On August 16, 2013, Mandalay Digital Group, Inc. (the "Company"), entered into an Underwriting Agreement (the "Underwriting Agreement") with Ladenburg Thalmann & Co. Inc. (the "Underwriter"), relating to the offer and sale (the "Offering") of 4,838,710 shares (the "Firm Shares") of its common stock (the "Common Stock") at a public offering price of $2.48. The Company has granted the Underwriter a 30-day option to purchase up to an additional 725,806 shares of its common stock to cover over-allotments, if any. The gross proceeds in the offering were $12 million and the net proceeds were approximately $11.2 million (after deducting underwriting commissions and offering expenses payable by us).

The closing of the Offering of the Firm Shares occurred on August 21, 2013. The Underwriter received a fee of 6.5% of the gross proceeds of the Offering, plus a non-accountable expense allowance equal to .5% of the gross proceeds of the Offering. The Underwriting Agreement requires us to indemnify the underwriter against certain liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments that the underwriters may be required to make because of such liabilities.

The Offering was conducted pursuant to the Company's registration statement on Form S-3, as amended (File No. 333-189783), which became effective on August 5, 2013, and a related prospectus supplement filed in connection with the Offering.

The Company issued press releases announcing the Offering on August 15, 2013, pricing of the Offering on August 16, 2013, and closing of the Offering on August 21, 2013, incorporated herein as Exhibits 99.3, 99.4 and 99.5, respectively.

Concurrently with the closing of the Offering on August 21, 2013, each of the Guber Family Trust and Trinad Capital Master Fund Ltd. (collectively, the "Holders") converted all accrued principal and interest due under certain Senior Secured Convertible Notes (the "Notes") held by them, totaling approximately $3,373,248, into Common Stock. The conversion rights were pre-existing from original issuance of the Notes. The Holders elected to convert the Notes pursuant to conversion notices they issued at their option on August 15, 2013. The conversion rate was the pre-existing contract price of $0.75 per share (which gives effect to the recent 5 into 1 reverse stock split). In the conversion, an aggregate of 4,497,664 shares of Common Stock was issued to the Holders. The shares were issued pursuant to the exemptions from registration provided by Section 4(2), Regulation D thereunder and/or Section 3(a)(9) under the Securities Act of 1933, as amended.