SSC Ideanomics (delisted)

  

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

Form 8-K

 

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): December 21, 2015

 

YOU ON DEMAND HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

 

Nevada	001-35561	20-1778374
(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification No.)
incorporation)

 

375 Greenwich Street, Suite 516 
New York, New York 10013 
(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: 212-206-1216

 

Not Applicable 
(Former name or former address, if changed since last report.)

 

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 (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))

 

 

 

Item 1.01.

Entry Into A Material Definitive Agreement.

 

Amended and Restated SSS Securities Purchase Agreement

 

On December 21, 2015, YOU On Demand Holdings, Inc. (the “Company”) entered into an Amended and Restated Securities Purchase Agreement (the “Amended and Restated SSS Purchase Agreement”) with Beijing Sun Seven Stars Culture Development Limited, a PRC company (“SSS”), which amended and restated the Securities Purchase Agreement between the Company and SSS dated November 23, 2015 (the “SSS Securities Purchase Agreement”), which was previously described in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 24, 2015.

 

Pursuant to the terms of the Amended and Restated SSS Purchase Agreement, on December 21, 2015, the Company issued and sold 4,545,454 shares of its Common Stock, par value $0.001 per share (the “Common Stock”), for $2.20 per share, or a total purchase price of $10.0 million to SSS. In addition, the Company issued SSS two-year warrants (the “Warrant”) to acquire an additional 1,818,182 shares of Common Stock (the “Warrant Shares”), at an exercise price of $2.75 per share. Until receipt of necessary shareholder approvals, the Warrant may not be exercised to the extent that such exercise would result in SSS beneficially owning more than 19.99% of the Company’s outstanding Common Stock.

 

Pursuant to the Amended and Restated SSS Purchase Agreement, the Company agreed to increase the size of its board of directors from five to eight members, and SSS will have the right to nominate up to three directors, such nomination rights intended to be proportional with its beneficial ownership. Accordingly, until such time as shareholder approval is received to permit exercise of the Warrant (described above), and the Note (defined and described below), SSS will not have full designation rights. SSS will have such proportional designation rights for so long as it beneficially owns at least 5% of the Common Stock.

 

Revised Content License and Note

 

In connection with the closing of the Amended and Restated SSS Purchase Agreement, on December 21, 2015, the Company entered into the Revised Content License Agreement with SSS (the “Revised Content License”), which amended certain terms of the Content License that was to have been entered into upon closing of the share issuances under the SSS Securities Purchase Agreement, which Content License was previously described in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on November 24, 2015.

 

Pursuant to the terms of the Revised Content License, SSS granted the Company a non-exclusive, royalty-free content distribution right for certain assets valued at approximately $29.1 million, in exchange for a promissory note (the “Note”) that is convertible into 9,208,860 shares of Common Stock (the “IP Shares”). The licensed assets include, subject to certain restrictions, the right to (i) license, exhibit, distribute, reproduce, transmit, perform, display and otherwise exploit and make available certain movies and television programs (that the Company currently has no rights to with its own content agreements and arrangements) (the “Titles”) within mainland China, (ii) copy and dub the Titles and make or have made translations of the Titles, (iii) promote each Title in any manner or media, (iv) use the Titles for audience and marketing testing, sponsor/advertiser screening and reference and file purposes and (v) include the Company’s name, trademark and logo in the Titles to identify the Company as the exhibitor of the Titles. Additionally, SSS provided the Company the right of first negotiation on all live-action or animated feature-length movies that SSS develops or obtains the right to license during the term of the Revised Content License.

 

The Note has a stated principal amount of $17.7 million, bears interest at the rate of 0.56% per annum and matures May 21, 2016. In the event of default, the Note will become immediately due and payable.

 

Until receipt of necessary shareholder approvals, the Note is not convertible into the IP Common Shares to the extent that such conversion would result in SSS beneficially owning more than 19.99% of the Company’s outstanding Common Stock. Once the necessary shareholder approval is received, the unpaid principal and interest thereon will automatically convert into the IP Common Shares.

 

Amended and Restated Tianjin Agreement

 

On December 21, 2015, the Company also entered into an Amended and Restated Share Purchase Agreement (the “Amended and Restated Tianjin Agreement”) with Tianjin Enternet Network Technology Limited, a PRC Company ("Tianjin"), an affiliate of SSS, which amended and restated the Share Purchase Agreement entered between the Company and Tianjin dated November 23, 2015(the “Tianjin Agreement”), which was previously described in the Company’s Current Report on Form

 

 

8-K, filed with the Securities and Exchange Commission on November 24, 2015.

 

Pursuant to the terms of the Amended and Restated Tianjin Agreement, on December 21, 2015, Tianjin contributed 100% of the equity interests of Tianjin Sevenstarsflix Network Technology Limited, a PRC company (“SSF”), a newly-formed subsidiary of Tianjin to the Company. SSF will offer a branded pay content service delivered to consumers ubiquitously through all its platform partners, will track and share consumer payments and other behavior data, will operate a customer management and data-based service and will develop mobile social TV-based customer management portals.

 

In exchange for the sale of the equity interest in SSF and subject to certain conditions, Tianjin will receive shares of Common Stock over three years, with the exact amount based on an earn-out provision, such amounts not to exceed 5.0 million shares of Common Stock for each of 2016, 2017 and 2018 (the “Earn-Out Share Award”). Pursuant to the earn-out provision, Tianjin may receive up to 5.0 million shares of the Common Stock for each of 2016, 2017 and 2018 if either (i) the number of homes and/or users subscribing to one or more of the content services provided by SSF (the “Homes/Users Passed”) is greater than or equal to the earn-out Homes/Users Passed threshold or (ii) the net income of SSF’s business is greater than or equal to the earn-out net income threshold. The target thresholds for the year ending December 31, 2016 are either 50.0 million Homes/Users Passed or $4.0 million net income. The target thresholds for the year ending December 31, 2017 are either 100.0 million Homes/Users Passed or $6.0 million net income. The target thresholds for the year ending December 31, 2018 are either 150.0 million Homes/Users Passed or $8.0 million net income.

 

The issuance of an Earn-Out Share Award is subject to the receipt of approval from either (i) the holders of a majority of the total votes cast in person or by proxy at a meeting of the Company’s shareholders or (ii) the holders of a majority of the outstanding voting securities of the Company entitled to vote on the relevant matters, if such action is taken by written consent (the “Earn-Out Required Vote”). In the event the Company has not obtained the Earn-Out Required Vote but Tianjin has met one of the target thresholds described above, the Company will not issue an Earn-Out Share Award to Tianjin, but instead will issue to Tianjin a Promissory Note (the “Tianjin Note”), with a principal amount equal to the quotient obtained by multiplying 5.0 million by the Company’s applicable stock price as defined in the Tianjin Note (the form of which is included as an exhibit to the Amended and Restated Tianjin Agreement).

 

Other

 

As contemplated by the Amended and Restated SSS Purchase Agreement, the Company expects certain of its stockholders to enter into a voting agreement in respect of the Company’s board of directors, including certain nominees designated by SSS.

 

The Company also agreed to use commercially reasonable efforts to obtain any approvals of the Company’s shareholders required under the Company’s organizational documents, applicable law and/or the listing rules and regulations of NASDAQ to approve the sale and issuance of the Warrant Shares and the IP Common Shares (defined below) as promptly as practicable.

 

On December 23, 2015, the Company issued a press release announcing the entry into and closing of the Amended and Restated SSS Purchase Agreement, the Revised Content License and the Amended and Restated Tianjin Agreement, among other items. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

Item 1.02.

Termination of a Material Definitive Agreement.

 

In connection with the transactions, on December 22, 2015, the Company and C Media Limited (an affiliate of Xuesong Song) terminated the voting agreement, dated November 23, 2015, among the Company and C Media Limited pursuant to which C Media had agreed to vote all of their shares of capital stock in the Company in favor of the issuance of securities to SSS and Tianjin under the SSS Securities Purchase Agreement, Content License and Tianjin Agreement.

 

Item 2.03

Creation of Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

 

The information pertaining to the Note in connection with the Revised Content License discussed in Item 1.01 of this Form 8-K is incorporated herein by reference in its entirety.

 

Item 3.02.

Unregistered Sales of Equity Securities.

 

The information pertaining to the sale of shares of the Common Stock, the issuance of the Warrant and the Note in connection with the Amended and Restated SSS Purchase Agreement and the Revised Content License and the potential issuance of shares of Common Stock (or Tianjin Note) to Tianjin in connection with the Amended and Restated Tianjin Agreement or the Tianjin

 

 

Note discussed in Item 1.01 of this Form 8-K is incorporated herein by reference in its entirety. The Company issued the shares of its Common Stock and the Warrant and Note to SSS, and will issue the shares of its Common Stock upon exercise of the Warrant, and conversion of the Note, and to Tianjin (including upon conversion of the Tianjin Note, if applicable) in reliance on exemptions from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.

 

Item 8.01.

Other Events.

 

On December 23, 2015, the Company issued a press release announcing the entry into the Amended and Restated SSS Purchase Agreement, Revised Content License and Amended and Restated Tianjin Agreement, among other items. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

 

As discussed in that press release, in light of the restructuring of the terms of the strategic investment from SSS as described in Item 1.01, on December 20, 2015, the board of directors of the Company decided to withdraw “Proposal 2” from consideration for approval at the Company’s 2015 Annual Meeting of Stockholders, scheduled to be held on Tuesday, December 29, 2015.  The withdrawal of Proposal 2 has no effect on any of the other proposals or matters set forth in the Company’s definitive proxy statement for the 2015 Annual Meeting of Stockholders.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.		Description
99.1		Press Release, dated December 23, 2015.

 

 

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.

 

	YOU ON DEMAND HOLDINGS, INC.
Date: December 24, 2015	By:	/s/ Xuesong Song
		Xuesong Song
		Executive Chairman

 

 

 

Exhibit 99.1

 

YOU On Demand and Bruno Wu's Sun Seven Stars Complete $10 Million Strategic Investment

 

NEW YORK, Dec. 23, 2015— YOU On Demand Holdings, Inc. (NASDAQ: YOD) ("YOU On Demand" or "YOD" or the "Company"), a leading Video On Demand ("VOD") service provider in China, delivering Hollywood movies & premium content to TV and mobile screens, and Bruno Wu's Sun Seven Stars Media Group Limited (SSS), one of the largest private media and investment conglomerates in China, have restructured the previously announced strategic investment, and closed the transaction, with SSS making a $10 million USD investment in YOD at $2.20 per share of common stock, an approximate 10% premium over the volume-weighted average closing price of the common stock as quoted by NASDAQ during the last 60 trading days, and receiving 2-year warrants to purchase an additional 1,818,182 shares of YOD at $2.75 per share, and a 6-month promissory note, which is automatically converted upon shareholder approval, into an additional 9,208,860 shares of YOD in exchange for license rights to content controlled by SSS. Exercise of the warrant and conversion of the note, along with payment of up to 15 million of earn-out shares issuable to SSS' affiliate, Tianjin Enternet Network Technology Limited, are all subject to receipt of YOD shareholder approval.

 

Commenting on the transaction, Mr. Wu stated, "As the SSS team continued to examine and comprehend the foundation, platform and service that YOU On Demand has been building over the last several years, we became more convinced to commit to the evolution of the YOD brand. The quick completion of this strategic investment is a testament to both the hard work by all involved, and more importantly, our excitement to begin working with YOU On Demand. By leveraging SSS' strong leadership position in content ownership, we have already begun the process of developing YOU On Demand into a leading next generation service offering in China's high growth paid content space."

 

Chairman of YOU on Demand Shane McMahon stated, "Mr. Wu's and Sun Seven Star's industry know-how and excellent reputation create the perfect partner to really catapult the YOD service and brand much further in the Chinese consumer market. We look forward to laying out in more detail YOD's mutually beneficial strategic plans, at the close of the full transaction."

 

  

Approval of the issuance of the remaining shares of YOD, which issuances were approved by both companies' Boards of Directors, is subject to approval by holders of a majority of the outstanding shares of YOD common stock. YOD will seek to obtain the necessary shareholder approvals in Q1 2016.

 

In light of the restructuring of the investment terms, the Board of Directors has decided to no longer seek shareholder approval of the SSS strategic investment at its Annual Meeting to be held on December 29, 2015, and accordingly, is withdrawing consideration of Proposal No. 2 from the agenda for its Annual Meeting.

 

YOD had originally proposed that shareholders approve the share issuances to SSS and its affiliates as part of the strategic investment by SSS in YOD. This proposal was included as Proposal No.2 in YOD's definitive proxy statement on Schedule 14A as filed with the U.S. Securities and Exchange Commission on December 9, 2015.

 

For a more detailed summary of the material provisions of the revised terms of the SSS strategic investment, see YOU On Demand's current report on Form 8-K to be filed with the U.S. Securities and Exchange Commission ("SEC") at www.sec.gov. As a reminder, YOU On Demand's Annual Shareholder Meeting will take place on December 29, 2015, at 10:00 AM, local time (PRC Time), at Office Park, Tower A, Suite 2603, 10 Jintong West Road, Chaoyang District, Beijing 100020, China.

 

The Notice of Meeting, Proxy Statement, Proxy Card and Annual Report are available on the internet at: materials.proxyvote.com/98741R.

 

YOU ON Demand's Board recommends that the Company's stockholders vote FOR the election of the nominees listed in Proposal 1(a) and Proposal 1(b) and FOR Proposal 3.

 

About YOU On Demand Holdings, Inc. (http://corporate.yod.com)

YOU On Demand (NASDAQ: YOD), is a leading multi-platform entertainment service company delivering premium content, including leading Hollywood movie titles, to customers across China via Subscription Video On Demand and Transactional Video On Demand. The Company has secured alliances with leading global media operators and content developers. YOU On Demand has content distribution agreements in place with many of Hollywood's top studios including Disney Media Distribution, Paramount Pictures, NBC Universal, Twentieth Century Fox Television Distribution, Miramax, as well as a broad selection of the best content from Chinese filmmakers. The Company has a comprehensive end-to-end secure delivery system, governmental partnerships and approvals and offers additional value-added services. YOU On Demand has strategic partnerships with the largest media entities in China, a highly experienced management team with international background and expertise in Cable, Television, Film, Digital Media, Internet and Telecom. YOU On Demand is headquartered in both New York, NY and Beijing, China.

 

 

About Bruno Wu and Sun Seven Stars

Bruno Wu is now the Founder, Co-Chairman and CEO of Sun Seven Stars Media Group Limited, one of the biggest private media and investment conglomerates in China. Its predecessor is Sun Media Group Holdings Limited, which was established by Bruno Wu and Yang Lan in 1999 and became one of the leading entertainment, media and investment companies in Asia after 10 years of growth. Sun Seven Stars Media Group Limited now has 7 business units including Sun Media Group, Sun eSports Group, Sun Seven Stars Culture Group, Enternet Group, Sun TV+ Network Group, Sun Music Group and Sun Art Capital Group. It has a presence in over ten major cities in the world including: Beijing, Shanghai, Tianjin, Hong Kong, New York, LA, Paris, London, Toronto, Seoul and Scandinavia countries.

 

Safe Harbor Statement

This press release contains certain statements that may include "forward looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Particular forward-looking statements in this release include statements regarding the effects of the business partnership with SSS. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

 

 

CONTACT:

Jason Finkelstein

YOU On Demand

212-206-1216

jason.finkelstein@yod.com

@youondemand

corporate.yod.com