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): May 3, 2010
SUBAYE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 333-62236 | 35-2089848 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
9/F., Beijing Business World
56 East Xinglong Street
Chongwen District
Beijing, China 100062
(Address of principal executive offices) (Zip Code)
(86) 10-67026968
Registrant’s telephone number, including area code
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):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.01 Completion of Acquisition or Disposition of Assets
On May 3, 2010, Subaye, Inc. (the “Company”) announced that it is discontinuing its trade services and movie entertainment businesses in order to focus on further developing its online video advertising business. The Company has sold its trade services business and certain assets of its entertainment business for a total of $7 million in cash proceeds. Pro forma financial information showing the effects of the transactions are presented in Item 9.01 of this Current Report on Form 8-K.
On April 29, 2010, the Company entered into a purchase and sale agreement (the “Agreement”) with Superb Quality Limited (“Superb”), pursuant to which the Company sold 100% of the ownership interest in Panyu M&M Co. Ltd., the Company’s wholly-owned subsidiary (“Panyu”), to Superb in exchange for $600,000 in cash. Panyu is the Company’s trade services business and holds the necessary licenses to conduct international and domestic trading and provide logistics services to customers. To the Company’s knowledge, there is no relationship between Superb and the Company or any of its affiliates, directors, officers or associates of any director or officer.
Additionally, to date the Company has sold certain of its movie copyrights, which are currently held by 3G Dynasty, Inc., the Company’s wholly-owned subsidiary (“3G”), and plans to sell the remaining assets of 3G from time to time, at the discretion of the Company’s management at commercially reasonable prices. The operations of 3G will be discontinued. To the Company’s knowledge, there are no relationships between any of the buyers of the movie copyrights or other 3G assets and the Company or any of its affiliates, directors, officers or associates of any director or officer.
Item 9.01 Financial Statements and Exhibits
(b) Pro forma financial information.
SUBAYE, INC. AND SUBSIDIARIES
Pro Forma Consolidated Segment Results of Operations
To Reflect Discontinued Operations
For the Three Months Ended December 31, 2009
(Unaudited)
| In US Dollars (Thousands) | | | | |
| | | | | |
| Revenues | | | | |
| Online Membership Services | | $ | 6,912 | |
| | | | |
| Costs of Sales | | | | |
| | | | |
| Online Membership Services | | | 1,427 | |
| Segment Operating Profit (1) | | | 5,485 | |
| Less: Operating Expenses (1) | | | | |
| Advertising | | | 94 | |
| Other Selling, General and Administrative | | | 1,265 | |
| Non-controlling Interest (2) | | | 472 | |
| | | | |
| Income From Continuing Operations Before Interest and Taxes | | $ | 3,654 | |
| | | |
| (1) | | Segment operating profit includes a segment’s net revenues reduced by its materials, labor and other product costs along with the segment’s selling, engineering and administrative expenses and non-controlling interest. Unallocated operating expenses, net loss (gain) on sales of businesses and assets, restructuring and other impairment charges, interest income and expense and taxes on income are excluded from the measure. |
| (2) | | Reflects the adoption of the FASB’s guidance on non-controlling interests in consolidated financial statements. |
SUBAYE, INC. AND SUBSIDIARIES
Pro Forma Balance Sheets
To Reflect Discontinued Operations
As of December 31, 2009
(Unaudited)
| | | | | |
| In US Dollars (Thousands) | | | | |
| | | | | |
| Assets | | | | |
| Cash | | $ | 169 | |
| | | | |
| Accounts Receivable | | | 6,563 | |
| | | | |
| Prepaid Advertising | | | 3,307 | |
| Deposit for Inventoriable Assets | | | 8,147 | |
| Assets Held for Sale | | | 36,164 | |
| Property and Equipment | | | 9,322 | |
| Total Assets | | | 63,672 | |
| | | | | |
| Liabilities | | | | |
| | | | |
| Accounts Payable and Accrued Expenses | | $ | 1,359 | |
| Liabilities Held for Sale | | | 7,519 | |
| Total Liabilities | | | 8,878 | |
| | | | | |
| | | | | |
| Shareholders’ Equity | | | | |
| Common Stock | | | 7 | |
| Additional Paid in Capital | | | 48,021 | |
| Deferred Stock Based Compensation | | | (6,789 | ) |
| Accumulated Other Comprehensive Income | | | (27 | ) |
| Retained Earnings | | | 13,582 | |
| Total Shareholders’ Equity | | | 54,794 | |
| Total Liabilities and Shareholders’ Equity | | $ | 63,672 | |
SUBAYE, INC. AND SUBSIDIARIES
Pro Forma Consolidated Segment Results of Operations
To Reflect Discontinued Operations
For the Year Ended September 30, 2009
(Unaudited)
| | | | | |
| In US Dollars (Thousands) | | | | |
| | | | | |
| Revenues | | | | |
| Online Membership Services | | $ | 26,651 | |
| | | | |
| Costs of Sales | | | | |
| | | | |
| Online Membership Services | | | 5,957 | |
| Segment Operating Profit (1) | | | 20,694 | |
| Less: Operating Expenses (1) | | | | |
| Advertising | | | 9,089 | |
| Other Selling, General and Administrative | | | 3,036 | |
| Non-controlling Interest (2) | | | 3,042 | |
| | | | |
| Income From Continuing Operations Before Interest and Taxes | | $ | 5,527 | |
| | | |
| (1) | | Segment operating profit includes a segment’s net revenues reduced by its materials, labor and other product costs along with the segment’s selling, engineering and administrative expenses and non-controlling interest. Unallocated operating expenses, net loss (gain) on sales of businesses and assets, restructuring and other impairment charges, interest income and expense and taxes on income are excluded from the measure. |
| (2) | | Reflects the adoption of the FASB’s guidance on non-controlling interests in consolidated financial statements. |
SUBAYE, INC. AND SUBSIDIARIES
Pro Forma Balance Sheets
To Reflect Discontinued Operations
As of September 30, 2009
(Unaudited)
| | | | | |
| In US Dollars (Thousands) | | | | |
| | | | | |
| Assets | | | | |
| Cash | | $ | 2 | |
| | | | |
| Accounts Receivable | | | 8,266 | |
| | | | |
| Prepaid Advertising | | | 370 | |
| Deposit for Inventoriable Assets | | | 8,152 | |
| Assets Held for Sale | | | 29,360 | |
| Property and Equipment | | | 10,580 | |
| Total Assets | | | 56,730 | |
| | | | | |
| Liabilities | | | | |
| | | | |
| Accounts Payable and Accrued Expenses | | $ | 566 | |
| Liabilities Held for Sale | | | 5,275 | |
| Total Liabilities | | | 5,841 | |
| Minority Interest in Subsidiaries | | | 10,180 | |
| | | | | |
| Shareholders’ Equity | | | | |
| Common Stock | | | 3 | |
| Additional Paid in Capital | | | 32,452 | |
| Deferred Stock Based Compensation | | | (2,908 | ) |
| Accumulated Other Comprehensive Income | | | 54 | |
| Retained Earnings | | | 11,108 | |
| Total Shareholders’ Equity | | | 40,709 | |
| Total Liabilities and Shareholders’ Equity | | $ | 56,730 | |
| | | | |
(d) Exhibits
Exhibit Number | Exhibit Title or Description |
| | |
| 99.1 | Press release, dated May 3, 2010. |
SIGNATURE
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.
Dated: May 5, 2010
| | SUBAYE, INC. |
| | |
| | |
| | By: | /s/ Zhiguang Cai |
| | Name: | Zhiguang Cai |
| | Title: | Chief Executive Officer |
