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32.2% Stake of IDI, Inc. (IDI) Maintained by Phillip Frost, MD

Reposted from Zolmaxnews

Publication date 1/20/16

Phillip Frost, MD recently stated that they own a 32.2% stake in IDI, Inc. (NYSE:IDI) in a Form 13D/A disclosure that was filed with the SEC on Wednesday, January 20th. The investor owns 12,487,865 shares of the stock valued at approximately $53,198,305. The reporting parties listed on the disclosure included Phillip Frost, MD and Frost Gamma Investments Trust. The disclosure is available through EDGAR at this link.

Phillip Frost, MD provided the following explanation of their ownership:

Item 4 is deleted in its entirety and replaced with the following text:
On November 16, 2015, the Issuer entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Issuer, Fluent
Acquisition I, Inc., a Delaware corporation and whollyowned subsidiary of the Issuer (“Merger Sub”), Fluent Acquisition II, LLC, a Delaware limited liability company and whollyowned subsidiary of the Issuer (“Merger Co”),
Fluent, Inc., a Delaware corporation (“Fluent”) the sellers of the Issuer (“Sellers”), and Ryan Schulke, as the representative of each Seller (the “Representative”). The Issuer, Merger Sub , Merger Co, Fluent, the
Sellers, and the Representative are sometimes referred to herein collectively as the “Parties” and each individually as a “Party.”
The Parties completed the Acquisition (as defined below) (the “Closing”) on December 9, 2015 to be effective as of December 8, 2015 (the
“Effective Time”). At the Effective Time, Merger Sub merged with and into Fluent, with Fluent as the surviving entity (the “Initial Merger”). Following consummation of the Merger, the Issuer caused Fluent to consummate a
subsequent merger (the “Subsequent Merger”), and together with the Initial Merger, (the “Acquisition”) with Merger Co, with Merger Co as the surviving entity. Immediately following the Subsequent Merger, Merger Co. changed its
name to “Fluent, LLC” (“Fluent LLC”).
As consideration for the Acquisition, at Closing, Sellers received from the Issuer:
1.
$100.0 million in cash, inclusive of working capital adjustments, held back escrow and reserve amounts and certain payments as set forth in the Merger Agreement of which $1.0 million was held back in connection with any
applicable working capital adjustments and $2.0 million was held back in connection with Sellers’ indemnification obligations under the Merger Agreement, and
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2.
300,037 shares of the Issuer’s Series B NonVoting Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred”). Each share of Series B Preferred shall automatically convert into 50
shares of the Issuer’s common stock, par value $0.0005 (the “Common Stock,” and such shares of Common Stock, the “Conversion Shares”), on the date that is the twenty first
(21) day following the mailing of an information statement to the Issuer’s stockholders disclosing the Issuer’s stockholder approval of the issuance of the Conversion Shares. The
issuances of Series B Preferred to Sellers were effected in reliance on the exemptions from registration afforded by Section 4(a)(2) of the Securities Act of 1933, (the “Securities Act”) and Rule 506 of Regulation D promulgated
thereunder.
At the Effective Time, the Issuer delivered written consents of Issuer stockholders representing a majority in voting interest
of Common Stock, in accordance with the Issuer’s governing documents and the General Corporation Law of the State of Delaware approving the issuance of the Conversion Shares.
At the Effective Time, the Issuer increased the board of directors to nine members, and Sellers, by majority vote, designated two directors to the
Issuer’s board of directors.
At the Effective Time, Daniel Brauser resigned from the Issuer’s board of directors (the “Board”). Also,
at the Effective Time, Phillip Frost, M.D., was appointed as a director of the Issuer to fill the Board seat vacated by Daniel Brauser, and was named Executive Vice Chairman of the Board. At the time of his joining the Board as Executive Vice
Chairman, Gamma Trust received a grant of 3,000,000 restricted stock units, provided that the issuance of shares of Common Stock underlying such restricted stock units is subject to stockholder approval of such issuance at the Issuer’s next
Annual Meeting of Stockholders and to a restricted stock unit agreement.
As part of the Issuer’s financing transactions for the Acquisition, the
Company entered into the following transactions:
Stock Purchase Agreement
On November 16, 2015, the Issuer entered into a Stock Purchase Agreement for the sale of 119,940 shares of Series B Preferred to Gamma Trust, in exchange
for $40.0 million (the “FGIT Stock Purchase Agreement”). Each share of Series B Preferred shall automatically convert into 50 shares of Common Stock, on the date that is the twenty first
(21) day following the mailing of an information statement to the Issuer’s stockholders disclosing the Issuer’s stockholder approval of the issuance of the Conversion Shares. The
sale was completed in connection with the Closing of the Acquisition. The Series B Preferred to be issued pursuant to the FGIT Stock Purchase Agreement were exempt from the registration requirements of the Act, in accordance with Section 4(2)
of the Act and Regulation D thereunder, as a transaction by an issuer not involving any public offering.
Securities Purchase Agreements
On November 16, 2015, the Issuer raised approximately $10.0 million in gross proceeds from the sale of 29,985 shares of the Issuer’s Series B
Preferred and warrants to purchase up to 749,625 shares of the Common Stock (each, a “SPA Warrant,” and collectively, the “SPA Warrants”) pursuant to securities purchase agreements (each, a “Securities Purchase Agreement,
and the transactions contemplated thereby, the “Securities Purchase Financing”) and collectively, the “Securities Purchase Agreements,” and the transactions contemplated thereby, the “Securities Purchase Financing”).
Each SPA Warrant is exercisable in whole in part at any time from the
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date that is the twenty first (21) day following the mailing of an information statement to the Issuer’s stockholders disclosing
the Issuer’s stockholder approval of the issuance of the shares underlying the SPA Warrants (the “SPA Warrant Shares”), until November 16, 2025. $7.0 million of such gross proceeds was raised pursuant to a Securities Purchase
Agreement between the Company and Gamma Trust, pursuant to which Gamma Trust received (i) 20,990 shares of Series B Preferred and (ii) an SPA Warrant to purchase up to 524,750 shares of Common Stock, with an exercise price of $6.67 per
share of Common Stock. The additional $3.0 million of such proceeds was raised pursuant to Securities Purchase Agreements between the Issuer and other participants in the private placement on the same terms provided to Gamma Trust. In aggregate,
such other participants received (i) 8,995 shares of Series B Preferred and (ii) SPA Warrants to purchase up to 224,875 shares of Common Stock. The Series B Preferred and SPA Warrants issued in connection with the Securities Purchase
Agreements were exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”) in accordance with Section 4(2) of the Act and Regulation D thereunder, as a transaction by an issuer not involving a
public offering.
Bridge Financing
At Closing, the
Issuer entered into and consummated a bridge loan transaction (the “Bridge Financing”) with each of Gamma Trust, Michael Brauser, the Executive Chairman of the Issuer’s Board and another investor (the “Bridge Investors”),
pursuant to which the Issuer received a $5.0 million bridge loan from Gamma Trust, a $4.0 million bridge loan from Mr. M. Brauser, and a $1.0 million bridge loan from such other investor, for aggregate bridge financing in the amount of $10.0
million. The Bridge Investors received (i) a promissory note in the principal amount equal to the amount of the their respective bridge loan, with a rate of interest of ten percent (10%) per annum, which interest shall be capitalized by
adding to the outstanding principal amount of such note (each, a “Bridge Note,” and collectively, the “Bridge Notes”), and (ii) a grant of one hundred (100) shares of Series B Preferred for each $1.0 million increment
of their respective bridge loan, pursuant to a fee letter agreement (each, a “Fee Letter,” and collectively, the “Fee Letters”). Each share of Series B Preferred shall automatically convert into 50 shares of Common Stock on the
date that is the twenty first (21) day following the mailing of an information statement to the Issuer’s stockholders disclosing the Issuer’s stockholder approval of the issuance
of the Conversion Shares.
The Reporting Persons acquired the shares of Series B Preferred convertible into Common Stock and Warrants to purchase Common
Stock of the Issuer for investment purposes. The Reporting Persons may, from time to time, depending upon market conditions and other factors deemed relevant by the Reporting Persons, acquire additional shares of Common Stock or other securities of
the Issuer convertible into Common Stock. The Reporting Persons reserve the right to, and may in the future choose to, change their purpose with respect to their investment and take such actions as they deem appropriate in light of the circumstances
including, without limitation, to dispose of, in the open market, in a private transaction or by gift, all or a portion of the shares of Series B Preferred, Warrants and/or Common Stock which they now own or may hereafter acquire.
At the Effective Time, in connection with the Merger, the Issuer entered into a Stockholders’ Agreement (the “Stockholders’ Agreement”),
with Sellers and Gamma Trust, James Reilly, Derek Dubner, Marlin Capital Investments, LLC, and Michael Brauser, solely in their respective capacities as principal stockholders of the Issuer, pursuant to which the parties thereto agree to vote in a
certain manner on specified matters, including the agreement to vote in favor of each party’s duly approved nominees for the Issuer’s Board. In addition, the Issuer must obtain the consent of the Sellers holding a majority of the Series B
Preferred held by all Sellers before effecting certain capital transactions of the Issuer or taking certain compensation action with respect to certain employees of Fluent until such time that the Conversion Shares are issued.
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On
December 21, 2015, the Reporting Persons transferred 15,073 shares of Common Stock of the Issuer as a bona fide gift.
Other than as described above,
the Reporting Persons do not have any present plan or proposal as stockholders which relates to, or would result in any action with respect to, the matters listed in paragraphs (a) through (j) of Item 4 of Schedule 13D.

Shares of IDI, Inc. (NYSE:IDI) opened at 4.26 on Wednesday. The company’s market cap is $66.47 million. IDI, Inc. has a 12 month low of $4.23 and a 12 month high of $12.80. The company’s 50-day moving average price is $7.26 and its 200-day moving average price is $7.70.

Separately, Chardan Capital started coverage on IDI in a research report on Tuesday, January 12th. They set a “buy” rating and a $12.50 price objective on the stock.

In related news, CEO Ryan Schulke bought 20,000 shares of the company’s stock in a transaction on Monday, January 11th. The shares were purchased at an average price of $5.81 per share, for a total transaction of $116,200.00. Following the completion of the transaction, the chief executive officer now directly owns 20,000 shares in the company, valued at approximately $116,200. The transaction was disclosed in a filing with the SEC, which is available at this link. Also, Chairman Michael Brauser bought 5,500 shares of the company’s stock in a transaction on Friday, January 15th. The shares were bought at an average price of $4.97 per share, for a total transaction of $27,335.00. Following the transaction, the chairman now owns 100,000 shares of the company’s stock, valued at $497,000. The disclosure for this purchase can be found here.

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