Cheer Holding, Inc. current report, Q4 FY2020

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Business Context and Reporting Period

Glory Star New Media Group Holdings Limited filed this Form 6-K for December 2020. The filing reports an amendment dated December 29, 2020, to the company’s Share Exchange Agreement. The amendment was entered into in response to the COVID-19 pandemic and its effects on the Chinese economy and the company’s financial results.

Key Financial and Capitalization Items

  • The 2020 earnout target was reduced from RMB315 million to RMB182 million of adjusted net income.
  • If adjusted net income for the fiscal year ended December 31, 2020 equals or exceeds RMB182 million, the sellers will be entitled to receive 5 million additional ordinary shares.
  • The filing does not provide revenue, reported profit, cash flow, margins, debt, liquidity, or other operating metrics for the period.

Material Changes Versus the Prior Arrangement

The amendment revises the 2020 earnout target downward by RMB133 million, or approximately 42.2%, from the original target. The contingent share consideration remains performance-based and depends on the company’s adjusted net income for fiscal 2020.

Guidance, Outlook, Risks, and Unusual Items

  • Management attributes the adjustment to the COVID-19 pandemic and its impact on the Chinese economy and company financial results.
  • The potential issuance of 5 million ordinary shares represents contingent dilution if the revised earnout threshold is achieved.
  • The filing does not provide broader financial guidance, an updated operating outlook, or a quantified COVID-19 impact.
  • The full amendment is filed as Exhibit 99.1 and is incorporated by reference into specified registration statements.

Investor Verification Items

  1. Verify the definition and calculation of “adjusted net income” under the amended Share Exchange Agreement.
  2. Confirm whether the RMB182 million threshold was achieved for the fiscal year ended December 31, 2020.
  3. Review whether and when the 5 million earnout shares were issued or became issuable.
  4. Assess the resulting ownership dilution and any related accounting treatment.
  5. Review Exhibit 99.1 for the complete amendment terms, including any other revisions not summarized in the filing.