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Item 3. Default upon Senior Securities
NeoMedia is currently in default of:
(i) the Investor Registration Rights Agreement entered into on February 17, 2006, in connection with the $22 million Series C Convertible preferred Stock Sale,
(ii) the Investor Registration Rights Agreement entered into on August 24, 2006, in connection with the $5 million secured convertible debenture,
(iii) the Investor Registration Rights Agreement entered into on December 29, 2006, in connection with the $2.5 million secured convertible debenture, and
(iv) the Investor Registration Rights Agreement entered into on March 27, 2007, in connection with the $7.5 million secured convertible debenture.
As a result, the Purchaser has certain rights with respect to the financing arrangements, specifically:
(i) the full face value of each instrument is callable in the aggregate amount of $36,616,000,
(ii) up to 325,000,000 warrants held by Purchaser with an exercise price of $0.04 can be exercised on a cashless basis,
(iii) the requirement for the Purchasers to maintain an ownership interest in NeoMedia of less than 5% is waived, and
(iv) NeoMedia is responsible for liquidated damages as required by each financing arrangement.
Sick.
(all figures based on the comparable quarter 2006)
Revenues doubled.
Cost of goods sold nearly tripled.
-------------------------------------
Gross profit rose by about a third.
Sales & marketing costs dropped by a third.
General & Admin cost nearly doubled.
--------------------------------------
Operating losses increased by about 20%.
Net operating losses increased nearly 7000%.
Net losses increased about 1000%.
Based on the burn rate in Q1 2006, all else remaining the same, NEOM will need a capital injection by the end of May
Anyone remember the
spin on the acquisitions posited by many here?
"The fact the acquired companies accepted partial payment in NEOM stock is a ringing endorsement of Neomedia's future prospects".
This line was parroted over and over as the reason to remain optimistic about an investment in NEOM. I often wonder who initially seeded the meme with this notion. Was it someone on the inside?
It did a good job of keeping people distracted from digesting the ludicrousness of the top-off agreements embedded in everyone of the acquisitions (maybe excluding BSD, I forget).
So to review - no, accepting stock was not a ringing endorsement of Neomedia in light of the fact that those receiving the shares were immune to downside risk via the top off agreement.
05/24/07 - 12:50 PM
kokonutguy,
My effort here is not to prove "them" wrong - no, it is an endeavor to outline exactly why "they" have been wrong from the beginning, are wrong now and will continue to be wrong in the future should shareholders continue to accept the abuse.
Neomedia is a virtually bankrupt company that had pledged everything it has to a notorious vulture capital firm for piece-meal cash that is barely enough to keep the lights on for the remainder of the year. What more needs to be proven "wrong"? Sure, we can deal in fiction and hypotheticals and pretend in the future everything will work out but that certainly isn't a successful approach toward investing, is it?
You are interested in NEOM's future because of your investment in the company, right kokonutguy? You are a shareholder of NEOM? You did buy your shares on the open market like every other retail shareholder, right? That Cornell money isn't indirectly trickling into your bank account is it? It better not be.
If you are truly a retail shareholder, it is certainly odd that you do not find the systematic erosion of the value of your position alarming in the least bit. Instead you've adopted a position whereby you are an apologist and pollyanna for all things NEOM. It's always sunshine and rainbows in NEOM-land, eh? Pay no attention to those abysmal financial filings behind the curtain - they're "old news", it's "boilerplate language", "management says" things have changed. Hmmm...
Please show me an example of a cutting edge website please.
I design websites - I am certified in CSS and XHTML - and would be curious as to what the laymen considers a cutting edge site.
May I ask you a question? Have you ever viewed the source code of a website - do you even know what it is or how to access it from your browser?
Oh, incidentally, my blog site is a prepackaged template provided by the blog platform Wordpress. I have no control over the layout, only the content.
As to your quip about venture capitalists - you're dead wrong.
I never implied that I can, nor endeavor to do, a better job.
I am simply sharing my opinion on this board. My opinion is that it can and is being done a better way, by more than just a few companies.
I expressed some doubts regarding announcemobile. A company offering "bleeding edge" technological solutions should itself be employing the latest technologies available - announcemobile is not.
Announcemobile's face, the company's corporate website, is a out-of-the-box template utilizing table-based design structure. Astute companies seeking high technology software services will often check the source code and whatnot of prospective service providers. One look at announcemobile's source code and astute companies will seek solutions elsewhere.
The same can be said of Neomedia's web site. It is outdated and full of trashy flash media "bling". It is neither optimized for search engines nor speaks of a firm on the cutting edge. Mobile barcodes are web 3.0. A company purporting to offer a solution for mobile barcodes at the very least should have a "face" that screams "we are on the cutting edge". But then again, NEOM expenses far more in SG&A than R&D and that is all anyone really needs to know.
BTW, I created a community a "qoders" community at Ning.com. All are free to join and interact if they are so inclined.
http://qoders.ning.com/
You are the one cross-posting rebuttals and what not.
I'm not worried, but your actions imply that you are.
Sorry, but your statements only go to demonstrate your ignorance on the subject.
Any brand, media company, ad agency or whoever looking toward the future certainly will be concerned about the mark-up structure of their mobile assets.
Sites created based on the W3C's standards regarding the separation of content and mark-up, a standard which promotes device-independent accessibility, are positioned for the future and will require less recoding as mobile browsing applications change and evolve.
So, yeah, companies that want to spend money coding and recoding their entire presence every eighteen months may not care about design practices with an eye toward the future.
Smart and savvy CTO/IT managers, etc. will ensure that their company's web assets are cutting edge - not only for future compatibility issues and search engine optimization but because up keep and maintenance will cost much less.
Funny stuff coming from a guy heading a company with a corporate site utilizing a table-based design.
And I was not discussing embedded applications like games or what not, I was talking about the mark-up used to structure the site.
As far as I know, announcemobile is not a mobile application developer. The company, upon request, will construct a three page website for $750-$1000. Doing this is not some herculean task - basically just some div tags that content is then dropped into.
Modern web design techniques require a separation of content and mark-up. Announcemobile's corporate site does not embrace these techniques but relies on a mark up structure that is neither search engine friendly, device-independent nor validates with the W3C.
I cannot image anyone serious about building a mobile presence would contract out work to a company that still embraces old mark-up techniques on their own website.
Jeff should spend less time blogging and more time educating himself on the modern internet.
I am throwing my hat into the mobile barcode blogging space.
Here is my humble submission.
http://nostrils.wordpress.com/
Thanks for that information, Doc.
$750-$1000 for a three page mobile site is a little steep. A mobile site is really no different than a regular site other than a little code tweaking to reduce overall page weight.
I find it interesting that "Jeff" is in the mobile space but announcemobile's corporate page is coded using tables to structure the content.
Marking up websites using tables is the antithesis of modern HTML (or XHTML). Most savvy and progressive web designers have moved to a CSS solution to position content. CSS positioning was invented and introduced by the W3C to set design standards that support device-independent accessibility.
The blog at announce mobile uses CSS positioning but I've always suspected it is built on the Wordpress infrastructure using one of the many free templates available. With that said, and if my suppositions are correct, "Jeff" is in breach of a copyright by failing to attribute the template to the designer.
The biggest slap in the face was when "Jeff" stated NEOM management is too busy to provide shareholders timely updates beyond the quarterly "feel good" calls.
I ask then, why then does the company retain the services of a third party PR firm?
The company is too busy to keep shareholders abreast of goings-on but can spend time holding court with an individual who probably spends hours a day writing and responding to blog posts. The same individual whose company boastfully announced a partnership with a website that distributes mobile ring tones (ring tones targeted to the "redneck" market nonetheless-LMAO).
Somebody tell "Jeff" that ring tone sites are so 2004. Every webmaster worth his salt has 100 or 200 ring tone sites.
You are correct.
However the implication was, at least how I read it, "many retail shareholders", or individuals who are not affiliated with the company beyond their status of shareholder.
The assertion that certain individuals are made privy to material, inside information has been made on this board many times in the past.
In fact it is an all to common trait among penny stocks to leak information to certain shareholders who then pass the information downstream until it reaches message boards like this one - often twisted and reframed many times over, like the old telephone game.
Sometimes these shareholders are actually being used - like tools - by company insiders to spread unsubstantiated claims to the investment community. These electronic message boards are the new boiler rooms.
You're making a pretty alarming accusation when you assert:
There are many shareholders that know things that you don't. The key is that they don't act on that information, a.k.a. buy or sell shares.
In fact, you are accusing Neomedia management of violating Regulation FD.
And "not acting" on the news means little, really. Inaction is just as dubious as action when in possession of material, inside information as you seem to suggest a select few shareholders are made privy to.
I've passed this issue onto my contact with the SEC. While I expect nothing to happen it is important that the proper regulatory authorities are made aware of the situation.
Boiling it down.
"Jeff's" statement of facts:
http://blog.announcemobile.com/
>> First and foremost, there are a couple “outside” factors that are out of NeoMedia’s and Announce Mobile’s control that I can not discuss that are currently inhibiting their ability to deliver.
>> [T]he biggest holdup of getting the application to the phones is not with NeoMedia, but with the carriers.
>> We are going to start seeing a lot more involvement from Gavitec and there will be much movement in this area.
>> Gavitec and NeoMedia are actively working on [a universal reader] and there is currently one version in beta testing right now with more to follow shortly.
>> There are customers and opportunities in the pipe and some actively being worked.
>> NeoMedia will be moving their headquarters.
Those 10Q's are restatements of prior quarters.
Please recall that NEOM uncovered material weaknesses in the company's accounting procedures. Basically the numbers out of the telecom unit were bogus and overstated. The filings you see are restatements of all affected periods.
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Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review
On April 2, 2007, management of NeoMedia Technologies, Inc. (the “Company”) concluded that financial statements issued in the Company’s Forms 10-Q for the three month period ended March 31, 2006, the three and six month periods ended June 30, 2006, and the three and nine month periods ended September 30, 2006, should no longer be relied upon because of an error in such financial statements. In addition, financial statements of BSD Software, Inc. filed in the Company’s Form 8-K/A for the years ended July 31, 2005 and 2004, and for the three and six months ended January 31, 2006 and 2005, should not be relied upon.
The Company, in reviewing its accounting practices with respect to revenue recognition of its subsidiary NeoMedia Telecom Services, became aware that it incorrectly applied the principles of EITF 99-19, “Reporting Revenue Gross as a Principal versus Net as an Agent.” As a result, the Company had overstated its net sales and its cost of goods sold reflected in the consolidated statement of operations during the three month period ended March 31, 2006, the three and six month periods ended June 30, 2006, and the three and nine month periods ended September 30, 2006. The adjustment does not affect net income (loss) during any period. The adjustment does not affect the previously reported consolidated statement of cash flows or consolidated balance sheet.
The NeoMedia Telecom Services business was acquired on March 21, 2006 through the acquisition by the Company of BSD Software, Inc. Therefore, the adjustment does not affect any results reported by the Company during the years ended December 31, 2005 or 2004, or any interim periods during 2005 or 2004.
As a result, the Company has restated certain financial information that was previously reported in its quarterly reports on Form 10-Q for the three month periods ended March 31, 2006, June 30, 2006, and September 30, 2006.
The audit committee of the Company’s board of directors discussed the restatement with the Company’s independent accountants.
The Company intends to file amended Forms 10-Q for the three month period ended March 31, 2006, the three and six month periods ended June 30, 2006, and the three and nine month periods ended September 30, 2006 as soon as practicable hereafter. The Company also intends to file an amended Form 8-K with restated financial results for acquired subsidiary BSD Software, Inc., as soon as practicable hereafter.
Actually, while having benefits, software consortiums typically "fail".
They do well in bringing the best-of-breed together into one place - but rarely, if ever, are true standards developed in the name of these things.
It is important to understand that mobile readers do not require a physical infrastructure build out. We are talking about device-wide software solutions. There won't be any "qode-enabled cell towers" or "qode-enables optical wiring".
Qode is ENTIRELY consumer-driven - meaning qode's market is likely to be fragmented and comprised of a number of competitors.
I see qode, and other mobile readers, much like I see the web browsers (Opera, Firefox and Internet Explorer) I use on my computer. Different and unique software to resolve the same computer code. Netscape was once a public company, Microsoft once sold IE as a packaged software in BestBuy - looking back, how ridiculous is that business model?
NEOM's model going forward should be self-evident, yet the company has consistently failed to execute while resting on it's (patent) laurels.
Sorry, that isn't going to work in a technology world becoming increasingly open-source. Maybe in five years when the stock is trading at $0.00005, mobile barcodes are as normal as clicking on a hyperlink and everyone has forgotten NEOM they can try the patent route again for a 10 to 100 bagger.
Until then, well, good luck to you.
Honestly, forcing NEOM to rely less on the company's patent position is probably the best hope for shareholders -- assuming the company can execute in the market without the patent crutch.
IMO, NEOM management has wasted a tremendous amount of time and opportunity sitting on it's hands waiting for others to develop the market and theoretically infringe on the company's patents.
They've wasted this time because evidently the managers of the company did not think it urgent to get a product out because the company "owned the bridge" - A bridge they believe and still believe the courts will uphold, forcing all who have crossed and will cross to pay a "toll".
But the times they are a changing.
As information technology blossomed in the mid-to-late nineteen nineties and in the early millennium, the U.S. patent office was overwhelmed with applications. This is a government agency we are talking about here - imagine the DMV but instead of high school-aged employees running the show, scientists who could not cut it in academia or the corporate world press the stamp against the paper. In response, the USPTO haphazardly approved many patents that probably would not have passed the smell test in a normalized environment. Apparently, and thankfully, they are willing to reconsider - willing to admit mistakes were made during unprecedented times and correct for those mistakes.
As consumers, as individuals who operate in the economy on a day to day basis, this apparent trend toward reassessment will prove to be incredibly beneficially over the long run.
True, true.
But those guy's are usually either really, really dumb (patsies) or really, really greedy. In the case of the latter, they're trying to ascend into the wealth stratosphere - the 100s of millions of dollars level.
The other dudes are just only kind of greedy. They're happy with their $10 or $20 million and stay under the radar.
It's not really that difficult. Adopt Straussian philosophy, build a solid network of like-minded individuals, buy a portfolio of useless patents, mining rights, et al., make sure you keep your accounting and legal issues above board, develop a "marketing" network and, if you can remain content with ten or twenty million, retire comfortably.
Here ya goes, Jonesie...
Something to chew on.
Notice how the stock reacts to Cornell news. This is news that is often released after the fact in a filing, citing recent placement dates.
Most notably, to my eyes at least, is on the seventh day after the placement the stock the stock puts in a large marubozu candlestick. Day eight is marked by a "black" candlestick which represents an up day but one where the close was lower than the open. Day nine marks the end of the move.
It would be interesting to go back and observe the market gyrations during similar periods.
So the real key to gaming NEOM on a short term basis is procuring (inside) information pertaining to when Cornell is making a move. It appears, based on a cursory review, that everything else - rumors of "big news", conferences, et al. - is just noise.
Oh yeah, I looked at my notes regarding double-bottoms. Failed double bottoms often retrace 1.5 times the length of the move off the bottom. Or, in the case of NEOM, roughly 0.07 - ((0.07 - 0.04) * 1.5) = 0.025
(top minus ((top minus bottom)) times 1.5) = target
Jonesie,
I don't see any definitive, tradeable pattern on the charts.
All else remaining the same, it looks like a failed attempt at breaking out of a one year down trend (the slope of NEOM's downtrend steepened in Q1 2006 - creating a "new" trend).
Basically, at this time, I have nothing to predict. I suppose my original rules can apply - C(3) > 50dEMA = Buy | C(1) < 50dEMA = Sell.
In any event - the stock should not break too far below $0.04 until NEOM needs to hit her sugar daddy up for more money. Then it can drop another rung as everything outstanding is repriced and the cycle renews.
Please refresh me on what exactly you are disputing.
Really, it is a simply process. Believe me, I've been in the finance industry in a number of capacities and have seen how it operates.
It probably looks something like this:
Cornell gives NEOM money.
NEOM gives Cornell convertible securities that have an annual yield and convert at a discount to the market (a.k.a floorless, toxic or death-spiral convertibles).
This paper creates an incentive to short the stock.
For example, I hold some hypothetical paper that converts at a 97% discount to the lowest bid over the last 30 trading days.
The stock price is currently trading at $1.00. The company is virtually bankrupt and I know they have no where else to turn but me if they endeavor to continue operations. Management is inept if not totally corrupt. They are right where I want them.
So I begin shorting - ten thousand here, one hundred thousand there. Six months have passed and the combined effects of my shorting and a garbage company led by crooked fools has dropped the stock price to $0.50. The cost basis on my total short position however - since I slowly scaled in - is $0.66.
I have an outstanding short position of, say, 1,000,000 shares at a net cost-basis of $0.66. I can now offset my short position by exercising my convertible at $0.48 (0.97 * 0.50) for a $0.18 or 28% gain ((0.66-0.48) / .66 plus any yield the convertible paper may have carried minus the carrying-costs on my short).
I've just netted a 30% gain in six months at - and this is important ..
wait for it...
wait for it...
no financial risk.
As long as my short position can be completely offset by my convertible position, I can't lose. My total downside is the yield on the convertible minus the carrying-cost (margin rate) of the short position. This is usually positive by 300-500 basis points if I am a big enough player and thus can demand low margin rates.
Okay, but Cornell no longer can short, nor can their "affiliates". Big deal. There are hundreds if not thousands of firms who do the convertible arbitrage trade. So Cornell then acts as a broker/dealer. They structure the financing, take receipt of the paper and then distribute it at a nice profit to unaffiliated parties who engage it what I described above.
This is not some conspiracy theory I am positing, this is finance 101 - this is the market. It happens all the time - even with big companies. I dabbled a bit in the market back in 2002- early 2003 when large(r) companies were forced to issue convertible paper due to high and rising credit spreads (i.e. issuing traditional debt was prohibitive given the rates the market was then demanding).
It was free money but that was the price back then when these corporations wanted/needed to access capital. They got their capital, we got our arbitrage opportunity, common stock holders got the raw end of the stick. Some of the companies eventually went bye-bye, others have completely recovered, retired the outstanding convertible paper and made longer term shareholders "whole". And the beat goes on...
Some here have wondered why NEOM just doesn't ask their current retail shareholder base for capital. Why can't I participate in the convertible offering they ask. Why? Because it is in high demand. Toxic convertible paper issued by a company with a relatively liquid market for it's common stock and an upside-down balance sheet is like printing money. It's even better when there are active "recruits" hyping the stock, ensuring a fairly deep bid.
Thanks.
Cornell's growth has been phenomenal in light of the fact the firm did not exist until 2001. No doubt their success is in no small part a result of their wicked - yet savvy - interaction with struggling public companies and the corrupt/inept executives that steer them.
It would be interesting (and a chore) to total the market capitalization of the combined companies at the time of the issuance versus the current combined market capitalization.
That would provide clearer picture on how much equity - in real dollars - Cornell has been successful in extracting.
Edited to add:
Also interesting would be a study in an effort to define what quantifiable qualities, if any, the companies that have not been crushed possess relative to the rest.
Well, according the Section 4, item L of the Securities Purchase Agreement dated August 24th, 2006:
Neither the Buyer(s) nor any of its affiliates have an open short position in the Common Stock of the Company, and the Buyer(s) agrees that it shall not, and that it will cause its affiliates not to, engage in any short sales of or hedging transactions with respect to the Common Stock as long as any Convertible Debentures shall remain outstanding.
What is interesting, however, is of all the items under Section 4, only item L is not preceded by an underlined title. Attaching material meaning to underlined versus non-underlined items is a stretch, obviously. However, it is both peculiar and curious.
See page 13 here:
http://www.sec.gov/Archives/edgar/data/1022701/000114420406036417/v051592_ex10-1.htm
There are previous financing arrangements with Cornell however that do not contain language restricting short sales and hedging actives but in fact the language is consistent with allowing for hedging activities - i.e. shorting against the box.
With that said, the covenants define affiliate as follows:
“Affiliate” for purposes hereof means, with respect to any person or entity, another person or entity that, directly or indirectly,
(i) has a ten percent (10%) or more equity interest in that person or entity,
(ii) has ten percent (10%) or more common ownership with that person or entity,
(iii) controls that person or entity, or
(iv) shares common control with that person or entity.
“Control” or “controls” for purposes hereof means that a person or entity has the power, direct or indirect, to conduct or govern the policies of another person or entity.
This blurs the line on short sales. While neither Cornell nor Cornell's affiliates are permitted to short or have open shorts in NEOM, it is certainly possible for Cornell to dump the paper to other, non-affiliate parties who indeed do short-sell NEOM to hedge against the risk of holding the convertible paper.
In fact, given that Cornell continually includes language restricting itself from owning more than 4.99% of NEOM's outstanding shares - and thus falls outside the boundaries of a majority stake holder and therefore does not need to report transactions with the SEC - it is likely that Cornell is indeed off-loading a great deal of its NEOM paper to unaffiliated parties in private transactions who are in turn shorting against the box to lock in returns or hedge risk.
It is likely that Cornell acts as a intermediary - or broker/dealer - in many of these instances. They provide the initial capital and then offload the paper for a quick profit to the many, many firms specializing in convertible arbitrage.
As of the fiscal year ending in 2006...
The combined business of NEOM and Gavitec, NEOM's "core business" which excludes all other assets, lost $200,000 on a gross basis (before operating and other costs).
Stated as simply as possible, every time NEOM+GAV sold $1.00 it cost the combined companies $1.13 before accounting for stuff like sales, general and administrative costs, interests costs, etc.
So to answer your question - no, as of 2006 NEOM has not made money. In fact the company has yet to execute on a business model where the cost of goods/services sold is less than the value received for said goods/services.
What does that mean??? Probably a big bonus for NEOM executives in 2007!!!
Beam,
I am not interested in reading articles about hedge funds. I am asking for you to clarify your statement regarding hedge funds as "evil doers".
I am well versed on the topic of hedge funds. I know that they are not agents of some mysterious industry that lurks in the shadows, looking to destroy public companies. They are simply an alternative asset class serving accredited investors.
The original definition of a hedge fund surrounded the industry's propensity to invest in assets that often traded inversely to the stock market, providing their investors a means of hedging against market risk. However with modern finance and technological advancement the industry has fragmented greatly and today a "hedge fund" can mean virtually anything. In fact, as of last month - "hedge funds" were net-long U.S. equities; a position that flies in the face of the traditional definition of a "hedge fund".
Cornell, I guess, might fall under the definition of a hedge fund. I consider Cornell to be a "vulture capital" fund. It seems that Cornell is quite active in toxic financing of struggling companies. Cornell seems quite adept at finding stocks that have moved higher in spite of underlying fundamentals. Cornell provides funds to these companies in consideration for certain rights which create an incentive to short-sell the company's stock.
It's a win-win for all but the retail shareholder. The executives of the public companies receive a cash windfall that more often than not is used to subsidize their salaries while Cornell receives certain securities that guarantee a return on investment in conjunction with providing a opportunity to profit as the stock price regresses back toward it's fundamental reality.
I'll hit you up with via email sometime this week.
In the meantime - it looks like Dodge is no longer on the Automart board.
http://www.automart-china.com/Advisory_Board.html
Refkin (Thornhill), Sada (Micropaint Mexico), Hunter (NEOM Chief Scientist) and Steinborn (Gavitec) are still there however.
It was clear as crystal, to myself at least, the moment I originally reviewed NEOM's financial statements what the company was and where it was headed.
It is so interesting to track the career paths of the players behind these things. Most people settle into a industry but these guys play so many different roles in disparate industries throughout the course of their professionals careers.
CPA at so-and-so accounting firm.
CEO of electronics manufacturing company.
Partner in a land development company.
President of a medical supply company.
Board member of a mobile device company.
They have a laundry list of career changes yet are seemingly successful business men. But the interesting aspect is the public companies they head are almost always consistently money losing operations and ultimately become worthless paper.
I have a theory or three on why this is so but I am hesitant to posit it on this board.
Would you expound upon your definition of an "evil doer" in relation to the hedge fund industry?
I'm confused about your position, specifically whether you are stating either all hedge funds are evil doers or some hedge funds are evil doers.
If the latter, what is your take on NEOM choosing to seek financing from an "evil doer" hedge fund opposed to a non-evil doer?
Interestingly enough, one of NEOM's board members, the company's current President and interim CEO, also serves on the advisory board for a firm that provides Stock Equity Distribution Agreement (SEDA) financing, among other services (non-recourse stock loans-read all about them), to public companies.
One's curiosity is piqued when considering this fact in light of the crushing financing terms NEOM accepted from Cornell.
One begins to wonder whether there is a conflict of interest between Mr. Fritz serving as President and CEO of NEOM and on the advisory board at this company:
http://www.usbusinessfinance.com/fritz.html
http://www.usbusinessfinance.com/
Did U.S. Business Finance (USBF) act as an placement agent, or in any other capacity, between Cornell and NEOM? Alan Refkin of Thornhill Capital fame was also at one time on USBF's advisory board. Was Thornhill and intermediary as to disguise or avoid the perception of a conflict of interest?
Has anyone ever inquired about Mr. Fritz's involvement with USBF?
Wow, this company looks compelling given stated financial projection and growth rate.
Indeed, it is not a widely known stock - especially in light of the difficulty in finding a chart for it.
But then the longer it flies under the radar the more time we have to accumulate a nice position! :)
Your math is fine...
but, personally, my rule of thumb regarding triple bottoms (or tops for that matter) is there is no such thing as a triple bottom.
There are inverted head and shoulder bottoms, but they are better defined as a bottom bookended by higher lows.
Head and Shoulder (inverted).
\ /
\ /\ /\ /
\ / \ / \ /
\/ \ / \/
\/
\
\ /\ /\
\ / \ / \
\/ \/ \
Relaywing, that's funny...
I always considered "O'Really" a Cornell actor, the hatchet man, in fact.
Odd that you say the same about "RP". I suppose they both serve similar but unique purposes.
My turn-around proposition:
1.) Fritz, Dodge, Barcaly and Keil are shown the door. They can take what they've garnered so far and ride into the sunset. I'll even compromise and allow one of the four to remain on the BOD.
2.) Concurrently, an entirely new management team is introduced into the fold. This will only happen if the technology is really all that it has been billed to be and the parasites of old are completely washed from the balance sheet.
3.) Move the company HQ to silicon valley. This Florida business is as bad as being stationed in Utah, Arizona or Nevada. Come on!
To reiterate at this point: dump all but one of the BOD, bring in a new team with fresh financiers and move the company to a technology hot spot where better synergies can be developed and exploited.
4.) With Cornell, the Fritz family and their cronies, and the aura of a Florida corporation (*cough* white shoes *cough*) out of the picture, begin reassessing the staff at the company. Are they truly engineers or are they arse kissers to power? At this point I am uncertain?
5.) A total realignment around the technology. Dump all but those most closely associated with it. Seat fillers need not apply, only those engineers and programmers who understand the nuances of the technology should be made part of the future company. Not only that --- they should be promoted into positions of Vice Presidents and what not, as long as they remain dedicated to their craft.
I look at NEOM's web presence and I wonder if they have a clue. Some dude out of Dubai, a HACKER nonetheless, is nearly equally positioned on Google for the search term qode. His endeavor is to find EXPLOITS! A worthy and necessary endeavor indeed but something that speaks to qode's true position - i.e. none.
If -- and this is a big IF since I am beginning to doubt that NEOM, the public corporation, has any real mobile barcode solution -- is sitting on the real thing then why be inert? Get out there. What do you have to lose? Give it away for free! Free barcodes, free mobile readers, free backend solutions. BE the company that spearheads the advance opposed to the company seen as attempting to stifle innovation.
It seems so obvious, doesn't it? So we reasonably ask -- why haven't they? I can't fathom why, it's so spooky.
Jonesie,
I've been meaning to ask you why you favor a linear scale over logarithmic?
Linear seems more suited for shorter time frames given the longer term propensity toward exponential movement - i.e. a $8 stock must move $0.80 for a 10% gain while a $80 stock similarly moves $8. Though the percentages are the same, on a linear scale the differences are exaggerated.
That's why NEOM's linear chart looks so goofy with the illusion of massive volatility at higher levels and flat trading at lower levels, when in reality the the volatility has remained relatively consistent. The average daily percentage move has dropped 1% to 4.5% since reaching a peak of 5.5% in mid-2005. A linear scale distorts this relative consistency.
Anyhow, just some food for thought.
Oh yeah, my "technical" reading ability increased dramatically when I finally ditched the secondary-indicator "training wheels". They can be useful when developing an automated trading system but when trading on a discretionary basis I find that they often just confuse things.
If you're interested in really polishing your skills I recommend Steve Nielson's book on Japanese Candlesticks (the title escapes me at the moment) and Dr. Alexander Elder's Trading for a Living. The latter, IMO, is a must read for anyone actively participating in stocks. The title doesn't do it justice as it is less about trading for a living and more about developing an overall trading/investment plan - from a system to psychology.
Cheers,
ASN
If you by air pocket, you mean a precipitous, violent drop ..
these pump and dumps rarely trade in that fashion.
It is advantageous and far more profitable to methodically drain the "patient" of "life" opposed to simply pulling the plug.
The favored model, put simply, is:
1.) Develop a vibrant online following.
2.) Run the stock up on rumors of "big news" to embolden the current following and attract fresh money. This helps to create a sense of positive reinforcement of the "herd's" decision making. It also helps to create a "guru class" in the eyes of the new investors. These "gurus" will help immensely when it is time to cash in.
3.) When a sustainable base of shareholders is achieved, begin the cash out process by forging deals with vulture capital firms. i.e. Accept chunks of money in consideration for assigning certain rights that create incentives to systematically short the stock (convertible paper equipped with moving conversion levels is current one favored method of achieving this).
4.) Work in concert with your new financial partners to assist them in extracting full value. This is accomplished through "dangling carrots" and "leaked news", here the "gurus", acting as conduits, can be of immense assistance. Important- the future must remain optimistic but always a moving target - "the big news is coming, we know it is, we just can't put our finger on exactly when to expect it. Don't worry about the stock price, go mow the lawn. Etc.". Message boards are the preferred conduit, though emails and spam can be employed to supplement the operation. The endless cycle of hype and letdown is beneficial to both parties as the financiers get the greatest possible return on investment while insiders receive follow-on offerings (more money).
5.) Never retreat, never surrender. The resolve of shareholders must be broken, their pride crushed and their financial losses so great that they never speak of them lest they risk facing further humiliation and embarrassment from friends, family and others they've persuaded into the stock. This serves as a protective measure to keep legal and regulatory pressures at bay. It feeds on the psyche of the average OTCBB "loser"; specifically the "gamblers" the market tends to attract - those who only speak of their winnings and keep silent about losses. Hey, they were not sophisticated enough to avoid the trap you set, so they are unlikely to be sophisticated enough to see through the endless smoke and mirrors constructed to obfuscate the operation.
6.) If followed correctly, fortunes amass and your antagonists - the shareholders you've bilked of their savings - rendered impotent by embarrassment and humiliation. Simply keep repeating "We're all losing here. No one is happy with the outcome so far but there is nothing left to do but hold out hope for better times".
7.) If young and greedy enough, reemerge, rinse and repeat in a new venture. Preferably a completely different industry, under a new alias (or better, behind the scenes).
There you have it, the seven steps to making a fortune in penny stocks.
Chart Update:
The effort to gap below the 50 day EMA and ST uptrend line, in conjunction with the lower cycle high, is ominous.
Notice the matching gap above the 50 dEMA that sparked the recent dead cat bounce.
Also worth noting, particularly to those who dismiss TA, is the Feb/Mar double bottom that reached it's target within five one-hundredths of a penny. 0.056 + (0.056 - 0.039) = 0.0725.
This stock is pretty easy to game if you are willing to bet large amounts in a relatively illiquid market. I don't recommend it as scaling into and out of positions at advantageous prices probably proves to be difficult given the company's OTCBB status.
Anyhow, just monitor the conversion levels of Cornell's holdings (warrants and convertibles) and trade around them. The move to $0.07 certainly provided Cornell a nice little opportunity to offset parts of their potential common stock position, no?
Declining liquidity is terrible news for Neomedia.
The only way Cornell will continue to pay NEOM executive's salaries is if they are provided a liquid market into which they can hedge their positions (i.e. short against the box).
No liquidity means Cornell's risks increase dramatically - which likely will mean the spigot is turned off for NEOM or Cornell demands even more "vig" in the form of even higher rates and warrant sweeteners.
If Billfold Gates..
had even an inkling of interest in NEOM; why was the company signing highly dilutive, shareholder eroding financing arrangements with a well-known vulture capital firm concurrent with the rumor of percolating MSFT interest?
There is a reason this stock is trading just north of a nickel, down over 90% from it's highs just two years ago and just above three year lows.
The argument that the market for the technology is fledgling and the stock market is unaware is complete balderdash. The market is a forwarding looking mechanism. The stock market takes flyers on techology that is years, sometimes decades, from producing an economic return. Case in point - biotech. There are biotech companies that generate zero revenue, and prospects for revenue generation seen years into the future, that attract billion dollar valuations.
The conspiracy regarding short sellers, competitors and bashers is just that - a conspiracy theory rooted in ignorance and paranoia. It is asserted to further obfuscate the reality of the situation and to insulate the true parasites of this company - current management and BOD - from justified condemnation.
The objective observers of this trainwreck see the problems, and cause of, quite clearly. Only those individuals blinded by their financial interest in the company, while probably buried in their positions, refuse to accept the impenetrable "truth".
The fact of the matter is the shareholders represented on this thread probably learned of NEOM through electronic message boards or from someone else who did. They were persuaded into this money pit through the misinformation and baseless speculation that is pervasive on penny stock message boards, this one included. It follows then since "they" were influenced by this board then others can likely be influenced as well. And the slippery slope of a ponzi scheme begins. Hence the near draconian censorship and attack dog response to opinion that may cast the company in a light other than some glorious company on the brink of making it's devoted followers millionaires many times over.
It's both sad and silly how group-think seeps into the financial decisions of individuals and these message boards are ripe with examples.