Item 3.02. Unregistered Sales of Equity Securities.
On May 31, 2014, India Globalization Capital, Inc. ("IGC") completed the
acquisition of 51% of the issued and outstanding share capital of Golden Gate
Electronics Limited, a corporation organized and existing under the laws of Hong
Kong ("Golden Gate"), from Sunny Tsang Hon Sang, the sole shareholder of Golden
Gate, pursuant to the terms of a Stock Purchase Agreement by and among the
parties. Golden Gate, headquartered in Hong Kong, operates an e-commerce
platform for trading of commodities and electronic components. The purchase
price of the acquisition consists of up to 1,209,765 shares of IGC common stock,
valued at approximately US$1,052,496 on the closing date of the Stock Purchase
Pursuant to the terms of the Stock Purchase Agreement, the shares are issuable
in four installments, with 205,661 shares having been issued at closing. The
balance of the shares are issuable in increments of (i) 205,660 shares following
the audit for IGC's fiscal year ending March 31, 2015 for achieving target
revenue of HK$75.0 million, and earnings of HK$2.25 million for the period from
July 1, 2014 to March 31, 2015, (ii) 399,222 shares following the audit for
IGC's fiscal year ending March 31, 2016 for achieving target revenue of HK$160.0
million, and earnings of HK$8.0 million during the 2016 fiscal year, and
(iii) 399,222 shares following the audit for IGC's fiscal year ending March 31,
2017 for achieving target revenue of HK$235.0 million, and earnings of HK$14.0
million during the 2017 fiscal year, with the shares delivered by IGC in each
period on a prorated basis if the earnings targets are not fully satisfied. For
convenience, on June 4, 2014, the U.S. dollar foreign exchange rate in late New
York trading was US$1.00 = HK$7.75
Notwithstanding the foregoing targets, in the event Golden Gate completes an
initial public offering in China or Hong Kong before September 30, 2017, and
less than all of the IGC shares have then been issued under the Stock Purchase
Agreement, the remaining unissued shares will be issued to Golden Gate, provided
the initial public offering price values Golden Gate higher than in accordance
with this transaction.
The Stock Purchase Agreement provides for "put" options under various
circumstances that would allow IGC and Golden Gate to reverse the transaction by
returning each other's shares. The put option held by Mr. Tsang Hon Sang would
be triggered based on IGC's share price dropping below certain minimum preset
share prices for extended periods of time or the suspension of trading or
delisting of IGC's shares. The put option held by IGC would be triggered if
Golden Gate has accumulated negative earnings for any of the next three fiscal
years, and both parties have a put option if certain loan facilities cannot be
renewed or new bank loans cannot be obtained.
The purchase price was determined as a result of arm's length negotiations
between the parties. The foregoing description of the acquisition does not
purport to be complete and is qualified in its entirety by reference to the full
text of the Stock Purchase Agreement, the form of which is filed as Exhibit 2.1
to this current report and is incorporated herein by reference. The shares
offered in the acquisition have not been registered under the Securities Act of
1933, as amended, and may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
Golden Gate, headquartered in Hong Kong, operates an e-commerce platform for
trading of commodities and electronic components. Golden Gate operates several
bank lines of credit facilities and uses an electronic trading e-commerce
platform to position itself as the supply chain partner for equipment
manufacturers, traders and service providers. It is an international broker that
strives to solve urgent sourcing needs. Golden Gate was profitable in the fiscal
year ended March 31, 2014, with unaudited revenue of approximately
IGC had no previous relationship or association with Golden Gate. There are
presently no significant changes anticipated in the business or product lines of
either IGC or Golden Gate.
IGC announced the closing of the acquisition in a press release issued on June
4, 2014, a copy of which is attached hereto as Exhibit 99.1 and is incorporated
in its entirety by reference.
Item 9.01 Financial Statement and Exhibits.
(a) Financial Statements of Businesses Acquired. In accordance with Item
9.01(a), the financial statements of Golden Gate are not "significant" and
therefore not required to be filed pursuant to Item 3.05(b) of Regulation S-X.
(b) Pro Forma Financial Information. In accordance with Item 9.01(b), the
pro forma financial information is not "significant" and therefore not required
to be filed pursuant to Article 11 of Regulation S-X.
The exhibits listed in the following Exhibit Index are filed as part of this
Number Exhibit Description
Stock Purchase Agreement, dated as of May 31, 2014
, by and among India
2.1 Globalization Capital, Inc.
, a Shareholder of Golden Gate Electronics
Limited and Golden Gate Electronics Limited.
99.1 Press release issued by India Globalization Capital, Inc. on June 5,