Ideanomics, Inc. (NASDAQ:IDEX)

NEW YORK, July 26, 2017 /PRNewswire/ -- Seven Stars Cloud Group, Inc. (SSC) ("SSC" or the "Company"), announced today the signing of a strategic cooperation agreement ("Cooperation Agreement") with International Business Settlement Holdings Limited (HKSE:00147.HK) under SSC's Transactional Finance Product Cloud.

According to the Cooperation Agreement, IBS (a publicly traded financial technology company) and SSC will partner on several initiatives related to global cross-border settlement and other financial related services using resources and technology from both companies.

The partnership between IBS and SSC will promote the application of private cloud technology and blockchain technology by docking the system with central bank's RTGS (Real-Time Gross Settlement), specifically central bank's whose countries are part of the Belt & Road initiative (a development strategy proposed by Chinese President Xi that focuses on connectivity and cooperation between Eurasian countries and encompassing around 60 countries thus far).

Item 1.01  Entry Into A Material Definitive Agreement. 

On July 6, 2016, the Company entered into a Common Stock Purchase Agreement (the “SPA”) with Seven Stars Works Co., Ltd., a Korea company (“SSW”) and an affiliate of Beijing Sun Seven Stars Culture Development Limited, a PRC company (“SSS”). SSS is controlled by the chairman of the Company’s Board of Directors, Bruno Wu. Pursuant to the terms of the SPA, the Company has agreed to sell and issue 2,272,727 shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”), for $1.76 per share, or a total purchase price of $4.0 million to SSW. The SPA contains customary representations, warranties and covenants. A total of $2.0 million has been received and closed, and the receipt of the remaining $2.0 million is just pending receipt of ordinary course approval from the appropriate Chinese governmental authorities.

The foregoing description of the SPA is not purported to be complete and is qualified in its entirety by reference to the complete text of such agreement which we will file as an exhibit to our next Quarterly Report on Form 10-Q.

Item 3.02. Unregistered Sales of Equity Securities.

The information pertaining to the sale of shares of the Common Stock 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 to SSW in reliance on exemptions from registration provided by Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated thereunder.

CALCULATION OF REGISTRATION FEE

Item 1.01 Entry Into A Material Definitive Agreement.

On May 30, 2016, YOU On Demand, Inc. (the “Company”), through its subsidiary YOU on Demand (Asia) Limited, and Megtron Hongkong Investment Group Co., Limited (“Megtron”) entered into a Joint Venture Agreement (the “JV Agreement”), pursuant to which the Company and Megtron have agreed to form a new jointly owned company (the “JVC”) to, among other things, operate, market and promote certain apps provided by the Company or its affiliates, including apps pre-installed on smart phones exported from China to overseas market by Megtron and its affiliates. The JVC will be responsible for the independent server, bandwidth, promotion and local market application of such apps.

As part of the joint venture, the Company shall ensure that the JVC is connected with China online channels, overseas local channels and third-party offline channels under a paid, either fixed fee or profit sharing model, with respect to the apps and content offered through such apps. The Company shall also generally support the JVC with regard to operation resources and technologies. For specific markets, the Company will be able to provide branding and content customization. For markets other than Asia, however, the Company shall lead the operations and promotions, but must openly share operational data with the JVC. The apps provided by the Company shall include, without limitation, video content with global copyright in film, television, music, game, shopping finance and news, and social media. Profits from the apps shall be shared between the Company and the JVC with the specifics to be determined on a case-by-case basis.

Megtron, an investment company with rich resources and distribution channels in Asia mobile terminal and telecom market, shall be responsible for negotiations with carriers and telecom companies of existing regions covered by the JV Agreement and new regions to be developed in the future and will try its best to expand the promotion of products and integrate the JVC with major customers in key markets. Megatron shall also leverage its industry resources to cause the JVC’s app service to be distributed through pre-installation, channel development and specific distribution chains, to achieve user installation and loading of such apps on mobile phones and other smart devices through method of pre-installation, online and offline promotion installation, refurbishing, or upgrade of previously sold mobile devices.

Under the terms of the JV Agreement, the JVC will have a registered capital of $10 million, which the Company and Megtron will contribute $5 million each, to be paid in installments with the first installment of RMB5.00 million to be paid within one month of the date of incorporation of the JVC. The parties are responsible for the JVC to the extent of the amount of their respective capital contribution, and the JVC will be responsible for its debts. The Company and Megtron are entitled to profits from the JVC in proportion to their respective capital contribution to the JVC’s registered capital, and responsible for losses of the JVC to the extent of their capital contribution.

The Company will be entitled to appoint 3 directors to the JVC’s board of directors and Megtron will be entitled to appoint 2 directors. The chairperson shall be one of the directors appointed by the Company. In addition, Megtron will be entitled to appoint the CEO and the Company will appoint the CFO of the JVC. Under the terms of the JV Agreement, certain corporate actions require a unanimous vote at a shareholders’ meeting, including, among other things, amendments to the articles of associations, merger, dissolutions, liquidations or other changes to the JVC’s corporate form, external investments by the JVC or provision of external guarantees by the JVC.

The term of the JV Agreement is 30 years, and for any matter not covered by the JV Agreement, the parties shall negotiate separately and sign a supplemental agreement.

The foregoing description of the JV Agreement is not purported to be complete and is qualified in its entirety by reference to the complete text of such agreement which we will file as an exhibit to our next Quarterly Report on Form 10-Q.

YOU On Demand Holdings, Inc., Its Subsidiaries and Variable Interest Entity
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended
		March 31,			March 31,
		2016			2015
Revenue	$	1,269,726		$	1,027,928
Cost of revenue		915,780			1,042,999
Gross profit (loss)		353,946			(15,071	)
Operating expenses:
Selling, general and administrative expense		2,165,053			2,448,302
Professional fees		367,446			288,718
Depreciation and amortization		97,463			89,743
Total operating expense		2,629,962			2,826,763
Loss from operations		(2,276,016	)		(2,841,834	)
Interest and other income (expense)
Interest expense, net		(33,473	)		(28,323	)
Change in fair value of warrant liabilities		37,023			(15,295	)
Equity share of losses on equity method investments		(10,348	)		(32,403	)
Other		162			(9,767	)
Loss before income taxes and non-controlling interest		(2,282,652	)		(2,927,622	)
Income tax benefit		8,612			8,612
Net loss		(2,274,040	)		(2,919,010	)
Net loss attributable to non-controlling interest		137,569			120,221
Net loss attributable to YOU On Demand common shareholders	$	(2,136,471	)	$	(2,798,789	)
Basic and diluted loss per share	$	(0.09	)	$	(0.12	)
Weighted average shares outstanding:
Basic and diluted		24,484,562			23,815,720

Item 1.01  Entry Into A Material Definitive Agreement. 

In a Current Report on Form 8-K filed with the Commission on April 19, 2016 (the “Initial 8-K”), YOU On Demand, Inc. (the “Company”) , reported, among other things, that the Company (i) had entered into a Joint Venture Agreement (the “JV Agreement”) with Frequency Networks, Inc. (“Frequency”), (ii) had entered into a Series A Preferred Stock Purchase Agreement with Frequency (the “SPA”), and (iii) had completed an initial closing under the SPA.

In a subsequent closing on April 28, 2016, pursuant to the SPA, the Company purchased an additional 2,855,424 shares of Series A Preferred Stock, par value $0.001 per share, of Frequency (the “Frequency Preferred Stock”) for a total purchase price of $1 million. The shares of Frequency Preferred Stock are convertible into shares of Frequency common stock, par value $0.001 at any time after the issuance upon the option of the holder on a one for one basis, subject to certain adjustment.

CALCULATION OF REGISTRATION FEE

Item 1.01 Entry Into A Material Definitive Agreement.

Frequency Networks, Inc. Joint Venture and Series A Preferred Stock Purchase

Joint Venture Agreement

On April 13, 2016, YOU On Demand, Inc. (the “Company”) and Frequency Networks, Inc. (“Frequency”) entered into a Joint Venture Agreement (the “JV Agreement”), pursuant to which the Company and Frequency have agreed to form a new jointly owned company (the “JVC”) to, among other things, launch Frequency in certain parts of Asia, undertake certain third party integrations and create over-the-top packages and digital networks that will aggregate both parties’ licensed content into branded, genre-specific channels.

Frequency is a cloud-based internet video service that aggregates and distributes video from thousands of the world’s top providers, including the leading TV and Multi-Channel Networks, and individual creators. TV, mobile and over-the-top operators use Frequency to deliver a complete internet video service to their subscribers. Frequency was founded by Blair Harrison in Los Angeles in 2010. Mr. Harrison previously founded FastTV, an early internet video search site, and was the CEO of online video entertainment site IFILM, sold to Viacom in 2005.

The JVC will have exclusive distribution rights for such channels and content in the JV territory (which includes Singapore, Brunei, Malaysia, Thailand, Indonesia, Philippines, Vietnam, Laos, Cambodia, Myanmar and China, including Hong Kong, Macao and Taiwan) and Frequency will have exclusive distribution rights for these channels outside the JV territory and will have certain obligations to provide such content to third parties and other vendors outside the JV territory.

The JVC’s share capital will be 49% owned by Frequency and 51% owned by the Company. Frequency’s initial contribution to the JVC shall be exclusive use of its platform and licensed content in the JV territory and the Company shall contribute certain licensed content, sales and marketing, and operating capital (to be determined by the Company).

The Company will be entitled to appoint 3 directors to the JVC’s board of directors and Frequency will be entitled to appoint 2 directors. The chairman shall be one of the directors appointed by the Company. Under the terms of the JV Agreement, certain corporate actions (“Reserved Matters”) require a board resolution voted for by at least one of the Frequency appointed directors and one of the Company’s appointed directors to be valid. Reserved Matters include, among other things, issuance of JVC shares, material changes to the articles of associations or bylaws, sale of the whole or a substantial part of the JVC, approval of annual budget and operating plan,any expansion of the operating and marketing territory of the JVC beyond the JV territory, material reorganization affecting the JVC, and any fundamental change to the nature of the business of the JVC.

Further, the Company and Frequency have agreed to create a three year business plan, which shall define the business objectives of the parties with respect to the JVC, and which shall be reviewed at least every twelve months. They have also agreed to act in good faith towards the other in order to promote the JVC’s success and to consult on matters materially affecting the development of the JVC’s business and the execution of the business plan. Each party shall use commercially reasonable efforts to ensure that the formation of the JVC is accomplished as soon as possible, but if the formation of the JVC has not occurred by May 31, 2016, the JV Agreement shall, unless otherwise agreed, automatically terminate and neither party shall have any claim of any nature whatsoever against the other party, provided, however, that in any event the Company shall have the exclusive right to enter into a joint venture with Frequency with respect to the JV territory for a period of 2 years.

In connection with the JV Agreement, Frequency also issued a 6-year warrant to the Company exercisable at any time into up to 3,000,000 shares of Frequency Preferred Stock for an exercise price of $0.42467 per share, subject to certain adjustments.

Series A Preferred Stock Purchase Agreement

On April 13, 2016, the Company and Frequency also entered into a Series A Preferred Stock Purchase Agreement (the “SPA”) for the purchase of 5,710,847 shares of Series A Preferred Stock, par value $0.001 per share, of Frequency (the “Frequency Preferred Stock”) for a total purchase price of $2 million. The shares of Frequency Preferred Stock are convertible into shares of Frequency common stock, par value $0.001 (“Frequency Common Stock”) at any time after the issuance upon the option of the holder on a one for one basis, subject to certain adjustment.

Each share of Frequency Preferred Stock is entitled to non-cumulative annual dividends at the rate of $0.02548 per annum, at the discretion of Frequency’s board of directors, and is convertible into one share of the Frequency Common Stock at any time by the Company, subject to adjustment for stock dividends, stock splits, and similar events. Each share of Frequency Preferred Stock is entitled to one vote as if converted into Frequency Common Stock. The holders of the outstanding Frequency Preferred Stock, as a class, will have the right to elect one member of the board of directors of Frequency. Each share of Frequency Preferred Stock will have a liquidation preference of $0.42467 per share plus any declared but unpaid dividends.

In connection with entering into the SPA, the Company also became party to Frequency’s Series A Preferred Stock Voting Agreement, Investors’ Rights Agreement and Right of First Refusal and Co-Sale Agreement (the “Ancillary Agreements”). The Ancillary Agreements, among other things, provide customary registration rights for the Frequency Common Stock issuable upon conversion of the Series A Preferred Stock, establishes voting agreements for director elections, and provides certain secondary rights of refusal and rights to participate in sales by other major Frequency Preferred Stock holders.

Nanjing Tops Game Co., Ltd. Investment

On April 13, 2016, the Company through its PRC subsidiary Tianjin Sevenstarflix Network Technology Limited (“SSF”), entered into an Game Right Assignment Agreement with Beijing Sun Seven Stars Cultural Development Limited (“SSS”), a PRC company and affiliate of the Company, for the acquisition of certain game IP rights (the “Game IP Rights”), for total fair value of approximately $2.7 million (RMB18 million). SSF then transferred the Game IP Rights to Nanjing Tops Game Co., Ltd. (“Topgame”) as a strategic investment in Topgame, a fast-growing PRC company specialized in the independent development and operation of online, stand-alone and other games as well as the distribution of domestic and overseas games, in exchange for 13% equity ownership in Topgame through a Capital Increase Agreement entered into on April 15, 2016 between SSF, Topgame and Topgame’s shareholders (the “Capital Increase Agreement”).

The Game IP Rights were acquired from SSS at fair value. Due to the related party nature of the transaction, the Company engaged an independent valuation firm to determine the fair value of the Game IP Rights. The transaction was approved by the Company’s Board of Directors (the “Board”), without directors Bruno Wu and Polly Wang, who did not vote because of their affiliate relationship with SSS.

Game Right Assignment Agreement

Under the terms of the Game Rights Assignment Agreement, SSS assigned the Game IP Rights, which consist of all of its rights in certain prospective animated movies (the “SSS Movies”) for the purpose of developing, producing and distributing Chinese-language games and video games of all formats and types including, but not limited to, card-based video games, mobile and internet games, role playing games, action role playing games, and massively multiplayer online role playing games based on the SSS Movies, to SSF. SSF paid SSS cash consideration of $2.7 million (RMB18 million) for the Game IP Rights. If any of the SSS Movies are not fully and finally developed and distributed to the public or if the name or description of the SSS Movies are changed or altered, SSS shall compensate the SSF for any direct losses incurred. The Game Rights Assignment Agreement also includes standard warranty, indemnification, and confidentiality terms.

Capital Increase Agreement

The Capital Increase Agreement transfers the Game IP Rights from SSF to Topgame, as an increase of Topgame’s registered capital, in exchange for 13% of Topgame’s equity. Topgame’s shareholders have approved of the capital increase and SSF as a new shareholder. Under the terms of the Capital Increase Agreement, SSF shall, within one month following the completion of the production of the SSS Movies, deliver to Topgame, among other things, the video files of the SSS Movies as well as related roles, figures, images, music, text, plots. Topgame has the right to make use of all the elements related to the SSS Movies for game adaption, unless otherwise agreed by SSF and Topgame. SSF’s delay of delivery, if any, is subject to the negotiations between the parties. SSF also undertakes and warrants to complete production, distribution and marketing of the SSS Movies and shall compensate Topgame for any and all economic losses incurred by Topgame as a result of any breach by SSF of such warranties.

The Capital Increase Agreement can be terminated with the mutual consent of the parties if it becomes inconsistent with the new laws and regulations that are enacted during the period between the execution of the Capital Increase Agreement and the completion of shareholder registration change, and the parties if the parties have failed to reach consensus on amending or modifying the Capital Increase Agreement pursuant to such new laws and regulations.

The foregoing description of the JV Agreement, SPA, Game Rights Assignment Agreement and Capital Increase Agreement 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 Quarterly Report on Form 10-Q.

Item 5.07. Submission of Matters to a Vote of Security Holders.

The transactions contemplated by the terms of the JV Agreement, SPA, Game Rights Assignment Agreement and Capital Increase Agreement as referred to in Item 1.01 were approved by written consent of the holders of a majority of the Company’s outstanding shares of Series E Preferred Stock, as permitted by the Company’s Bylaws and Nevada law. The Series E Preferred Stock is not registered pursuant to Section 12(b) or 12(g) of the Securities Act of 1933, as amended. No proxy soliciting material was utilized in connection with the approval by written consent.

Item 1.01 Entry Into A Material Definitive Agreement.

On December 21, 2015, of YOU On Demand, Inc. (the “Company”) 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 Beijing Sun Seven Stars Culture Development Limited, a PRC company (“SSS”), as part of a strategic investment by SSS in the Company, which was previously described in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 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 order to comply with PRC regulatory requirements, the Company operates its businesses through companies which it controls through contractual arrangements and not equity ownership. By virtue of these contractual arrangements, the Company controls the economic interests and has the power to direct the activities of these entities, and is therefore determined to be the primary beneficiary of these entities and consolidate the assets, liabilities and financial position of these entities in its consolidated financial statements. On April 5, 2016, the Company’s subsidiary YOU On Demand (Beijing) Technology Co., Ltd. (“YOD WFOE”), entered into such variable interest entity agreements with SSF (the “SSF VIE Agreements”). Lan Yang, holder of 99% equity ownership in SSF and a party to certain of the SSF VIE Agreements, is the spouse of Bruno Zheng Wu, the Company’s Chairman. Yun Zhu, holder of 1% equity ownership in SSF and a party to certain of the SSF VIE Agreements, is the Vice President of SSS.

YOU On Demand Holdings, Inc., Its Subsidiaries and Variable Interest Entity
CONSOLIDATED STATEMENTS OF OPERATIONS

		2015			2014
Revenue	$	4,606,380		$	1,962,622
Cost of revenue		3,673,895			2,756,363
Gross profit/(loss)		932,485			(793,741	)
Operating expenses:
Selling, general and administrative expenses		8,237,056			7,459,192
Professional fees		715,723			653,646
Depreciation and amortization		390,373			536,689
Total operating expenses		9,343,152			8,649,527
Loss from operations		(8,410,667	)		(9,443,268	)
Interest and other income/(expense)
Interest expense, net		(119,913	)		(2,374,368	)
Change in fair value of warrant liabilities		189,833			(621,239	)
Change in fair value of contingent consideration		-			(160,766	)
Equity share of loss on equity method investments		(156,135	)		(20,717	)
Impairment of equity method investments		(214,998	)		-
Loss from disposal of consolidated entities		-			(622,939	)
Others		136,511			(85,516	)
Loss before income taxes and non-controlling interest		(8,575,369	)		(13,328,813	)
Income tax benefit		34,448			304,670
Net loss		(8,540,921	)		(13,024,143	)
Net loss attributable to non-controlling interest		439,648			615,683
Net loss attributable to YOU On Demand shareholders		(8,101,273	)		(12,408,460	)
Deemed dividends on preferred stock		-			(16,402,161	)
Net loss attributable to YOU On Demand common shareholders	$	(8,101,273	)	$	(28,810,621	)
Basic and diluted loss per share	$	(0.34	)	$	(1.47	)
Weighted average shares outstanding:
Basic and diluted		23,948,487			19,600,510

Management Discussion and Analysis

Revenue for the year ended December 31, 2015 was $4,606,000, as compared to $1,963,000 for 2014, an increase of approximately $2,643,000, or 135%. The revenue increase was primarily attributed to addition of new Internet Protocol Television (“IPTV”), Over-the-Top (“OTT”) and mobile distribution channels. Building on the Company’s VOD business growth in 2014, we entered into contracts with ten new distribution partners in 2015, and revenue from these ten new distribution partners accounted for 56% of total revenues for 2015. Revenue generated from mobile and OTT channels increased 164% year-over-year, and accounted for approximately $1,597,000 million, or 35% of total revenues, for the year ended December 31, 2015. The remaining revenue for 2015 was attributed to cable and IPTV distribution channels and, to a lesser extent, other content delivery services.

Loss from disposal of consolidated entities

Effective March 25, 2014, we deconsolidated our ownership in WFOE and Jinan Zhong Kuan as we determined that they were no longer required for our organizational structure on a going forward basis. We recorded a loss of $623,000 from disposal of these consolidated entities as discussed in Note 6 of our consolidated financial statements included in this report.

Net loss attributable to non-controlling interest

Hua Cheng has a 20% non-controlling interest in Zhong Hai Video and as such we allocate 20% of the operating loss of Zhong Hai Video to Hua Cheng. During the year ended December 31, 2015, $440,000 of our operating loss from Zhong Hai Video was allocated to Hua Cheng. For the year ended December 31, 2014, operating loss attributable to non-controlling interest was $1,055,000, of which $616,000 was allocated to Hua Cheng.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On March 28, 2016, the Board of Directors (the “Board”) of YOU On Demand Holdings, Inc. (the “Company”) appointed Ms. Mei Chen as the new CFO and principal accounting officer of the Company, effective April 1, 2016, and entered into an employment agreement with Ms. Chen on such date. Further, the Board appointed Mr. Bing Yang as President of YOU On Demand’s newly formed E-Commerce division, effective April 26, 2016, and entered into an employment agreement with Mr. Yang on such date.

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).

Item 1.01.  Entry Into A Material Definitive Agreement. 

Securities Purchase Agreement and Content License Transaction

On November 23, 2015, YOU On Demand Holdings, Inc. (the “Company”) entered into a Securities Purchase Agreement (the “SSS Securities Purchase Agreement”) with Beijing Sun Seven Stars Culture Development Limited, a PRC company (“SSS”), pursuant to which the Company agreed to sell and SSS agreed to purchase 4,545,454 shares of Common Stock of the Company, par value $0.001 per share (the “Common Stock”), for $2.20 per share, or a total purchase price of $10.0 million. In addition, the Company agreed to issue SSS two-year warrants to acquire an additional 1,818,182 shares of Common Stock, which warrants will have an exercise price of $2.75 per share (the “SSS Securities Purchase”). Closing of the SSS Securities Purchase is subject to certain closing conditions, including receipt of approval from the holders of a majority of the issued and outstanding Common Stock, Series A Preferred Stock and Series E Preferred Stock, voting together as a single class on an as-converted basis. The Company is also required to enter into a Voting Agreement and the Content License, both of which are further described below. In addition, C Media Limited (of which Xuesong Song is Chairman and Chief Executive Officer) will exchange 7,000,000 shares of its Series A Preferred Stock for 933,333 shares of our common stock, and both Xuesong Song and Shane McMahon will step down as Executive Chairman and Chairman, respectively, and their respective employment agreements shall terminate on January 31, 2016 provided that Mr. Song and Mr. McMahon will remain as members of the Board of Directors.

Prior to the closing of the SSS Securities Purchase Agreement, SSS agreed to use reasonable efforts to secure $50.0 million of financing for the Company, which proceeds will be used by the Company to produce its own original content.

Pursuant to the SSS Securities Purchase Agreement, and contingent upon the closing of the SSS Securities Purchase, 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 following the closing of the SSS Securities Purchase. SSS will have such designation rights, proportional to its beneficial ownership, for so long as it beneficially owns at least 5% of the Common Stock.

The foregoing summary does not purport to be a complete statement of the parties’ rights and obligations under the SSS Securities Purchase Agreement and is qualified in its entirety by reference to the SSS Securities Purchase Agreement attached hereto as Exhibit 10.1.

Content License

In connection with the closing of the SSS Securities Purchase, the Company will enter into a Content License Agreement with SSS (the “Content License”), pursuant to which SSS will grant the Company a non-exclusive, royalty-free content distribution right for certain assets valued at approximately $29.1 million, in exchange for 9,208,860 shares of Common Stock, at a value exchange of $3.16 per share. These 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 will provide the Company with 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 Content License.

The foregoing summary does not purport to be a complete statement of the parties’ rights and obligations under the Content License and is qualified in its entirety by reference to the form of Content License attached hereto as Exhibit 10.2.

Tianjin Agreement

On November 23, 2015, the Company also entered into a Share Purchase Agreement with Tianjin Enternet Network Technology Limited, a PRC Company ("Tianjin"), an affiliate of SSS (the “Tianjin Agreement”). Under the Tianjin Agreement, Tianjin agreed to contribute 100% of the equity interests of Tianjin Sevenstarsflix Network Technology Limited, a PRC company (“SSF”), a to-be-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, Tianjin will receive shares of the 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. 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 closing of the Tianjin Agreement is subject to various closing conditions, including receipt of approval from the holders of a majority of the issued and outstanding Common Stock, Series A Preferred Stock and Series E Preferred Stock, voting together as a single class on an as-converted basis. The Company is also required to enter into a Voting Agreement and the Content License, both of which are further described below.

The foregoing summary does not purport to be a complete statement of the parties’ rights and obligations under the Tianjin Agreement and is qualified in its entirety by reference to the Tianjin Agreement attached hereto as Exhibit 10.3.

Other Transaction Documents

Voting Agreement

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

Stockholder Agreement

On November 23, 2015, the Company entered into a voting agreement with certain stockholders, including C Media Limited (an affiliate of Xuesong Song) and Shane McMahon whereby such stockholders 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. These holders collectively represent approximately 54% of the votes of the Company’s common stockholders, Series A stockholders and Series E stockholders voting together as a single class.

YOU On Demand Holdings, Inc., Its Subsidiaries and Variable Interest Entity
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended						Nine Months Ended
		September 30,			September 30,			September 30,			September 30,
		2015			2014			2015			2014
Revenue	$	476,165		$	644,891		$	2,983,741		$	965,268
Cost of revenue		900,284			873,025			2,772,322			2,606,142
Gross profit/(loss)		(424,119	)		(228,134	)		211,419			(1,640,874	)
Operating expenses:
Selling, general and administrative expense		1,832,443			1,861,053			5,939,559			5,772,350
Professional fees		141,034			114,271			581,115			375,986
Depreciation and amortization		98,643			124,936			283,468			414,486
Total operating expense		2,072,120			2,100,260			6,804,142			6,562,822
Loss from operations		(2,496,239	)		(2,328,394	)		(6,592,723	)		(8,203,696	)
Interest and other income/(expense)
Interest expense, net		(30,613	)		(29,151	)		(89,168	)		(2,346,210	)
Change in fair value of warrant liabilities		91,315			281,537			125,364			(655,849	)
Change in fair value of contingent consideration		-			(47,634	)		-			(160,766	)
Loss on investment in unconsolidated entities		(50,642	)		(6,389	)		(143,666	)		(16,646	)
Gain on sale of subsidiary		-			-			-			755,426
Loss on dissolution of a variable interest entity		-			-			-			(27,463	)
Others		142,280			(14,783	)		95,937			(82,464	)
Net loss before income taxes and non-controlling interest		(2,343,899	)		(2,144,814	)		(6,604,256	)		(10,737,668	)
Income tax benefit		8,612			28,812			25,836			84,249
Net loss		(2,335,287	)		(2,116,002	)		(6,578,420	)		(10,653,419	)
Net loss attributable to non-controlling interest		249,369			169,364			376,893			696,708
Net loss attributable to YOU On Demand shareholders		(2,085,918	)		(1,946,638	)		(6,201,527	)		(9,956,711	)
Dividends and deemed dividends on preferred stock		-			-			-			(16,402,161	)
Net loss attributable to YOU On Demand common shareholders	$	(2,085,918	)	$	(1,946,638	)	$	(6,201,527	)	$	(26,358,872	)
Basic and diluted loss per share	$	(0.09	)	$	(0.09	)	$	(0.26	)	$	(1.45	)
Weighted average shares outstanding:
Basic and diluted		24,003,403			22,012,166			23,890,929			18,203,124

Management Discussion and Analysis

Revenue for the three months ended September 30, 2015 was $476,000, as compared to $645,000 for the same period in 2014. The decrease in revenue of approximately $169,000 was primarily attributable to slowdown in our VOD business for the quarter, which was affected by delays in the execution of certain new agreements and decline in monthly subscribers on some distribution platforms after the summer. Our revenue is derived from delivery of our licensed content and performance of related services for customers and channel partners, which spans across multiple platforms and distribution networks thereby causing some variability in the timing of our content and service delivery. Changes in internal resource allocation of our customers and channel partners, economic and market conditions and industry regulatory environment also influence the progress of our distribution arrangements.

Hua Cheng has a 20% non-controlling interest in Zhong Hai Video and as such we allocate 20% of the operating loss of Zhong Hai Video to Hua Cheng. During the three months ended September 30, 2015, $249,000 of our operating loss from Zhong Hai Video was allocated to Hua Cheng. For the three months ended September 30, 2014, operating loss attributable to non-controlling interest was $169,000.

CALCULATION OF REGISTRATION FEE

Item 7.01 Regulation FD Disclosure.

On June 18, 2015, YOU On Demand Holdings, Inc. (NASDAQ:YOD) (“YOU On Demand”), issued a press release announcing that based on the collaborative success of its original partnership (from August 2014) with Beijing Hiveview Technology Co, Ltd., a wholly owned subsidiary of Dr. Peng Telecom and Media Group, Ltd. (publicly listed on the Shanghai Stock Exchange) (“Dr. Peng Group”), both companies have agreed to expand the existing distribution agreement to closer integrate YOU On Demand’s services with Dr. Peng Group’s branded consumer products and broadband services. A copy of the press release is furnished hereto as Exhibit 99.1 and incorporated by reference herein.

YOU ON DEMAND HOLDINGS, INC.

CALCULATION OF REGISTRATION FEE

Item 1.01  Entry into a Material Definitive Agreement. 

On March 26, 2015, Zhong Hai Shi Xun Information Technology Co., Ltd, (“Zhong Hai Video”), the operating company of YOU On Demand Holdings, Inc. (the “Company” or “YOD”) in the People’s Republic of China (“PRC” or “China”), entered into a Mobile Video-on-Demand Service Cooperation Agreement (the “Agreement”) with C Media Limited (“C Media”), pursuant to which YOD’s subscription video-on-demand (“SVOD”) and transactional video-on-demand (“TVOD”) services will become available to users through C Media’s railway Wi-Fi mobile video service platform. The details of the Agreement, including its addendum, were finalized on April 28, 2015. The initial term of the Agreement is one year, during which period C Media will pay to Zhong Hai Video a minimum guarantee payment of RMB1,200,000 yuan (the “Base Revenue”) as well as additional fees in excess of the Base Revenue based on revenue sharing terms as prescribed in the Agreement. Mr. Xuesong Song is the Executive Chairman of the Company and also serves as the Chairman and Chief Executive Officer of C Media. C Media is a shareholder of the Company.

The foregoing summary of the Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the Agreement which will be filed with the Company’s quarterly report on form 10-Q for the quarter ended March 31, 2015.

YOU On Demand Holdings, Inc. and Its Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS

		2014			2013
Revenue	$	1,962,622		$	308,695
Cost of revenue		2,756,363			3,126,089
Gross loss		(793,741	)		(2,817,394	)
Operating expense:
Selling, general and administrative expense		7,459,192			7,608,742
Professional fees		653,646			705,692
Depreciation and amortization		536,689			774,480
Impairments of long-lived assets		-			311,249
Total operating expense		8,649,527			9,400,163
Loss from operations		(9,443,268	)		(12,217,557	)
Interest and other income/(expense)
Interest expense, net		(2,374,368	)		(370,752	)
Change in fair value of warrant liabilities		(621,239	)		(466,060	)
Change in fair value of contingent consideration		(160,766	)		(251,963	)
Loss on long-term equity investments		(20,717	)		(2,741	)
Loss from disposal of consolidated entities		(622,939	)		-
Others		(85,516	)		55,831
Net loss from continuing operations before income taxes and non-controlling interest		(13,328,813	)		(13,253,242	)
Income tax benefit		304,670			111,266
Net loss from continuing operations		(13,024,143	)		(13,141,976	)
Net income from discontinued operations		-			5,255,474
Net loss		(13,024,143	)		(7,886,502	)
Net loss attributable to non-controlling interests		615,683			1,054,970
Net loss attributable to YOU On Demand shareholders		(12,408,460	)		(6,831,532	)
Dividends and deemed dividends on preferred stock		(16,402,161	)		(1,358,364	)
Net loss attributable to YOU On Demand common shareholders	$	(28,810,621	)	$	(8,189,896	)
Basic and diluted loss per share:
Loss from continuing operations	$	(1.47	)	$	(0.89	)
Income from discontinued operations		-			0.35
Basic and diluted loss per share	$	(1.47	)	$	(0.54	)
Weighted average shares outstanding:
Basic and diluted		19,600,510			15,226,216

Management Discussion and Analysis

Revenues

Revenue for the year ended December 31, 2014 was $1,963,000, as compared to $309,000 for 2013. The increase is revenue of approximately $1,654,000 was attributable to the growth of our VOD business.

Net loss attributable to non-controlling interest

Hua Cheng has a 20% non-controlling interest in Zhong Hai Video and as such we allocate 20% of the operating loss of Zhong Hai Video to Hua Cheng. During the year ended December 31, 2014, $616,000 of our operating loss from Zhong Hai Video was allocated to Hua Cheng. For the year ended December 31, 2013, operating loss attributable to non-controlling interest was $1,055,000, of which $878,000 was allocated to Hua Cheng.

Item 1.01  Entry into a Material Definitive Agreement. 

Amendment No. 5 to McMahon Note

On May 10, 2012, at the Company’s request, Mr. McMahon made a loan to the Company in the amount of $3,000,000. In consideration for the loan, the Company issued a convertible note to Mr. McMahon in the principal amount of $3,000,000, as amended on May 18, 2012, October 19, 2012, May 10, 2013 and January 31, 2014 (as amended, restated, supplemented or otherwise modified from time to time, including without limitation that certain Waiver concerning provisions of the convertible note between the Company and Mr. McMahon, dated November 4, 2013, the "McMahon Note").

Effective on December 30, 2014, the Company and Mr. McMahon entered into Amendment No. 5 to the McMahon Note pursuant to which the maturity date of the McMahon Note, which was December 31, 2014, is now extended to be December 31, 2016.

The foregoing description of Amendment No. 5 to the McMahon Note is qualified in its entirety by reference to the actual Amendment No. 5 to the McMahon Note, a copy of which is filed as Exhibit 10.1 hereto and incorporated herein by reference.

YOU On Demand Holdings, Inc., Its Subsidiaries and Variable Interest Entity
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended						Nine Months Ended
		September 30,			September 30,			September 30,			September 30,
		2014			2013			2014			2013
Revenue	$	644,891		$	95,295		$	965,268		$	146,852
Cost of revenue		873,025			712,327			2,606,142			2,350,931
Gross loss		(228,134	)		(617,032	)		(1,640,874	)		(2,204,079	)
Operating expenses:
Selling, general and administrative expense		1,861,053			1,726,967			5,772,350			5,856,484
Professional fees		114,271			78,379			375,986			474,114
Depreciation and amortization		124,936			154,719			414,486			620,946
Impairments of long-lived assets		-			-			-			311,249
Total operating expense		2,100,260			1,960,065			6,562,822			7,262,793
Loss from operations		(2,328,394	)		(2,577,097	)		(8,203,696	)		(9,466,872	)
Interest & other income/(expense):
Interest expense, net		(29,151	)		(29,818	)		(2,346,210	)		(88,882	)
Change in fair value of warrant liabilities		281,537			(6,840	)		(655,849	)		(37,130	)
Change in fair value of contingent consideration		(47,634	)		(15,649	)		(160,766	)		(99,343	)
Gain/(loss) on investment in unconsolidated entities		(6,389	)		8,592			(16,646	)		7,873
Gain on sale of subsidiary		-			-			755,426			-
Loss on dissolution of a variable interest entity		-			-			(27,463	)		-
Others		(14,783	)		(11,827	)		(82,464	)		58,769
Net loss from continuing operations before income tax and non-controlling interest		(2,144,814	)		(2,632,639	)		(10,737,668	)		(9,625,585	)
Income tax benefit		28,812			21,168			84,249			82,129
Net loss from continuing operations		(2,116,002	)		(2,611,471	)		(10,653,419	)		(9,543,456	)
Net income from discontinued operations		-			5,589,872			-			5,255,474
Net income/(loss)		(2,116,002	)		2,978,401			(10,653,419	)		(4,287,982	)
Net loss attributable to non-controlling interest		169,364			193,512			696,708			834,685
Net income/(loss) attributable to YOU On Demand shareholders		(1,946,638	)		3,171,913			(9,956,711	)		(3,453,297	)
Dividend on preferred stock		-			(1,029,829	)		(16,402,161	)		(1,029,829	)
Net income/(loss) attributable to YOU on Demand common shareholders	$	(1,946,638	)	$	2,142,084		$	(26,358,872	)	$	(4,483,126	)
Basic and diluted loss per share:
Loss from continuing operations	$	(0.09	)	$	(0.22	)	$	(1.45	)	$	(0.65	)
Income from discontinued operations		-			0.36			-			0.35
Basic and diluted income/(loss) per share	$	(0.09	)	$	0.14		$	(1.45	)	$	(0.30	)
Weighted average shares outstanding:
Basic and diluted		22,012,166			15,553,097			18,203,124			15,034,841

Management Discussion and Analysis

Revenue

Revenue for the three months ended September 30, 2014, totaled $645,000, as compared to $95,000 for 2013. The increase in revenue of approximately $550,000 was attributable to the growth of our VOD business.

Net Loss Attributable to Non-controlling Interest

Hua Cheng has a 20% non-controlling interest in Zhong Hai Video and as such we allocate 20% of the operating loss of Zhong Hai Video to Hua Cheng. During the three months ended September 30, 2014, $169,000 of our operating loss from Zhong Hai Video was allocated to Hua Cheng, as compared to $193,000 during the same period of 2013.

YOU On Demand Holdings, Inc., Its Subsidiaries and Variable Interest Entity
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

		Three Months Ended						Six Months Ended
		June 30,			June 30,			June 30,			June 30,
		2014			2013			2014			2013
Revenue	$	182,696		$	50,619		$	320,377		$	51,557
Cost of revenue		857,179			790,019			1,733,117			1,638,604
Gross loss		(674,483	)		(739,400	)		(1,412,740	)		(1,587,047	)
Operating expense:
Selling, general and administrative expenses		2,270,657			2,073,537			3,911,297			4,050,767
Professional fees		76,231			223,051			261,715			474,485
Depreciation and amortization		139,590			173,394			289,550			466,227
Impairments of long-lived assets		-			311,249			-			311,249
Total operating expense		2,486,478			2,781,231			4,462,562			5,302,728
Loss from operations		(3,160,961	)		(3,520,631	)		(5,875,302	)		(6,889,775	)
Interest & other income (expense):
Interest expense, net		(28,321	)		(29,704	)		(2,317,059	)		(59,064	)
Change in fair value of warrant liabilities		1,501,632			(4,885	)		(937,386	)		(30,290	)
Change in fair value of contingent consideration		589,994			(42,046	)		(113,132	)		(83,694	)
Gain (loss) on investment in unconsolidated entities		(5,349	)		2,275			(10,257	)		(719	)
Gain (loss) on sale of subsidiary		-			-			755,426			-
Loss on dissolution of variable interest entity		-			-			(27,463	)		-
Other		(15,015	)		71,777			(67,681	)		70,596
Net loss from continuing operations before income taxes and noncontrolling interest		(1,118,020	)		(3,523,214	)		(8,592,854	)		(6,992,946	)
Income tax benefit		32,495			29,821			55,437			60,961
Net loss from continuing operations		(1,085,525	)		(3,493,393	)		(8,537,417	)		(6,931,985	)
Net loss from discontinued operations		-			(97,823	)		-			(334,398	)
Net loss		(1,085,525	)		(3,591,216	)		(8,537,417	)		(7,266,383	)
Plus: Net loss attributable to noncontrolling interests		292,560			310,771			527,344			641,173
Net loss attributable to YOU On Demand shareholders		(792,965	)		(3,280,445	)		(8,010,073	)		(6,625,210	)
Dividends on preferred stock		-			-			(16,402,161	)		-
Net loss attributable to YOU on Demand common shareholders	$	(792,965	)	$	(3,280,445	)	$	(24,412,234	)	$	(6,625,210	)
Basic and diluted loss per share:
Loss from continuing operations	$	(0.05	)	$	(0.22	)	$	(1.50	)	$	(0.44	)
Loss from discontinued operations		-			nil			-			(0.01	)
Basic and diluted loss per share	$	(0.05	)	$	(0.22	)	$	(1.50	)	$	(0.45	)
Weighted average shares outstanding:
Basic and diluted		16,598,990			14,938,780			16,267,036			14,771,261

Management Discussion and Analysis

Revenues

Revenues for the three months ended June 30, 2014, totaled $183,000, as compared to $51,000 for 2013. The increase in revenue of approximately $132,000 was attributable to the growth of our VOD business.

Net Loss Attributable to Non-controlling Interest

Hua Cheng has a 20% non-controlling interest in Zhong Hai Video and as such we allocate 20% of the operating loss of Zhong Hai Video to Hua Cheng. During the three months ended June 30, 2014, $292,000 of our operating loss from Zhong Hai Video was allocated to Hua Cheng, as compared to $260,000 during the same period of 2013.

49% of the operating loss of our Jinan Broadband subsidiary was allocated to Shandong Cable (previously Jinan Parent), the 49% co-owner of this business. During the three months ended June 30, 2013, $51,000 of our operating loss from Jinan Broadband was allocated to Jinan Parent. Effective July 31, 2013, the Company sold its 51% interest in Jinan Broadband. See Note 4 to our unaudited consolidated financial statements included in this report.

Item 4.01. Changes in Registrant’s Certifying Accountant

YOU On Demand Holdings, Inc. (the “Company”) previously engaged UHY LLP (“UHY”) as its independent auditor for the fiscal year ending December 31, 2014. UHY has served as the independent auditor for the Company since August, 1, 2007. On June 24, 2014, the Company’s audit committee authorized the dismissal of UHY as its independent registered public accounting firm. The dismissal became effective on June 25, 2014.

UHY’s audit reports on the Company’s financial statements for the fiscal years ended December 31, 2013 and 2012 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, except that both reports contain an explanatory paragraph regarding the going concern assumption.

During the Company’s fiscal years ended December 31, 2013 and 2012, and through June 25, 2014, there have been (i) no disagreements with UHY on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to UHY’s satisfaction, would have caused them to make reference to the subject matter in connection with their report on the Company’s financial statements for such years, and (ii) there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K, except that for the fiscal years ended December 31, 2013 and 2012, the Company’s Board of Directors discussed with UHY the existence of a material weakness in the Company’s internal control over financial reporting, as more fully described in the Company’s Annual Reports on Form 10-K for the years ended December 31, 2013 and December 31, 2012, filed on March 31, 2014 and April 8, 2013, respectively, with the Securities and Exchange Commission.

YOU ON DEMAND HOLDINGS, INC.

CALCULATION OF REGISTRATION FEE

Proposed

Maximum

Proposed

Amount

Amount to be

Offering

Maximum

of

Title of each class of

Registered

Price Per

Aggregate

Registra

securities to be registered

(1)

Unit (2)

Offering Price (2)

tion Fee

Common Stock, $0.001 par value, issuable upon conversion of Series E Preferred Stock

7,428,574

$

2.66

19,760,007

2,545 (3)

NEW YORK, April 4, 2014 /PRNewswire/ -- YOU On Demand Holdings, Inc. (NASDAQ: YOD) ("YOU On Demand"), a leading multi-platform entertainment and Video On Demand company in China, today announced the expansion of its cooperation to offer feature films from global film and television studio, Miramax, via YOU On Demand's mobile service. YOU On Demand will now make available Miramax's library titles including Oscar�-winners "Chicago" and "The English Patient," through its Subscription Video On Demand (SVOD) package and via its Transactional Video On Demand (TVOD) offering. "The Miramax library includes some of the best known, award-winning and critically acclaimed films Hollywood has to offer," said Shane McMahon, Chairman of YOU On Demand. "We are very excited to expand our partnership with Miramax and continue YOU On Demand's pursuit to provide rich and diverse content to customers anytime and anywhere on a wide variety of platforms, including mobile, digital cable, IPTV and Over-the-Top."

YOU On Demand Holdings, Inc. and Its Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS

		2013			2012
Revenue	$	308,695		$	1,700,799
Cost of revenue		3,126,089			3,460,772
Gross loss		(2,817,394	)		(1,759,973	)
Operating expense:
Selling, general and administrative expenses		7,608,742			9,689,763
Professional fees		705,692			1,046,095
Depreciation and amortization		774,480			2,159,149
Impairments of long-lived assets		311,249			-
Total operating expense		9,400,163			12,895,007
Loss from operations		(12,217,557	)		(14,654,980	)
Interest & other income / (expense)
Interest income		3,426			2,974
Interest expense		(374,178	)		(77,965	)
Stock purchase right		-			(43,748	)
Cost of reset provision		-			(658,719	)
Change in fair value of warrant liabilities		(466,060	)		647,302
Change in fair value of contingent consideration		(251,963	)		1,313,443
Loss (gain) on investment in unconsolidated entities		(2,741	)		67,675
Loss on investment write-off		-			(95,350	)
Loss on write-off of uncollectible loans		-			(513,427	)
Gain on deconsolidation of Shandong Media		-			141,814
Other		55,831			(139,739	)
Net loss from continuing operations before income taxes and noncontrolling interest		(13,253,242	)		(14,010,720	)
Income tax benefit		111,266			354,294
Net loss from continuing operations		(13,141,976	)		(13,656,426	)
Net gain (loss) from discontinued operations (including gain on disposal of $5,616,269 in 2013)		5,255,474			(2,630,979	)
Net loss		(7,886,502	)		(16,287,405	)
Plus: Net loss attributable to noncontrolling interests		1,054,970			2,074,098
Net loss attributable to YOU On Demand shareholders		(6,831,532	)		(14,213,307	)
Dividends on preferred stock		(1,358,364	)		(924,132	)
Net loss attributable to YOU on Demand common shareholders	$	(8,189,896	)	$	(15,137,439	)
Basic earnings (loss) per share
Loss from continuing operations	$	(0.89	)	$	(1.12	)
Gain (loss) from discontinued operations		0.35			(0.24	)
Basic loss per shares	$	(0.54	)	$	(1.36	)
Diluted earnings (loss) per share
Loss from continuing operations	$	(0.89	)	$	(1.12	)
Gain (loss) from discontinued operations		0.35			(0.24	)
Diluted loss per shares	$	(0.54	)	$	(1.36	)
Weighted average shares outstanding
Basic		15,226,216			11,099,746
Diluted		15,226,216			11,099,746

Management Discussion and Analysis

Revenues

Revenues for the year ended December 31, 2013, totaled $309,000, as compared to $5,000 for 2012. The increase is revenue of approximately $304,000 is attributable to the growth of our VOD business.

NEW YORK, Feb. 3, 2014 /PRNewswire/ -- YOU On Demand Holdings, Inc. (NASDAQ: YOD) ("YOU On Demand" or "the Company"), a leading multi-platform entertainment and Video On Demand company in China, announced today that C Media Limited ("C Media"), a leading mobile video service provider in China, and certain additional investors, have invested USD $19 million in the Company in exchange for shares of the Company's Series E Convertible Preferred Stock ("Series E Shares"). C Media's purchase of Series E Shares represents the second phase of C Media's strategic investment in YOU On Demand. The aggregate amount of C Media's investment in the Company, including its first phase investment, interim contribution, and second phase investment (together with the other purchasers of Series E Shares), is USD $25 million.

C Media completed the first phase of its investment in the Company in July 2013 with the purchase of $4 million of shares of the Company's Series D Preferred Stock, which converted automatically into Series E Shares at the closing of its second phase investment in the Company on January 31, 2014. Further information regarding the first phase of C Media's investment in the Company can be found in the Company's current report on Form 8-K filed with the Securities and Exchange Commission on July 11, 2013.

Between the first phase of C Media's investment in YOU On Demand in July 2013, and its second phase investment in the Company on January 31, 2014, C Media contributed USD $2 million to the Company in exchange for a Promissory Note from the Company with the same principal amount. The outstanding principal and interest on this Note converted automatically into Series E Shares upon closing of C Media's second phase investment. Details of the $2 million Note and related transactions can be found in the Company's current report on Form 8-K filed with the Securities and Exchange Commission on November 8, 2013.

Chardan Capital Markets, LLC (www.chardancm.com) acted as the sole placement agent for the sale and purchase of all of the Series E Shares issued and sold by the Company on January 31, 2014.

Commenting on this expansion of C Media's strategic investment in YOU On Demand, Mr. Xuesong Song, co-founder, Chairman, CEO and the largest shareholder of C Media said, "The YOU On Demand team, led by Chairman Shane McMahon and CEOWeicheng Liu, continues to make significant progress in building their organization into a world-class, multi-platform entertainment content company. Their recent expansion into mobile, backed by a key distribution agreement with Huawei, underscores that the Company remains uniquely positioned to capitalize on China's fast-growing demand for access to quality entertainment anywhere, anytime. As a significant investor in YOU On Demand, C Media looks forward to continuing to utilize our mobile industry expertise and wealth of industry relationships to further support YOD's future success."

Shane McMahon, Chairman of YOU On Demand, stated, "We are excited that C Media has elected to significantly expand their strategic investment in YOU On Demand and fully fund the Company for the foreseeable future. In addition to providing us with funding to assist our Company at this important inflection point in our corporate evolution, we also look forward to continuing to benefit from Mr. Song's tremendous experience and success doing business in China, as well as C Media's mobile industry expertise. With C Media's ongoing support, we will continue YOU On Demand's mission to provide consumers with the best and highest quality entertainment experiences across a wide array of user-friendly platforms."

As per the terms of the strategic investment by C Media, YOU On Demand today announced that, effective upon the closing of C Media's second phase investment in the Company on January 31, 2014, Michael Jackson and Michael Birkin resigned from its board of directors and the size of the board was expanded to seven members. Mr. Jin Shi, Mr. Clifford Higgerson and Mr. Arthur Wong were appointed to fill the vacancies.  The professional experience of each of these new members of the Company's board is described briefly below.

"We are honored to have, Mr. Shi, Mr. Higgerson and Mr. Wong join our Board of Directors," said Shane McMahon, Chairman of YOU On Demand. "All three are highly accomplished executives in their respective fields and their collective experience will be invaluable in helping to shape and grow YOU On Demand.  The Board of Directors and the management of the Company would like to thank Mr. Birkin and Mr. Jackson for their considerable contributions and wish them much success in their future endeavors."

Third Quarter 2013 Financial Results

• Revenue for the quarter ended September 30, 2013 amounted to $0.1 million, while total operating expenses declined approximately 35% to $2.0 million.
• Net income of $3.0 million, or diluted EPS of $0.14 per share vs. last years loss of $ (0.36)

Marc Urbach, YOU On Demand's President & CFO, commented, "We are delighted with the very strong relationship YOD has been developing with the C Media team over the past several months and we look forward to achieving additional milestones as defined in our business plan in the coming months, specifically with the financial and technological backing of C Media. We have been strengthening our balance sheet in recent quarters, reflecting their growing capital investment, plus the additional $4.7 millioncash infusion we recently received following our divestiture of the non-core Jinan Broadband assets."

NEW YORK, Nov. 13, 2013 /PRNewswire/ -- YOU On Demand Holdings, Inc. (NASDAQ: YOD) ("YOU On Demand" or the "Company"), a leading multi-platform entertainment and Video On Demand (VOD) company in China, announced today that the Company has received early payment for the remaining outstanding balance of RMB 24,000,000 (approximately $4 million USD) due in connection with the recent sale of its legacy asset, Jinan Broadband.

As previously disclosed, YOU On Demand entered into a definitive agreement to sell all of its interest in Jinan Broadband to Shandong Broadcast Network ("Shandong Broadcast") for total consideration of RMB 29,000,000, subject to customary closing conditions.  The sale of Jinan Broadband to Shandong Broadcast became final on July 31, 2013.

The first payment of RMB 5,000,000 was received by YOU On Demand on July 31, 2013 with the remaining balance previously scheduled to be due in two separate payments: (i) RMB 10,000,000 by November 20, 2013, and (ii) RMB 14,000,000 by May 20, 2014.

Marc Urbach, President & CFO of YOU On Demand stated, "The additional cash provided by the sale and now early full payment for the Jinan Broadband asset will be extremely beneficial to YOU On Demand from a cash flow and working capital perspective.  As previously stated, YOU On Demand reduced its investment of financial and management resources in its legacy business, Jinan Broadband, and re-deployed those assets for the benefit of YOU On Demand's core VOD businesses."

NEW YORK, Nov. 5, 2013 /PRNewswire/ -- YOU On Demand Holdings, Inc. (NASDAQ: YOD) ("YOU On Demand" or the "Company"), the first national Video On Demand (VOD) platform in China, announced today that C Media Limited ("C Media"), a leading China-based mobile video service provider, has raised its aggregate strategic investment in YOU On Demand, increasing its present stake to $6 million USD with a $2 million USD Convertible Bridge Note financing ("Bridge Note").  The Bridge Note would convert to Series E Convertible Preferred Stock ("Series E Preferred Stock") upon consummation of the proposed Phase 2 investment and would bring the total C Media Phase 2 investment in YOU On Demand to $12 million USD (the Bridge Note conversion plus an additional issuance and purchase of $10 million USD of Series E Preferred Stock). 

In addition, C Media and YOU On Demand have agreed to extend the Phase 2 investment deadline from October 31, 2013 to December 4, 2013. The Phase 2 purchase price remains $1.75 per share for Series E Preferred Stock and C Media has granted the Company the one-month extension for executing definitive documentation and satisfying the original closing conditions, as set forth in their agreement.

As previously disclosed in early July, C Media made an initial $4 million USD investment in YOU On Demand, acquiring approximately 2.3 million shares of 4% Series D Convertible Preferred Stock at $1.75 per share. Series D shares are convertible on a one-for-one basis for YOD common shares.  With the consummation of the Phase 2 investment, the total C Media investment including Phase 1, conversion of the Bridge Note and Phase 2, if concluded, would total $16 million USD.

Mr. Xuesong Song, co-founder, Chairman and CEO of C Media stated, "This increased investment in YOU On Demand further underscores C Media's growing confidence in the YOU On Demand team and represents what we believe is an exciting opportunity to jointly capitalize on China's fast-growing mobile and digital cable entertainment space together with a truly innovative partner. Based on their satisfaction of certain additional closing conditions that we anticipate will be completed prior to the December deadline, we expect to further expand upon our current $6 million investment in YOU On Demand later this year."

Shane McMahon, Chairman of YOU On Demand, stated, "We are extremely pleased with the working relationship we have developed with C Media over the past several months and appreciate their continued support and confidence.  We look forward to making additional progress with the execution of our business plan, and specifically doing so with our C Media partnership."

YOU On Demand has content distribution agreements in place with many of Hollywood's top studios including Disney Media Distribution, Paramount Pictures, NBC Universal, Warner Bros., Miramax Films, Lionsgate and Magnolia Pictures, as well as a broad selection of the best content from Chinese filmmakers.

NEW YORK, Aug. 14, 2013 /PRNewswire/ -- YOU On Demand Holdings, Inc. (NASDAQ: YOD) ("YOU On Demand" or the "Company"), the first national Video On Demand (VOD) platform in China, today announced its operating results for the three- and six-month periods ending June 30, 2013 (a full copy of its quarterly report on Form 10-Q will be posted at www.sec.gov).  ChairmanShane McMahon and President and CFO Marc Urbach are hosting an investor update conference call today at 4:30 p.m. ET to discuss the Company's recent results. The conference call dial-in is (800) 616-4018.

Marc Urbach, YOU On Demand's President & CFO, stated, "The cash and cash equivalents line item on our balance sheet at June 30 does not reflect two significant transactions that closed subsequent to the end of our most recent fiscal quarter which will ultimately provide gross proceeds totaling approximately $8.7 million:  C Media's Phase 1 strategic investment and the sale of YOU On Demand's legacy Jinan Broadband asset.  Further, as a result of the sale of Jinan Broadband, we are now exclusively focused on operating YOU On Demand's VOD platform."

Shane McMahon, YOU On Demand's Chairman, concluded, "With our liquidity position much improved, our management team better-aligned and key mobile partner C Media onboard, we believe YOD is in a strong position to further leverage its growing brand and catalogue of premium content, by exploring popular platforms such as mobile and internet, which will complement our existing digital cable platform."

It is important to note that YOU On Demand's revenues for the prior-year quarter and six-month periods principally reflect the operations of one of its two legacy businesses (Shandong Media), which has subsequently been sold (except for a 30% interest). Current quarter and six-month 2013 revenues do not reflect contributions from either holding.