NeoMedia Technologies, Inc (NEOM)

[bleedingedge]

You have to factor in paying off the debts on the balance sheet first before anypayment flows through to preferred shareholders and then to common shareholders.

As of the last 10Q, total Liabilites was listed at $80.82 million. With $19.9mm for the Preferred Shareholders and $0.7 for deferred revenue, the other liabilities that need to be paid first totals $60.3mm. This includes $6mm in accrued expenses (bills not paid), $4.5mm in purchase price guarantee (12Snap sahreholder payments due), $29.4mm in debentures (YAGI), $19.2 in derivative financial instruments (YAGI), and $0.7 in deferred tax liability.

Here's the way it would work:
Acquiring company offers $100 total which includes paying off the debts/liabilities:
purchase price: $100mm
payment of current liabilities: <$60.3mm>
payment to preferred shareholders: <$19.9mm>
balance of proceeds to be distributed to common shareholders: $19.8mm or $0.004 per share @ 5 billion sahres (YAGI still has the warrants)

So in this example, the purchase offer would be made at $0.004/share plus the assumption of the liabilities for a total purchase price of $100mm.

Since YAGI's notes ($29.4mm) are secured by all of the assets of the company (not sure if the $19.2 in derivative financial instuments are also secured by the assets), you know that YAGI is going to take payment first to release the assets. Therefore, a $45mm nearly covers YAGI's hold and nobody else gets anything.