| Subsequent Events |
Pursuant
to FASB ASC 855, Management has evaluated all events and transactions that occurred from September 30, 2017 through the date of
issuance of these financial statements. During this period, we did not have any significant subsequent events, except as disclosed
below:
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On
October 3, 2017, the Company entered into a Securities Purchase Agreement (the “Purchase
Agreement”) with certain investors named therein (the “Investors”),
pursuant to which the Company agreed to issue and sell, in a registered direct offering
by the Company directly to the Investors (the “Registered Offering”), an
aggregate of 1,647,691 shares Common Stock, at an offering price of $3.90 per share for
gross proceeds of approximately $6,425,995 before deducting the placement agent fee and
related offering expenses. The Shares were offered by the Company pursuant to a registration
statement on Form S-3 (File No. 333-214805), which was filed with the Securities and
Exchange Commission (the “Commission”) on November 25, 2016 and was declared
effective by the Commission on December 19, 2016 (the “Registration Statement”). |
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In
a concurrent private placement (the “October 2017 Private Placement” and
together with the Registered Offering, the “Offerings”), the Company agreed
to issue to the Investors who participated in the Registered Offering warrants (the “Offering
Warrants” and collectively with the Shares, the “Securities”) exercisable
for one share of Common Stock for each Share purchased in the Registered Offering for
an aggregate of 1,647,691 shares of Common Stock at an exercise price of $3.90 per share.
Each Offering Warrant will be immediately exercisable on the date of its issuance and
will expire five years from the date it becomes exercisable. Subject to limited exceptions,
a holder of an Offering Warrant will not have the right to exercise any portion of its
warrants if the holder, together with its affiliates, would beneficially own in excess
of 4.99% of the number of shares of Common Stock outstanding immediately after giving
effect to such exercise (the “Beneficial Ownership Limitation”); provided,
however, that upon 61 days’ prior notice to the Company, the holder may increase
or decrease the Beneficial Ownership Limitation, provided further that in no event shall
the Beneficial Ownership Limitation exceed 9.99%. The Offering Warrants and the shares
of our Common Stock issuable upon the exercise of the Offering Warrants are not being
registered under the Securities Act of 1933, as amended (the “Securities Act”),
were not offered pursuant to the Registration Statement and were offered pursuant to
the exemption provided in Section 4(a)(2) under the Securities Act, and Rule 506(b) promulgated
thereunder. |
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On
October 2, 2017, the Company entered into an Engagement Letter (the “Engagement
Letter”) with Chardan (the “Placement Agent”) pursuant to which the
Company engaged Chardan as its placement agent in connection with the Offerings. The
Placement Agent agreed to use its reasonable best efforts to arrange for the sale of
the Securities. The Company agreed to pay the Placement Agent a placement agent fee in
cash equal to 9.0% of the gross proceeds from the sale of the Securities and to reimburse
certain out-of-pocket expenses of up to $35,000. The Engagement Letter also contains
representations, warranties, indemnification and other provisions customary for transactions
of this nature. |
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Subsequent
to September 30, 2017, the Company issued 25,000 shares of Common Stock upon conversion
of 75 shares of Series A Convertible Preferred Stock as a conversion prices of $3.00
per share. |
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Pursuant
to FASB ASC 855, Management has evaluated all events and transactions that occurred from December 31, 2016 through the date of
issuance of these financial statements. During this period, we did not have any significant subsequent events, except as disclosed
below:
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Subsequent to the end of the fiscal year,
on January 10, 2017, the Company entered into an amendment of our home entertainment Distribution Agreement
with Sony pursuant to which, among other things, Sony agreed to pay DADC $1,489,583, the amount which
was owed and payable by us to DADC for the disk replication, packaging and distribution services.
In connection with such transaction, we issued Sony 301,231
shares of our common stock at $4.945 per share, Sony’s exclusive territory for exercising its home entertainment
distribution rights under the Distribution Agreement was extended from the United States and Canada to worldwide, and
the amount of advances subject to recoupment by Sony out of royalty payments that would otherwise be due to us under the
Distribution Agreement was increased by the amount of the payment to DADC. (See Notes 7 and 8 for additional information
about this transaction.)
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On February 9, 2017, the Company entered into the Private
Transaction pursuant to the Agreement with certain holders of the Company’s Original Warrants. The Original Warrants
were originally issued on November 3, 2015, to purchase an aggregate of 1,443,362 shares of the Company’s common
stock at an exercise price of $3.30 per share and were to expire on November 3, 2020.
Pursuant to the Agreement, the holders of the Original Warrants
and the Company agreed that such Original Warrant holders would exercise their Original Warrants in full and the Company
would issue to each such holder new warrants, with the new warrants being identical to the Original Warrants except that
the termination date of such new warrants is February 10, 2022 (the “Reload Warrants”). In addition, depending
on the number of Original Warrants exercised by all holders of the Original Warrants, the Company also agreed to issue
to the holders another new warrant, identical to the Original Warrant except that the exercise price of such warrant is
$5.30 and such warrant is not exercisable until August 10, 2017 (the “Market Price Warrants” and together
with the Reload Warrants, the “New Warrants”).
The Company received gross proceeds of $3,866,573 from the
exercise of the Original Warrants and issued Reload Warrants to purchase an aggregate of 799,991 shares of the Company’s
common stock and Market Price Warrants to purchase an aggregate of 371,699 shares of the Company’s common stock.
Chardan acted as financial advisor on the Private Transaction
in consideration for which Chardan received $363,617 and will be issued New Warrants for 115,000 shares of the Company’s
common stock.
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On various dates subsequent to December 31, 2016, an investor
converted 450 shares of Series A Convertible Preferred Stock into 150,000 shares of the Company’s common stock at a
conversion price of $3.00. |
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On various dates subsequent to December 31, 2016, the Company
issued 18,522 shares of Common Stock to certain consultants for services rendered totaling $100,000. |
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