Attached files
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EX-31.2 - NEOMEDIA TECHNOLOGIES INC | v165767_ex31-2.htm |
EX-32.1 - NEOMEDIA TECHNOLOGIES INC | v165767_ex32-1.htm |
EX-31.1 - NEOMEDIA TECHNOLOGIES INC | v165767_ex31-1.htm |
EX-32.2 - NEOMEDIA TECHNOLOGIES INC | v165767_ex32-2.htm |
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10 - Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended September 30, 2009
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period from __________ to ____________
Commission
File Number 0-21743
NeoMedia
Technologies, Inc.
(Exact
Name of Issuer as Specified In Its Charter)
Delaware
|
36-3680347
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Identification
No.)
|
Two
Concourse Parkway, Suite 500, Atlanta, GA 30328
(Address,
including zip code, of principal executive offices)
678-638-0460
(Registrants’
telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12
months, and (2) has been subject to such filing requirements for the past 90
days. Yes x No¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files. Yes ¨ No ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer ¨ Accelerated
filer ¨ Non-accelerated
filer ¨ Smaller
Reporting Company x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes ¨ No
x
The
number of outstanding shares of the registrant’s common stock on November 9,
2009 was 2,176,040,904.
NeoMedia
Technologies, Inc.
Form
10-Q
For
the Quarterly Period Ended September 30, 2009
Index
Page
|
|||
PART
I
|
Financial
Information
|
2
|
|
ITEM
1.
|
Financial
Statements
|
2
|
|
ITEM
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
20
|
|
ITEM
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
26
|
|
ITEM
4.
|
Controls
and Procedures
|
26
|
|
PART
II
|
Other
Information
|
28
|
|
ITEM
1.
|
Legal
Proceedings
|
28
|
|
ITEM
1A.
|
Risk
Factors
|
28
|
|
ITEM
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
29
|
|
ITEM
3.
|
Defaults
Upon Senior Securities
|
29
|
|
ITEM
4.
|
Submission
of Matters to A Vote of Security Holders
|
29
|
|
ITEM
5.
|
Other
Information
|
29
|
|
ITEM
6.
|
Exhibits
|
30
|
|
Signatures
|
36
|
FORWARD-LOOKING
STATEMENTS
This Form
10-Q contains “forward-looking statements” relating to NeoMedia Technologies,
Inc., a Delaware corporation, which represent our current expectations or
beliefs including, but not limited to, statements concerning our operations,
performance, financial condition and growth. For this purpose, any statements
contained in this Form 10-Q that are not statements of historical fact are
forward-looking statements. Without limiting the generality of the foregoing,
words such as “may”, “anticipate”, “intend”, “could”, “estimate” or “continue”
or the negative or other comparable terminology are intended to identify
forward-looking statements. These statements, by their nature, involve
substantial risks and uncertainties, such as credit losses, dependence on
management and key personnel, variability of quarterly results, the ability to
continue our growth strategy and competition, certain of which are beyond our
control. Should one or more of these risks or uncertainties materialize or
should the underlying assumptions prove incorrect, actual outcomes and results
could differ materially from those indicated in the forward-looking
statements.
Any
forward-looking statement speaks only as of the date on which such statement is
made, and we undertake no obligation to update any forward-looking statement or
statements to reflect events or circumstances after the date on which such
statement is made or to reflect the occurrence of unanticipated events. New
factors emerge from time to time and it is not possible for us to predict all of
such factors, nor can we assess the impact of each such factor on the business
or the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking
statements.
1
PART
I - FINANCIAL INFORMATION
ITEM
1. Financial Statements
NeoMedia
Technologies, Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
(in
thousands, except share and per share data)
September 30,
|
December 31,
|
|||||||
2009
|
2008
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 74 | $ | 1,259 | ||||
Trade
accounts receivable, net of allowance for doubtful accounts of $0 and $0,
respectively
|
46 | 102 | ||||||
Inventories,
net of allowance for obsolete & slow-moving inventory of $65 and $81
respectively
|
187 | 117 | ||||||
Prepaid
expenses and other current assets
|
421 | 544 | ||||||
Total
current assets
|
728 | 2,022 | ||||||
Property,
equipment and leasehold improvements, net
|
107 | 79 | ||||||
Goodwill
|
3,060 | 3,418 | ||||||
Proprietary
software, net
|
2,241 | 2,738 | ||||||
Patents
and other intangible assets, net
|
2,066 | 2,293 | ||||||
Cash
surrender value of life insurance policies
|
659 | 508 | ||||||
Other
long-term assets
|
156 | 430 | ||||||
Total
assets
|
$ | 9,017 | $ | 11,488 | ||||
LIABILITIES
AND SHAREHOLDERS’ DEFICIT
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 158 | $ | 134 | ||||
Taxes
payable
|
7 | 7 | ||||||
Accrued
expenses
|
8,119 | 5,787 | ||||||
Deferred
revenues and customer prepayments
|
235 | 403 | ||||||
Notes
payable
|
109 | 50 | ||||||
Accrued
purchase price guarantee
|
4,535 | 4,614 | ||||||
Deferred
tax liability
|
348 | 706 | ||||||
Derivative
financial instruments - warrants
|
7,791 | 1,189 | ||||||
Derivative
financial instruments - debentures payable
|
41,253 | 26,256 | ||||||
Debentures
payable - carried at amortized cost
|
12,241 | 11,227 | ||||||
Debentures
payable - carried at fair value
|
27,383 | 19,892 | ||||||
Total
current liabilities
|
102,179 | 70,265 | ||||||
Commitments
and contingencies (Note 7)
|
||||||||
Series
C convertible preferred stock, $0.01 par value, 30,000 shares authorized,
9,859 and 19,144 shares issued and outstanding, liquidation value of
$9,859 and $19,144
|
9,859 | 19,144 | ||||||
Shareholders’
deficit:
|
||||||||
Common
stock, $0.01 par value, 5,000,000,000 shares authorized, 2,079,180,883 and
1,375,056,229 shares issued and 2,076,028,605 and 1,371,904,960
outstanding, respectively
|
20,760 | 13,719 | ||||||
Additional
paid-in capital
|
131,815 | 120,430 | ||||||
Accumulated
deficit
|
(254,745 | ) | (211,305 | ) | ||||
Accumulated
other comprehensive loss
|
(72 | ) | 14 | |||||
Treasury
stock, at cost, 201,230 shares of common stock
|
(779 | ) | (779 | ) | ||||
Total
shareholders’ deficit
|
(103,021 | ) | (77,921 | ) | ||||
Total
liabilities and shareholders’ deficit
|
$ | 9,017 | $ | 11,488 |
The
accompanying notes are an integral part of these consolidated financial
statements.
2
NeoMedia
Technologies, Inc. and Subsidiaries
Condensed
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share
data)
For
the three months ended
|
||||||||
September
30,
|
September
30,
|
|||||||
2009
|
2008
|
|||||||
Net
sales
|
$ | 189 | $ | 330 | ||||
Cost
of sales
|
238 | 377 | ||||||
Gross
deficit
|
(49 | ) | (47 | ) | ||||
Sales
and marketing expenses
|
149 | 711 | ||||||
General
and administrative expenses
|
984 | 1,216 | ||||||
Research
and development costs
|
330 | 406 | ||||||
Impairment
of investment
|
261 | - | ||||||
Operating
loss
|
(1,773 | ) | (2,380 | ) | ||||
Gain
(loss) from change in fair value of hybrid financial
instruments
|
(7,802 | ) | 975 | |||||
Gain
(loss) from change in fair value of derivative liability -
warrants
|
5,800 | (315 | ) | |||||
Loss
from change in fair value of derivative liability -
debentures
|
(8,651 | ) | (7,640 | ) | ||||
Loss
on sale of assets
|
- | (6 | ) | |||||
Interest
expense related to convertible debt
|
(1,140 | ) | (498 | ) | ||||
Loss
from continuing operations
|
(13,566 | ) | (9,864 | ) | ||||
Income
from discontinued operations
|
- | 31 | ||||||
Net
loss
|
(13,566 | ) | (9,833 | ) | ||||
Dividends
on convertible preferred stock
|
(234 | ) | (398 | ) | ||||
Net
loss attributable to common shareholders
|
(13,800 | ) | (10,231 | ) | ||||
Comprehensive
loss:
|
||||||||
Net
loss
|
(13,566 | ) | (9,833 | ) | ||||
Other
comprehensive income (loss):
|
||||||||
Foreign
currency translation adjustment
|
(7 | ) | 136 | |||||
Comprehensive
loss
|
$ | (13,573 | ) | $ | (9,697 | ) | ||
Net
loss per share, basic and diluted:
|
||||||||
Continuing
operations
|
$ | (0.01 | ) | $ | (0.01 | ) | ||
Discontinued
operations
|
$ | - | $ | - | ||||
Net
loss per share, basic and diluted
|
$ | (0.01 | ) | $ | (0.01 | ) | ||
Weighted
average number of common shares:
|
||||||||
Basic
and fully diluted
|
1,957,840,909 | 1,236,058,293 |
The
accompanying notes are an integral part of these consolidated financial
statements.
3
NeoMedia
Technologies, Inc. and Subsidiaries
Condensed
Consolidated Statements of Operations (Unaudited)
(in
thousands, except share and per share data)
For
the nine months ended
|
||||||||
September
30,
|
September
30,
|
|||||||
2009
|
2008
|
|||||||
Net
sales
|
$ | 815 | $ | 801 | ||||
Cost
of sales
|
1,046 | 983 | ||||||
Gross
deficit
|
(231 | ) | (182 | ) | ||||
Sales
and marketing expenses
|
613 | 1,994 | ||||||
General
and administrative expenses
|
2,770 | 3,789 | ||||||
Research
and development costs
|
1,004 | 1,623 | ||||||
Impairment
of investment
|
261 | - | ||||||
Operating
loss
|
(4,879 | ) | (7,588 | ) | ||||
Gain
on extinguishment of debt
|
- | 22 | ||||||
Gain
(loss) from change in fair value of hybrid financial
instruments
|
(7,490 | ) | 3,684 | |||||
Gain
(loss) from change in fair value of derivative liability -
warrants
|
(6,602 | ) | 3,151 | |||||
Loss
from change in fair value of derivative liability -
debentures
|
(18,327 | ) | (12,186 | ) | ||||
Loss
on sale of assets
|
- | (90 | ) | |||||
Interest
expense related to convertible debt
|
(4,803 | ) | (2,172 | ) | ||||
Loss
from continuing operations
|
(42,101 | ) | (15,179 | ) | ||||
Income/(loss)
from discontinued operations
|
- | (260 | ) | |||||
Net
Loss
|
(42,101 | ) | (15,439 | ) | ||||
Dividends
on convertible preferred stock
|
(977 | ) | (1,196 | ) | ||||
Net
loss attributable to common shareholders
|
(43,078 | ) | (16,635 | ) | ||||
Comprehensive
loss:
|
||||||||
Net
loss
|
(42,101 | ) | (15,439 | ) | ||||
Other
comprehensive loss:
|
||||||||
Foreign
currency translation adjustment
|
(86 | ) | (14 | ) | ||||
Comprehensive
loss
|
$ | (42,187 | ) | $ | (15,453 | ) | ||
Net
loss per share, basic and diluted:
|
||||||||
Continuing
operations
|
$ | (0.02 | ) | $ | (0.01 | ) | ||
Discontinued
operations
|
$ | - | $ | - | ||||
Net
loss per share, basic and diluted
|
$ | (0.02 | ) | $ | (0.01 | ) | ||
Weighted
average number of common shares:
|
||||||||
Basic
and fully diluted
|
1,713,213,128 | 1,137,671,871 |
The
accompanying notes are an integral part of these consolidated financial
statements.
4
NeoMedia
Technologies, Inc. and Subsidiaries
|
Consolidated
Statements of Cash Flows
|
(In
Thousands)
|
For
the nine months ended
|
||||||||
September
30,
|
||||||||
2009
|
2008
|
|||||||
Cash
Flows from Operating Activities:
|
||||||||
Loss
from continuing operations
|
(42,101 | ) | (15,439 | ) | ||||
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
||||||||
Loss
from discontinued operations
|
- | 260 | ||||||
Depreciation
and amortization
|
760 | 786 | ||||||
Impairment
of investment
|
261 | - | ||||||
Loss
on sale of assets
|
- | 90 | ||||||
Gain
on early extinguishment of debt
|
- | (22 | ) | |||||
(Gain)
loss from change in fair value of hybrid financial
instruments
|
7,490 | (3,684 | ) | |||||
(Gain)
loss from change in fair value of warrants
|
6,602 | (3,151 | ) | |||||
Loss
from change in fair value of debentures
|
18,327 | 12,186 | ||||||
Interest
expense related to convertible debt
|
4,803 | 2,172 | ||||||
Stock-based
compensation expense
|
280 | 1,570 | ||||||
Decrease/
(increase) in value of life insurance policies
|
(151 | ) | 69 | |||||
Changes
in operating assets and liabilities
|
||||||||
Trade
and other accounts receivable
|
56 | 157 | ||||||
Inventories
|
(70 | ) | 53 | |||||
Prepaid
expenses and other assets
|
136 | (623 | ) | |||||
Accounts
payable and accrued liabilities
|
(55 | ) | 831 | |||||
Deferred
revenue and other current liabilities
|
(178 | ) | (275 | ) | ||||
Net
cash used in operating activities
|
(3,840 | ) | (5,020 | ) | ||||
Cash
Flows from Investing Activities:
|
||||||||
Acquisition
of property and equipment
|
(65 | ) | (41 | ) | ||||
Expenses
of discontinued operations
|
- | (255 | ) | |||||
Proceeds
from sale of investments
|
- | 751 | ||||||
Payment
of purchase price guarantee obligations
|
- | (14 | ) | |||||
Net
cash provided by (used in) investing activities
|
(65 | ) | 441 | |||||
Cash
Flows from Financing Activities:
|
||||||||
Net
proceeds from exercise of stock options
|
116 | - | ||||||
Borrowings
under convertible debt instruments, net
|
2,610 | 3,686 | ||||||
Net
cash provided by financing activities
|
2,726 | 3,686 | ||||||
Effect
of exchange rate changes on cash for continuing operations
|
(6 | ) | (7 | ) | ||||
Net
decrease in cash and cash equivalents from continuing
operations
|
(1,185 | ) | (900 | ) | ||||
Cash
and cash equivalents, beginning of period
|
1,259 | 1,415 | ||||||
Cash
and cash equivalents, end of period
|
74 | 515 | ||||||
Supplemental
cash flow information:
|
||||||||
Interest
paid during the period
|
3 | 34 | ||||||
Accretion
of dividends on Series C Convertible Preferred Stock
|
977 | 1,196 | ||||||
Series
C Convertible Preferred Stock converted to common stock
|
9,285 | 789 |
The
accompanying notes are an integral part of the consolidated financial
statements.
5
NeoMedia
Technologies, Inc. and Subsidiaries
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
Note
1 - General
Business –
NeoMedia utilizes the mobile phone by leveraging barcodes (printed symbols) as a
seamless mechanism to link brands, advertisers, carriers, retailers and
consumers using the power of the mobile internet.
With our
barcode ecosystem technology, NeoMedia transforms mobile phones with cameras
into barcode scanners which provide instant access to mobile web content
whenever a barcode is scanned. A barcode makes any medium immediately
interactive – the code links consumers to the multimedia capability of the
mobile web. Combining this technology with analytics and reporting capabilities
improves the way advertisers market to mobile consumers.
NeoMedia
provides the infrastructure to facilitate mobile barcode scanning and its
associated commerce worldwide. Our mobile barcode ecosystem software reads and
transmits data from 1D and 2D barcodes to its intended destination. Our code
management and clearinghouse platforms create, connect, record, and transmit the
transactions embedded in the barcodes, like web-URLs, text messages (SMS), and
telephone calls, ubiquitously and reliably.
In order
to provide complete mobile marketing solutions, NeoMedia also offers barcode
scanning hardware that reads barcodes displayed on mobile phone screens or
printed media. NeoMedia provides infrastructure solutions to enable mobile
ticketing and couponing programs – including scanner hardware and system support
software for seamless implementation.
This
technology is supported by our patents. In addition, NeoMedia has an open
standards philosophy designed to make integration and use of the technology easy
for handset manufacturers, mobile operators and advertisers; and the consumer’s
experience is safe, reliable and interoperable.
Accounting
Standards Codification - In June 2009, the Financial Accounting Standards
Board ("FASB") issued a statement establishing the FASB Accounting Standards
Codification™ (the “FASB ASC" or the “Codification"). Effective for interim and
annual periods ended after September 15, 2009, the Codification became the
source of authoritative U.S. generally accepted accounting principles ("US
GAAP") recognized by the FASB to be applied by nongovernmental entities. Rules
and interpretive releases of the United States Securities and Exchange
Commission (the “SEC”) under authority of federal securities laws are also
sources of authoritative US GAAP for SEC registrants. This statement did not
change existing US GAAP, and as such, did not have an impact on our consolidated
financial statements. We have updated our references to US GAAP, in order to
reflect the Codification.
Going
Concern – We have historically incurred net losses and losses from
operations and we expect that we will continue to have negative cash flows as we
implement our business plan. There can be no assurance that our
continuing efforts to execute our business plan will be successful and that we
will be able to continue as a going concern. The accompanying consolidated
financial statements have been prepared in conformity with US GAAP, which
contemplate our continuation as a going concern. Net loss from
continuing operations for the nine months ended September 30, 2009 and 2008 was
$42.1 million and $15.2 million, respectively. Net cash used for
operations during the same periods was $3.8 million and $5.0 million,
respectively. We also have an accumulated deficit of $254.7 million and a
working capital deficit of $101.5 million as of September 30, 2009, much of
which is related to the derivative value of our financing instruments including
$76.4 million related to the fair value of hybrid and derivative financial
instruments, and $12.2 million related to the carrying value of debentures
carried at amortized cost.
The items
discussed above raise substantial doubt about our ability to continue as a going
concern.
We
currently do not have sufficient cash to sustain us for the next twelve
months. We will require additional financing in order to execute our
operating plan and continue as a going concern. Our management’s plan
is to attempt to secure adequate funding to bridge the commercialization of our
barcode ecosystem business. We cannot predict whether this additional financing
will be in the form of equity, debt, or another form and we may not be able to
obtain the necessary additional capital on a timely basis, on acceptable terms,
or at all. We believe that we can obtain additional financing, but in
the event that these financing sources do not materialize, or that we are
unsuccessful in increasing our revenues and profits, we may be unable to
implement our current plans for expansion, repay our debt obligations as they
become due or continue as a going concern, any of which circumstances would have
a material adverse effect on our business, prospects, financial condition and
results of operations.
6
YA Global
Investments, L.P. (“YA Global”) has provided us with financing on a
month-to-month basis, totaling $2.6 million, during 2009. YA Global has informed
us that they intend to provide additional financing for our operations through
the end of 2009. This additional financing has not yet been completed as of the
date of this report. If cash received from our customers and licensees is not
sufficient to fund our operations we will require additional capital financing
from YA Global or from other sources in the future in order to continue as a
going concern.
The
financial statements do not include any adjustments relating to the
recoverability and reclassification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary, should we be unable to
continue as a going concern.
Note
2 - Summary of Significant Accounting Policies
Basis of
Presentation –
The accompanying condensed balance sheet as of December 31, 2008,
which was derived from audited consolidated financial statements, and the
unaudited condensed consolidated financial statements as of and for the periods
ended September 30, 2009 and 2008, have been prepared in accordance with US GAAP
for interim financial information and with the instructions to Form 10-Q and
Article 8 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by US GAAP for complete financial
statements. In our opinion, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. Our
operations consist of one reportable segment. For further information, refer to
the consolidated financial statements and footnotes thereto included in our
Annual Report on Form 10-K for the year ended December 31,
2008. The net effect of discontinued operations is reported
separately from the results of our continuing operations. Operating
results for the nine month period ended September 30, 2009 are not necessarily
indicative of the results that may be expected for the full fiscal
year.
Use of
Estimates – The preparation of financial statements in conformity with US
GAAP requires management to make estimates and assumptions that affect amounts
reported therein, including those related to revenue recognition, valuation of
accounts receivable, property, plant and equipment, long-lived assets,
intangible assets, derivative liabilities and contingencies. Due to the inherent
uncertainty involved in making estimates, actual results reported in future
periods may differ from those estimates.
Basic and Diluted
Loss Per Share – Basic net loss per share is computed by dividing net
loss by the weighted average number of shares of common stock outstanding during
the period. During the three and nine months ended September 30, 2009 and 2008,
we reported a net loss per share, and as such the basic and diluted loss per
share were equivalent.
The
following shares related to outstanding stock options, warrants, convertible
debt and convertible preferred stock for the three and nine months ended
September 30, 2009 and 2008, are anti-dilutive and therefore have been excluded
from diluted earnings per share:
Three
months ended September 30,
|
Nine
months ended September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Outstanding
stock options
|
95,263,548 | 116,541,081 | 94,561,241 | 116,541,081 | ||||||||||||
Outstanding
warrants
|
1,006,195,834 | 1,014,470,834 | 1,006,195,834 | 1,014,470,834 | ||||||||||||
Convertible
debt
|
6,492,936,266 | 11,780,475,652 | 6,215,593,350 | 10,645,838,866 | ||||||||||||
Convertible
preferred stock
|
1,922,206,202 | 6,518,198,594 | 2,134,358,223 | 6,627,785,070 | ||||||||||||
9,516,601,850 | 19,429,686,161 | 9,450,708,648 | 18,404,635,851 |
Inventories
- Inventories, consisting of material, material overhead, labor and
processing costs, are stated at the lower of cost (first-in, first-out) or
market.
7
Note
3 – Discontinued Operations
MicroPaint
Repair, 12Snap & Telecom Services – During 2006, we acquired and in
2007 we subsequently disposed of our Micro Paint Repair (MPR), 12Snap, Mobot and
Sponge business units. During the three and nine months ended September 30,
2008, we incurred wind-down expenses related to these discontinued
businesses.
Legacy Software
Product lines, Maxicode, PDF417 & WISP – On July 17, 2009, the
Company entered into an Asset Purchase and Sale Agreement to dispose of certain
assets in connection with our legacy Maxicode, PDF 417 and WISP software product
lines. Neither the assets sold, nor the royalty revenues to be received in
connection with the asset sale, were or are material to the
Company.
Note
4 – Financing
On
February 17, 2006, the Company issued shares of its Series C convertible
preferred stock to YA Global, an accredited investor, and between August 24,
2006 and August 14, 2009, has issued fifteen secured convertible debentures to
YA Global. In addition, in connection with these debentures and the Series C
convertible preferred stock, the Company also issued common stock warrants to YA
Global. The significant terms of the Series C convertible preferred stock,
the convertible debentures and the warrants are set out in Note 5 to our
consolidated financial statements, included in our Annual Report on Form 10-K
for the year ended December 31, 2008 and summarized below. During the second
quarter of 2009, YA Global distributed 3,350 of it’s preferred shares to other
investors.
Series C
Convertible Preferred Stock - On February 17, 2006, we issued 22,000
shares of $1,000 Series C 8% convertible preferred stock, with a face value of
$22 million, to YA Global. The Series C convertible preferred stock is
convertible into shares of common stock at the lower of $0.02 per share and 97%
of the lowest closing bid price of the common stock for the 30 trading days
immediately preceding the conversion date.
As of
September 30, 2009, 12,141 shares of the original 22,000 shares of our Series C
preferred stock have been converted into our common shares, leaving 9,859
shares, with a face value of $9.9 million outstanding. During the quarter ended
September 30, 2009, there was a change in the estimate of the number of shares
of preferred stock which were converted. During the period from February 2008
through April 2009, the trading market price of our common stock (and the
conversion price) was less than its par value. We are limited to
issuing shares of common stock at no less than the par value, and all shares of
our common stock issued in those conversions were issued at par value. However,
the methodology used to estimate the number of shares of preferred stock
converted during that time was based upon the value received for the shares
issued, with the difference between that value and the par value
recorded as a deemed dividend. Effective September 30, 2009, the methodology
used to determine the number of preferred shares being converted was changed
such that it was no longer dependent on the market value of the common shares
issued. The number of common shares issued did not change because we
consistently issued those common shares at a price no lower than par
value.
The
Series C convertible preferred stock is currently classified outside of
Shareholders’ Equity in the mezzanine section of our balance sheet. The change
in estimate in the number of shares converted resulted in a reduction in the
preferred stock outstanding of approximately $5.6 million, and a corresponding
reduction in the accumulated deficit of $3.0 million related to the deemed
dividends, and $2.6 million recorded as an increase to additional paid in
capital.
On
October 13, 2009, 300 Series C preferred shares were converted into 30 million
common shares. On October 19, 2009, 100 Series C preferred shares were converted
into 10 million common shares. And on October 23, 2009, 300 Series C preferred
shares were converted into 30 million common shares.
8
Secured
Convertible Debentures - The underlying agreements for each of the
fifteen debentures issued to YA Global are essentially the same, except in
regard to the interest rate, varying conversion prices per share, and the number
of warrants that were issued in conjunction with each of the debentures. The
debentures are convertible into our common stock at the lower of a fixed
conversion price per share or a percentage of the lowest volume-weighted average
price (“VWAP”) for a specified number of trading days prior to conversion. All
of the convertible debentures are secured according to the terms of a Security
Pledge Agreement dated August 23, 2006, which was entered into in connection
with the first convertible debenture issued to YA Global and which provides YA
Global with a security interest in substantially all of our assets.
The table
below summarizes the significant terms of each of the debentures:
Conversion Price – Lower of Fixed Price or Percentage
|
||||||||||||||||||||||||||
Default
|
of VWAP for Preceding Period
|
|||||||||||||||||||||||||
Face
|
Interest
|
Interest
|
Fixed
|
Default
|
Preceding
|
|||||||||||||||||||||
Debenture
Issue Date
|
Amount
|
Maturity
|
Rate
|
Rate
|
Price
|
%
|
%
|
Period
|
||||||||||||||||||
August
24, 2006
|
$ | 5,000,000 |
7/29/2010
|
10 | % | n/a | $ | 0.01 | 90 | % | n/a |
30
Days
|
||||||||||||||
December
29, 2006
|
2,500,000 |
7/29/2010
|
10 | % | n/a | $ | 0.01 | 90 | % | n/a |
30
Days
|
|||||||||||||||
March
27, 2007
|
7,458,651 |
7/29/2010
|
13 | % | n/a | $ | 0.01 | 90 | % | n/a |
30
Days
|
|||||||||||||||
August
24, 2007
|
1,775,000 |
7/29/2010
|
14 | % | n/a | $ | 0.01 | 80 | % | n/a |
10
Days
|
|||||||||||||||
April
11, 2008
|
390,000 |
4/11/2010
|
15 | % | 24 | % | $ | 0.01 | 80 | % | 75 | % |
10
Days
|
|||||||||||||
May
16, 2008
|
500,000 |
5/16/2010
|
15 | % | 24 | % | $ | 0.01 | 80 | % | 50 | % |
10
Days
|
|||||||||||||
May
29, 2008
|
790,000 |
5/29/2010
|
15 | % | 24 | % | $ | 0.01 | 80 | % | 50 | % |
10
Days
|
|||||||||||||
July
10, 2008
|
137,750 |
7/10/2010
|
15 | % | 24 | % | $ | 0.01 | 80 | % | 50 | % |
10
Days
|
|||||||||||||
July
29, 2008
|
2,325,000 |
7/29/2010
|
14 | % | 24 | % | $ | 0.02 | 95 | % | 50 | % |
10
Days
|
|||||||||||||
October
28, 2008
|
2,325,000 |
7/29/2010
|
14 | % | 20 | % | $ | 0.02 | 95 | % | 50 | % |
10
Days
|
|||||||||||||
April
6, 2009
|
550,000 |
7/29/2010
|
14 | % | 20 | % | $ | 0.02 | 95 | % | 50 | % |
10
Days
|
|||||||||||||
May
1, 2009
|
550,000 |
7/29/2010
|
14 | % | 20 | % | $ | 0.02 | 95 | % | 50 | % |
10
Days
|
|||||||||||||
June
5, 2009
|
715,000 |
7/29/2010
|
14 | % | 20 | % | $ | 0.02 | 95 | % | 50 | % |
10
Days
|
|||||||||||||
July
15, 2009
|
535,000 |
7/29/2010
|
14 | % | 20 | % | $ | 0.02 | 95 | % | 50 | % |
10
Days
|
|||||||||||||
August
14, 2009
|
475,000 |
7/29/2010
|
14 | % | 20 | % | $ | 0.02 | 95 | % | 50 | % |
10
Days
|
The
debentures issued prior to May 29, 2008 were originally issued with higher fixed
exercise prices but because those debentures include full-ratchet anti-dilution
provisions, their fixed conversion price was reduced to $0.01 as of May 29,
2008.
All the
debentures with YA Global contain provisions for acceleration of principal and
interest upon default. Certain of the debentures also contain default interest
rates and conversion prices, as reflected in the table above.
As of
August 25, 2008, we were in default on our August 24, 2006 Convertible Debenture
due to non-payment of principal and interest in accordance with the terms of the
agreement. On September 24, 2008, we entered into a Letter Agreement with YA
Global which extended the maturity dates of the August 24, 2006 and the December
29, 2006 debentures to July 29, 2010. The extension was considered a one-time
extension for the specific period indicated but was not considered a waiver of
existing events of default. However, a waiver was subsequently obtained from YA
Global, effective as of December 31, 2008, which waiver is discussed further
below. On April 6, 2009 (effective March 27, 2009) the maturity date of the
March 27, 2007 debenture was extended to July 29, 2010. On August 14, 2009, the
maturity date of the August 24, 2007 debenture was extended to July 29,
2010.
9
We
obtained a waiver from YA Global, effective as of December 31, 2008 in
which all prior events of default and the related cross default provisions of
other financing instruments with YA Global were waived. YA Global waived the
right to collect any liquidated damages, penalties or fines which had not
previously been paid by us and also acknowledged that as of December 31, 2008,
we were not under any obligation to file a registration statement under any of
the financing arrangements. YA Global does, however, still have demand rights
under certain agreements which would require us to file registration statements
in accordance with the terms of the agreements.
On July
15, 2009 and August 14, 2009, we entered into additional secured convertible
debentures with YA Global for principal amounts of $535,000 and $475,000,
respectively. The debentures mature on July 29, 2010, accrue interest at 14% per
annum and are payable on the maturity date in cash, or provided that certain
equity conditions are satisfied, in shares of common stock. At any
time from the closing date until the maturity date, YA Global has the right to
convert the convertible debentures into our common stock at the then
effective conversion price, which varies relative to the our trading stock
price, at the lesser of $0.02 per share, and 95% of the lowest weighted average
price of the Company’s common stock during the ten days preceding the conversion
date, and adjusts to 50% of the lowest weighted average price of the Company’s
common stock during the ten days preceding the conversion date in the event of a
default. The conversion is limited such that the holder cannot exceed 4.99%
ownership, unless the holders waive their right to such limitation. We have the
right to redeem a portion or the entire outstanding note at a 10% premium plus
accrued interest. The debentures are secured by certain Pledged Property, as
defined in the Security Agreement dated July 29, 2008, and certain Patent
Collateral, as defined in a Patent Security Agreement dated July 29,
2008.
In our
evaluation of these financing transactions, we concluded that the conversion
features were not afforded the exemption as conventional convertible instruments
due to the variable conversion rate; and they did not otherwise meet the
conditions set forth in current accounting standards for equity classification.
Because equity classification was not available for the conversion feature, we
elected to bifurcate the compound derivative, and carry it as a derivative
liability, at fair value. The compound derivative consists of (i) the embedded
conversion feature, (ii) down round protection feature, and (iii) default,
non-delivery and buy-in puts which were combined into one compound instrument
that is carried as a component of derivative liabilities.
The
following tables illustrate how the proceeds arising from the July 2009 and
August 2009 financings were allocated on the financing inception
dates:
Classification
|
July
15, 2009
|
August
14, 2009
|
||||||
Convertible
debenture
|
$ | 132,779 | $ | 134,337 | ||||
Compound
embedded derivative
|
367,221 | 315,663 | ||||||
Net
proceeds
|
500,000 | 450,000 | ||||||
Fees
retained by YA Global
|
35,000 | 25,000 | ||||||
Gross
proceeds
|
$ | 535,000 | $ | 475,000 |
We used
the Flexible Monte Carlo Simulation valuation technique to value the compound
embedded derivative because it embodies all of the requisite assumptions
(including credit risk, interest-rate risk and exercise/conversion behaviors)
that are necessary to fair value these more complex instruments.
Assumptions
used as of inception of the financings included the following significant
estimates:
10
July
15, 2009
|
August
14, 2009
|
|||||||
Conversion
prices
|
$ | 0.011 | $ | 0.009 | ||||
Remaining
terms (years)
|
1.04 | 0.96 | ||||||
Equivalent
volatility
|
227.74 | % | 203.09 | % | ||||
Equivalent
interest-risk adjusted rate
|
12.51 | % | 12.46 | % | ||||
Equivalent
credit-risk adjusted yield rate
|
14.50 | % | 10.93 | % |
Subsequent
Events
Debenture
Conversion - On October 26, 2009, $321,000 of the $550,000 face value
convertible debenture dated April 6, 2009 was converted into 30,000,000 shares
of our common stock.
Fair Value
Considerations - In accordance with the
FASB ASC Topic 815, Derivatives and Hedging, we
determined that the conversion features of the Series C convertible preferred
stock, and the August 2006, December 2006, July 2008, October 2008, April 2009,
May 2009 June 2009, July 2009 and August 2009 Debentures met the criteria of
embedded derivatives and that the conversion features of these instruments
needed to be bifurcated and accounted for as derivative instrument liabilities.
Changes in the fair value of the derivative liability for the embedded
conversion option are charged or credited to income. As permitted by FASB ASC
815-15-25, Recognition of
Embedded Derivatives, we have elected not to bifurcate the embedded
derivatives in the March 2007, August 2007, April 2008 or May 2008 Debentures
and accordingly these convertible instruments are being carried in their
entirety at their fair values, with the changes in the fair value of the
Debentures charged or credited to income each period.
Derivative
financial instruments arising from the issuance of convertible financial
instruments are initially recorded, and continuously carried, at fair value.
Upon conversion of any of the convertible financial instruments, the carrying
amount of the debt, including any unamortized premium or discount, and the
related derivative instrument liability are credited to the capital accounts
upon conversion to reflect the stock issued and no gain or loss is
recognized.
Embedded
Derivative Instruments – Series C Preferred Stock and August 2006, December
2006, July 2008, October 2008, April 2009, May 2009, June 2009, July 2009 and
August 2009 Convertible Debentures - Embedded derivative financial
instruments arising from the convertible instruments consist of multiple
individual features that were embedded in each instrument. For each convertible
instrument, we evaluated all significant features and, as required under current
accounting standards, aggregated the components into one compound derivative
financial instrument for financial reporting purposes. For financings recorded
in accordance with FASB ASC 815, the compound embedded derivative instruments
are valued using the Flexible Monte Carlo methodology because that model
embodies certain relevant assumptions (including, but not limited to, interest
rate risk, credit risk, and conversion/redemption privileges) that are necessary
to value these complex derivatives.
Assumptions
used as of September 30, 2009 included exercise estimates/behaviors and the
following other significant estimates:
11
Remaining
|
Equivalent
|
Equivalent
|
||||||||||||||||||
Conversion
|
Term
|
Equivalent
|
Interest-Risk
|
Credit-Risk
|
||||||||||||||||
Prices
|
(years)
|
Volatility
|
Adjusted
Rate
|
Adjusted
Rate
|
||||||||||||||||
Series
C Convertible Preferred Stock
|
$ | 0.004 | 0.83 | 184 | % | 8.38 | % | 10.40 | % | |||||||||||
August
24, 2006
|
$ | 0.004 | 0.83 | 184 | % | 10.79 | % | 10.40 | % | |||||||||||
December
29, 2006
|
$ | 0.004 | 0.83 | 184 | % | 10.79 | % | 10.40 | % | |||||||||||
July
10, 2008
|
$ | 0.004 | 0.78 | 188 | % | 15.00 | % | 10.40 | % | |||||||||||
July
29, 2008
|
$ | 0.005 | 0.83 | 184 | % | 12.93 | % | 10.40 | % | |||||||||||
October
28, 2008
|
$ | 0.005 | 0.83 | 184 | % | 12.93 | % | 10.40 | % | |||||||||||
April
6, 2009
|
$ | 0.005 | 0.83 | 184 | % | 12.93 | % | 10.40 | % | |||||||||||
May
1, 2009
|
$ | 0.005 | 0.83 | 184 | % | 12.93 | % | 10.40 | % | |||||||||||
June
5, 2009
|
$ | 0.005 | 0.83 | 184 | % | 12.93 | % | 10.40 | % | |||||||||||
July
15, 2009
|
$ | 0.005 | 0.83 | 183 | % | 12.69 | % | 10.40 | % | |||||||||||
August
14, 2009
|
$ | 0.005 | 0.83 | 183 | % | 12.69 | % | 10.40 | % |
Equivalent
amounts reflect the net results of multiple modeling simulations that the
Flexible Monte Carlo Simulation methodology applies to underlying assumptions.
The assumptions included in the calculation are highly subjective and subject to
interpretation.
Due to
the variable component of the conversion price, rapid fluctuations in the
trading market price may result in significant variations to the calculated
conversion price. For each debenture, we analyze the ratio of the conversion
price (as calculated based on the percentage of VWAP for the 30 day or 10 day
prior period) to the trading market price for a period of time equal to the term
of the debenture to determine the average ratio for the term of the note. Each
quarter, the ratio in effect on the date of the valuation is compared with the
average ratio over the term of the debenture to determine if the calculated
conversion price is representative of past trends or if it is considered
unrepresentative due to a large fluctuation in the stock price over a short
period of time. If the calculated conversion price results in a ratio which
deviates significantly from the average ratio over the term of the agreement,
the average ratio of the conversion price to the trading market price is then
multiplied by the current trading market price to determine the variable portion
of the conversion price for use in the fair value calculations. This variable
conversion price is then compared with the fixed conversion price and, as
required by the terms of the debentures, the lower of the two amounts is used as
the conversion price in the Flexible Monte Carlo model used for valuation
purposes. On September 30, 2009, the fixed conversion price for each of the
debentures was equal to or higher than the calculated variable conversion price.
Accordingly, the variable conversion price was used in the Flexible Monte
Carlo valuation model. This analysis is performed each quarter to determine
if the calculated conversion price is reasonable for purposes of determining the
fair value of the embedded conversion features (for instruments recorded under
FASB ASC 815) or the fair value of the hybrid instrument (for instruments
recorded under FASB ASC 815-15-25).
Hybrid Financial
Instruments Carried at Fair Value – 2007 and 2008 Convertible Debentures -
The March 2007, August 2007, April 11, 2008, May 16, 2008 and May 29,
2008 convertible debentures are recorded in accordance with FASB ASC 815-15-25
and the entire hybrid instrument was initially recorded at fair value, with
subsequent changes in fair value recognized in earnings. These financial
instruments are valued using the common stock equivalent approach. The
common stock equivalent is calculated using the shares indexed to the debentures
valued at the market price of our stock and the present value of the
coupon.
Current Period
Valuations - For the Series C convertible preferred stock and the August
2006 and December 2006 debentures, due to our previous default position with
respect to these instruments, the carrying value of each instrument in effect as
of December 31, 2006 was written up to its full face value during the fourth
quarter of 2006. For these instruments and the July 2008, October 2008, April
2009, May 2009, June 2009, July 2009 and August 2009 debentures, the embedded
derivative instrument, primarily the conversion feature, has been separated and
accounted for as a derivative instrument liability, as discussed above. This
derivative instrument liability is marked to market each reporting
period.
12
The March
2007, August 2007, April 2008 and May 2008 debentures were each initially
recorded at their full fair value pursuant to FASB ASC 815-15-25. That fair
value is marked-to-market each reporting period, with any changes in the fair
value charged or credited to income.
The face
value and the carrying value or fair value, as appropriate, of the Series C
preferred stock and the debentures as of September 30, 2009 and December 31,
2008 was:
Face
|
Carrying
|
|||||||||||||||
September
30, 2009
|
Value
|
Value
|
Fair value
|
Total
|
||||||||||||
(in
thousands)
|
||||||||||||||||
Series C Convertible Preferred Stock
|
$ | 9,859 | $ | 9,859 | $ | - | $ | 9,859 | ||||||||
August 24,
2006
|
$ | 5,000 | $ | 5,000 | $ | - | $ | 5,000 | ||||||||
December 29,
2006
|
2,500 | 2,500 | - | 2,500 | ||||||||||||
March
27, 2007
|
7,459 | - | 18,859 | 18,859 | ||||||||||||
August
24, 2007
|
1,775 | - | 4,449 | 4,449 | ||||||||||||
April
11, 2008
|
390 | - | 952 | 952 | ||||||||||||
May
16, 2008
|
500 | - | 1,212 | 1,212 | ||||||||||||
May
29, 2008
|
790 | - | 1,911 | 1,911 | ||||||||||||
July
10, 2008
|
137 | 122 | - | 122 | ||||||||||||
July
29, 2008
|
2,325 | 2,023 | - | 2,023 | ||||||||||||
October
28, 2008
|
2,325 | 2,051 | - | 2,051 | ||||||||||||
April
6, 2009
|
550 | 31 | - | 31 | ||||||||||||
May
1, 2009
|
550 | 153 | - | 153 | ||||||||||||
June
5, 2009
|
715 | 27 | - | 27 | ||||||||||||
July
15, 2009
|
535 | 183 | - | 183 | ||||||||||||
August
14, 2009
|
475 | 151 | - | 151 | ||||||||||||
Total
|
$ | 26,026 | $ | 12,241 | $ | 27,383 | $ | 39,624 |
Face
|
Carrying
|
|||||||||||||||
December
31, 2008
|
Value
|
Value
|
Fair value
|
Total
|
||||||||||||
(in
thousands)
|
||||||||||||||||
Series C Convertible Preferred Stock
|
$ | 19,144 | $ | 19,144 | $ | - | $ | 19,144 | ||||||||
August 24,
2006
|
$ | 5,000 | $ | 5,000 | $ | - | $ | 5,000 | ||||||||
December 29,
2006
|
2,500 | 2,500 | - | 2,500 | ||||||||||||
March
27, 2007
|
7,459 | - | 13,478 | 13,478 | ||||||||||||
August
24, 2007
|
1,775 | - | 3,217 | 3,217 | ||||||||||||
April
11, 2008
|
390 | - | 736 | 736 | ||||||||||||
May
16, 2008
|
500 | - | 955 | 955 | ||||||||||||
May
29, 2008
|
790 | - | 1,506 | 1,506 | ||||||||||||
July
10, 2008
|
137 | 109 | - | 109 | ||||||||||||
July
29, 2008
|
2,325 | 1,785 | - | 1,785 | ||||||||||||
October
23, 2008
|
2,325 | 1,833 | - | 1,833 | ||||||||||||
Total
|
$ | 23,201 | $ | 11,227 | $ | 19,892 | $ | 31,119 |
13
The
following table reflects the number of common shares (in thousands) into which
the Series C convertible preferred stock and debentures are convertible and the
fair values of the embedded conversion features in those debentures that are
carried at amortized cost, at September 30, 2009 and December 31,
2008:
September
30, 2009
|
December
31, 2008
|
|||||||||||||||
Common
|
Embedded
|
Common
|
Embedded
|
|||||||||||||
Stock
|
Conversion
|
Stock
|
Conversion
|
|||||||||||||
Shares
|
Feature
|
Shares
|
Feature
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Series
C Convertible Preferred Stock
|
3,269,931 | $ | 18,312 | 21,456,650 | $ | 10,728 | ||||||||||
August
24, 2006
|
1,282,051 | 9,642 | 5,555,556 | 7,260 | ||||||||||||
December
29, 2006
|
854,759 | 4,590 | 3,703,957 | 3,556 | ||||||||||||
March
27, 2007
|
1,912,475 | - | 8,287,390 | - | ||||||||||||
August
24, 2007
|
455,128 | - | 1,972,222 | - | ||||||||||||
April
11, 2008
|
100,000 | - | 433,333 | - | ||||||||||||
May
16, 2008
|
128,205 | - | 555,556 | - | ||||||||||||
May
29, 2008
|
202,564 | - | 877,778 | - | ||||||||||||
July
10, 2008
|
35,321 | 200 | 153,056 | 158 | ||||||||||||
July
29, 2008
|
494,681 | 2,692 | 2,325,000 | 2,327 | ||||||||||||
October
28, 2008
|
494,681 | 2,637 | 2,325,000 | 2,227 | ||||||||||||
April
6, 2009
|
96,491 | 619 | - | - | ||||||||||||
May
1, 2009
|
96,491 | 619 | - | - | ||||||||||||
June
5, 2009
|
125,439 | 805 | - | - | ||||||||||||
July
15, 2009
|
113,830 | 602 | - | - | ||||||||||||
August
14, 2009
|
101,064 | 535 | - | - | ||||||||||||
Total
|
9,763,111 | $ | 41,253 | 47,645,498 | $ | 26,256 |
The
carrying value of the embedded conversion feature related to the April 6, 2009,
May 1, 2009, June 5, 2009, July 15, 2009 and August 14, 2009 financings at
inception was approximately $531,000, $419,000, $679,000, $367,000 and $316,000,
respectively.
The terms
of the embedded conversion features in the convertible instruments presented
above provide for variable conversion rates that are indexed to our trading
common stock price. As a result, the number of indexed shares is subject to
continuous fluctuation. For presentation purposes, the number of shares of
common stock into which the embedded conversion feature of the Series C
convertible preferred stock was convertible as of September 30, 2009 was
calculated as face value plus assumed dividends (if declared), divided by the
lesser of the fixed rate ($0.02) or the market price multiplied by the average
ratio of market price to conversion price over the term of the note. The number
of shares of common stock into which the embedded conversion feature in the
convertible debentures was convertible as of September 30, 2009 was calculated
as the face value of each instrument divided by the conversion price as of
September 30, 2009.
The March
2007, August 2007, April 2008 and May 2008 debentures are carried in their
entirety at fair value in accordance with FASB ASC 815-15-25 and the value of
the embedded conversion feature is effectively embodied in those fair
values.
Changes
in the fair value of convertible instruments that are carried at fair value (the
March 2007, August 2007, April 2008 and May 2008 debentures) are reported as
“Gain (loss) from change in fair value of hybrid financial instruments” in the
accompanying consolidated statement of operations. The following represents a
reconciliation of the changes in fair value of these financial instruments
measured at fair value under FASB ASC 815-15-25:
14
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in thousands)
|
(in thousands)
|
|||||||||||||||
Debenture
Issue Date
|
||||||||||||||||
March
27, 2007
|
$ | (5,272 | ) | $ | 1,721 | $ | (5,382 | ) | $ | 3,777 | ||||||
August
24, 2007
|
(1,388 | ) | 358 | (1,232 | ) | 809 | ||||||||||
April
11, 2008
|
(264 | ) | (94 | ) | (215 | ) | (74 | ) | ||||||||
May
16, 2008
|
(341 | ) | (391 | ) | (257 | ) | (363 | ) | ||||||||
May
29, 2008
|
(537 | ) | (619 | ) | (404 | ) | (465 | ) | ||||||||
Total
|
$ | (7,802 | ) | $ | 975 | $ | (7,490 | ) | $ | 3,684 |
Changes
in the fair value of derivative instrument liabilities related to the bifurcated
embedded derivative features of convertible instruments not carried at fair
value are reported as “Gain (loss) from change in fair value of derivative
liability debentures” in the accompanying consolidated statement of operations.
The following represents a reconciliation of the changes in fair value of these
derivative financial instruments recorded under FASB ASC 815:
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in thousands)
|
(in thousands)
|
|||||||||||||||
Series C Convertible Preferred Stock
|
$ | (1,837 | ) | $ | (4,793 | ) | $ | (13,226 | ) | $ | (9,226 | ) | ||||
Debenture
Issue Date
|
||||||||||||||||
August
24, 2006
|
(3,001 | ) | (471 | ) | (2,382 | ) | (546 | ) | ||||||||
December 29,
2006
|
(1,323 | ) | (235 | ) | (1,034 | ) | (273 | ) | ||||||||
July
10, 2008
|
(59 | ) | (67 | ) | (42 | ) | (67 | ) | ||||||||
July
29, 2008
|
(726 | ) | (2,074 | ) | (365 | ) | (2,074 | ) | ||||||||
October
28, 2008
|
(699 | ) | - | (410 | ) | - | ||||||||||
April
6, 2009
|
(167 | ) | - | (88 | ) | - | ||||||||||
May
1, 2009
|
(167 | ) | - | (200 | ) | - | ||||||||||
June
5, 2009
|
(218 | ) | - | (126 | ) | - | ||||||||||
July
15, 2009
|
(235 | ) | - | (235 | ) | - | ||||||||||
August
14, 2009
|
(219 | ) | - | (219 | ) | - | ||||||||||
Total
|
$ | (8,651 | ) | $ | (7,640 | ) | $ | (18,327 | ) | $ | (12,186 | ) |
Warrants -
YA Global holds warrants to purchase shares of our common stock that were
issued in connection with the convertible debentures and the Series C
convertible preferred stock. The warrants are exercisable at the lower of a
fixed exercise price or a specified percentage of the current market price. From
time to time, the fixed exercise prices of the warrants held by YA Global have
been reduced as an inducement for YA Global to enter into subsequent financing
arrangements. In addition to the warrants issued to YA Global, certain other
warrants have been issued to consultants and other service
providers.
The
warrants issued to YA Global and others do not meet all of the established
criteria for equity classification in FASB ASC 815-40, Derivatives and Hedging – Contracts
in Entity’s Own Equity, and accordingly, are recorded as derivative
liabilities at fair value. Changes in the fair value of the warrants are charged
or credited to income or expense each period.
A summary
of the warrants outstanding (in thousands) follows:
15
September
30, 2009
|
December
31, 2008
|
|||||||||||||||||||||
Common
|
Common
|
|||||||||||||||||||||
Exercise
|
Expiration
|
Stock
|
Fair
|
Stock
|
Fair
|
|||||||||||||||||
Price
|
Date
|
Warrants
|
Value
|
Warrants
|
Value
|
|||||||||||||||||
(in thousands)
|
||||||||||||||||||||||
Series
C Convertible Preferred Stock
|
$ | 0.0039 |
2/17/2011
|
75,000 | $ | 540 | 75,000 | $ | 23 | |||||||||||||
August
24, 2006 debenture
|
0.0039 |
8/24/2011
|
175,000 | 1,313 | 175,000 | 193 | ||||||||||||||||
December
29, 2006 debenture
|
0.0039 |
12/29/2011
|
42,000 | 323 | 42,000 | 50 | ||||||||||||||||
March
27, 2007 debenture
|
0.0039 |
3/27/2012
|
125,000 | 963 | 125,000 | 150 | ||||||||||||||||
August
24, 2007 debenture
|
0.0039 |
8/24/2012
|
75,000 | 577 | 75,000 | 90 | ||||||||||||||||
May
16, 2008 debenture
|
0.0039 |
5/16/2015
|
7,500 | 60 | 7,500 | 10 | ||||||||||||||||
May
29, 2008 debenture
|
0.0039 |
5/29/2015
|
50,000 | 400 | 50,000 | 70 | ||||||||||||||||
July
29, 2008 debenture
|
0.0047 |
7/29/2015
|
450,000 | 3,600 | 450,000 | 602 | ||||||||||||||||
Other
warrants
|
0.011-.48 |
Various
|
6,696 | 15 | 8,471 | 1 | ||||||||||||||||
Total
|
1,006,196 | $ | 7,791 | 1,007,971 | $ | 1,189 |
The
warrants are valued using the Black-Scholes-Merton valuation methodology because
that model embodies all of the relevant assumptions that address the features
underlying these instruments. Significant assumptions used in this model as of
September 30, 2009 included an expected life equal to the remaining term of the
warrants, an expected dividend yield of zero, estimated volatility of 157% to
223%, and risk-free rates of return of 0.18% to 2.31%.
Fair Value
Considerations – We adopted the
provisions of FASB ASC Topic 820, Fair Value Measurement and
Disclosures, as of January 1, 2008, with respect to financial
instruments. As required by FASB ASC 820, assets and liabilities measured at
fair value are classified in their entirety based on the lowest level of input
that is significant to their fair value measurement. Our derivative financial
instruments which are required to be measured at fair value on a recurring basis
under FASB ASC 815-15-25 or FASB ASC 815 as of September 30, 2009 and December
31, 2008 are all measured at fair value using Level 3 inputs. Level 3 inputs are
unobservable inputs that are supported by little or no market activity and that
are significant to the fair value of the assets or liabilities.
The
following represents a reconciliation of the changes in fair value of financial
instruments measured at fair value on a recurring basis using significant
unobservable inputs (Level 3) during the nine months ended September 30, 2009,
in thousands:
Beginning
balance: Derivative financial instruments
|
$ | 27,445 | ||
Total
gains (losses)
|
24,929 | |||
Transfers
in/out of Level 3
|
(3,330 | ) | ||
Ending
balance
|
$ | 49,044 |
Note
5 – Stock-Based Compensation
A total
of 28,286,040 stock options were issued to employees and directors during the
nine months ended September 30, 2009. A total of 38,876,763 stock options were
issued to employees during the nine months ended September 30,
2008. The grant date fair values of these options were $184,000 and
$202,000, respectively, which amounts are being recognized over the vesting
period of the options. For the three months ended September 30, 2009
and 2008, respectively, total stock-based compensation expense recorded in the
statement of operations was $103,000 and $580,000, and $280,000 and $1.6 million
for the nine months ended September 30, 2009 and 2008,
respectively.
We used
the following assumptions to value the stock options granted during the nine
months ended September 30, 2009 and 2008:
16
Nine
months ended September 30,
|
||||||||
2009
|
2008
|
|||||||
Volatility
|
138% - 282 | % | 88% - 201 | % | ||||
Expected
dividends
|
- | - | ||||||
Expected
term (in years)
|
5.6 | 3 | ||||||
Risk-free
rate
|
0.50 | % | 4.35 | % |
During
the nine months ended September 30, 2009 options to purchase 11,600,000 shares
of our common stock were exercised. The exercise price of these options was
$0.01 per share, providing us with proceeds of $116,000. There were no stock
option exercises during the nine months ended September 30, 2008.
On April
29, 2009 the Stock Option Committee of the Board of Directors approved a
resolution granting 6,548,540 stock options to 14 of our employees and directors
to partially compensate them for reductions in salaries and fees related to our
cost control measures. These stock options are inclusive in the aggregate number
of stock options issued during the nine months ended September 30, 2009. The
exercise price of these options was $0.02 per share. In addition, the resolution
included a change in control provision, under which all options held by these
employees and directors would vest upon such change in control of the
company.
Note
6 – Accrued Liabilities
Accrued
liabilities consist of the following as of September 30, 2009 and December 31,
2008:
September
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
(in
thousands)
|
||||||||
Accruals
for disputed services
|
$ | 2,298 | $ | 2,224 | ||||
Accrued
operating expenses
|
1,508 | 1,791 | ||||||
Accrued
payroll related expenses
|
278 | - | ||||||
Accrued
interest
|
4,035 | 1,772 | ||||||
Total
|
$ | 8,119 | $ | 5,787 |
Note 7 –
Contingencies
We are
involved in various legal actions arising in the normal course of business, both
as claimant and defendant. Although it is not possible to determine with
certainty the outcome of these matters, it is the opinion of management that the
eventual resolution of the following legal actions will not have a material
adverse effect on our financial position or operating results. We expense
professional fees associated with our legal proceedings as they are incurred
according to the terms negotiated between us and the respective professional who
represents our interests. We have not accrued a loss contingency in relation to
any of our pending litigation.
Scanbuy,
Inc. - On January 23, 2004, we filed suit against Scanbuy, Inc.
(“Scanbuy”) in the Northern District of Illinois, claiming that Scanbuy has
manufactured, or has had manufactured for it, and has used, or actively induced
others to use, technology which allows customers to use a built-in UPC bar code
scanner to scan individual items and access information, thereby infringing our
patents. The complaint stated that on information and belief, Scanbuy had
actual and constructive notice of the existence of the patents-in-suit, and,
despite such notice, failed to cease and desist their acts of infringement and
continue to engage in acts of infringement of the patents-in-suit. On
April 15, 2004, the Court dismissed the suits against Scanbuy for lack of
personal jurisdiction.
On April
20, 2004, we re-filed our suit against Scanbuy in the Southern District of New
York alleging patent infringement. Scanbuy filed their answer on June 2, 2004.
We filed our answer on July 23, 2004. On February 13, 2006, Scanbuy filed an
amended answer to the complaint. We filed our reply to Scanbuy’s amended answer
on March 6, 2006. On January 20, 2007, the court dismissed Scanbuy's request for
a summary judgment. On February 17, 2009, the USPTO sent NeoMedia a Notice of
Intent to Issue Ex Parte Reexamination Certificate, and on June 9, 2009 NeoMedia
received a Reexamination Certificate for the ‘048 patent. NeoMedia
requested that the stay be lifted and a joint summary status of the case was
provided to the Court. On April 17, 2009 both parties met with the Court
to discuss the status of the case. On August 3, 2009 the Court issued an order
lifting the stay and granting our request to proceed with discovery, which is
now in progress.
17
On
October 16, 2009, we entered into a ten year settlement and license agreement
with Scanbuy, Inc., in which the Company and Scanbuy settled all of their
pending litigation against each other and granted non-exclusive licenses and a
sublicense to each other.
Ephrian Saguy,
iPoint – media, plc. and iPoint – media, Ltd. – On or around March 5,
2008, we received a summons and notice that the plaintiffs had commenced a third
party action in the Magistrate Court in Tel-Aviv-Jaffa, Israel seeking damages
from us and YA Global for breach of contract and unjust enrichment related to
services provided by iPoint and investment by us and YA Global. We have entered
into an assignment agreement with YA Global and have retained legal counsel in
Israel to represent us. The Company plans to rigorously defend this lawsuit and
at this time we are unable to determine a probable outcome in this
matter.
Rothschild Trust
Holdings, LLC – On September 19, 2008, we were served a complaint by
Rothschild Trust Holding, LLC alleging we owed royalty payments for the use of
certain patents. On February 25, 2009, we filed an answer to the complaint. On
July 20, 2009 we entered into non-binding mediation and an interim agreement
which requires us to provide documentation for review by Rothschild Trust
Holding, LLC. The non-binding mediation and interim agreement failed
to settle the matter, and the litigation continues. We believe the
complaint is without merit and we intend to vigorously defend against
it.
Scanbuy and
Marshall Feature Recognition, LLC – On or around December 19, 2008, we
received a complaint filed in the Eastern District of Texas by Scanbuy and
Marshall Feature Recognition, LLC (“MFR”) alleging infringement of certain
patents. On January 8, 2009, we filed an answer denying infringement and
asserting that the patents of Scanbuy and MFR are invalid. On or about May 8,
2009, the parties agreed and the case was transferred to the Southern District
of New York due to lack of personal jurisdiction in the Eastern District of
Texas. On August 3, 2009 the New York Court assigned the case to the same judge
responsible for our suit against Scanbuy, described above. However, because of
significant differences between the cases each will be tried separately. The
Court’s order also established a timetable for discovery in this
case.
On
October 16, 2009, we entered into a settlement and license agreement with
Scanbuy., in which the Company and Scanbuy settled all of their pending
litigation against each other. The settlement and license agreement
also settled the pending claim brought by Scanbuy and Marshall Feature
Recognition, LLC (“MFR”) against the Company by providing for a paid-up,
non-exclusive sublicense to use all of the patents licensed by MFR to Scanbuy
within the defined territory.
The Hudson
Consulting Group, Inc. – On June 30, 2009, we received from the Superior
Court of Fulton County, in the State of Georgia a Notice of Filing of Foreign
Judgment related to the judgment granted against us by the Superior Court,
Judicial District of Middlesex, in the State of Connecticut, granted on August
22, 2008. The Notice of Filing seeks to collect on the Judgment which
was granted in Connecticut. We are seeking to settle this matter.
Dennis G.
Priddy – On July 30, 2009, we and our Chief Executive Officer were served
with a Writ of Summons filed in the Northern District Superior Court of
Hillsborough County, New Hampshire. The allegations in the Writ included several
employment related matters. We believe the complaint is without merit and we
intend to vigorously defend against it. On October 19, 2009 the parties entered
into a settlement agreement and the matter was subsequently dismissed. The
settlement amount was not material.
Note
8 – Geographic Reporting
We are
structured and evaluated by our Board of Directors and management as one
business unit.
Consolidated
net sales and net loss from continuing operations for the three and nine month
ended September 30, 2009 and 2008, and the identifiable assets as of September
30, 2009 and December 31, 2008 by geographic area were as
follows:
18
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||
Net
Sales:
|
||||||||||||||||
United
States
|
$ | 73 | $ | 83 | $ | 228 | $ | 289 | ||||||||
Germany
|
116 | 247 | 587 | 512 | ||||||||||||
Total
|
$ | 189 | $ | 330 | $ | 815 | $ | 801 | ||||||||
Loss
from continuing operations:
|
||||||||||||||||
United
States
|
(13,246 | ) | (9,542 | ) | (40,998 | ) | (13,851 | ) | ||||||||
Germany
|
(320 | ) | (322 | ) | (1,103 | ) | (1,328 | ) | ||||||||
Total
|
$ | (13,566 | ) | $ | (9,864 | ) | $ | (42,101 | ) | $ | (15,179 | ) |
September 30,
|
December 31,
|
|||||||
2009
|
2008
|
|||||||
Identifiable
assets:
|
||||||||
United
States
|
$ | 8,642 | $ | 10,920 | ||||
Germany
|
375 | 568 | ||||||
Total
|
$ | 9,017 | $ | 11,488 |
Note
9 - Subsequent Events
NeuStar, Inc.,
License Agreement -
On October 2, 2009, we entered into a four year agreement with
NeuStar, Inc., in which we granted to NeuStar a non-exclusive license to a
portion of the Company’s patent portfolio primarily for the purpose of
establishing and providing registry and clearinghouse services within the field
of use and territory. The terms of the License Agreement also grant to NeuStar
an exclusive right to sub-license that same portion of the Company’s patent
portfolio within the field of use and territory to resolution authorities for a
period of not less than one year, but up to four years depending on the
achievement of certain milestones as set forth in the License Agreement. In
addition, NeuStar will perform certain reservations, administration, billing
& collection and other additional services for the benefit of the Company,
Neustar and the sub-licensees.
Brand Extension
Mobile Solutions, S.A (“BEMS”) License Agreement - On October 7, 2009, we
entered into a four year agreement with Brand Extension Mobile Solutions,
S.A., a Madrid (Spain) corporation (“BEMS”), in which
we granted to BEMS a non-exclusive license to use the Licensed Platform in
an approved field of use within a certain geographical territory. The Licensed
Platform will support BEMS’s performance of exclusive commercial operations
under a particular cooperation agreement between BEMS and Telefónica
Internacional, S.A.U. (“Telefónica”). BEMS
intends to use the Company as its prime vendor in connection with such agreement
with Telefónica. The License Agreement grants to BEMS the right to distribute
the Company’s barcode reading software via download or through its inclusion in
mobile devices. The License Agreement also requires BEMS to purchase twenty-five
of the Company’s hardware products to support testing and marketing of barcode
and mobile barcode based ticketing and couponing activities. The License
Agreement requires the Company to provide certain support services, which
include providing support, maintenance, upgrade and update services to BEMS or
to BEMS’s customers. The License Agreement also provides that the Company shall
have certain limited sublicense and interoperability obligations to facilitate
BEMS’s existing relationships and obligations.
19
ITEM
2. Management’s Discussion and Analysis of Financial Condition
and Results of Operations
Special
Note About Forward-Looking Statements
Certain
statements in Management’s Discussion and Analysis, other than purely historical
information, including estimates, projections, statements relating to our
business plans, objectives, and expected operating results, and the assumptions
upon which those statements are based, are “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended. These
forward-looking statements generally are identified by the words “believe,”
“project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “plan,”
“may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions. Forward-looking statements are based on
current expectations and assumptions that are subject to risks and
uncertainties, which may cause actual results to differ materially from the
forward-looking statements. For a detailed discussion of risks and uncertainties
that could cause actual results and events to differ materially from such
forward looking statements, please refer to the section titled “Risk Factors” in
the Company’s 2008 Form 10-K filed on April 14, 2009 with the SEC. We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events, or
otherwise.
Overview
NeoMedia
provides the infrastructure to make mobile barcode scanning and its associated
commerce easy, universal, and reliable – worldwide. Our barcode ecosystem
products including mobile barcode reading software, NeoReader, read and transmit
data from 1D and 2D barcodes to its intended destination. Our Code Management
(NeoSphere) and Code Clearinghouse (NeoRouter) platforms create, connect,
record, and transmit the transactions embedded in the barcodes, like web-URLs,
text messages (SMS), and telephone calls, ubiquitously and
reliably.
In order
to provide complete mobile marketing solutions, NeoMedia also offers barcode
scanning hardware that reads barcodes displayed on mobile phone screens or
printed media. NeoMedia provides infrastructure solutions to enable mobile
ticketing and couponing programs – including scanner hardware and system support
software for seamless implementation.
This technology
is supported by our patents. In addition, NeoMedia has an open standards
philosophy designed to make integration and use of the technology easy for
handset manufacturers, mobile operators and advertisers; and the user experience
safe, reliable and interoperable for consumers.
In 2006,
we began divesting our non-core businesses in order to focus our efforts on the
area that we believe will deliver the most value - our code-reading business and
the related intellectual property. In the fourth quarter of 2006, we disposed of
two subsidiaries, Mobot and Sponge. During April 2007, we sold the 12Snap
business unit and in October 2007, we completed the sale of our Telecom Services
business. In November 2007, we sold our Micro Paint Repair business
unit. As a consequence of these divestitures, we evaluate our
continuing business as one consolidated business. These divestitures
were integral to our turnaround plan and the proceeds received from the sale of
our non-core business units have been used to continue the development of our
code-reading business. A major goal of ours is to provide the
industrial and carrier-grade infrastructure to enable reliable, scalable and
billable commerce that is customer-focused and drives revenue
growth.
During
2008 and early 2009 we have made significant changes to strengthen our
management team. In June 2008, Mr. Iain A. McCready became our Chief Executive
Officer and Chairman of our Board of Directors; in September 2008, Mr. Michael
W. Zima became our Chief Financial Officer and Secretary; in January 2009, Ms.
Laura Marriott became a Member of our Board of Directors; and in March 2009, Mr.
Dean Wood became our Vice President - Business Development.
During
2009, we have taken steps to build on the developing ecosystem based on the
strengths of our patent portfolio. To accomplish this, we have entered into
several licensing programs and resolved a significant outstanding legal
matter.
20
On July
28, 2009, we entered into a non-exclusive patent licensing agreement with Mobile
Tag, Inc. for machine readable mobile codes under our patent portfolio. Under
the terms of that agreement, we will receive a percentage of revenue generated
by Mobile Tag, Inc. through the use and licensing of our patent
portfolio.
On
October 2, 2009, we entered into a four year agreement with NeuStar, Inc.
in which we granted to NeuStar a non-exclusive license to a portion of the
Company’s patent portfolio primarily for the purpose of establishing and
providing registry and clearinghouse services within the field of use and
territory. The terms of the License Agreement also grant to NeuStar an exclusive
right to grant royalty bearing sub-licenses to the same portion of the Company’s
patent portfolio within the field of use and territory to resolution authorities
for a period of not less than one year, but up to four years depending on the
achievement of certain milestones as set forth in the License Agreement. In
addition, NeuStar will perform certain reservations, administration, billing
& collection and other additional services for the benefit of the Company,
NeuStar and the sub-licensees.
On
October 7, 2009, we entered into a four year agreement with Brand Extension
Mobile Solutions, S.A., a Madrid (Spain) corporation (“BEMS”), in which
we granted to BEMS a royalty bearing, and non-exclusive license to use the
Licensed Platform in an approved Field of Use within a certain geographical
Territory. The Licensed Platform will support BEMS’s performance of exclusive
commercial operations under a particular cooperation agreement between BEMS and
Telefónica Internacional, S.A.U. (“Telefónica”). BEMS
intends to use the Company as its prime vendor in connection with such agreement
with Telefónica. The License Agreement grants to BEMS the right to distribute
the Company’s barcode reading software via download or through its inclusion in
mobile devices. The License Agreement also requires BEMS to purchase twenty-five
of the Company’s hardware products to support testing and marketing of barcode
and mobile barcode based ticketing and couponing activities.
On
October 16, 2009, we entered into a ten year settlement and license agreement
with Scanbuy, Inc., in which the Company and Scanbuy settled all of their
pending litigation against each other and granted non-exclusive licenses and a
sublicense to each other. Pursuant to the terms of the Agreement, the Company
granted to Scanbuy a royalty bearing, non-exclusive license to use a portion of
the Company’s patent portfolio within the field of use and in the
territory.
Comparison
of the Three and Nine Months Ended September 30, 2009 and 2008
Results
of Continuing Operations
Beginning
in late 2008 and continuing in 2009, we have taken aggressive steps to control
our costs. These efforts have resulted in reduced operating losses in the three
months ended September 30, 2009 compared to the three months ended September 30,
2008, of $1.8 million and $2.4 million, respectively, and reduced operating
losses in the nine months ended September 30, 2009, compared to the nine months
ended September 30, 2008, of $4.9 million and $7.6 million, respectively.
However, our loss from continuing operations was $42.1 million during the nine
months ended September 30, 2009 compared to $15.2 million during the nine months
ended September 30, 2008. The overall loss incurred in the nine months ended
September 30, 2009 was primarily the result of net non-cash losses from the
change in fair value of our hybrid financial instruments, warrants and
debentures, totaling $32.4 million. The net non-cash losses for the three months
ended September 30, 2009 totaled $10.7 million. We incurred these net
non-cash losses principally as a result of the fluctuations in the market value
of our common stock during the three and nine months ended September 30, 2009.
During the nine months ended September 30, 2008 we reported net non-cash losses
on our hybrid financial instruments, warrants and debentures, totaling $5.4
million. These net non-cash losses were principally the result
of fluctuations in the market value of our common stock.
A summary
of our net sales for the three and nine months ended September 30, 2009 and 2008
is presented below:
21
Three Months Ended September 30,
|
Increase (decrease)
|
|||||||||||||||
2009
|
2008
|
$
|
%
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Hardware
|
21 | $ | 128 | (107 | ) | -84 | % | |||||||||
Lavasphere
|
93 | 38 | 55 | 146 | % | |||||||||||
Barcode
ecosystem
|
1 | - | 1 | - | ||||||||||||
Legacy
product
|
67 | 82 | (15 | ) | -18 | % | ||||||||||
Patent
licensing
|
6 | - | 6 | - | ||||||||||||
Other
|
1 | 82 | (81 | ) | -99 | % | ||||||||||
Net
Sales
|
$ | 189 | $ | 330 | (141 | ) | -43 | % |
Nine Months Ended September 30,
|
Increase (decrease)
|
|||||||||||||||
2009
|
2008
|
$
|
%
|
|||||||||||||
(in
thousands)
|
||||||||||||||||
Hardware
|
449 | $ | 276 | 173 | 63 | % | ||||||||||
Lavasphere
|
123 | 77 | 46 | 60 | % | |||||||||||
Barcode
ecosystem
|
6 | - | 6 | - | ||||||||||||
Legacy
product
|
212 | 251 | (39 | ) | -15 | % | ||||||||||
Patent
licensing
|
16 | 39 | (23 | ) | -60 | % | ||||||||||
Other
|
9 | 158 | (149 | ) | -95 | % | ||||||||||
Net
Sales
|
$ | 815 | $ | 801 | 14 | 2 | % |
Net Sales
- Total revenues decreased $141,000, or 43%, to $189,000 for the three
months ended September 30, 2009 from $330,000 for the three months ended
September 30, 2008. Total revenues increased $14,000, or 2%, to $815,000 for the
nine months ended September 30, 2009 from $801,000 for the nine months ended
September 30, 2008. Our net sales and product mix have changed as a result of
fluctuations in our operations and as a result of changes in our business
strategy. During the three months ended September 30, 2009, our
hardware product sales decreased $107,000 or 84%. However, during the nine
months ended September 30, 2009, sales of our hardware products increased
$173,000 or 63%. During 2009 we introduced our newest model barcode scanners and
sold remaining quantities of our older models. Our hardware products tend to be
sold in large transactions and can fluctuate significantly among reporting
periods. During the three months ended September 30, 2009 our Lavasphere product
sales increased $55,000 or 146%, and during the nine months ended September 30,
2009, sales of our Lavasphere product sales increased $46,000 or 60%, both as a
result of increased demand for these products and services. During 2009 we
introduced our barcode ecosystem products and during the nine months ended
September 30, 2009, we have recognized $6,000 of sales revenue for our barcode
ecosystem products, as well as $16,000 of sales revenue for the related platform
licensing and patent licensing agreements. In succeeding quarters we expect
these revenues to increase as we shift the focus of our efforts toward the
emerging barcode ecosystem. We believe this focus will deliver the most value in
the future. During the three months ended September 30, 2009 we disposed of our
legacy software products. However, we retained a share of those products’ future
revenues. Accordingly, we expect these revenues to continue at reduced
levels.
Cost of
Sales - Cost of sales was $238,000 for the three months ended September
30, 2009 compared with $377,000 for the three months ended September 30, 2008, a
decrease of $139,000, or 37%. Cost of sales was $1,046,000 for the nine
months ended September 30, 2009 compared with $983,000 for the nine months ended
September 30, 2008, an increase of $63,000, or 6%. Cost of sales for
NeoMedia Europe, related to our hardware products, was $2,300 and
$135,000 for the three months ended September 30, 2009 and 2008,
respectively, and was $336,000 and $250,000 for the nine months ended
September 30, 2009 and 2008, respectively. Amortization costs related to our
patents, and the proprietary software was $236,000 and $243,000 for
the three months ended September 30, 2009 and 2008, respectively, and was
$710,000 and $733,000 for the nine months ended September 30, 2009 and
2008, respectively.
Sales and
Marketing - Sales and marketing expenses were $149,000 and $711,000 for
the three months ended September 30, 2009 and 2008, respectively, a decrease of
$562,000 or 79%, and $613,000 and $2.0 million for the nine months ended
September 30, 2009 and 2008, respectively, a decrease of $1.4 million or 69%.
The decrease in sales and marketing expenses was the result of strict cost
controls implemented in mid-late 2008 and further reductions in 2009 compared
with 2008.
22
General and
Administrative - General and administrative expenses were $1.0 million
and $1.2 million for the three months ended September 30, 2009 and 2008,
respectively, a decrease of $232,000, or 19%, and $2.8 million and $3.8 million
for the nine months ended September 30, 2009 and 2008, respectively, a decrease
of $1.0 million, or 27%. The decrease in general and administrative expenses was
the result of reductions in compensation and travel costs, as well as reductions
in professional fees implemented in mid-late 2008 and further reductions in 2009
compared with 2008.
Research and
Development - Research and development expenses were $330,000 and
$406,000 for the three months ended September 30, 2009 and 2008, respectively, a
decrease of $76,000, or 19%, and $1.0 million and $1.6 million for the nine
months ended September 30, 2009 and 2008, respectively, a decrease of $619,000,
or 38%. The decrease in research and development expenses was the result of
reductions in compensation and costs associated with the development of our
hardware products, which were completed and launched in late 2008. We have also
implemented further cost controls in 2009 compared with 2008.
Impairment of
investment – Impairment charges of $261,000 resulted from our review and
adjustment in the carrying value of our investment in Sponge Limited. Our
investment in Sponge Limited is now fully reserved.
Gain (Loss) from
Change in Fair Value of Hybrid Financial Instruments - We carry certain of our
convertible debentures at fair value, in accordance with FASB ASC 815-15-25, and
do not separately account for the embedded conversion feature. The
change in the fair value of these liabilities includes changes in the value of
the interest due under these instruments, as well as changes in the fair value
of the common stock underlying the instruments. The liability related to
these hybrid instruments increased in the three months ended September 30,
2009 resulting in a loss of $7.8 million, and decreased in the three
months ended September 30, 2008 resulting in a gain of $1.0
million. The liability related to these hybrid instruments increased in the
nine months ended September 30, 2009, resulting in a loss of $7.5 million,
and decreased in the nine months ended September 30, 2008 resulting in
a gain of $3.7 million. These fair value changes were primarily as a result of
the fluctuations in the value of our common stock during the
period. Because our stock price has been volatile and because many of our
hybrid financial instruments include relatively low fixed conversion prices, it
is possible that further increases in the market price of our stock could cause
the fair value of our hybrid financial instruments to increase significantly in
future periods.
Gain (Loss) from
Change in Fair Value of
Derivative
Liabilities - Warrants
- We
account for our outstanding common stock warrants that were issued in connection
with the preferred stock and our debentures, at fair value. The liability
related to warrants decreased in the three months ended September 30, 2009
resulting in a gain of $5.8 million, and increased in the three months ended
September 30, 2008 resulting in a loss of $.3 million. The liability
related to warrants increased in the nine months ended September 30, 2009, and
decreased in the nine months ended September 30, 2008, resulting in a loss of
$6.6 million, and a gain of $3.1 million, respectively. These fair value changes
were primarily as a result of the fluctuations in the value of our common stock
during the period. Because our stock price has been volatile and because many of
our warrants include relatively low fixed exercise prices it is possible that
further increases in the market price of our common stock could cause the fair
value of our warrants to increase significantly in future periods.
Gain (Loss) from
Change in Fair Value of
Derivative
Liabilities - Debentures
- For our
Series C convertible preferred stock, and certain of our convertible debentures,
we account for the embedded conversion feature separately as a derivative
financial instrument. We carry these derivative financial
instruments at fair value. The liability related to the derivative
instruments embedded in these debentures increased in the three months ended
September 30, 2009, and 2008, respectively, resulting in a loss of $8.7 million,
and $7.6 million, respectively. The liability related to these derivative
instruments and debentures increased in the nine months ended September 30,
2009, and 2008, respectively, resulting in a loss of $18.3 million, and $12.2
million, respectively. These fair value changes were primarily as a result of
the fluctuations in the value of our common stock during the period. Because our
stock price has been volatile and because many of our derivative financial
instruments include relatively low fixed conversion prices, it is possible that
further increases in the market price of our common stock could cause the fair
value of our derivative financial instruments to increase significantly in
future periods.
23
Other Interest
Expense, net - Other interest expense was $1.1 million, and $.5 million
for the three months ended September 30, 2009 and 2008, respectively, a decrease
of $.6 million or 120%, and $4.8 million and $2.2 million for the nine months
ended September 30, 2009 and 2008, respectively, an increase of $2.6 million or
118% that results from increased financing activities from the second half of
2008 through September 30, 2009. Other interest expense consists of interest
charges related to convertible debentures that are not carried at fair value
under FASB ASC 815-15-25, interest accrued for creditors as part of financed
purchases, past due balances and notes payable, net of interest earned on cash
equivalent investments.
Results of
Discontinued Operations - In 2007, we discontinued
the operations of our Mobot, Sponge, 12Snap, Telecom Services and Micro Paint
Repair business units. During the nine months ended September 30,
2008, we recognized a loss of $260,000, primarily attributable to wind-down
expenses associated with Micro Paint Repair, 12Snap, and Telecom
Services.
Liquidity
and Capital Resources
As of
September 30, 2009, we had $74,000 in cash and cash equivalents; a decrease of
$1.2 million, or 94%, compared with a total of $1.3 million as of
December 31, 2008.
Cash used
in operating activities decreased to $3.8 million for the nine months ended
September 30, 2009 compared with $5.0 million for the period ended
September 30, 2008. The decrease in cash used in operations is
primarily due to the cost control measures implemented in late 2008 and in
2009.
Cash used
in investing activities was $65,000 for the nine months ended September 30,
2009, representing the purchase of equipment. Net cash provided by investing
activities was $441,000 for the nine months ended September 30,
2008. This was primarily due to the sale of our remaining ownership
of 12Snap, wind-down expenses from discontinued operations, a partial settlement
of intercompany loans and cash retained by us from the shut-down of Micro Paint
Repair-US which resulted in net proceeds to us of $751,000.
Cash
provided by financing activities was $2.7 million for the nine months ended
September 30, 2009, which resulted from $2.6 million in convertible debt
instruments net of fees from Y.A. Global, and proceeds received upon exercise of
stock options by two former employees totaling $116,000. Cash provided by
financing activities during the nine months ended September 30, 2008 was $3.7
million, and was the result of additional borrowing activities through
convertible debt instruments.
As of
September 30, 2009, we had a working capital deficiency of $101.5 million, of
which $76.4 million relates to the fair value of hybrid and derivative financial
instruments, and $12.2 million relates to the carrying value of debentures
carried at amortized cost. These values are significantly greater than the face
amount of our debt that would be otherwise due in cash if the conversion feature
of these instruments and the warrants did not exist.
Significant
Liquidity Events
Going
Concern - We have historically incurred net losses and losses from
operations and we expect that we will continue to have negative cash flows as we
implement our business plan. There can be no assurance that our
continuing efforts to execute our business plan will be successful and that we
will be able to continue as a going concern. The accompanying consolidated
financial statements have been prepared in conformity with US GAAP, which
contemplate our continuation as a going concern. Net loss for the
nine months ended September 30, 2009 was $42.1 million while net cash used
by operations was $3.8 million. We also have an accumulated
deficit of $254.7 million and a working capital deficit of $101.5
million as of September 30, 2009, much of which is related to the
derivative value of our financing instruments. We also have a continuing
obligation as of September 30, 2009 of $4.6 million relating to a purchase price
guarantee associated with our prior acquisition of 12Snap (which we subsequently
sold).
The items
discussed above raise substantial doubts about our ability to continue as a
going concern.
We
currently do not have sufficient cash to sustain us for the next twelve
months. We will require additional financing in order to execute our
operating plan and continue as a going concern. Our management’s plan
is to attempt to secure adequate funding to bridge the commercialization of our
barcode ecosystem business. We cannot predict whether this additional financing
will be in the form of equity, debt, or another form and we may not be able to
obtain the necessary additional capital on a timely basis, on acceptable terms,
or at all. We believe that we can obtain additional financing, but in
the event that these financing sources do not materialize, or that we are
unsuccessful in increasing our revenues and profits, we may be unable to
implement our current plans for expansion, repay our debt obligations as they
become due or continue as a going concern, any of which circumstances would have
a material adverse effect on our business, prospects, financial condition and
results of operations.
24
YA Global
Investments, L.P. (“YA Global”) has provided us with financing on a
month-to-month basis, totaling $2.6 million, during 2009. YA Global has informed
us that they intend to provide additional financing for our operations through
the end of 2009. This additional financing has not yet been completed as of the
date of this report. If cash received from our customers and licensees is not
sufficient to fund our operations we will require additional capital financing
from YA Global or from other sources in the future in order to continue as a
going concern.
The
financial statements in this Form 10-Q do not include any adjustments relating
to the recoverability and reclassification of recorded asset amounts or the
amounts and classification of liabilities that might be necessary, should we be
unable to continue as a going concern.
Sources of Cash
and Projected Cash Requirements - As of
September 30, 2009, our cash balance was $74,000. NeoMedia’s reliance on YA
Global as our primary financing source has certain ramifications that could
affect future liquidity and business operations. For example,
pursuant to the terms of the convertible debenture agreements between us and YA
Global, without YA Global’s consent we cannot (i) issue or sell any shares
of our common stock or our preferred stock without consideration or for
consideration per share less than the closing bid price immediately prior to its
issuance, (ii) issue or sell any preferred stock, warrant, option, right,
contract, call, or other security or instrument granting the holder thereof the
right to acquire our common stock for consideration per share less than the
closing bid price immediately prior to its issuance, (iii) enter into any
security instrument granting the holder a security interest in any of our assets
or (iv) file any registration statements on Form S-8. In addition, pursuant to
security agreements between us and YA Global, YA Global has a security interest
in all of our assets. Such covenants could severely harm our ability
to raise additional funds from sources other than YA Global, and would likely
result in a higher cost of capital in the event we secured funding.
Additionally,
pursuant to the terms of the Investment Agreement between us and YA Global in
connection with our Series C convertible preferred stock sale, we cannot (i)
enter into any debt arrangements in which we are the borrower, (ii) grant any
security interest in any of our assets or (iii) grant any security below market
price.
Subsequent
Events
NeuStar, Inc.,
License Agreement -
On October 2, 2009, we entered into a four year agreement with
NeuStar, Inc., in which we granted to NeuStar a non-exclusive license to a
portion of the Company’s patent portfolio primarily for the purpose of
establishing and providing registry and clearinghouse services within the field
of use and territory. The terms of the License Agreement also grant to NeuStar
an exclusive right to sub-license that same portion of the Company’s patent
portfolio within the field of use and territory to resolution authorities for a
period of not less than one year, but up to four years depending on the
achievement of certain milestones as set forth in the License Agreement. In
addition, NeuStar will perform certain reservations, administration, billing
& collection and other additional services for the benefit of the Company,
NeuStar and the sub-licensees.
Brand Extension
Mobile Solutions, S.A (“BEMS”) License Agreement - On October 7, 2009, we
entered into a four year agreement with Brand Extension Mobile Solutions,
S.A., a Madrid (Spain) corporation (“BEMS”), in which
we granted to BEMS a non-exclusive license to use the Licensed Platform in
an approved field of use within a certain geographical territory. The Licensed
Platform will support BEMS’s performance of exclusive commercial operations
under a particular cooperation agreement between BEMS and Telefónica
Internacional, S.A.U. (“Telefónica”). BEMS
intends to use the Company as its prime vendor in connection with such agreement
with Telefónica. The License Agreement grants to BEMS the right to distribute
the Company’s barcode reading software via download or through its inclusion in
mobile devices. The License Agreement also requires BEMS to purchase twenty-five
of the Company’s hardware products to support testing and marketing of barcode
and mobile barcode based ticketing and couponing activities. The License
Agreement requires the Company to provide certain support services, which
include providing support, maintenance, upgrade and update services to BEMS or
to BEMS’s customers. The License Agreement also provides that the Company shall
have certain limited sublicense and interoperability obligations to facilitate
BEMS’s existing relationships and obligations.
25
Scanbuy, Inc.
License Agreement - On October 16, 2009, we entered into a ten year
settlement and license agreement with Scanbuy, Inc., in which the Company and
Scanbuy settled all of their pending litigation against each other and granted
non-exclusive licenses and a sublicense to each other. The Agreement
provides that within five business days after the effective date of the
Agreement, each will file motions for dismissal in the United States District
Court, Southern District of New York to terminate the pending claim brought by
the Company against Scanbuy, and pending claims brought by Scanbuy and Marshall
Feature Recognition, LLC (“MFR”) against the Company. Pursuant to the terms of
the Agreement, the Company granted to Scanbuy a royalty bearing, non-exclusive
license to use a portion of the Company’s patent portfolio within the field of
use and in the territory defined in the Agreement. Scanbuy granted to the
Company a paid-up, irrevocable, non-exclusive license within the Territory to
use the Scanbuy Licensed Patents, and a paid-up, non-exclusive sublicense to use
all of the patents licensed by MFR to Scanbuy within the defined
territory.
Critical
Accounting Policies and Estimates
There
have been no material changes to our critical accounting policies and estimates
from the information provided in Item 7, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” included in our
Annual Report on Form 10-K for the fiscal year ended December 31,
2008.
ITEM 3.
Quantitative and Qualitative Disclosures about Market Risk
We are a
“smaller reporting company” as defined by Rule 12b-2 of the Exchange Act and are
not required to provide information under this item.
ITEM 4.
Controls and Procedures
Disclosure
Controls and Procedures
- Our management, with the participation of our CEO and CFO have
evaluated the effectiveness of our disclosure controls and procedures (as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of
the end of the period covered by this report.
These
controls are designed to ensure that information required to be disclosed in the
reports we file or submit pursuant to the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the rules and forms
of the SEC, and that such information is accumulated and communicated to our
management, including our CEO and CFO, as appropriate, to allow timely decisions
regarding required disclosure.
Based on
this evaluation, our CEO and CFO concluded that our disclosure controls and
procedures were not effective as of September 30, 2009 at a reasonable assurance
level, because of the material weaknesses described in Item 9A of our Annual
Report on Form 10−K for the fiscal year ended December 31, 2008, which we are
still in the process of remediating. Please see “Management’s Report
on Internal Control over Financial Reporting” in Item 9A of the 2008 Form 10−K
for a full description of these weaknesses.
Notwithstanding
the material weaknesses described in Item 9A of the Form 10−K for the fiscal
year ended December 31, 2008, we believe that our consolidated financial
statements presented in this Quarterly Report on Form 10−Q fairly present, in
all material respects, our financial position, results of operations, and cash
flows for all periods presented herein.
Inherent
Limitations - Our
management, including our Chief Executive Officer and Chief Financial Officer,
do not expect that our disclosure controls and procedures will prevent all error
and all fraud. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. The design of any system of controls is based in part
upon certain assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated goals under
all potential future conditions. Further, the design of a control system must
reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within our company have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty, and that breakdown
can occur because of simple error or mistake. In particular, many of our current
processes rely upon manual reviews and processes to ensure that neither human
error nor system weakness has resulted in erroneous reporting of financial
data.
26
Changes in
Internal Control over Financial Reporting - There were no changes in
the Company’s internal control over financial reporting during the period ended
September 30, 2009, which were identified in conjunction with management’s
evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the
Exchange Act, that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
27
PART
II - OTHER INFORMATION
ITEM
1. Legal Proceedings
Scanbuy,
Inc. - On January 23, 2004, we filed suit against Scanbuy, Inc.
(“Scanbuy”) in the Northern District of Illinois, claiming that Scanbuy has
manufactured, or has had manufactured for it, and has used, or actively induced
others to use, technology which allows customers to use a built-in UPC bar code
scanner to scan individual items and access information, thereby infringing our
patents. The complaint stated that on information and belief, Scanbuy had
actual and constructive notice of the existence of the patents-in-suit, and,
despite such notice, failed to cease and desist their acts of infringement and
continue to engage in acts of infringement of the patents-in-suit. On
April 15, 2004, the Court dismissed the suits against Scanbuy for lack of
personal jurisdiction.
On April
20, 2004, we re-filed our suit against Scanbuy in the Southern District of New
York alleging patent infringement. Scanbuy filed their answer on June 2, 2004.
We filed our answer on July 23, 2004. On February 13, 2006, Scanbuy filed an
amended answer to the complaint. We filed our reply to Scanbuy’s amended answer
on March 6, 2006. On January 20, 2007, the court dismissed Scanbuy's request for
a summary judgment. On February 17, 2009, the USPTO sent NeoMedia a Notice of
Intent to Issue Ex Parte Reexamination Certificate, and on June 9, 2009 NeoMedia
received a Reexamination Certificate for the ‘048 patent. NeoMedia
requested that the stay be lifted and a joint summary status of the case was
provided to the Court. On April 17, 2009 both parties met with the Court
to discuss the status of the case. On August 3, 2009 the Court issued an order
lifting the stay and granting our request to proceed with discovery, which is
now in progress.
On
October 16, 2009, we entered into a ten year settlement and license agreement
with Scanbuy, Inc., in which the Company and Scanbuy settled all of their
pending litigation against each other and granted non-exclusive licenses and a
sublicense to each other.
Rothschild Trust
Holdings, LLC – On September 19, 2008, we were served a complaint by
Rothschild Trust Holding, LLC alleging we owed royalty payments for the use of
certain patents. On February 25, 2009, we filed an answer to the complaint. On
July 20, 2009 we entered into non-binding mediation and an interim agreement
which requires us to provide documentation for review by Rothschild Trust
Holding, LLC. The non-binding mediation and interim agreement failed to settle
the matter, and the litigation continues. We believe the complaint is
without merit and we intend to vigorously defend against it.
Scanbuy and
Marshall Feature Recognition, LLC – On or around December 19, 2008, we
received a complaint filed in the Eastern District of Texas by Scanbuy and
Marshall Feature Recognition, LLC (“MFR”) alleging infringement of certain
patents. On January 8, 2009, we filed an answer denying infringement and
asserting that the patents of Scanbuy and MFR are invalid. On or about May 8,
2009, the parties agreed and the case was transferred to the Southern District
of New York due to lack of personal jurisdiction in the Eastern District of
Texas. On August 3, 2009 the New York Court assigned the case to the same judge
responsible for our suit against Scanbuy, described above. However, because of
significant differences between the cases each will be tried separately. The
Court’s order also established a timetable for discovery in this
case.
On
October 16, 2009, we entered into a settlement and license agreement with
Scanbuy, in which the Company and Scanbuy settled all of their pending
litigation against each other. The settlement and license agreement also settled
the pending claim brought by Scanbuy and Marshall Feature Recognition, LLC
(“MFR”) against the Company by providing for a paid-up, non-exclusive sublicense
to use all of the patents licensed by MFR to Scanbuy within the defined
territory.
For a
description of pending legal proceedings, see Note 7 – Contingencies, to the
Consolidated Financial Statements set forth in this Form 10-Q.
ITEM
1A. Risk Factors
We are a
smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are
not required to provide information under this item.
28
ITEM
2. Unregistered Sales of Equity Securities and Use of
Proceeds
None
ITEM
3. Defaults Upon Senior Securities
None
ITEM
4. Submission of Matters to A Vote of Security Holders
None
ITEM
5. Other Information
None
29
ITEM
6. Exhibits
(a)
Exhibits:
Exhibit
|
Filed
|
Filing
|
||||||||
Number
|
Description
|
Herewith
|
Form
|
Exhibit
|
Date
|
|||||
3.1
|
Articles
of Incorporation of Dev-Tech Associates, Inc. and amendment
thereto
|
SB-2
|
3.1
|
11/25/96
|
||||||
3.2
|
Bylaws
of DevSys, Inc.
|
SB-2
|
3.2
|
11/25/96
|
||||||
3.3
|
Restated
Certificate of Incorporation of DevSys, Inc.
|
SB-2
|
3.3
|
11/25/96
|
||||||
3.4
|
By-laws
of DevSys, Inc.
|
SB-2
|
3.4
|
11/25/96
|
||||||
3.5
|
Articles
of Merger and Agreement and Plan of Merger of DevSys, Inc and Dev-Tech
Associates, Inc.
|
SB-2
|
3.5
|
11/25/96
|
||||||
3.6
|
Certificate
of Merger of Dev-Tech Associates, Inc. into DevSys, Inc.
|
SB-2
|
3.6
|
11/25/96
|
||||||
3.7
|
Articles
of Incorporation of Dev-Tech Migration, Inc. and amendment
thereto
|
SB-2
|
3.7
|
11/25/96
|
||||||
3.8
|
By-laws
of Dev-Tech Migration, Inc.
|
SB-2
|
3.8
|
11/25/96
|
||||||
3.9
|
Restated
Certificate of Incorporation of DevSys Migration, Inc.
|
SB-2
|
3.90
|
11/25/96
|
||||||
3.1
|
Form
of By-laws of DevSys Migration, Inc.
|
SB-2
|
3.10
|
11/25/96
|
||||||
3.11
|
Form
of Agreement and Plan of Merger of Dev-Tech Migration, Inc. into DevSys
Migration, Inc.
|
SB-2
|
3.11
|
11/25/96
|
||||||
3.12
|
Form
of Certificate of Merger of Dev-Tech Migration, Inc. into DevSys
Migration, Inc.
|
SB-2
|
3.12
|
11/25/96
|
||||||
3.13
|
Certificate
of Amendment to Certificate of Incorporation of DevSys, Inc. changing our
name to NeoMedia Technologies, Inc.
|
SB-2
|
3.13
|
11/25/96
|
||||||
3.14
|
Form
of Certificate of Amendment to Certificate of Incorporation of NeoMedia
Technologies, Inc. authorizing a reverse stock split
|
SB-2
|
3.14
|
11/25/96
|
||||||
3.15
|
Form
of Certificate of Amendment to Restated Certificate of Incorporation of
NeoMedia Technologies, Inc. increasing authorized capital and creating
preferred stock
|
SB-2
|
3.15
|
11/25/96
|
||||||
10.1
|
Second
Agreement and Amendment to Consulting Agreement between NeoMedia and
Thornhill Capital, dated July 22, 2005
|
S-3/A
|
10.3
|
1/30/06
|
||||||
10.2
|
Standby
Equity Distribution Agreement, dated March 30, 2005, between NeoMedia and
Cornell Capital Partners
|
8-K
|
16.1
|
4/1/05
|
||||||
10.3
|
Placement
Agent Agreement, dated March 30, 2005, between NeoMedia and Cornell
Capital Partners
|
8-K
|
16.2
|
4/1/05
|
||||||
10.4
|
Escrow
Agreement, dated March 30, 2005, between NeoMedia and Cornell Capital
Partners
|
8-K
|
16.3
|
4/1/05
|
||||||
10.5
|
Registration
Rights Agreement, dated March 30, 2005, between NeoMedia and Cornell
Capital Partners
|
8-K
|
16.4
|
4/1/05
|
||||||
10.6
|
Promissory
Note, dated March 30, 2005, between NeoMedia and Cornell Capital
Partners
|
8-K
|
16.5
|
4/1/05
|
||||||
10.7
|
Security
Agreement, dated March 30, 2005, between NeoMedia and Cornell Capital
Partners
|
8-K
|
16.5
|
4/1/05
|
||||||
10.8
|
|
Warrant
dated March 30, 2005, granted by NeoMedia to Thornhill Capital
LLC
|
|
|
S-3/A
|
|
10.12
|
|
7/18/05
|
30
Exhibit
|
Filed
|
Filing
|
||||||||
Number
|
Description
|
Herewith
|
Form
|
Exhibit
|
Date
|
|||||
10.9
|
Warrant
dated March 30, 2005, granted by NeoMedia to Cornell Capital Partners
LP
|
S-3/A
|
10.13
|
7/18/05
|
||||||
10.10
|
Definitive
Merger Agreement between NeoMedia and Mobot
|
8-K
|
16.10
|
2/10/06
|
||||||
10.11
|
Definitive
Sale and Purchase Agreement between NeoMedia and 12Snap
|
8-K
|
16.10
|
2/14/06
|
||||||
10.12
|
Definitive
Sale and Purchase Agreement between NeoMedia and Gavitec
|
8-K
|
16.10
|
2/21/06
|
||||||
10.13
|
Definitive
Sale and Purchase Agreement between NeoMedia and Sponge
|
8-K
|
16.10
|
2/22/06
|
||||||
10.14
|
Promissory
Note, dated October 18, 2004, between NeoMedia and Cornell Capital
Partners
|
S-3/A
|
10.26
|
1/30/06
|
||||||
10.15
|
Investment
Agreement, dated February 17, 2006 between NeoMedia and Cornell Capital
Partners
|
8-K
|
10.1
|
2/21/06
|
||||||
10.16
|
Investor
Registration Rights Agreement, dated February 17, 2006 between NeoMedia
and Cornell Capital Partners
|
8-K
|
10.2
|
2/21/06
|
||||||
10.17
|
Irrevocable
Transfer Agent Instruction, dated February 17, 2006, by and among
NeoMedia, Cornell Capital Partners and American Stock Transfer & Trust
Co.
|
8-K
|
10.3
|
2/21/06
|
||||||
10.18
|
Warrant,
dated February 17, 2006
|
8-K
|
10.4
|
2/21/06
|
||||||
10.19
|
Warrant,
dated February 17, 2006
|
8-K
|
10.5
|
2/21/06
|
||||||
10.20
|
Warrant,
dated February 17, 2006
|
8-K
|
10.6
|
2/21/06
|
||||||
10.21
|
Assignment
Agreement, dated February 17, 2006 by NeoMedia and Cornell Capital
Partners
|
8-K
|
10.7
|
2/21/06
|
||||||
10.22
|
Assignment
of Common Stock, dated February 17, 2006 between NeoMedia and Cornell
Capital Partners
|
8-K
|
10.8
|
2/21/06
|
||||||
10.23
|
Securities
Purchase Agreement, dated August 24, 2006, between the Company and Cornell
Capital Partners, LP
|
8-K
|
10.1
|
8/30/06
|
||||||
10.24
|
Investor
Registration Rights Agreement, dated August 24, 2006, between the Company
and Cornell Capital Partners, LP
|
8-K
|
10.2
|
8/30/06
|
||||||
10.25
|
Pledge
and Security Agreement, dated August 24, 2006, between the Company and
Cornell Capital Partners, LP
|
8-K
|
10.30
|
8/30/06
|
||||||
10.26
|
Secured
Convertible Debenture, dated August 24, 2006, issued by the Company to
Cornell Capital Partners, LP
|
8-K
|
10.40
|
8/30/06
|
||||||
10.27
|
Irrevocable
Transfer Agent Instructions, dated August 24, 2006, by and among the
Company, Cornell Capital Partners, LP and American Stock Transfer &
Trust Co.
|
8-K
|
10.50
|
8/30/06
|
||||||
10.28
|
A
Warrant, dated August 24, 2006
|
8-K
|
10.60
|
8/30/06
|
||||||
10.29
|
B
Warrant, dated August 24, 2006
|
8-K
|
10.70
|
8/30/06
|
||||||
10.30
|
C
Warrant, dated August 24, 2006
|
8-K
|
10.80
|
8/30/06
|
||||||
10.31
|
D
Warrant, dated August 24, 2006
|
8-K
|
10.9
|
8/30/06
|
||||||
10.32
|
Amendment
to Warrant No. CCP-002, dated August 24, 2006, between the
Company and Cornell Capital Partners, LP
|
8-K
|
10.1
|
8/30/06
|
||||||
10.33
|
Amendment
to “A” Warrant No. CCP-001, dated August 24, 2006, between the
Company and Cornell Capital Partners, LP
|
8-K
|
10.11
|
8/30/06
|
||||||
10.34
|
Amendment
to “B” Warrant No. CCP-002, dated August 24, 2006, between the Company and
Cornell Capital Partners, LP
|
8-K
|
10.12
|
8/30/06
|
||||||
10.35
|
Amendment
to “C” Warrant No. CCP-003, dated August 24, 2006, between the
Company and Cornell Capital Partners, LP
|
8-K
|
10.13
|
8/30/06
|
||||||
10.36
|
Letter
of intent amongst the Company, Global Emerging Markets, and Jose
Sada
|
8-K
|
16.1
|
8/31/06
|
||||||
10.37
|
Termination
Agreement between NeoMedia Technologies, Inc, and Cornell Capital
Partners, LP
|
S-3/A
|
10.53
|
1/30/07
|
||||||
10.38
|
Definitive
share purchase and settlement agreement between NeoMedia and Sponge, dated
November 14, 2006
|
8-K
|
16.1
|
11/20/06
|
||||||
10.39
|
|
Agreement
between NeoMedia and FMS
|
|
|
8-K
|
|
16.1
|
|
12/7/06
|
31
Exhibit
|
Filed
|
Filing
|
||||||||
Number
|
Description
|
Herewith
|
Form
|
Exhibit
|
Date
|
|||||
10.40
|
Escrow
agreement amongst NeoMedia, Mobot, FMS, and Kirkpatrick and Lockhart
Nicholson Graham LLP
|
8-K
|
16.2
|
12/7/06
|
||||||
10.41
|
Description
of Special Preference Stock
|
8-K
|
16.3
|
12/7/06
|
||||||
10.42
|
Promissory
note payable from NeoMedia to FMS
|
8-K
|
16.4
|
12/7/06
|
||||||
10.43
|
License
agreement between NeoMedia and Mobot
|
8-K
|
16.50
|
12/7/06
|
||||||
10.44
|
Securities
Purchase Agreement, dated December 29, 2006, between the Company and
Cornell Capital Partners, LP
|
8-K
|
10.10
|
1/8/07
|
||||||
10.45
|
Investor
Registration Rights Agreement, dated December 29, 2006, between the
Company and Cornell Capital Partners, LP
|
8-K
|
10.20
|
1/8/07
|
||||||
10.46
|
Secured
Convertible Debenture, dated December 29, 2006, issued by the Company to
Cornell Capital Partners, LP
|
8-K
|
10.30
|
1/8/07
|
||||||
10.47
|
Irrevocable
Transfer Agent Instructions, dated December 29, 2006, by and among the
Company, Cornell Capital Partners, LP and American Stock Transfer &
Trust Co.
|
8-K
|
10.40
|
1/8/07
|
||||||
10.48
|
A
Warrant, dated December 29, 2006
|
8-K
|
10.50
|
1/8/07
|
||||||
10.49
|
Amendment
to Warrant No. CCP-002, dated December 29, 2006, between the
Company and Cornell Capital Partners, LP
|
8-K
|
10.6
|
1/8/07
|
||||||
10.50
|
Amendment
to “A” Warrant No. CCP-001, dated December 29, 2006, between
the Company and Cornell Capital Partners, LP
|
8-K
|
10.7
|
1/8/07
|
||||||
10.51
|
Amendment
to “B” Warrant No. CCP-002, dated December 29, 2006, between the Company
and Cornell Capital Partners, LP
|
8-K
|
10.8
|
1/8/07
|
||||||
10.52
|
Amendment
to “C” Warrant No. CCP-003, dated December 29, 2006, between
the Company and Cornell Capital Partners, LP
|
8-K
|
10.9
|
1/8/07
|
||||||
10.53
|
Amendment
to “A” Warrant No. CCP-001, dated December 29, 2006, between
the Company and Cornell Capital Partners, LP
|
8-K
|
10.1
|
1/8/07
|
||||||
10.54
|
Amendment
to “B” Warrant No. CCP-001, dated December 29, 2006, between
the Company and Cornell Capital Partners, LP
|
8-K
|
10.11
|
1/8/07
|
||||||
10.55
|
Amendment
to “C” Warrant No. CCP-001, dated December 29, 2006, between
the Company and Cornell Capital Partners, LP
|
8-K
|
10.12
|
1/8/07
|
||||||
10.56
|
Securities
Purchase Agreement, dated December 29, 2006, between the Company and
Cornell Capital Partners, LP
|
8-K
|
10.13
|
1/8/07
|
||||||
10.57
|
Amendment
Agreement I to the Sale and Purchase Agreement between NeoMedia and
certain former shareholders of Gavitec AG, dated January 23,
2007
|
8-K
|
10.1
|
1/29/07
|
||||||
10.58
|
Consulting
Agreement between the Company and SKS Consulting of South Florida
Corp.
|
8-K
|
10.1
|
2/6/07
|
||||||
10.59
|
Amendment
Agreement III to Sale and Purchase Agreement between NeoMedia and certain
former shareholders of 12Snap AG, dated March 16, 2007
|
8-K
|
10.1
|
3/22/07
|
||||||
10.60
|
Securities
Purchase Agreement between NeoMedia and Cornell Capital Partners LP, dated
March 27, 2007
|
8-K
|
10.1
|
3/27/07
|
||||||
10.61
|
Investor
Registration Rights Agreement between NeoMedia and Cornell Capital
Partners LP, dated March 27, 2007
|
8-K
|
10.2
|
3/27/07
|
||||||
10.62
|
Secured
Convertible Debenture, issued by NeoMedia to Cornell Capital Partners, LP,
dated March 27, 2007
|
8-K
|
10.3
|
3/27/07
|
||||||
10.63
|
Irrevocable
Transfer Agent Instructions, by and among NeoMedia, Cornell Capital
Partners, LP and Worldwide Stock Transfer, dated March 27,
2007
|
8-K
|
10.4
|
3/27/07
|
||||||
10.64
|
Warrant,
issued by NeoMedia to Cornell Capital Partners, LP, dated March 27,
2007
|
8-K
|
10.5
|
3/27/07
|
||||||
10.65
|
Master
Amendment Agreement, by and between NeoMedia and Cornell Capital Partners,
LP, dated March 27, 2007
|
8-K
|
10.6
|
3/27/07
|
||||||
10.67
|
Security
Agreement, by and between NeoMedia and Cornell Capital Partners, LP, dated
on or about August 24, 2006
|
8-K
|
10.7
|
3/27/07
|
||||||
10.68
|
|
Security
Agreement, by and between NeoMedia and Cornell Capital Partners, LP, dated
March 27,2007
|
|
|
8-K
|
|
10.8
|
|
3/27/07
|
32
Exhibit
|
Filed
|
Filing
|
||||||||
Number
|
Description
|
Herewith
|
Form
|
Exhibit
|
Date
|
|||||
10.69
|
Security
Agreement (Patent), by and between NeoMedia and Cornell Capital Partners,
LP, dated March 27, 2007
|
8-K
|
10.9
|
3/27/07
|
||||||
10.70
|
Pledge
Shares Escrow Agreement, by and between NeoMedia and Cornell Capital
Partners, dated March 27, 2007
|
8-K
|
10.10
|
3/27/07
|
||||||
10.71
|
Sale
and Purchase Agreement between NeoMedia and Bernd M.
Michael
|
8-K
|
10.1
|
4/6/07
|
||||||
10.72
|
Completion
of Acquisition of Disposition of Assets of BSD Software
Inc.
|
8-K/A
|
10.1
|
6/8/07
|
||||||
10.73
|
Full
and Final Settlement Agreement, dated August 14, 2007, by and between
NeoMedia, Wayside and Tesscourt
|
8-K
|
99.1
|
8/17/07
|
||||||
10.74
|
Letter
of intent between NeoMedia Technologies, Inc. and Greywolf Entertainment,
Inc.
|
8-K
|
16.1
|
8/21/07
|
||||||
10.75
|
Registration
Rights Agreement, by and between NeoMedia and YA Global Investments, L.P.,
dated August 24, 2007
|
8-K
|
10.1
|
8/30/07
|
||||||
10.76
|
Secured
Convertible Debenture, issued by NeoMedia to YA Global Investments, dated
August 24, 2007
|
8-K
|
10.2
|
8/30/07
|
||||||
10.77
|
Irrevocable
Transfer Agent Instructions, by and among NeoMedia, YA Global Investments,
L.P. and Worldwide Stock Transfer, LLC, dated August 24,
2007
|
8-K
|
10.3
|
8/30/07
|
||||||
10.78
|
Warrant
issued by NeoMedia to YA Global Investments, L.P., dated August 24,
2007
|
8-K
|
10.4
|
8/30/07
|
||||||
10.79
|
Repricing
Agreement, by and between NeoMedia and YA Global Investments, L.P., dated
August 24, 2007
|
8-K
|
10.5
|
8/30/07
|
||||||
10.80
|
Security
Agreement, by and between NeoMedia and YA Global Investments, L.P., dated
August 24, 2007
|
8-K
|
10.6
|
8/30/07
|
||||||
10.81
|
Security Agreement (Patent),
by and between NeoMedia and YA Global Investments, L.P., dated August 24,
2007
|
8-K
|
10.7
|
8/30/07
|
||||||
10.82
|
Sale
and Purchase Agreement between NeoMedia and Greywolf Entertainment, Inc.,
dated October 26, 2007
|
8-K
|
10.1
|
11/5/07
|
||||||
10.83
|
Definitive
purchase agreement between NeoMedia Technologies, Inc. and Micro Paint
Holdings Limited, dated November 1, 2007.
|
8-K
|
10.1
|
11/7/07
|
||||||
10.84
|
Distribution
agreement between NeoMedia Technologies, Inc. and Micro Paint Holdings
Limited, dated November 1, 2007.
|
8-K
|
16.1
|
11/7/07
|
||||||
10.85
|
Sale
of the Assets of the Micro Paint Repair Business Unit.
|
8-K
|
10.1
|
11/21/07
|
||||||
10.86
|
Share
Purchase and Transfer Agreement, dated January 31, 2008, by and between
NeoMedia and Bernd Michael.
|
8-K
|
10.1
|
2/8/08
|
||||||
10.87
|
Arbitration
Agreement, dated January 31, 2008, by and between NeoMedia and Bernd
Michael.
|
8-K
|
10.1
|
2/8/08
|
||||||
10.88
|
Secured
Convertible Debenture, dated April 11, 2008, issued by the Company to YA
Global Investments, L.P.
|
8-K
|
10.1
|
4/17/08
|
||||||
10.89
|
Secured
Convertible Debenture, dated May 16, 2008, issued by the Company to YA
Global Investments, L.P.
|
8-K
|
10.1
|
5/22/08
|
||||||
10.90
|
Warrant,
dated May 16, 2008, issued by the Company to YA Global Investments,
L.P.
|
8-K
|
10.2
|
5/22/08
|
||||||
10.91
|
Secured
Convertible Debenture, dated May 30, 2008, issued by the Company to YA
Global Investments, L.P.
|
8-K
|
10.1
|
6/5/08
|
||||||
10.92
|
Warrant,
dated May 30, 2008, issued by the Company to YA Global Investments,
L.P.
|
8-K
|
10.2
|
6/5/08
|
33
Exhibit
|
Filed
|
Filing
|
||||||||
Number
|
Description
|
Herewith
|
Form
|
Exhibit
|
Date
|
|||||
10.93
|
Settlement
Agreement and Release, dated June 3, 2008, by and between the Company and
William Hoffman
|
8-K
|
10.5
|
6/5/08
|
||||||
10.94
|
Resignation
Letter, effective May 22, 2008, executed by William
Hoffman
|
8-K
|
10.6
|
6/5/08
|
||||||
10.95
|
Settlement
Agreement and Release, dated June 2, 2008, by and between the Company and
Frank J. Pazera
|
8-K
|
10.7
|
6/5/08
|
||||||
10.96
|
Resignation
Letter, effective May 22, 2008, executed by Frank J.
Pazera
|
8-K
|
10.8
|
6/5/08
|
||||||
10.97
|
Employment
Agreement, dated June 10, 2008, by and between NeoMedia Technologies, Inc.
and Iain McCready
|
8-K
|
10.1
|
6/16/08
|
||||||
10.98
|
Secured
Convertible Debenture, dated July 10, 2008, issued by the Company to YA
Global Investments, L.P.
|
8-K
|
10.1
|
7/16/08
|
||||||
10.99
|
Securities
Purchase Agreement, dated July 29, 2008, by and between the Company and YA
Global Investments, L.P.
|
8-K
|
10.1
|
8/4/08
|
||||||
10.100
|
Secured
Convertible Debenture, dated July 29, 2008, issued by the Company to YA
Global Investments, L.P.
|
8-K
|
10.2
|
8/4/08
|
||||||
10.101
|
Security
Agreement, dated July 29, 2008, by and among the Company, each of the
Company’s subsidiaries made a party thereto and YA Global Investments,
L.P.
|
8-K
|
10.3
|
8/4/08
|
||||||
10.102
|
Patent
Security Agreement, dated July 29, 2008, by and among the Company, each of
the Company’s subsidiaries made a party thereto and YA Global Investments,
L.P.
|
8-K
|
10.4
|
8/4/08
|
||||||
10.103
|
Warrant
9-1A, dated July 29, 2008, issued by the Company to YA Global Investments,
L.P.
|
8-K
|
10.5
|
8/4/08
|
||||||
10.104
|
Warrant
9-1B, dated July 29, 2008, issued by the Company to YA Global Investments,
L.P.
|
8-K
|
10.6
|
8/4/08
|
||||||
10.105
|
Warrant
9-1C, dated July 29, 2008, issued by the Company to YA Global Investments,
L.P.
|
8-K
|
10.7
|
8/4/08
|
||||||
10.106
|
Warrant
9-1D, dated July 29, 2008, issued by the Company to YA Global Investments,
L.P.
|
8-K
|
10.8
|
8/4/08
|
||||||
10.107
|
Escrow
Agreement, dated July 29, 2008, by and among the Company, YA Global
Investments, L.P., Yorkville Advisors, LLC and David Gonzalez,
Esq.
|
8-K
|
10.9
|
8/4/08
|
||||||
10.108
|
Irrevocable
Transfer Agent Instructions, dated July 29, 2008, by and among the
Company, the Investor, David Gonzalez, Esq. and WorldWide Stock Transfer,
LLC
|
8-K
|
10.10
|
8/4/08
|
||||||
10.109
|
Letter
Agreement, dated September 24, 2008, by and among NeoMedia Technologies,
Inc. and YA Global Investments, L.P.
|
8-K
|
10.1
|
10/1/08
|
||||||
10.110
|
Second
Secured Convertible Debenture, dated October 28, 2008, issued by the
Company to YA Global Investments, L.P.
|
8-K
|
10.3
|
11/3/08
|
||||||
10.111
|
Revised
Exhibit A to Escrow Agreement, dated October 28, 2008
|
8-K
|
10.12
|
11/3/08
|
||||||
10.112
|
Letter
Agreement, dated March 27, 2009, by and between the Company and YA Global
Investments, L.P.
|
8-K
|
10.13
|
4/13/09
|
||||||
10.113
|
Amendment
Agreement, dated April 6, 2009, by and between the Company and YA Global
Investments, L.P.
|
8-K
|
10.14
|
4/13/09
|
||||||
10.114
|
Third
Secured Convertible Debenture (first closing), dated April 6, 2009, issued
by the Company to YA Global Investments, L.P.
|
8-K
|
10.15
|
4/13/09
|
34
Exhibit
Number
|
Description
|
Filed
Herewith
|
Form
|
Exhibit
|
Filing
Date
|
|||||
10.115
|
Waiver,
effective as of December 31, 2008, by and between the Company and YA
Global Investments, L.P.
|
8-K
|
10.16
|
4/13/09
|
||||||
10.116
|
Fourth
Secured Convertible Debenture (second amended third closing), dated May 1,
2009, issued by the Company to YA Global Investments, L.P.
|
8-K
|
10.15
|
5/7/09
|
||||||
10.117
|
Agreement,
dated June 5, 2009 (Additional Agreement), by and between the Company and
YA Global Investments, L.P.
|
8-K
|
10.16
|
6/5/09
|
||||||
10.118
|
Fifth
Convertible Debenture (Additional Agreement closing), dated June 5, 2009,
issued by the Company to YA Global Investments, L.P.
|
8-K
|
10.17
|
6/5/09
|
||||||
10.119
|
Agreement,
dated July 15, 2009 (Second Additional Agreement), by and between the
Company and YA Global Investments, L.P.
|
8-K
|
10.18
|
7/21/09
|
||||||
10.120
|
Sixth
Convertible Debenture dated July 15, 2009, (Second Additional Debenture),
issued by the Company to YA Global Investments, L.P.
|
8-K
|
10.19
|
7/21/09
|
||||||
10.121
|
Agreement,
dated July 17, 2009, by and between the Company and Silver Bay Software,
LLC.
|
8-K
|
10.20
|
7/21/09
|
||||||
10.122
|
Agreement,
dated July 17, 2009, by and between the Company and Mr. Greg
Lindholm.
|
8-K
|
10.21
|
7/21/09
|
||||||
10.123
|
Non-Exclusive
License Agreement between the Company and Mobile Tag, Inc. dated July 28,
2009
|
8-K
|
10.1
|
7/30/09
|
||||||
10.124
|
Agreement
dated August 14, 2009 (Third Additional Agreement) by and between the
Company and Y.A. Global Investments, L.P.
|
10-Q
|
10.124
|
8/14/09
|
||||||
10.125
|
Seventh
Convertible Debenture dated August 14, 2009 (Fifth Additional Debenture)
issued by the Company to Y.A. Global Investments, L.P.
|
10-Q
|
10.125
|
8/14/09
|
||||||
10.126
|
Non-exclusive
License Agreement with exclusive right to sub-license provision between
Company and Neustar, Inc. dated October 2, 2009.
|
8-K
|
10.1
|
10/6/09
|
||||||
10.127
|
Non-Exclusive
License Agreement to use the Licenced Platform between the Company and
Brand Extension Mobile Solutions, S.A., a Madrid (Spain) corporation
(“BEMS"), dated October 7, 2009.
|
8-K
|
10.1
|
10/13/09
|
||||||
10.128
|
Settlement
Agreement and non-exclusive license and a sublicense between the Company
and Scanbuy, Inc., dated October 16, 2009.
|
8-K
|
10.1
|
10/20/09
|
||||||
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
X
|
||||||||
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
X
|
||||||||
32.1
|
Certification
of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
X
|
||||||||
32.2
|
|
Certification
of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
X
|
|
|
|
35
SIGNATURES
In
accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NEOMEDIA TECHNOLOGIES, INC.
|
|
(Registrant)
|
|
Dated: November 16,
2009
|
/s/ Iain A. McCready
|
Iain A. McCready
|
|
Chief Executive Officer
|
|
Dated: November 16,
2009
|
/s/ Michael W. Zima
|
Michael W. Zima
|
|
Chief Financial Officer & Principal Accounting
Officer
|
36