Additional Deposit, as the “Deposit” for all purposes of the Agreement (the “Second Additional Deposit”), and amend the Deposit Escrow Agreement with the Escrow Agent to reflect the Second Additional Deposit (the “Second Additional Deposit Requirements”), then GameStop shall have the right to terminate the Agreement on or before Monday, August 19, 2019 by written notice to Cool (in accordance with the Agreement), in which case the Additional Deposit shall be released to GameStop and Cool shall instruct the Escrow Agent in writing to so release the Additional Deposit to GameStop within three (3) days of termination and Cool shall take all other action required in connection therewith (and GameStop shall be entitled to pursue all other available remedies under the Agreement, at law or in equity, as a result of such termination); |
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if (a) Cool obtains the New Binding Financing Commitments and satisfies the Additional Deposit Requirements and the Second Additional Deposit Requirements, (b) the Transactions have not closed by Thursday, September 12, 2019 and (c) Cool does not, on or before Thursday, September 12, 2019, deposit an additional $350,000 with the Escrow Agent, which amount shall also be treated as the “Deposit” for all purposes of the Agreement (the “Third Additional Deposit”), and amend the Deposit Escrow Agreement with the Escrow Agent to reflect the Third Additional Deposit (the “Third Additional Deposit Requirements”), then GameStop shall have the right to terminate the Agreement on or before Friday, September 20, 2019 by written notice to Cool (in accordance with the Agreement), in which case the Additional Deposit and the Second Additional Deposit shall be released to GameStop and Cool shall instruct the Escrow Agent in writing to so release the Additional Deposit and the Second Additional Deposit to GameStop within three (3) days of termination and Cool shall take all other action required in connection therewith (and GameStop shall be entitled to pursue all other available remedies under the Agreement, at law or in equity, as a result of such termination); |
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if Cool obtains the New Binding Financing Commitments and satisfies the Additional Deposit Requirements, the Second Additional Deposit Requirements and the Third Additional Deposit Requirements (if the Closing has not occurred before September 12, 2019) and the Closing occurs on or before September 20, 2019: |
*the Agreement will be deemed to be automatically amended as follows:
Section 1.3(a) of the Agreement (marked to show changes):
“(a)Total Consideration. In consideration for the sale of Shares pursuant to Section 1.1, the Seller shall be entitled to an amount of consideration equal to the sum of (i) the Total Closing Consideration (as adjusted pursuant to Sections 6.10 and 6.11), plus (ii) the Final Inventory Amount (to the extent that it exceeds the Estimated Inventory Amount) (if any) less $1,100,000, in accordance with Section 1.3(e), plus (iii) the Final Working Capital Adjustment (to the extent that it exceeds the Estimated Working Capital Adjustment Amount) (if any), in accordance with Section 1.3(d), plus (iv) the Indemnity Escrow Release Amount (if any) in accordance with Article IX.”
Section 1.3(e)(v) of the Agreement (marked to show changes):
Very truly yours,
COOL HOLDINGS, INC.
By:/s/ Vernon A. LoForti
Vernon A. LoForti
Senior Vice President & CFO
Agreed and Accepted:
GAMESTOP CORP.
By:/s/ Troy Crawford
Name: Troy Crawford
Title: Chief Accounting Officer
SIMPLY MAC, INC.
By: /s/ Troy Crawford
Name: Troy Crawford
Its: SVP, Controller & Assistant Secretary