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Organization and Principal Activities

YOU On Demand Holdings, Inc., is a Nevada corporation that primarily operates in China through our subsidiaries and variable interest entities (“VIEs”). The Company, its subsidiaries and its VIEs are collectively referred to as YOU on Demand (“YOU On Demand”, “we”, “us”, or “the Company”).

YOU on Demand is principally engaged in providing video on demand (“VOD”) content through a comprehensive end-to-end secure delivery system. Our services are offered across multiple platforms, including digital cable television, IPTV (“Internet Protocol Television”), mobile and over-the-top (“OTT”) devices.

Prior to July 31, 2013, the Company held 51% interest in Jinan Guangdian Jia He Broadband Co. ltd. (“Jinan Broadband”), a cable broadband business based in Jinan City, China. Effective July 31, 2013, the Company sold its 51% interest in Jinan Broadband.

In the opinion of management, these financial statements reflect all adjustments, which are of a normal and recurring nature that is necessary for a fair statement of the results for the periods presented in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and with the instructions to Form 10-Q in Article 10 of SEC Regulation S-X. The results of operations for the interim periods presented are not necessarily indicative of results for the full year.

Certain information and footnote disclosures normally included in the annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on March 31, 2014 (our “2013 Annual Report”).

Reclassifications

In presenting the Company’s unaudited consolidated statement of operations for the three and nine months ended September 30, 2013, we recorded approximately $69,000 and $298,000 of business related expenses as “professional fees”. In presenting the Company’s unaudited consolidated statement of operations for the three and nine months ended September 30, 2014, we reclassified such business related expenses from “professional fees” to “selling, general and administrative expense” to more properly reflect fees paid for recurring operating expenses in the ordinary course of business. The prior year information has been reclassified to be comparable with our current year presentation. This reclassification has no effect on previously reported net loss.