Item 1.01. Entry into a Material Definitive Agreement.
On July 24, 2014 (the "Closing Date"), Single Touch Systems, Inc. (the
"Company"), Single Touch Interactive, Inc., a wholly-owned subsidiary of the
Company, DoubleVision Networks, Inc., ("DoubleVision"), and the shareholders of
the DoubleVision (collectively the "Sellers") entered into a Share Purchase
Agreement (the "Purchase Agreement") pursuant to which acquired all of the
shares of DoubleVision.
The Company paid $3.6 million (the "Purchase Price") for DoubleVision by issuing
8,000,000 shares of the Company's common stock (the "Shares") to the Sellers at
an agreed-upon valuation of $0.45 per share. The Company also agreed to pay
$400,000 to one of DoubleVision's creditors. Substantially all of the Sellers
are subject to lockup agreements that restrict the sale of the Shares for at
least one year. The Purchase Price may be reduced subject to certain conditions
related to DoubleVision's liabilities. The Sellers also have an earn -out
provision which could cause the Company to issue additional shares of the
Company's common stock equal to $1,000,000 (valued at the average closing price
for the ninety days ending July 31, 2015) to the Sellers if the Company's media
placement revenues for the twelve-month period from August 1, 2014 to July 31,
2015 are at least $3,000,000, subject to certain conditions such as receipt of
customer payments and achievement of a gross margin threshold.
In connection with the Purchase Agreement, on the Closing Date, the Company
entered into consulting agreements with two of DoubleVision's officers for
$5,000 each quarter provided certain milestones are achieved. The Purchase
Agreement contains standard representations, warranties and covenants.
In connection with the shares of common stock issued or issuable under the
Purchase Agreement, the Company relied on Section 4(2) of the Securities Act of
1933, as amended, for transactions not involving a public offering. Each of the
Sellers made representations that they were accredited investors.
The descriptions of the terms of the Purchase Agreement do not purport to be
complete and are qualified in their entirety by the copy which is included as an
exhibits to this Current Report.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of business acquired. The required financial statements
will be filed no later than 71 calendar days after the date of the filing of
this report on Form 8-K.
(b) Pro forma financial information. The required pro forma financial
information will be filed no later than 71 calendar days after the date of the
filing of this report on Form 8-K.
Exhibit Number Description
10.1 Share Purchase Agreement
99.1 Press Release