x
|
Preliminary Information Statement
|
o
|
Confidential, For Use of the Commission only
|
|
|
|
(as permitted by Rule 14c-5(d)(2))
|
o
|
Definitive Information Statement
|
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|
x
|
No Fee Required
|
o
|
Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
|
(1)
|
Title of each class of securities to which transaction applies:
|
(2)
|
Aggregate number of securities to which transaction applies:
|
(3)
|
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
|
(4)
|
Proposed maximum aggregate value of transaction:
|
(5)
|
Total fee paid:
|
o
|
Fee paid previously with preliminary materials:
|
o
|
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
|
(1)
|
Amount previously paid:
|
(2)
|
Form, Schedule or Registration Statement No.:
|
(3)
|
Filing party:
|
(4)
|
Date filed:
|
|
·
|
Growth in the Chinese Economy. We operate in China and derive all of our revenues from sales to customers in China. Economic conditions in China, therefore, affect virtually all aspects of our operations, including the demand for our products, the availability and prices of our supplies and our other expenses. China has experienced significant economic growth, achieving an average annual growth rate of approximately 10% in gross domestic product from 1996 through 2011. China is expected to experience continued growth in all areas of investment and consumption, even in the face of a global economic recession. However, China has not been entirely immune to the global economic slowdown and is experiencing a slowing of its growth rate.
|
|
·
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PRC Economic Stimulus Plans. The PRC government has issued a policy entitled “Central Government Policy On Stimulating Domestic Consumption To Counter The Damage Result From Export Business Of The Country,” pursuant to which the PRC Central Government is dedicating approximately $580 billion to stimulate domestic consumption. Companies that are either directly or indirectly related to construction, and to the manufacture and sale of building materials, electrical household appliances and telecommunication equipment, are expected to benefit. We could potentially benefit if the stimulus plan injects funds into cable infrastructure allowing access to our PPV network.
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|
·
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Deployment of Value-added Services. To augment our product offerings and create other revenue sources, we work with strategic partners to deploy value-added services to our cable customers. Value-added services, including but not limited to the synergies created by the additions of our new assets, will become a focus of revenue generation for our company. No assurance can be made that we will add other value-added services, or if added, that they will succeed.
|
|
Pro Forma Comparisons
|
|
||||||||||
|
Year Ended
|
|
||||||||||
|
As Reported
|
|
|
Shandong Media
|
|
|
Pro Forma
|
|
||||
|
December 31,
|
|
|
6 months
|
|
|
December 31,
|
|
||||
|
2012
|
|
|
|
|
|
2012
|
|
||||
|
|
|
|
|
|
|
(excluding
Shandong Media)
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Revenue
|
|
$
|
6,873,000
|
|
|
$
|
1,696,000
|
|
|
$
|
5,177,000
|
|
Cost of revenue
|
|
|
7,083,000
|
|
|
|
1,229,000
|
|
|
|
5,854,000
|
|
Gross profit (loss)
|
|
|
(210,000
|
)
|
|
|
467,000
|
|
|
|
(677,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
10,811,000
|
|
|
|
717,000
|
|
|
|
10,094,000
|
|
Professional fees
|
|
|
1,345,000
|
|
|
|
-
|
|
|
|
1,345,000
|
|
Depreciation and amortization
|
|
|
4,083,000
|
|
|
|
58,000
|
|
|
|
4,025,000
|
|
Impairments of long-lived assets
|
|
|
840,000
|
|
|
|
-
|
|
|
|
840,000
|
|
Total operating expense
|
|
|
17,079,000
|
|
|
|
775,000
|
|
|
|
16,304,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(17,289,000
|
)
|
|
|
(308,000
|
)
|
|
|
(16,981,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest & other income / (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
9,000
|
|
|
|
-
|
|
|
|
9,000
|
|
Interest expense
|
|
|
(79,000
|
)
|
|
|
-
|
|
|
|
(79,000
|
)
|
Right to purchase expense
|
|
|
(44,000
|
)
|
|
|
-
|
|
|
|
(44,000
|
)
|
Cost of reset provision
|
|
|
(659,000
|
)
|
|
|
-
|
|
|
|
(659,000
|
)
|
Change in fair value of warrant liabilities
|
|
|
647,000
|
|
|
|
-
|
|
|
|
647,000
|
|
Change in fair value of contingent consideration
|
|
|
1,313,000
|
|
|
|
-
|
|
|
|
1,313,000
|
|
Gain on investment in unconsolidated entities
|
|
|
68,000
|
|
|
|
-
|
|
|
|
68,000
|
|
Loss on investment write-off
|
|
|
(95,000
|
)
|
|
|
-
|
|
|
|
(95,000
|
)
|
Loss on write-off of uncollectible loans
|
|
|
(514,000
|
)
|
|
|
(473,000
|
)
|
|
|
(41,000
|
)
|
Gain on deconsolidation of Shandong Media
|
|
|
142,000
|
|
|
|
-
|
|
|
|
142,000
|
|
Other
|
|
|
(140,000
|
)
|
|
|
-
|
|
|
|
(140,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes and noncontrolling interests
|
|
|
(16,641,000
|
)
|
|
|
(781,000
|
)
|
|
|
(15,860,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
|
353,000
|
|
|
|
9,000
|
|
|
|
344,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(16,288,000
|
)
|
|
|
(772,000
|
)
|
|
|
(15,516,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interests
|
|
|
2,074,000
|
|
|
|
386,000
|
|
|
|
1,688,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to YOU On Demand shareholders
|
|
$
|
(14,214,000
|
)
|
|
$
|
(386,000
|
)
|
|
$
|
(13,828,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividends on preferred stock
|
|
|
(924,000
|
)
|
|
|
-
|
|
|
|
(924,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to YOU on Demand common shareholders
|
|
$
|
(15,138,000
|
)
|
|
$
|
(386,000
|
)
|
|
$
|
(14,752,000
|
)
|
|
Pro Forma Comparisons
|
|
||||||||||
|
Year Ended
|
|
||||||||||
|
As Reported
|
|
|
Shandong Media
|
|
|
Pro Forma
|
|
||||
|
December 31,
|
|
|
12 months
|
|
|
December 31,
|
|
||||
|
2011
|
|
|
|
|
|
2011
|
|
||||
|
|
|
|
|
|
|
(excluding
Shandong Media)
|
|
||||
|
|
|
|
|
|
|
|
|
||||
Revenue
|
|
$
|
7,868,000
|
|
|
$
|
2,993,000
|
|
|
$
|
4,875,000
|
|
Cost of revenue
|
|
|
5,526,000
|
|
|
|
2,159,000
|
|
|
|
3,367,000
|
|
Gross profit
|
|
|
2,342,000
|
|
|
|
834,000
|
|
|
|
1,508,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
8,801,000
|
|
|
|
1,306,000
|
|
|
|
7,495,000
|
|
Professional fees
|
|
|
2,115,000
|
|
|
|
5,000
|
|
|
|
2,110,000
|
|
Depreciation and amortization
|
|
|
4,424,000
|
|
|
|
110,000
|
|
|
|
4,314,000
|
|
Impairments of long-lived assets
|
|
|
244,000
|
|
|
|
-
|
|
|
|
244,000
|
|
Total operating expense
|
|
|
15,584,000
|
|
|
|
1,421,000
|
|
|
|
14,163,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(13,242,000
|
)
|
|
|
(587,000
|
)
|
|
|
(12,655,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest & other income / (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
11,000
|
|
|
|
-
|
|
|
|
11,000
|
|
Interest expense
|
|
|
(2,000
|
)
|
|
|
-
|
|
|
|
(2,000
|
)
|
Stock purchase right
|
|
|
(194,000
|
)
|
|
|
-
|
|
|
|
(194,000
|
)
|
Change in fair value of contingent consideration
|
|
|
3,000
|
|
|
|
-
|
|
|
|
3,000
|
|
Loss on investment in unconsolidated entities
|
|
|
(14,000
|
)
|
|
|
-
|
|
|
|
(14,000
|
)
|
Gain on deconsolidation of AdNet
|
|
|
470,000
|
|
|
|
-
|
|
|
|
470,000
|
|
Other
|
|
|
(44,000
|
)
|
|
|
(2,000
|
)
|
|
|
(42,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes and noncontrolling interests
|
|
|
(13,012,000
|
)
|
|
|
(589,000
|
)
|
|
|
(12,423,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
|
370,000
|
|
|
|
95,000
|
|
|
|
275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(12,642,000
|
)
|
|
|
(494,000
|
)
|
|
|
(12,148,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interests
|
|
|
1,372,000
|
|
|
|
247,000
|
|
|
|
1,125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to YOU On Demand shareholders
|
|
$
|
(11,270,000
|
)
|
|
$
|
(247,000
|
)
|
|
$
|
(11,023,000
|
)
|
|
Year Ended
|
|
|
|
|
|
|
|
||||||||
|
December 31,
|
|
|
December 31,
|
|
|
Amount
|
|
|
%
|
|
|||||
|
2012
|
|
|
2011
|
|
|
Change
|
|
|
Change
|
|
|||||
|
(Pro Forma)
|
|
|
(Pro Forma)
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Revenue
|
|
$
|
5,177,000
|
|
|
$
|
4,875,000
|
|
|
$
|
302,000
|
|
|
|
6
|
%
|
Cost of revenue
|
|
|
5,854,000
|
|
|
|
3,367,000
|
|
|
|
2,487,000
|
|
|
|
74
|
%
|
Gross (loss) profit
|
|
|
(677,000
|
)
|
|
|
1,508,000
|
|
|
|
(2,185,000
|
)
|
|
|
-145
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
10,094,000
|
|
|
|
7,495,000
|
|
|
|
2,599,000
|
|
|
|
35
|
%
|
Professional fees
|
|
|
1,345,000
|
|
|
|
2,110,000
|
|
|
|
(765,000
|
)
|
|
|
-36
|
%
|
Depreciation and amortization
|
|
|
4,025,000
|
|
|
|
4,314,000
|
|
|
|
(289,000
|
)
|
|
|
-7
|
%
|
Impairments of long-lived assets
|
|
|
840,000
|
|
|
|
244,000
|
|
|
|
596,000
|
|
|
|
244
|
%
|
Total operating expense
|
|
|
16,304,000
|
|
|
|
14,163,000
|
|
|
|
2,141,000
|
|
|
|
15
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(16,981,000
|
)
|
|
|
(12,655,000
|
)
|
|
|
(4,326,000
|
)
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest & other income / (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
9,000
|
|
|
|
11,000
|
|
|
|
(2,000
|
)
|
|
|
-18
|
%
|
Interest expense
|
|
|
(79,000
|
)
|
|
|
(2,000
|
)
|
|
|
(77,000
|
)
|
|
|
3,850
|
%
|
Stock purchase right
|
|
|
(44,000
|
)
|
|
|
(194,000
|
)
|
|
|
150,000
|
|
|
|
-77
|
%
|
Cost of reset provision
|
|
|
(659,000
|
)
|
|
|
-
|
|
|
|
(659,000
|
)
|
|
|
-
|
|
Change in fair value of warrant liabilities
|
|
|
647,000
|
|
|
|
-
|
|
|
|
647,000
|
|
|
|
-
|
|
Change in fair value of contingent consideration
|
|
|
1,313,000
|
|
|
|
3,000
|
|
|
|
1,310,000
|
|
|
|
43667
|
%
|
Gain on investment in unconsolidated entities
|
|
|
68,000
|
|
|
|
(14,000
|
)
|
|
|
82,000
|
|
|
|
-586
|
%
|
Loss on investment write-off
|
|
|
(95,000
|
)
|
|
|
-
|
|
|
|
(95,000
|
)
|
|
|
-
|
|
Loss on write-off of uncollectible loans
|
|
|
(41,000
|
)
|
|
|
-
|
|
|
|
(41,000
|
)
|
|
|
-
|
|
Gain on deconsolidation of Shandong Media
|
|
|
142,000
|
|
|
|
-
|
|
|
|
142,000
|
|
|
|
-
|
|
Gain on disposal of AdNet
|
|
|
-
|
|
|
|
470,000
|
|
|
|
(470,000
|
)
|
|
|
-100
|
%
|
Other
|
|
|
(140,000
|
)
|
|
|
(42,000
|
)
|
|
|
(98,000
|
)
|
|
|
233
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes and noncontrolling interests
|
|
|
(15,860,000
|
)
|
|
|
(12,423,000
|
)
|
|
|
(3,437,000
|
)
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit
|
|
|
344,000
|
|
|
|
275,000
|
|
|
|
69,000
|
|
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
(15,516,000
|
)
|
|
|
(12,148,000
|
)
|
|
|
(3,368,000
|
)
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to noncontrolling interests
|
|
|
1,688,000
|
|
|
|
1,125,000
|
|
|
|
563,000
|
|
|
|
50
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to YOU On Demand shareholders
|
|
$
|
(13,828,000
|
)
|
|
$
|
(11,023,000
|
)
|
|
$
|
(2,805,000
|
)
|
|
|
25
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deemed dividends on preferred stock
|
|
|
(924,000
|
)
|
|
|
-
|
|
|
|
(924,000
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to YOU on Demand common shareholders
|
|
$
|
(14,752,000
|
)
|
|
$
|
(11,023,000
|
)
|
|
$
|
(3,729,000
|
)
|
|
|
|
|
|
Year Ended
|
|
||||||
|
December 31,
|
|
|
December 31,
|
|
|||
|
2012
|
|
|
2011
|
|
|||
Net cash used in operating activities
|
|
$
|
(10,601,000
|
)
|
|
$
|
(5,735,000
|
)
|
Net cash used in investing activities
|
|
|
(1,240,000
|
)
|
|
|
(3,295,000
|
)
|
Net cash provided by financing activities
|
|
|
8,660,000
|
|
|
|
10,247,000
|
|
Effect of exchange rate changes on cash
|
|
|
43,000
|
|
|
|
(282,000
|
)
|
Net (decrease) increase in cash and cash equivalents
|
|
|
(3,138,000
|
)
|
|
|
935,000
|
|
Cash and cash equivalents at beginning of period
|
|
|
7,519,000
|
|
|
|
6,584,000
|
|
Cash and cash equivalents at end of period
|
|
|
4,381,000
|
|
|
|
7,519,000
|
|
|
|
Payments due by period
|
|
|||||||||||||||||
|
|
|
|
Less than
|
|
|
|
|
|
|
|
|
More than 5
|
|
||||||
Contractual Obligations
|
|
Total
|
|
|
1 year
|
|
|
1-3 years
|
|
|
3-5 Years
|
|
|
years
|
|
|||||
Product costs
|
|
$
|
7,344,000
|
|
|
$
|
1,860,000
|
|
|
$
|
5,484,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Property leases
|
|
|
334,000
|
|
|
|
317,000
|
|
|
|
17,000
|
|
|
|
-
|
|
|
|
-
|
|
Equipment leases
|
|
|
198,000
|
|
|
|
198,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Other
|
|
|
90,000
|
|
|
|
90,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
7,966,000
|
|
|
$
|
2,465,000
|
|
|
$
|
5,501,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
·
|
Variable Interest Entities. We account for entities qualifying as VIEs in accordance with FASB Topic 810, Consolidation. VIEs are required to be consolidated by the primary beneficiary. The primary beneficiary is the entity that holds the majority of the beneficial interests in the variable interest entity. A VIE is an entity for which the primary beneficiary’s interest in the entity can change with changes in factors other than the amount of investment in the entity.
|
|
·
|
Revenue Recognition. Revenue is recorded as services are provided to customers. We generally recognize all revenue in the period in which the service is rendered, provided that persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable, and collection is reasonably assured. We record deferred revenue for payments received from customers for the performance of future services and recognizes the associated revenue in the period that the services are performed.
|
|
·
|
Licensed Content. The Company obtains content through content license agreements and revenue sharing agreements with studios and distributors. The license agreement may or may not be recognized in licensed content. When the license fee is not known or reasonably determinable for a specific title, the title does not meet the criteria for recognition in licensed content in accordance with Financial Accounting Standards Boards (FASB) Accounting Standards Codification (ASC) Topic 920, Entertainment – Broadcasters. In the event, the license fee is not known or reasonably determinable for a specific title in content license agreements that do not specify the license fee per title, we expense as costs of revenues the greater of revenue sharing costs incurred through the end of the reporting period or the proportionate value of total minimum license fees expensed on a straight-line basis over the term of each license agreement. As the Company expenses license fees on a straight-line basis, it may result in deferred or prepaid license fees. Prepaid license fees are classified as an asset on the consolidated balance sheets as licensed content and deferred license fees are classified as a liability on the consolidated balance sheets as deferred license fees.
|
|
·
|
Intangible Assets and Goodwill. We account for intangible assets and goodwill, in accordance with ASC 350, Intangibles-Goodwill and Other. ASC 350 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be evaluated for impairment at least annually. ASC 350 also requires that intangible assets with estimable useful lives be amortized over their respective estimated useful lives and reviewed for impairment whenever events indicate the carrying amount may not be recoverable. In accordance with ASC 350, goodwill is allocated to reporting units, which are either the operating segment or one reporting level below the operating segment. On an annual basis, we review goodwill for impairment by first assessing qualitative factors to determine whether the existence of events or circumstances makes it more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, goodwill is further tested for impairment by comparing the carrying value to the estimated fair value of its reporting units, determined using externally quoted prices (if available) or a discounted cash flow model and, when deemed necessary, a market approach.
|
|
·
|
Foreign Currency Translation. The businesses of our operating subsidiaries are currently conducted in and from China in Renminbi. The Company makes no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, the rates stated below, or at all. The Chinese government imposes control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange and through restrictions on foreign trade. The Company uses the U.S. dollar as its reporting and functional currency. Translation adjustments are reported as other comprehensive income or expenses and accumulated as other comprehensive income in the equity section of the balance sheet. Financial information is translated into U.S. dollars at prevailing or current rates respectively, except for revenues and expenses which are translated at average current rates during the reporting period. Exchange gains and losses resulting from retained profits are reported as a separate component of stockholders’ equity.
|
|
·
|
Business Combinations. We account for acquisitions according to ASC 805, Business Combinations. ASC 805 requires that upon initially obtaining control, an acquirer should recognize 100% of the fair values of acquired assets, including goodwill and assumed liabilities, with only limited exceptions, even if the acquirer has not acquired 100% of its target. Additionally, contingent consideration arrangements will be fair valued at the acquisition date and included on that basis in the purchase price consideration and transaction costs will be expensed as incurred. This statement also modifies the recognition for pre-acquisition contingencies, such as environmental or legal issues, restructuring plans and acquired research and development value in purchase accounting. This statement amends ASC 740-10, Income Taxes, to require the acquirer to recognize changes in the amount of its deferred tax benefits that are recognizable because of a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances.
|
|
|
|
Shares Beneficially Owned(1)
|
|
|||||||||||||||||||||||||
|
|
|
Common Stock(2)
|
|
|
Series A Preferred
Stock(3)
|
|
|
Series C Preferred
Stock(4)
|
|
|
% Total
Voting
Power(5)
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Name and Address of Beneficial Owner
|
Office, If
Any
|
|
Shares
|
|
|
% of
Class
|
|
|
Shares
|
|
|
% of
Class
|
|
|
Shares
|
|
|
% of
Class
|
|
|
|
|
|||||||
Directors and Officers
|
|
||||||||||||||||||||||||||||
Shane McMahon
|
Chairman and CEO
|
|
|
2,680,834
|
(6)
|
|
|
17.6
|
%
|
|
|
7,000,000
|
(6)
|
|
|
100
|
%
|
|
|
0
|
|
|
|
*
|
|
|
|
49.0%
|
%
|
Marc Urbach
|
President and CFO
|
|
|
277,445
|
(7)
|
|
|
1.8
|
%
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
%
|
Weicheng Liu
|
China CEO and Director
|
|
|
2,141,466
|
(8)
|
|
|
14.2
|
%
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
|
|
8.8
|
%
|
James Cassano
|
Director
|
|
|
15,667
|
(9)
|
|
|
*
|
%
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
%
|
Michael Birkin
|
Director
|
|
|
5,000
|
|
|
|
*
|
%
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
%
|
Michael Jackson
|
Director
|
|
|
5,000
|
|
|
|
*
|
%
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
|
|
*
|
%
|
All officers and directors as a group (6 persons named above)
|
|
|
|
5,125,412
|
|
|
|
32.5
|
%
|
|
|
7,000,000
|
|
|
|
100
|
%
|
|
|
0
|
|
|
|
*
|
|
|
|
57.6
|
%
|
5% Security Holders
|
|
||||||||||||||||||||||||||||
Shane McMahon
|
Chairman and CEO
|
|
|
2,680,834
|
(6)
|
|
|
17.6
|
%
|
|
|
7,000,000
|
(6)
|
|
|
100
|
%
|
|
|
0
|
|
|
|
*
|
|
|
|
49.0%
|
%
|
Weicheng Liu
|
China CEO and Director
|
|
|
2,141,466
|
(8)
|
|
|
14.2
|
%
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
|
|
8.8
|
%
|
Steven Oliveira
18 Fieldstone Ct.
New City, NY 10956
|
|
|
|
250,000
|
(10)
|
|
|
1.7
|
%
|
|
|
0
|
|
|
|
*
|
|
|
|
250,000
|
(10)
|
|
|
100
|
%
|
|
|
*
|
%
|
FMR LLC
82 Devonshire St.
Boston, MA 02109
|
|
|
|
1,334,402
|
(11)
|
|
|
8.90
|
%
|
|
|
0
|
|
|
|
*
|
|
|
|
0
|
|
|
|
*
|
|
|
|
5.5
|
%
|
(1)
|
Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to our ordinary shares. For each beneficial owner above, any options exercisable within 60 days have been included in the denominator.
|
(2)
|
Based on 14,819,691 shares of Common Stock issued and outstanding as of March 31, 2013.
|
(3)
|
Based on 7,000,000 shares of Series A Preferred Stock issued and outstanding as of March 31, 2013. Each share of Series A Preferred Stock is convertible, at any time at the option of the holder, into shares of Common Stock on a ten-to-one basis (and thereafter adjusted to reflect the Company’s February 9, 2012 1-for-75 reverse stock split). Holders of Series A Preferred Stock vote with the holders of Common Stock on all matters and are entitled to ten (10) votes for each one (1) share of Common Stock that is issuable upon conversion of a share of Series A Preferred Stock (meaning that holders of Series A Preferred Stock are currently entitled to 100 votes per share).
|
(4)
|
Based on 250,000 shares of Series C Preferred Stock issued and outstanding as of March 31, 2013. Each share of Series B Preferred Stock is convertible, at the holder’s option, into one share of Common Stock; provided, however, that the holder of Series B Preferred Stock may not convert the Series B Preferred Stock into Common Stock to the extent that such holder would beneficially own in excess of 9.99% of the number of shares of Common Stock of the Company outstanding immediately after giving effect to such conversion. The holder of Series B Preferred Stock may waive the restriction on the conversion of the Series B Shares into Common Stock upon 61 days’ notice to the Company. In addition, the holders of Series B Preferred Stock are not entitled to vote on matters submitted to a vote of the shareholders of the Company.
|
(5)
|
Represents total voting power with respect to all shares of our Common Stock and Series A Preferred Stock.
|
(6)
|
Includes 366,667 shares underlying options exercisable within 60 days at $3.00 per share, and 14,167 shares underlying options exercisable within 60 days at $4.50 per share
|
(7)
|
Includes 1,333 shares underlying options exercisable within 60 days at $75.00 per share, 266,667 shares underlying options exercisable within 60 days at $3.00 per share, and 6,667 shares underlying options exercisable within 60 days at $4.50 per share.
|
(8)
|
Includes 266,667 shares underlying options exercisable within 60 days at $3.75 per share and 14,167 shares underlying options exercisable within 60 days at $4.50 per share.
|
(9)
|
Includes 667 shares underlying options exercisable within 60 days at $33.75 per share, and 10,000 shares underlying options exercisable within 60 days at $3.00 per share.
|
(10)
|
Includes 250,000 shares of Common Stock underlying warrants which are exercisable within 60 days. Mr. Steven Oliveira is the sole member of Oliveira Capital, LLC and has voting and dispositive over securities owned by Oliveira Capital, LLC. See Note 4 above with respect to Shares of Series C Preferred Stock and the restrictions on conversion thereof.
|
(11)
|
Includes 175,000 shares of Common Stock underlying warrants which are exercisable within 60 days. FMR LLC carries out the voting of the shares under written guidelines established by the Boards of Trustees of the funds over which FMR LLC is deemed to have beneficial ownership.
|
2012
|
2011
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 4,381,043 | $ | 7,519,574 | ||||
Marketable equity securities, available for sale
|
2,229 | 2,229 | ||||||
Accounts receivable, net
|
382 | 399,791 | ||||||
Inventories, net
|
384,088 | 413,562 | ||||||
Licensed content, current
|
681,457 | 150,325 | ||||||
Prepaid expenses
|
423,779 | 438,712 | ||||||
Loan receivable from related party
|
- | 316,660 | ||||||
Amounts due from shareholders
|
- | 414,743 | ||||||
Amount due from non-controlling interest
|
- | 1,572,699 | ||||||
Other current assets
|
135,606 | 340,175 | ||||||
Total current assets
|
6,008,584 | 11,568,470 | ||||||
Property and equipment, net
|
4,098,594 | 5,099,050 | ||||||
Licensed content, noncurrent
|
530,367 | 450,975 | ||||||
Intangible assets, net
|
5,059,188 | 7,149,748 | ||||||
Goodwill
|
6,105,478 | 6,105,478 | ||||||
Investment in unconsolidated entities
|
655,834 | 582,652 | ||||||
Other assets
|
- | 101,031 | ||||||
Total assets
|
$ | 22,458,045 | $ | 31,057,404 | ||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$ | 2,130,507 | $ | 3,298,041 | ||||
Accrued expenses and liabilities
|
2,456,542 | 862,473 | ||||||
Deferred revenue
|
2,091,788 | 1,856,674 | ||||||
Payable to Jinan Parent
|
144,592 | 143,286 | ||||||
Other current liabilities
|
920,888 | 543,163 | ||||||
Contingent purchase price consideration liability, current
|
368,628 | 1,091,571 | ||||||
Convertible promissory note
|
3,000,000 | - | ||||||
Warrant liabilities
|
878,380 | - | ||||||
Total current liabilities
|
11,991,325 | 7,795,208 | ||||||
Other long-term payable
|
- | 76,670 | ||||||
Deferred license fees, noncurrent
|
460,547 | - | ||||||
Contingent purchase price consideration liability
|
368,628 | 2,267,518 | ||||||
Deferred tax and uncertain tax position liabilities
|
305,849 | 810,616 | ||||||
Total liabilities
|
13,126,349 | 10,950,012 | ||||||
Commitments and Contingencies
|
||||||||
Convertible reedeemable preferred stock, $.001 par value; 50,000,000 shares authorized
|
||||||||
Series A - 7,000,000 shares issued and outstanding, liquidation preference of $3,500,000 at December 31, 2012 and 2011, respectively
|
1,261,995 | 1,261,995 | ||||||
Series B - 7,866,800 and 10,266,825 shares issued and outstanding, liquidation preference of $3,933,400 and $5,133,400 at December 31, 2012 and 2011, respectively
|
3,223,575 | 3,950,358 | ||||||
Series C - 250,000 and 0 shares issued and outstanding, liquidation preference of $1,000,000 and $0 at December 31, 2012 and 2011, respectively
|
627,868 | - | ||||||
Equity:
|
||||||||
Common stock, $.001 par value; 1,500,000,000 shares authorized, 13,742,394 and 10,467,400 issued at December 31, 2012 and 2011, respectively
|
13,742 | 10,467 | ||||||
Additional paid-in capital
|
62,388,502 | 54,505,825 | ||||||
Accumulated deficit
|
(58,841,664 | ) | (43,704,225 | ) | ||||
Accumulated other comprehensive income
|
604,632 | 468,471 | ||||||
Total YOU On Demand equity
|
4,165,212 | 11,280,538 | ||||||
Noncontrolling interests
|
53,046 | 3,614,501 | ||||||
Total equity
|
4,218,258 | 14,895,039 | ||||||
Total liabilities and equity
|
$ | 22,458,045 | $ | 31,057,404 |
2012
|
2011
|
|||||||
Revenue
|
$ | 6,873,230 | $ | 7,868,175 | ||||
Cost of revenue
|
7,083,517 | 5,525,625 | ||||||
Gross (loss) profit
|
(210,287 | ) | 2,342,550 | |||||
Operating expense:
|
||||||||
Selling, general and administrative expenses
|
10,811,548 | 8,801,085 | ||||||
Professional fees
|
1,344,653 | 2,114,942 | ||||||
Depreciation and amortization
|
4,082,936 | 4,423,760 | ||||||
Impairment of long-lived assets
|
840,000 | 244,861 | ||||||
Total operating expense
|
17,079,137 | 15,584,648 | ||||||
Loss from operations
|
(17,289,424 | ) | (13,242,098 | ) | ||||
Interest & other income / (expense)
|
||||||||
Interest income
|
8,636 | 10,574 | ||||||
Interest expense
|
(78,953 | ) | (1,764 | ) | ||||
Stock purchase right
|
(43,748 | ) | (194,321 | ) | ||||
Cost of reset provision
|
(658,719 | ) | - | |||||
Change in fair value of warrant liabilities and modification to certain warrants
|
647,302 | - | ||||||
Change in fair value of contingent consideration
|
1,313,443 | 3,016 | ||||||
Gain (loss) on investment in unconsolidated entities
|
67,675 | (14,371 | ) | |||||
Loss on investment write-off
|
(95,350 | ) | - | |||||
Loss on write-off of uncollectible loans
|
(513,427 | ) | - | |||||
Gain on deconsolidation of Shandong Media
|
141,814 | - | ||||||
Gain on disposal of AdNet
|
- | 470,041 | ||||||
Other
|
(139,739 | ) | (42,849 | ) | ||||
Net loss before income taxes and noncontrolling interest
|
(16,640,490 | ) | (13,011,772 | ) | ||||
Income tax benefit
|
353,085 | 369,707 | ||||||
Net loss
|
(16,287,405 | ) | (12,642,065 | ) | ||||
Plus: Net loss attributable to noncontrolling interests
|
2,074,098 | 1,372,164 | ||||||
Net loss attributable to YOU On Demand shareholders
|
$ | (14,213,307 | ) | $ | (11,269,901 | ) | ||
Deemed dividends on preferred stock
|
(924,132 | ) | - | |||||
Net loss attributable to YOU on Demand common shareholders
|
$ | (15,137,439 | ) | $ | (11,269,901 | ) | ||
Net loss per share
|
||||||||
Basic
|
$ | (1.36 | ) | $ | (1.15 | ) | ||
Diluted
|
$ | (1.36 | ) | $ | (1.15 | ) | ||
Weighted average shares outstanding
|
||||||||
Basic
|
11,099,746 | 9,759,430 | ||||||
Diluted
|
11,099,746 | 9,759,430 |
2012
|
2011
|
|||||||
Net loss
|
$ | (16,287,405 | ) | $ | (12,642,065 | ) | ||
Other comprehensive (loss) income:
|
||||||||
Foreign currency translation adjustments
|
136,161 | 379,472 | ||||||
Unrealized losses on available for sale securities
|
- | (7,204 | ) | |||||
Less: Comprehensive loss attributable to non-controlling interest
|
1,969,294 | 1,221,384 | ||||||
Comprehensive loss attributable to YOU On Demand shareholders
|
$ | (14,181,950 | ) | $ | (11,048,413 | ) |
Accumulated
|
YOU On
|
|||||||||||||||||||||||||||||||
Additional
|
Other
|
Demand
|
||||||||||||||||||||||||||||||
Common
|
Par
|
Paid-in
|
Accumulated
|
Comprehensive
|
Shareholders'
|
Noncontrolling
|
Total
|
|||||||||||||||||||||||||
Shares
|
Value
|
Capital
|
Deficit
|
Income
|
Equity
|
Interest
|
Equity
|
|||||||||||||||||||||||||
Balance January 1, 2011
|
8,810,250 | $ | 8,810 | $ | 42,907,048 | $ | (32,434,324 | ) | $ | 246,983 | $ | 10,728,517 | $ | 4,684,126 | $ | 15,412,643 | ||||||||||||||||
Common shares issued for services
|
2,667 | 3 | 9,997 | - | - | 10,000 | - | 10,000 | ||||||||||||||||||||||||
Warrants issued for service
|
- | - | 24,816 | - | - | 24,816 | - | 24,816 | ||||||||||||||||||||||||
Stock option compensation expense
|
- | - | 599,196 | - | - | 599,196 | - | 599,196 | ||||||||||||||||||||||||
Stock purchase right
|
- | - | 194,321 | - | - | 194,321 | - | 194,321 | ||||||||||||||||||||||||
Stock warrants issued pursuant to licensed content
|
- | - | 676,462 | - | - | 676,462 | - | 676,462 | ||||||||||||||||||||||||
Common shares issued for cash
|
1,654,213 | 1,654 | 10,916,152 | - | - | 10,917,806 | - | 10,917,806 | ||||||||||||||||||||||||
Issuance costs related to the issuance of common shares
|
- | - | (822,167 | ) | - | - | (822,167 | ) | - | (822,167 | ) | |||||||||||||||||||||
Contribution from noncontrolling interest
|
- | - | - | - | - | - | 151,759 | 151,759 | ||||||||||||||||||||||||
Share adjustment for round lot holders in connection with 75-for-1 reverse split
|
270 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Net loss attributable to YOU On Demand shareholders
|
- | - | - | (11,269,901 | ) | - | (11,269,901 | ) | (1,372,164 | ) | (12,642,065 | ) | ||||||||||||||||||||
Foreign currency translation adjustments
|
- | - | - | - | 228,692 | 228,692 | 150,780 | 379,472 | ||||||||||||||||||||||||
Unrealized losses on marketable securities
|
- | - | - | - | (7,204 | ) | (7,204 | ) | - | (7,204 | ) | |||||||||||||||||||||
Balance December 31, 2011
|
10,467,400 | $ | 10,467 | $ | 54,505,825 | $ | (43,704,225 | ) | $ | 468,471 | $ | 11,280,538 | $ | 3,614,501 | $ | 14,895,039 | ||||||||||||||||
Warrants issued for services
|
- | - | 38,604 | - | - | 38,604 | - | 38,604 | ||||||||||||||||||||||||
Common shares issued for services
|
181,617 | 182 | 571,682 | - | - | 571,864 | - | 571,864 | ||||||||||||||||||||||||
Stock option compensation expense
|
- | - | 766,149 | - | - | 766,149 | - | 766,149 | ||||||||||||||||||||||||
Stock purchase right
|
- | - | 43,748 | - | - | 43,748 | - | 43,748 | ||||||||||||||||||||||||
Conversion of Series B preferred shares into common
|
320,000 | 320 | 726,463 | - | - | 726,783 | - | 726,783 | ||||||||||||||||||||||||
Common shares and options issued for Sinotop acquisition earnout
|
245,274 | 245 | 1,308,145 | - | - | 1,308,390 | - | 1,308,390 | ||||||||||||||||||||||||
Common shares and warrants issued for cash in connection with August 2012 private placement
|
646,250 | 646 | 2,287,895 | - | - | 2,288,541 | - | 2,288,541 | ||||||||||||||||||||||||
Issuance costs in connection with August 2012 private placement
|
80,813 | 81 | (633,746 | ) | - | - | (633,665 | ) | - | (633,665 | ) | |||||||||||||||||||||
Common shares issued for cash in connection with December 2012 retail financing
|
1,800,000 | 1,800 | 2,698,200 | - | - | 2,700,000 | - | 2,700,000 | ||||||||||||||||||||||||
Issuance costs in connection with December 2012 retail financing
|
- | - | (506,262 | ) | - | - | (506,262 | ) | - | (506,262 | ) | |||||||||||||||||||||
Beneficial conversion feature due to modification of Series C preferred stock
|
- | - | 581,800 | - | - | 581,800 | - | 581,800 | ||||||||||||||||||||||||
Deconsolidation of Shandong Media
|
- | - | - | - | - | - | (497,383 | ) | (497,383 | ) | ||||||||||||||||||||||
Reduction of registered capital for Zhong Hai Video
|
- | - | - | - | - | - | (1,094,778 | ) | (1,094,778 | ) | ||||||||||||||||||||||
Issuance of shares in connection with exercise of options
|
324 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Share adjustment for round lot holders in connection with 75-for-1 reverse split
|
716 | 1 | (1 | ) | - | - | - | - | - | |||||||||||||||||||||||
Net loss
|
- | - | - | $ | (15,137,439 | ) | - | (15,137,439 | ) | (2,074,098 | ) | (17,211,537 | ) | |||||||||||||||||||
Foreign currency translation adjustments
|
- | - | - | - | 136,161 | 136,161 | 104,804 | 240,965 | ||||||||||||||||||||||||
Balance, December 31, 2012
|
13,742,394 | $ | 13,742 | $ | 62,388,502 | $ | (58,841,664 | ) | $ | 604,632 | $ | 4,165,212 | $ | 53,046 | $ | 4,218,258 |
2012
|
2011
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (16,287,405 | ) | $ | (12,642,065 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities
|
||||||||
Stock compensation expense
|
1,376,617 | 634,012 | ||||||
Depreciation and amortization
|
4,082,936 | 4,423,760 | ||||||
Amortization of licensed content
|
150,324 | 75,162 | ||||||
Deferred income tax
|
(353,085 | ) | (369,707 | ) | ||||
(Gain) loss on investment in unconsolidated entities
|
(67,675 | ) | 14,371 | |||||
Loss on investment write-off
|
47,675 | - | ||||||
Provision for bad debt expense
|
163,076 | 52,429 | ||||||
Change in fair value of warrant liabilities
|
(647,302 | ) | - | |||||
Change in fair value of contingent purchase price consideration liability
|
(1,313,443 | ) | (3,016 | ) | ||||
Value of right to purchase shares
|
43,748 | 194,321 | ||||||
Cost of reset provision
|
658,719 | - | ||||||
Gain on deconsolidation of Shandong Media, net of cash
|
(334,589 | ) | - | |||||
Impairment charge for Jinan Broadband equipment
|
840,000 | - | ||||||
Impairment charge for Sinotop equipment
|
- | 32,681 | ||||||
Impairment charge to AdNet assets, net of cash
|
- | 209,497 | ||||||
Gain on deconsolidation of AdNet
|
- | (470,041 | ) | |||||
Loss on uncollectible shareholder loan and related party loan
|
473,698 | - | ||||||
Loss on uncollectible loan to Shanghai Tianduo
|
39,729 | - | ||||||
Other
|
7,996 | - | ||||||
Change in assets and liabilities,
|
||||||||
Accounts receivable
|
(182,094 | ) | (207,358 | ) | ||||
Inventory
|
34,093 | 33,990 | ||||||
Licensed content
|
(797,987 | ) | - | |||||
Prepaid expenses and other assets
|
(164,046 | ) | 628,805 | |||||
Accounts payable
|
(29,787 | ) | 1,556,689 | |||||
Accrued expenses and liabilities
|
693,360 | 41,206 | ||||||
Deferred revenue
|
317,414 | 212,220 | ||||||
Deferred license fee
|
462,966 | 76,670 | ||||||
Other current liabilities
|
26,550 | (221,462 | ) | |||||
Other
|
157,687 | (7,203 | ) | |||||
Net cash used in operating activities
|
(10,600,825 | ) | (5,735,039 | ) | ||||
Cash flows from investing activities:
|
||||||||
Acquisition of property and equipment
|
(953,636 | ) | (2,547,120 | ) | ||||
Investments in intangibles
|
(272,643 | ) | (442,702 | ) | ||||
Leasehold improvements
|
(10,754 | ) | - | |||||
Advances to Shandong Media shareholders
|
(32,771 | ) | (219,755 | ) | ||||
Repayments from Shandong Media shareholders
|
29,663 | - | ||||||
Investment in unconsolidated entity
|
- | (46,411 | ) | |||||
Loan to Shanghai Tianduo
|
- | (38,677 | ) | |||||
Net cash used in investing activities
|
(1,240,141 | ) | (3,294,665 | ) | ||||
Cash flows from financing activities
|
||||||||
Proceeds from sale of equity securities
|
6,285,000 | 10,917,806 | ||||||
Proceeds from issuance of convertible note
|
3,000,000 | - | ||||||
Costs associated with August 2012 financing and share issuances
|
(118,906 | ) | (822,167 | ) | ||||
Costs associated with December 2012 financing and share issuances
|
(506,262 | ) | - | |||||
Capital contribution from Jinan Parent
|
- | 151,759 | ||||||
Net cash provided by financing activities
|
8,659,832 | 10,247,398 | ||||||
Effect of exchange rate changes on cash
|
42,603 | (282,516 | ) | |||||
Net (decrease) increase in cash and cash equivalents
|
(3,138,531 | ) | 935,178 | |||||
Cash and cash equivalents at beginning of period
|
7,519,574 | 6,584,396 | ||||||
Cash and cash equivalents at end of period
|
$ | 4,381,043 | $ | 7,519,574 | ||||
Supplemental Cash Flow Information:
|
||||||||
Cash paid for taxes
|
$ | - | $ | - | ||||
Cash paid for interest
|
$ | 78,953 | $ | 1,764 | ||||
Software contributed in lieu of issued capital included in intangibles
|
$ | 398,183 | $ | - | ||||
Value of shares and warrants issued in connection with August 2012 private financing
|
$ | 2,639,640 | $ | - | ||||
Value of shares and options issued for Sinotop contingent consideration earnout
|
$ | 1,308,391 | $ | - | ||||
Value of common stock issued from conversion of Preferred Series B shares
|
$ | 726,783 | $ | - | ||||
Value of warrants issued for licensed content
|
$ | - | $ | 676,462 | ||||
Property and equipment included in accrued expenses
|
$ | - | $ | 192,791 | ||||
Intangible assets inlcuded in accounts payable
|
$ | - | $ | 210,000 |