Rumble Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Unregistered Sales of Equity Securities, Leadership Update, Other Events, Financial Statements and Exhibits
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Introductory Note
On December 20, 2024, Rumble Inc., a Delaware corporation (“Rumble” or the “Company”), entered into a Transaction Agreement (the “Transaction Agreement”), by and between the Company and Tether Investments S.A. de C.V. (as successor in interest to Tether Investments Limited) (“Tether”), pursuant to which, subject to the terms and conditions of the Transaction Agreement, Tether agreed to make a strategic investment in the Company of $775 million, consisting of 103,333,333 newly issued shares of the Company’s Class A Common Stock, par value $0.0001 per share (“Common Stock”), at a price of $7.50 per share (the “Investment”). The Company used a portion of the proceeds from the Investment to fund a self tender offer (the “Offer” and together with the Investment, the “Transaction”) to purchase up to 70 million shares of its outstanding Common Stock at the same price ($7.50 per share) as the Investment.
The Offer expired at 5:00 p.m., New York City time, on February 4, 2025. Based on the final count by the depositary for the Offer, 70,061,168 shares of Common Stock were validly and successfully tendered and not properly withdrawn. Pursuant to the terms of the Offer, Rumble accepted for purchase 70,000,000 shares of Common Stock on a pro-rata basis, except for tenders of odd lots, which were accepted in full, for a total cost of $525 million, excluding fees and expenses related to the Offer. On February 7, 2025, the Company and Tether closed the Investment (the “Closing”), and the Company issued and sold 103,333,333 shares of Common Stock to Tether for the purchase price described above. The Company used a portion of the funds received from the Investment to pay for the shares accepted for purchase in the Offer.
Item 1.01. Entry into a Material Definitive Agreement.
Pursuant to the Transaction Agreement, at the Closing, the Company and Tether entered into a registration rights agreement (the “Registration Rights Agreement”) to provide Tether with customary registration rights, including the obligation for the Company to file a registration statement on Form S-3 to register the resale of Tether’s shares of Common Stock and to provide Tether with certain customary demand and piggyback registration rights. The foregoing description of the Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Registration Rights Agreement, a copy of which is attached as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth in the Introductory Note above related to the Investment is hereby incorporated into this Item 3.02. The Company is relying on the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), afforded by Section 4(a)(2) thereof. The Investor represented that it is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As previously reported, Michael Ellis resigned as General Counsel and Corporate Secretary of the Company, effective upon the close of business on February 7, 2025 (the “Separation Date”), to pursue a position in government. In connection with Mr. Ellis’ resignation, in recognition of his significant contributions to the Company, the Compensation Committee of the Board of Directors of the Company determined to provide Mr. Ellis with the following payment and benefits: (i) a one-time cash bonus payment of $1,000,000, to be paid on the Separation Date; (ii) accelerated vesting of all of Mr. Ellis’ stock options and restricted stock units outstanding as of the Separation Date; and (iii) an extension of the post-termination exercise period of Mr. Ellis’s stock options until the earlier of the fifth anniversary of the Separation Date and the original expiration date of the stock options.
Item 8.01. Other Events
On February 7, 2025, the Company issued a press release announcing the closing of the Transaction. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
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Forward-Looking Statements
Certain statements in this Form 8-K (and the Exhibits hereto) constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements contained in this Form 8-K (and the Exhibits hereto) that are not historical facts are forward-looking statements and include, for example, statements regarding the Company’s (“we” or “our”) expectations or beliefs regarding our proposed transaction with Tether, the use of the proceeds therefrom and the acceleration of our expansion into cryptocurrency. Certain of these forward-looking statements can be identified by using words such as “anticipates,” “believes,” “intends,” “estimates,” “targets,” “expects,” “endeavors,” “forecasts,” “well underway,” “could,” “will,” “may,” “future,” “likely,” “on track to deliver,” “on a trajectory,” “continues to,” “looks forward to,” “is primed to,” “plans,” “projects,” “assumes,” “should” or other similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties, and our actual results could differ materially from future results expressed or implied in these forward-looking statements. The forward-looking statements included in this Form 8-K are based on our current beliefs and expectations of our management as of the date of this Form 8-K. These statements are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include the risk that we may be unable to derive additional benefits from the relationship with Tether, including increased advertising revenue, cloud revenue, and expansion into cryptocurrency payments; the risk that stockholder litigation in connection with the Transaction may result in significant costs of defense, indemnification and liability; risks inherent with our increasing affiliation with crypto assets, including volatility, as well as regulatory and reputational risks; the risks of implementing a new treasury diversification strategy; our ability to grow and manage future growth profitably over time, maintain relationships with customers, compete within our industry and retain key employees; the possibility that we may be adversely impacted by economic, business, and/or competitive factors; our limited operating history makes it difficult to evaluate our business and prospects; our recent and rapid growth may not be indicative of future performance; we may not continue to grow or maintain our active user base, and may not be able to achieve or maintain profitability; risks relating to our ability to attract new advertisers, or the potential loss of existing advertisers or the reduction of or failure by existing advertisers to maintain or increase their advertising budgets; Rumble Cloud, our cloud services business, may not achieve success and, as a result, our business, financial condition and results of operations could be adversely affected; negative media campaigns may adversely impact our financial performance, results of operations, and relationships with our business partners, including content creators and advertisers; spam activity, including inauthentic and fraudulent user activity, if undetected, may contribute, from time to time, to some amount of overstatement of our performance indicators; we collect, store, and process large amounts of user video content and personal information of our users and subscribers and, if our security measures are breached, our sites and applications may be perceived as not being secure, traffic and advertisers may curtail or stop viewing our content or using our services, our business and operating results could be harmed, and we could face governmental investigations and legal claims from users and subscribers; we may fail to comply with applicable privacy laws; we are subject to cybersecurity risks and interruptions or failures in our information technology systems and, notwithstanding our efforts to enhance our protection from such risks, a cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss; we may be found to have infringed on the intellectual property of others, which could expose us to substantial losses or restrict our operations; we may face liability for hosting a variety of tortious or unlawful materials uploaded by third parties, notwithstanding the liability protections of Section 230 of the Communications Decency Act of 1996; we may face negative publicity for removing, or declining to remove, certain content, regardless of whether such content violated any law; paid endorsements by our content creators may expose us to regulatory risk, liability, and compliance costs, and, as a result, may adversely affect our business, financial condition and results of operations; our traffic growth, engagement, and monetization depend upon effective operation within and compatibility with operating systems, networks, devices, web browsers and standards, including mobile operating systems, networks, and standards that we do not control; our business depends on continued and unimpeded access to our content and services on the internet and, if we or those who engage with our content experience disruptions in internet service, or if internet service providers are able to block, degrade or charge for access to our content and services, we could incur additional expenses and the loss of traffic and advertisers; we face significant market competition, and if we are unable to compete effectively with our competitors for traffic and advertising spend, our business and operating results could be harmed; we rely on data from third parties to calculate certain of our performance metrics and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business; changes to our existing content and services could fail to attract traffic and advertisers or fail to generate revenue; we derive the majority of our revenue from advertising and the failure to attract new advertisers, the loss of existing advertisers, or the reduction of or failure by existing advertisers to maintain or increase their advertising budgets would adversely affect our business; we depend on third-party vendors, including internet service providers, advertising networks, and data centers, to provide core services; hosting and delivery costs may increase unexpectedly; we have offered and intend to continue to offer incentives, including economic incentives, to content creators to join our platform, and these arrangements may involve fixed payment obligations that are not contingent on actual revenue or performance metrics generated by the applicable content creator but rather are based on our modeled financial projections for that creator, which if not satisfied may adversely impact our financial performance, results of operations and liquidity; we may be unable to develop or maintain effective internal controls; potential diversion of management's attention and consumption of resources as a result of acquisitions of other companies and success in integrating and otherwise achieving the benefits of recent and potential acquisitions; we may fail to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows; changes in tax rates, changes in tax treatment of companies engaged in e-commerce, the adoption of new tax legislation, or exposure to additional tax liabilities may adversely impact our financial results; compliance obligations imposed by new privacy laws, laws regulating social media platforms and online speech in certain jurisdictions in which we operate, or industry practices may adversely affect our business; and those additional risks, uncertainties and factors described in more detail under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, and in our other filings with the Securities and Exchange Commission (the “SEC”). We do not intend, and, except as required by law, we undertake no obligation, to update any of our forward-looking statements after the issuance of this Form 8-K to reflect any future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
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Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits |
| 10.1 | Registration Rights Agreement, dated February 7, 2025, by and between Rumble Inc. and Tether Investments S.A. de C.V. | |
| 99.1 | Press Release, dated February 7, 2025. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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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.
| Date: February 7, 2025 | By: | /s/ Brandon Alexandroff |
| Name: | Brandon Alexandroff | |
| Title: | Chief Financial Officer |
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