8-K

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): January 30, 2017

WECAST NETWORK, 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)

Building B4, Tai Ming International Business Court,

Tai Hu Town, Tongzhou District, Beijing, China 101116
(Address of principal executive offices) (Zip Code)

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

(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

Securities Purchase Agreement

On January 30, 2017, Wecast Network, Inc. (the “Company” or “Wecast”) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with BT Capital Global Limited, a Hong Kong company (“BT”) and affiliate of the Company’s chairman Bruno Wu, pursuant to which the Company agreed to purchase and BT agreed to sell all of the outstanding capital stock (the “SVG Common Shares”) of Sun Video Group Hong Kong Limited, a Hong Kong corporation (“SVG”) for an aggregate purchase price of (i) $800,000; and (ii) a Promissory Note (the “Note”) with the principal and interest thereon convertible into shares of the Company’s Common Stock, par value $0.001 per share (the “Wecast Common Shares”) at a conversion rate of $1.50 per Wecast Common Share in exchange for a guarantee that SVG will achieve certain financial goals within 12 months of the closing, as described further below.

The above-referenced transaction was recommended by the Audit Committee of the Company’s Board of Directors (the “Audit Committee”), consisting solely of disinterested directors, and approved by the Company’s Board of Directors (the “Board”). Duff & Phelps, LLC served as an independent financial advisor to the Audit Committee and rendered a fairness opinion in connection with the transaction, which concluded that the transaction was fair from a financial point of view to the Company.

Performance Guarantee

Under the terms of the Purchase Agreement, BT has guaranteed that the business of the SVG and its subsidiaries (the “Sun Video Business”) shall achieve (i) audited revenue of $250 million (the “Revenue Performance Guarantee”), and (ii) $15 million of audited gross profit (the “Profit Performance Guarantee”, and together with the Revenue Performance Guarantee the “Performance Guarantees”), within 12 months of the closing (the “Performance Guarantee Time”). If the Sun Video Business fails to meet either of the Revenue Performance Guarantee or the Profit Performance Guarantee within the Performance Guarantee Time, BT shall forfeit back to the Purchaser the Wecast Common Shares, on a pro rata basis based on the Performance Guarantee for which the Sun Video Business achieves the lowest percentage of the respective amount guaranteed.

The Performance Guarantees shall be based on the consolidated revenue and gross profit of the SVG, its subsidiaries, and any new businesses started by the SVG or its subsidiaries (“New Businesses”), prior to the subtraction of any minority interests. The Performance Guarantees shall also include the consolidated revenue and gross profit of any companies acquired by SVG or its subsidiaries (“Acquisitions”), provided that the Board approves of such future acquisitions. BT shall secure or provide financing for New Businesses and Acquisitions in the form of loans or equity participation at the subsidiary level. The Wecast Common Shares shall be held in escrow and shall be disbursed on a quarterly basis under the terms of an escrow agreement to be entered into between the parties, based on the Company’s unaudited quarterly financial statements. Wecast Common Shares distributed to BT from the escrow account shall be subject to forfeiture back to the Company at the end of each of its fiscal year to the extent the Company’s auditor determines that the year’s Performance Guarantees entitles BT to less Wecast Common Shares than the number of Wecast Common Shares that have already been distributed

Profit Sharing

If the Sun Video Business achieves more than $50 million in cumulative audited net income within 3 years of closing, (the “Net Income Threshold”), the Company shall pay BT 50% of the amount of any cumulative audited net income above the Net Income Threshold. Profit share payments shall be made on an annual basis, in either cash or stock at the discretion of the Board, following each year’s annual audit. If the Board decides to make the payment in stock, the number of Company common stock shares to be awarded shall be calculated based on the market price of the Company’s common stock at the time of its annual audit

Promissory Note

Pursuant to the terms of the Purchase Agreement, the Company issued the Note that is convertible at a conversion rate of $1.50 per Wecast Common Share. The Note has a stated principal amount of $50 million, bears interest at the rate of 0.56% per annum and matures December 31, 2017. 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 Wecast Common Shares. Once the necessary shareholder approval is received, the unpaid principal and interest thereon will automatically convert into the Wecast Common Shares.

Other

Under the terms of the Purchase Agreement, the Company has 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 issuance of the Wecast Common Shares as promptly as practicable.

The foregoing description of the Purchase Agreement and the Note is not purported to be complete and is qualified in its entirety by reference to the complete text of such agreements which we will file as exhibits to our next Annual Report on Form 10-K.

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 issued in connection with the Purchase Agreement 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 issuance of the Note and the potential issuance the Wecast Common Shares to BT in connection the Note discussed in Item 1.01 of this Form 8-K is incorporated herein by reference in its entirety. The Company issued the Note and will issue the Wecast Common Shares upon conversion of the Note 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 February 1, 2017, the Company issued a press release announcing the entry into and closing of the Purchase Agreement, among other items. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release, dated February 1, 2017.

*  *  *  *  *

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.

	WECAST NETWORK, INC.
Date: February 1, 2017	By:	/s/ Bing Yang
		Bing Yang
		Chief Executive Officer

EX-99.1

Exhibit 99.1

 

Wecast Network Completes Acquisition of Sun Video Group and Issues 2017 Company-Wide Guidance of $280 Million Revenue

New York, NY, February 1, 2017 – Wecast Network, Inc. (NASDAQ: WCST) (“Wecast” or the “Company” or “WCST”), announced today that with full Board due diligence, review of the third-party fairness opinion and ultimately, unanimous approval, the Company has completed the previously announced related-party transaction for the acquisition of Sun Video Group HK Limited ("SVG"), which has a 51% ownership stake in M.Y. Products, LLC ("MYP"), a global, smart supply chain management operator. Additonally, WCST is issuing as of today, total Company-wide 2017 guidance of $280 million top-line revenue.

In exchange for all of the outstanding capital shares in SVG and a guarantee that SVG will achieve certain financial goals within 12 months of the closing, the seller, BT Capital Global Limited (a Bruno Wu/Sun Seven Stars company) will receive $800k in cash (already paid in advance of closing) and a promissory note of $50 million, with the principal and interest convertible into shares of WCST common stock at a conversion rate of $1.50 per share (33,333,333 shares).

As previously mentioned and as part of the original deal, SVG guaranteed it would achieve certain revenue and profitability milestones within 12 months of closing the transaction.  If SVG fails to meet the guarantee, then SVG would forfeit back to the Company the WCST promissory note / common stock it received, on a pro-rata basis.  As part of the negotiation process, that revenue milestone has been increased to $250 million (up from $200 million) and the gross profit milestone has been established at $15 million.

Additionally, if SVG achieves a net income threshold of more than $50,000,000 in cumulative audited net income within three (3) years of closing, WCST shall pay back to the seller, 50% of the amount of any cumulative audited net income above the net income threshold. Profit share payments shall be made on an annual basis, in cash or stock (at the Board’s discretion), following each year’s annual audit.

CEO Bing Yang commenting on the completed deal stated, “The SVG team has developed a business centered on connecting Asian manufacturers with U.S. retail chains in a more efficient, direct and

value-enhancing manner. The SVG deal provides Wecast Network with a tremendous opportunity to innovate and disrupt certain global supply chains. This deal, along with other M&A currently being vetted, will provide the foundation for Wecast Network’s goal towards becoming a next generation global brand and content licensing & IP sales company, driven by AI and Big Data. Based on all of this, today Wecast Network is confident in issuing Company-wide 2017 guidance of $280 million in top-line revenue.”

Sun Video Group will be rebranded as Wecast Services Group (“WSG”), and the names of Sun Video Group and its subsidiaries will be changed to reflect the rebranding.

Functioning as a global smart supply chain management company, the newly-named Wecast Services Group will be dedicated to supporting the Company’s brand licensing and video commerce business with B2B services, including but not limited to: Supply Chain Management, Manufacturer Sourcing, Supply Chain Financing, VR (virtual reality)-Enabled Commerce Technology and AI-driven Big Data Technology Management.

With the aforementioned service offerings under one roof, the Wecast Services Group provides Chinese manufacturers the opportunity to vastly improve profitability by eliminating middlemen costs from the distribution chain and allowing manufacturers to capture more robust margins as well as reapportioning cost savings to marketing and branding, thereby improving revenue volume.

As indicated in a December 2016 press release, Bruno Wu's SSS has established a 3 Billion RMB ($437 million USD) Holding Company to support and invest in WCST's future growth and expansion. The newly formed Wecast Services Group will be a beneficiary of this support initiative.

More details regarding this transaction can be found in the Company’s SEC filing under Form 8K filed today.

About Wecast Network Inc. (http://corporate.wecastnetworkinc.com)

Wecast Network Inc (NASDAQ: WCST), is a next generation global brand licensing, IP sales and video commerce company driven by AI and Big Data. With a firm focus on 4 strategy pillars which include: Brand, Content, Commerce and Licensing, the Company is leveraging and optimizing its legacy operations as a premium content Video On Demand service provider in China to evolve into a global, vertical, ubiquitous and transactional B2B2C, mobile-driven, consumer and supply chain management platform. By aiming to establish the world’s premier multimedia, social networking and smart e-commerce-enabled network with the largest global effective connected user base, Wecast, through this expanded, cloud-based, ecosystem of connected screens combined with strong partnerships with leading global providers, will be capable of delivering a vast array of WCST/YOD–branded products and services to enterprise customers and end-use consumers - anytime and anywhere, across multiple platforms and devices.

Wecast has content distribution agreements in place with many of Hollywood's top studios including Disney Media Distribution, Paramount Pictures, NBC Universal and Twentieth Century Fox Television Distribution, Miramax, as well as a broad selection of the best content from Chinese filmmakers. In addition, the Company has governmental partnerships and licenses as well as numerous JV partnerships and strategic cooperation agreements with an array of distribution and content partners in the global new media space. Wecast is headquartered in both New York, NY and Beijing, China.

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. 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

Director Strategy & IR

Wecast Network, Inc.

212-206-1216