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Thanks.
This is a deep value play.
Market Cap - 106.5 million.
Cash & Equiv - 93.6 million.
To the contrary, I think NEOM desires the new CEO to have connections with potential investors.
In other words, NEOM hopes the new CEO will bring with him/her access to financing.
Fritz hinted to this point in the recent CC as one of the prerequisites for the position -- but the language is confusing. He may be referring to investment relation firms defined as entities that do IR and PR work for companies OR he may be referring to investment firms. The former doesn't make much sense since firms servicing as outsourced investor relations are a dime a dozen and it does not follow logically that the requirement of a new CEO would be possessing preexisting relationships with said firms. The latter makes a ton of sense but, again, I think this requires clarity.
"The number one thing we are doing is hiring a top level CEO who will guide the ship going forward. When I took this position it was announced as an interim position in order to right size and bring all the problems to bear and fix them and we are well down the road of fixing all the problems that we've had. We totally believe that the new CEO will bring with him a number of things: one, or her, one, credibility, two, additional management team, three, market presence, four, a Rolodex of people that they can call on and immediately help us in the industry, five, relationships with investor relation firms and so there is a number of things that will, that, that new person will help us with. And that is probably the number one thing, that, that will .. and you asked what was the number one thing, that was it."
I did not say a 99.5% success rate. I said a 99.5% degree of accuracy in determining the potential for success of microcaps.
What that means is my first filter splits the candidates between potentials and dogs. 99.5% of the stocks that fit into the dog column ultimately prove to be poor investments. Occasionally I miss something and one or two companies that in actuality should have fallen in the potential category get miscategorized as a dog.
This is an important distinction and a tip that potentially will save you from taking unnecessary risks: I look for reasons not to invest as my first step.
Most of the gambling types have 5 or 10 thousand burning through their pocket and they're looking for reasons to dump it into a stock. Wrong wrong wrong! I've been there, done that and lost a ton of cash in the process. The prudent question one should ask oneself is "why shouldn't I invest in this company" not "why should I invest in this company".
Once this initial screen is applied - your investment potentials normally represent about 10%-15% of your original basket of stocks. So if your original group was 30 companies, you'll be left with 3 to 5 potentials to further scrutinize. Of that number - depending on your strategy - you will be lucky to find more than two companies that truly warrant an investment.
My particular strategy - at least the one that works best for my goals and temperament - focuses on deep values in growth industries. Most are either potential turnaround plays selling at or below intrinsic value or undiscovered companies in growth industries. This works for me because I attempt to minimize my downside risk and will accept less upside potential to accomplish this goal. Others may be more accepting of beta in search for greater alpha.
EDIT:
Here is a link to my Marketocracy portfolio. As you can see - I out performed 98.9% of the other funds on the site over a two year period.
http://marketocracy.com/cgi-bin/WebObjects/Portfolio.woa/ps/FundPublicPage/source=CfNiAoHpDmInJnImMa...
Okay, I'm satisfied with my analysis of this company and very confident in my projection that Neomedia is effectively dead.
Retail shareholders will eventually lose the entirety of their investment in NEOM, it is just a matter of time.
I do not like to give explicit buy or sell recommendations but I will make an exception - you will be best served selling into any upside as the probabilities of a 100% loss are extremely high. It is better to retain some capital than lose it all holding out hope.
I'm sorry, but it is extremely unlikely that this ship can be turned around without totally eviscerating the retail shareholders.
The company is completely upside down and only a one-in-a-billion shot miracle will change this unfortunate fact. And that "shot" isn't a strategic investor or new management - it will require that the mobile barcode industry move from infancy to hypergrowth in an impossible period of time AND that Neomedia lie at the center of said growth. It is just not going to happen as this industry is still three to five years from beginning the upward ascent of the S-curve that defines the growth of any new technology.
For the sake of the decent folks here, and you know who you are, I hope I am proven wrong. I just don't think I am; I'm almost always right when it comes to penny stocks. I have a formula that is 99.5% accurate in determining the probabilities of success for micro-to-small cap companies. Maybe I'll sprinkle a few of my "secrets" here and there, we'll see.
Dark reality.
NEOM requires $3.5 million in capital per year just to satisfy the interest expense of the outstanding Preferred and Debentures.
$3.5 million is over two-times what NEOM's core business (qode + Gavitec) generated in aggregate sales - not profits, sales - in 2006 ($1,605,000).
Even more sick is the company reported a gross loss of $204,000 on $1,605,000 in net sales. That means for every dollar NEOM generates in sales the company loses twelve cents before accounting for operating and finance expenses.
Wait, I'm confused.
So O'Leary is the White Knight de jour? I thought it was "Jeff" and O'Leary was "yesterday's" savior?
What new management team and what new partner?
A new, strategic partner has been touted since 2005. Yet since that time NEOM has continued to dissuade new financial partners by handing Cornell an ever increasing ownership interest in the company.
It is going to take around fifty million dollars to remove the Cornell parasite from the company. That's nearly 66% more than the current market capitalization of NEOM.
At the current rate it would require about $65 million in capital to acquire only a $15 million dollar stake in NEOM -- assuming one would want Cornell off the books before taking a large interest in the company. Given that NEOM has a historical pattern of losses - spending $4 for every $1 in ownership interest is not an enticing proposition.
Here is a more likely scenario. NEOM is restructured. Cornell, in exchange for allowing the restructured company to retain unencumbered ownership of the intellectual property, is granted 84.45% of the outstanding stock with the remaining 14.45% allocated to FritzCo and current employees. 0.1% will go to the current retail shareholder base.
One more bar..
to retrace and the entire run will be unwound.
>
NEOM ended the third quarter of 2003 with 151.7 million shares issued and outstanding - equating to a market capitalization of about three million dollars ($3,000,000) at two-cents per share ($0.02).
If the shares attributable to the outstanding Convertible Preferred and Convertible Debentures owed to Cornell are included into the count - the float has increased nearly 1,000% in three and one half years while sales ($461,000 in Q3 2003 and $399,000 in Q1 2007) have declined about 15%.
I tried. I never got through even though a few callers got through more than once (which is curious enough).
EDIT: BTW, your post to me a couple weeks ago was a quality one. I never found the opportunity to reply. There wasn't much else to say other than to nod my head in agreement.
Bo, the problem is most of these businesses are shrewed when conducting their operations.
They make certain that all "i's" are dotted and all "t's" crossed. They are meticulous in disclosing the required statement of risks in their SEC filings.
The cost of running one of these things - beyond the, uh, uhm, "marketing" expenses - is largely comprised of paying the requisite tribute to the accounting and legal industries.
You stay consistent in paying tribute and you will largely be operating above board.
The only way the SEC can stop the flow of penny stock P&D's would be to make the regulatory filing costs extremely high - so high as to create disincentives. If it were to cost say $500K to get into the game, the risks would be elevated and much of the "profit" incentive wiped out. But it isn't going to happen.
I'm disappointed that no one asked on the CC whether executives at NEOM use their options or stock holdings in NEOM as collateral for non-recourse stock loans.
The capital firm where Charles W. Fritz sits on the Advisory Board offers non-recourse stock loans.
I'm also disappointed no one inquired into Fritz's role with said firm, US Business Finance, considering the company offers many of the financing options Neomedia is currently utilizing with Cornell.
I'm curious whether US Business Finance conducts any business with Cornell or Cornell affiliates.
Stock Loans let you tap your equity without selling shares!
http://www.usbusinessfinance.com/corpstockloans.html
http://www.usbusinessfinance.com/partners.html
Individual shareholders of public companies can gain access to cash with a NO MARGIN CALL stock loan collateralized against your public company stock. Aged affiliate or free trading common shares apply. Quickly obtain 35% to 80% of your stock's value on a non-recourse loan basis. Retain upside potential in your stock. But in the event of a price decline, you can walk away with no consequences. You will have created a hedge situation! Even if your stock is not eligible for a margin loan, it can often qualify for this aggressive program. Fees are paid only if your loan is completed. There are no credit checks or income verification!
When exactly was the din on the "next Google" hype reaching full pitch?
As is nearly always the case when one comes across statements such as "might be the next google or microsoft" - it is usually far more profitable to simply buy the Googles or Microsofts of the world than the companies expected to be "there" next.
>
>
Out of all the things to be upset about - a potential reverse split should rank last on the list.
Forward or reverse splits are simply window dressing and have no impact on the underlying business or company.
This is Finance 101 folks. If you cannot grasp this concept you should sell all of your self-directed investments and stick with mutual funds.
I edited
for grammar and syntax. The context and spirit of my post was enhanced.
Thank you for your candor.
It is disheartening to observe a company "piss away" a obvious market opportunity.
It is important to make the following distinction: qode is alive and well, it's success just won't -- and probably can't -- be shared with the traditional retail shareholder base.
Let me put it this way -- there is no way in hell I would install qode on my cellular phone. Not that I have anything to hide, I'm just a stickler for personal privacy rights.
Nice post.
However the tone of your message implies that your current economic downside in regards to a equity ownership stake in Neomedia is null. Am I correct?
And do you see why, "Jeff"?
FritzCo,
Big miss.
ALWAYS require that all contacts agree to non-disclosure agreements.
This is Elwood Norris 101.
Holy Cow - Dead Man Walking.
Here is a breakdown of the dilution in the pipeline attributable to Cornell. Remember, the paper that Cornell holds has varying conversion prices. Like the controversial "top off" agreements - there is no floor, thus Cornell bears no downside risk.
February 2006 $22 million Series C Convertible Preferred:
715,747,165
August 2006 $5 million Secured Convertible Debenture:
313,888,889
December 2006 $2.5 million Secured Convertible Debenture:
111,444,444
March 2007 $7.5 million Secured Convertible Debenture:
333,668,080
715747165
313888889
111444444
333668080
-------------
1,474,748,578 in pending common stock convertible from currently outstanding Debentures, Preferred and Warrant securities held by Cornell Capital and affiliates.
Of which 1,022,400,000 shares are attributable to securities with a floating conversion level of either 97% or 90% of the lowest closing bid over the last 30 days prior to conversion.
The second figure is the most important as that paper will eventually hit the market as it always converts at a discount to prevailing market prices. The first figure includes warrants which only reprice when NEOM requires additional capital.
Wow, so we can tack on another 40 million or so to the current market capitalization given the yet to be issued over hang of stock. To correct for this overhand, all else remaining the same, NEOM requires another 50% haircut in stock price.
Yet that presents additional problems, given the floating conversion rate, as the lower the stock goes the more common stock is required to satisfy the outstanding Preferred and Debentures.
Now we know why they call it Toxic or Death Spiral financing.
In light of this exercise - I don't buy the strategic investor hype. I can't imagine that any legitimate, reputable capital firm wants a piece of this mess. I also cannot imagine any credible CEO-type accepting employment with a sinking ship.
What a waste - this company, in its current incarnation, is dead.
Now we know why Buffett demands capable and honest management - to avoid getting his capital hamstrung in cluster$%s like NEOM.
Depends on your definition of value.
Considering the IP has never generated a positive economic return, one might argue the IP is currently worthless. What's the point of IP if it cannot be leveraged to generate a profit? But since the IP is positioned around emerging markets, this assumption is patently (haha!) unfair.
NEOM reports the carrying value of the IP at $2.7 million. Obviously this is also a inaccurate number as I believe it only reflects filing costs, purchase costs and/or development costs minus depreciation.
We can only ascertain a value based on the information we currently have available to us. That information indicates that the IP is currently less than "worthless" - that is to say it actually operates at a NEGATIVE gross margin. The pending legal issue with Scanbuy and the EFF's attempt to debunk the IP casts further doubts on the value of the patents.
If we were to speculate based on imperfect information, which is mostly what NEOM longs have been doing, we'd need projected industry volume and sales numbers, current competitors, emerging competitors, how the revenue will be shared within vertical markets, et al. This information is available but it does not come cheaply.
Net-net, and I think you'd agree, the IP is currently without value as it has yet to generate positive economic value, that is value defined as net income after all expenses.
Cornell.
It is in Cornell's best interest to manage a controlled downtrend with intermittent, short-lived price spikes.
There is still 36 million theoretical dollars in capitalization to siphon from this stock. The toxic convertible "game" is to grab as much of that figure as possible via death by one thousand cuts.
Reaching fair value in one violent move leaves far too much of that remaining capital on the table. A tightly managed down trend is the most efficient and lucrative method toward extracting as much of the remaining market capitalization as possible.
More downside to come...
Even in the most optimistic attempt to value Neomedia, all else remaining equal, the company is still grossly overvalued.
The company records 19 million in current assets - 16 million of which is recorded as assets held for sale (Micropaint and Triton).
Normally, when assessing the intrinsic value of a company you would discount the 16 million dollar figure associated with the assets held for sale by about 2/3 and likely even more considering the assets do not operate at a profit (ie they are an operational liability). However, this is the most optimistic approach so we will recognize them at the full reported value and stick with 19 million.
+$19,000,000
The company reports about $14 million in long term assets - a little over $10 million of which is attributable to goodwill, capitalized patents and proprietary software. Similar to the current assets - you would normally apply a discount to this value but we are being optimistic so..
19,000,000
14,000,000
----------
33,000,000 in assets.
That was easy, huh? $33 million in combined assets.
Now normally we'd begin to reflect the liabilities to ascertain a intrinsic value - about $85 million currently - but we're remaining optimistic, so we'll ignore them.
Okay, $33 million in assets and a market capitalization of $36 million. The market is apparently doing the same optimistic equation in valuing NEOM at this time. The market has decided to ignore the 85 million in outstanding debt, the historical pattern of operating and net losses and the typical discounts applied to the value of assets carried on the balance sheet.
Basically, all else remaining the same, NEOM is priced to perfection. Considering NEOM burns through about $1.8 million in cash per quarter -- the market capitalization, in the most optimistic scenario where we do not include debt or discounts to reported assets, should drop another 20% by year's end. It will likely be much much more -- the market will only ignore the white elephant in the living room for so long -- probably to the tune of another 33%-50% barring a miraculous fundamental turnaround or a successful pump and dump campaign.
The acquisition spree was a huge debacle and will ultimately prove to be the demise of the retail investor base.
Not only did NEOM turnaround and sell the acquired companies at a loss but NEOM still holds the $22+ million in death spiral Convertible Preferred on the balance sheet - the debt currently accruing liquidation penalties because NEOM can't even file a registration statement on time.
Imagine taking out a loan for $1 million to purchase a property. The terms of the loan dictate that for every $100 drop in the value of the property $3 more dollars are tacked onto the face value of the loan (death spiral).
You then buy your house for $1 million. Nine months later you realize you can't afford it and sell it for $500K - but because of subsequent financial blunders that $500K received in the sale must be used to pay back other loans. So now you have a $1,017,000 loan outstanding and no asset. That's exactly what happened to NEOM with the acquisitions. WTF???
Appallingly, Fritz continued to talk about "leveraging up" in today's CC. "Leveraging" is precisely what put the company in the position it is today - virtual bankruptcy.
Leveraging only works if you have shrewed asset allocators to deploy the borrowed capital. The people making the decisions at NEOM are absolutely some of the worst asset allocators I have ever come across. NEOM has made, what, ten asset purchases - patents, entire companies and equity stakes in companies - and to date not one, NOT ONE, has ever generated a positive return.
Check that - I think iPoint was recorded as a gain after initially writing down the value of the investment.
Yup.
I follow Warren Buffett's maxim about management when it comes to investments.
He could careless about a business or prospects for a business if said business is not run by capable and honest managers.
The silence of NEOM executives in regards to past and present difficulties is deafening.
Shirking accountability, putting lip-stick on a pig and parroting the same tired speculative mantra does little to engender trust.
When NEOM executives should of been rightsizing the company in preparation for mobile code adoption - they went on a haphazard, shotgun acquisition spree. These guys are good at one thing and one thing only - spending other people's money.
You nailed it.
The executives do not need to perform to be rewarded. If Fritz, et al. had any semblance of decency, they would forgo receiving a salary, return all repriced options back to the company and work completely on a pay per performance basis contingent on reaching concrete and measurable goals.
The company's finances dictate that these guys should be staying at the Motel 6 and dining at Thelma's 24hr All You Can Eat Buffet when attending conferences but my gut tells me they're likely shacking up at the Ritz and dining at 5-star joints while toasting their personal success.
If they keep adding to the OS count, and keep borrowing tens of millions of dollars per quarter, they still get paid, and still buy retirement property in the Carolinas. If they keep borrowing, to keep this boat afloat, then they continue to receive the salaries, the perks, and the benefits of heading a publicly traded company. And we, the little investors, get nothing, and have nothing to say about it.
Here are my notes.
I stopped midway thru the questions as they became redundant and it was clear that Fritz, OLeary and Dodge were not going to say much of anything.
--Fritz
Core business: focusing in on core qode and gavitec platform.
Key item: MC2 initiative.
"happy with the progress of the group"
CEO search: Signed agreement with Heidrich and Struggles(sp?).
Goal: new CEO in place by "July sometime"
Process of rebranding qode platform into complete suite of tools.
Market interest in end-to-end solutions.
"Turn the phone into a wallet".
Hired Mr. Jay Bosh(sp?).
Identified nine market segments where we are taking strong initiatives in.
Already have clients helping enabling markets - a lot of clients based in Europe.
Seeing a lot of activity spurred across Europe, Asia and Latin America.
Intellectual Property: Re-hired Rob Durst. Pursuing creating IP for Neomedia as well as pursuing licensing programs around the world.
EFF: In the process of going through those steps with the patent office in the US.
Gavitec: fully integrated into qode offering.
--O'Leary
Final acquisition of Gavitec.
Micropaint expected to sell within 60 days.
Triton - moving along according to plan. Confident company will be sold in 90 days. Triton not expected not to require additional funding.
Searching for investment of 10 million or more.
Consulting agreement with Thornhill. Eliminating 50% of corporate burn rate.
-- Dodge:
$1.9 million cashed used in quarter.
-- Q&A:
How do you intend to get our financial house in order?
Cornell has always been a big supporter of NEOM. Working on strategic investment. Involves our financial structure as a whole.
What is our staff head count and monthly burn rate?
30 employees in core. 20 in non-core sub. $500K-$700 per month.
Position on the BOD of automart does not interfere with position at NEOMEDIA. Chinese market is a risky proposition with anybody. In a way that benefits shareholders, benefits us (regarding payment from Automart).
Total of direct sales of 7 people who are out under our control. Indirectly number of agents and/or comarketing agreements leveraging that direct sales force. I do not have that direct number off my head - a good dozen to 15 indirect sales agents across the world. Goal not to ramp up a direct sales force.
Operation run rate roughly the same as the 1st quarter of last year. Certain base operation run rate that every public company must have to maintain its public status. We are at that core operating rate. Working on strategic investment that we will then strategically invest that cash.
--------------------
I'd say they followed my hypothetical rather closely.
http://www.investorshub.com/boards/read_msg.asp?message_id=19632710
Yup, essentially there was zero clarity provided.
It was the same old talking points:
>> Strategic investor.
>> New CEO.
>> Realigning the company to focus on core initiatives.
It was funny to hear Fritz talk about the necessary qualifications of a new CEO - specifically that they must have credibility. A refreshing, albeit brief, moment of unintentional introspection by Trustafarian Charlie.
"Extremely confident at what the IP can and can't do in Federal Courts." - Charles Fritz
A lot of different answers to the same questions:
Working on a strategic investment. Involves our financial structure as a whole, can't say anything more than that, etc.
Exploring strategic investments.
My favorite was Dodge's comment in regards to the outstanding monies owed to Neomedia by Automart, and underscores Jonsie's point of a bifurcated shareholder class:
"[Exploring repayment options] in a way that benefits shareholders and benefits us".
He made a clear distinction between "shareholders" and "us".
Sad.
Fritz -- interim CEO, President, Chairman of the COB and a part of NEOM from the beginning -- doesn't know the exact number of indirect sales agents.
That basically says it all.
Wow, pretty much softball questions that allow a ton of wiggle room - "not permitted to disclose at this time", "blah hype blah rah rah" type answers.
When phrasing the questions it is important that the language is pointed and the answer can be provided with a simple yes or no. Otherwise the question is viewed as speculative and the lawyers will advise Fritz, et al. to refrain from stating anything other than that which is said in the SEC filings.
I anticipate that any open-ended question requiring a speculative answer on the part of the executives will be passed over - particularly those relating to financial concerns.
Q1: Mr. Fritz---NEOM's future appears entirely dependent on MC2's formation and implementation. Is this true or not? Please explain why, or why not?
Of course not. NEOM is exploring opportunities within the MC2 framework. We've opted to pool our IP with other companies in an effort to hasten an industry standard. Should MC2 fail to achieve such ends, NEOM will continue to seek ventures and partnerships with individual companies.
Q2: Mr. Fritz, or Dr. Steinborn, if present---What specific progress, if any, was made at the MC2 meeting last week that IS favorable (or unfavorable) to the financial future of NEOM and/or Gavitec and identify by name who has expressed any interest in taking a stake in NEOM?
Per the risk disclosures in our SEC filings, the current relationship with Cornell makes it difficult to attract financing from other parties at reasonable terms. MC2 continues to work toward reaching an industry standard and, as mentioned in A1, NEOM is participating by pooling it's IP.
Q3: Mr. Fritz, or Dr. Steinborn, if present---When will (a) the 'universal reader' be available to handset makers/carriers and (b) what codes will it read and (c) who will embed it and (d) will it incorporate qode® capabilities? Please explain the expected timing and revenue stream(s) from this product...
Our team is working diligently to roll out the universal reader. To date the alpha version reads ___ codes. We are working with handset providers to find embedding partnerships. At this time we cannot provide a concrete rollout or projected revenue stream. Look for more information on this in the future.
Q4: Mr. Dodge---Before another company would consider taking an equity stake in NEOM, NEOM needs to "get its financial situation in order"--so just how do you plan to do that given that NEOM is in default on all of its obligations to Cornell? Please explain the elements of your plan to us...specifically, how will Cornell exit its investment? Will they convert to common shares and exercise all warrants held, or just sell their existing position to outside parties? Or, God forbid, just liquidate the IP. Please explain which option you expect it will be and why...
I can't comment on Cornell's investment strategy in regards to their position in our company. Cornell continues to be a valuable partner of Neomedia and we look forward to continuing our relationship with them.
Q5: Mr. Fritz or Mr. O'Leary---Alternatively, since Cornell effectively controls over half of the company now IF its current investment were to be converted today and all warrants exercised today, please explain why Mr. Mark Angelo is not available to answer shareholder questions during this CC? Again, we want to hear from Mr. Angelo the exact amount Cornell is willing to sell its stake in NeoMedia for. Please explain why we can or cannot get an audience with Mr. Angelo...
See A4. I cannot comment on Cornell's behalf.
Q6: Mr. Dodge---What is the current head-count and monthly cash burn rate and when will NEOM run out of cash without additional cash infusion?
This is a "hard ball" question and IMO will be ignored.
Q7: Mr. O'leary---Is there a letter of intent or agreement in effect TODAY to sell either AutoX or Triton and is it for a profit, or a loss? If no LOI(s), explain why not? If so, for how much money and when will it/they close?
This is a "hard ball" question and IMO will be ignored.
They will answer the first part by simply pointing to information contained in the SEC filings.
Q8: Mr. Fritz or Mr. O'Leary---Has there been ANY proposed settlement, including a conditional or partial settlement, with Scanbuy, and if so, for how much cash or other compensation? Who is our legal counsel for the Scanbuy lawsuit TODAY and are they working on a contingency basis only?
I don't want to fluster our lawyers so I need to be careful in answering this question. Simply put - NEOM is and will continue to vigorously defend our IP. Please refer to our SEC documents -- specifically the section on legal matters - for any information we are permitted to disclose on this topic.
Q9: Mr. Fritz---Will Newscorp introduce and use qode® by June 30th, or not? If not by then, when? If so, is it a promotional freebie, or is there revenue projected from Newscorp for the balance of 2007 and how much?
We continue to work with Newscorp. NDA's prohibit us from disclosing contract specifics.
Q10: Mr. Fritz or Mr. O'Leary---Please explain why Thornhill's warrants were repriced (on p. 55 of the 10-Q filed May 10th) and why NEOM's CFO, David Dodge, serves on Deepfield's BOD in light of their bad debt owed to us, which Mr. Refkin is incented to get repaid to us with these repriced warrants, all while Refkin himself apparently sits on Deepfield's advisory board?
They will not touch this question with a ten-foot pole
Q11: Mr. O'Leary, just how can you affect a turnaround at NEOM when you are on retainer with at least three other companies who, like NeoMedia, are paying you very well indeed as well as offering lucrative warrants while vying for your time? What is the status of our new CEO hiring efforts?
The first part will go unanswered
We have retained the services of ____ firm in assisting our CEO search. We cannot provide a concrete timeframe for hiring a new CEO but ____ is working diligently on our behalf.
Q12: Mr. Fritz---Just for the record, has Google, Microsoft or Symbol Tech ever made any offer to license NEOM IP or qode® (formerly Paperclick®), and, if so, for how much? If not, has ANY other Fortune 500 company or equivalent-sized firm offered to license NEOM's IP, and, is so, for how much?
This is GREAT softball question because they can really stoke the speculative fire with the following answer..
NDA's prohibit us from providing any comments on this matter.
Q13: Open---Last but not least, when can we expect a PR announcement that will drive a 2 for 1 stock split vice a reverse split? If qode® has the potential to be bigger than Google, NO reverse split should be necessary, don't you all agree?
LOL.. they can't answer this question. And they will avoid negating any speculation in regards to a reverse split. They'd be fools to publicly take the option of a reverse split off the table.
Q14, if time permits: How many keywords have been sold THIS year-to-date? And to whom? And for how much money? (...and is Cellufun a paying customer TODAY, or not?)
Per existing NDA's, we are prohibited from disclosing information on this matter.
Yahtzee!
You nailed it.
For extra-credit on the company "they" keep, do some digging into The FINX Group - the company that at one time had a non-binding agreement to purchase NEOM's "Qode" assets.
You can start here:
http://www.google.com/search?q=qode+finx
If you connect the dots correctly you will be surprised where the path takes you.
Wow, just wow.
I must admit I missed this post by YJ.
How sick is that NEOM has agreed to reprice 5.5 million warrants to 0.048 if Thornhill is able to 1.) develop mutually agreed upon payment terms and 2.) collect on the payments of the monies owed to Neomedia by Automart.
Yet Refkin, Thornhill's managing director (IIRC actually his wife Martha is the managing director), is Chairman of the Advisory Board at Automart. The same board that seats Joe Sada of Micropaint Latin America fame, K. Hunter, Neom's chief scientist, C. Steinborn, head of Gavitec and until very recently D. Dodge, NEOM's CFO.
http://www.automart-china.com/Advisory_Board.html
..........
On April 12, 2007, NeoMedia entered into an agreement with Thornhill Capital LLC (“Thornhill”), an independent consultant, pursuant to which NeoMedia agreed to:
(i) 2,000,000 warrants will be repriced from $0.227 to $0.048 upon execution of a contract outlining mutually agreed payment terms for amounts owed to NeoMedia by Automart, a customer of NeoMedia’s Micro Paint Repair business unit,
(ii) 3,500,000 warrants will be repriced from $0.328 to $0.048 upon receipt of payment by NeoMedia from Automart,
Question for the CC:
Have Neomedia executives, Neomedia officers or members of the Neomedia Board of Directors used Neomedia options or Neomedia stock as collateral for non-recourse stock loans?
In case anyone is wondering - a non-recourse stock loan is a way a insider can effectively monetize a equity position in their company without making the requisite disclosure filings with the SEC.
So you feel YJ is speaking to Thornhill and Refkin's future role regarding their capacity in acting as a sort-of broker between Cornell and Neomedia?
Specifically, that YJ believes the future of Thornhill/Refkin acting in this role is in doubt?
That makes sense - your interpretation that is. If you are correct in your interpretation, I think YJ will be proven incorrect. The NEOM <- Thornhill <- Cornell chain will always remain intact. That is the most effective way to loot "you" of your money. Uh, um, I mean deploy it in a manner that affords the most probable return on investment to Neomedia.
As a result of the initial dilution caused by settling with the subs' top off provisions, I believe Cornell concluded 'not us!'--we can't let THAT dilution DILUTE us too, no siree!--and effectively got to reprice all of their 427MM warrants (averaging only about a 4.4¢ exercise price) since NEOM
Post hoc ergo propter hoc.
There is no direct connection between the subs "top off" and Cornell's repricing. Cornell has always required repricing covenants in their financing agreements with Neomedia.
YJ - What do you mean...
when you say:
Mr. A. Refkin (Thornhill) deserves zero consideration for such a repricing in my opinion. His past role and future role remain questionable in my mind...no, completely suspect in my opinion. YJ.
Specifically, I am not clear on your meaning of "suspect" in the context of your statement.
That is an interesting breakdown, thanks.
Though the stock price has declined about 35% annually over the observed period the "size" of the company has risen about 23% annually over the same period.
This is a great illustration of the damaging effects of runaway dilution.
Not mine.
Neomedia's language - or at least Neom's lawyers and accountants - directly from the 10Q.
Bottom line, though, Cornell has Neom by the short hairs.
May as just rename the company NeoNell or maybe CorMedia.
"Technology Company" ... ???
Sales and marketing expenses: 859
General and administrative expenses:* 2,440
Research and development costs: 506
-----
Loss from operations: 3,805
Operating Expenses as a Percentage of Net Operating Costs
Sales and marketing expenses: 22.5%
General and administrative expenses: 64.1%
Research and development costs: 13.3%
-----
Loss from operations: 100%
ZZzzz....
Net cash used in operating activities for 3 months ending 3/31/07: ($3,634)
$3634 / 3 months = $1,211 cash burn per month.
$2,295 in cash and cash equivalents at period ending 3/31/07.
$2,295 cash as of 3/31 divided by $1,211 burn per month = 1.9 months of cash remaining.
All else remaining the same, NEOM will be broke by approximately May 28th.
NeoMedia’s reliance on Cornell Capital Partners (“Cornell”) as its 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 NeoMedia and Cornell signed in connection with the convertible debenture sales, without Cornell’s consent NeoMedia cannot:
(i) issue or sell any shares of common stock or 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 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 its assets of, or
(iv) file any registration statements on Form S-8.
In addition, pursuant to security agreements between NeoMedia and Cornell signed in connection with the convertible debentures, Cornell has a security interest in all of NeoMedia’s assets. Such covenants could severely harm NeoMedia’s ability to raise additional funds from sources other than Cornell, and would likely result in a higher cost of capital in the event funding were secured.