YOU On Demand (YOD) Reports Q3 Loss of $0.09/Share; Enters Investment Agreement iwth Bruno Wu's Sun Seven Stars

YOU On Demand (NASDAQ: YOD) reported Q3 EPS of ($0.09), versus ($0.09) reported last year. Revenue for the quarter came in at $476 thousand, versus $645 thousand reported last year.

YOU On Demand also today announced that its Board of Directors (the "Board") has received and approved a nonbinding proposal ("Investment Proposal") from Bruno Wu's Beijing Sun Seven Stars Culture Development Limited ("SSS"). For informational purposes, Bruno Wu is now the Founder, Co-Chairman and CEO of Sun Seven Stars Media Group Limited, one of the biggest private media and investment conglomerates in China. Its predecessor is Sun Media Group Holdings Limited, which was established by Bruno Wu and Yang Lan in 1999 and became one of the leading entertainment, media and investment companies in Asia after 10 years of growth. Sun Seven Stars Media Group Limited now has 7 business units including Sun Media Group, Sun eSports Group, Sun Seven Stars Culture Group, Enternet Group, Sun TV+ Network Group, Sun Music Group and Sun Art Capital Group. It has a presence in over ten major cities in the world including: Beijing, Shanghai, Tianjin, Hong Kong, New York, LA, Paris, London, Toronto, Seoul and Scandinavia countries.

The Investment Proposal is outlined as follows:

• SSS would make a strategic cash investment of $10,000,000 at $2.20 per share of common stock, an approximate 12% premium over the volume-weighted average closing price of the common stock as quoted by NASDAQ during the last 45 days;
• SSS will offer to provide loans to YOU On Demand in the event that the Company has requirements for additional working capital to expand operations and market the YOD service;
• SSS will receive approximately 1.8 million 2-year cash warrants to purchase common shares at an exercise price of $2.75;
• SSS will use reasonable efforts to secure $50 million of financing for YOD produced original content;
• SSS will grant YOU On Demand the non-exclusive right, to over 3,100 hours of Hollywood, domestic and children's movies, TV and original content (that YOD currently has no rights to with its own content agreements and arrangements), expected to be valued at approximately $29,100,000, in exchange for common shares of YOD common stock at a value exchange of $3.16 per share or a 60% premium over the volume-weighted average closing price of the common stock as quoted by NASDAQ during the last 45 days. The value of the that content will be determined by an independent accounting and advisory firm retained by YOU On Demand;
• SSS and partner Tianjin Enternet Network Technology Limited ("Tianjin Enternet") will sell to YOU On Demand 100% of the outstanding equity interests of Tianjin SevenStarsFlix Network Technology Limited ("SevenStarsFlix"), a to-be-formed subsidiary of Tianjin Enternet. SevenStarsFlix 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;
  • Consideration for the sale of the equity interest in Tianjin Enternet will be on an earn-out basis. Tianjin Enternet will receive YOD common stock based on reaching the following targets:

• SSS will provide right of first negotiation to YOD on all live-action or animated feature-length movies that SSS develops or obtains the right to license.

While the Company and SSS are pursuing a closing of the foregoing transactions, the Board cautions the Company's shareholders and others considering trading in its securities that this is a nonbinding investment proposal subject to the following:

• Satisfactory completion by the Company of due diligence review of the content and equity to be contributed to the Company;
• Satisfactory completion by SSS and Tianjin Enternet of due diligence review of the business of the Company;
• The negotiation, execution and delivery of mutually acceptable definitive documentation for the transactions contemplated herein;
• Each party obtaining all required approvals for the transaction; and
• The company obtaining a satisfactory independent valuation of the content rights transferred to the Company.

There can be no assurance that any definitive agreement will be executed, or that this, or any other, transaction will be approved or consummated. The Company does not undertake any obligation to provide any updates with respect to this or any other transaction, except as required under applicable law.

For earnings history and earnings-related data on YOU On Demand (YOD) click here.

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