Please read this first before jumping to conclusions!! they are talking about: The additional shares will be issuable for proper corporate purposes, such as future acquisitions; the issuance of common stock upon the exercise of outstanding options and warrants; conversion of outstanding convertible preferred stock; and for dividends or splits
Now if you try to imagine what this all can mean, I would not say panic!!! I would go for a stock split, just to give you an example!! Or maybe they want to take over another company in the field, bigger piece of the pie!!
Do not just jump to conclusions!!! Yet!!
General Information
NeoMedia’s Board of Directors has authorized an amendment to NeoMedia’s Certificate of Incorporation to increase the number of authorized shares of Common Stock from 1,000,000,000 to 5,000,000,000. As of March 31, 2006, there were 622,120,574 shares of Common Stock outstanding. In addition, 232,408,096 additional shares are reserved for issuance upon exercise of outstanding options and warrants, and 7,123,698 shares will be issued upon exchange of certificates in connection with the acquisition of BSD Software.
The additional shares will be issuable for proper corporate purposes, such as future acquisitions; the issuance of common stock upon the exercise of outstanding options and warrants; conversion of outstanding convertible preferred stock; and for dividends or splits. Stockholder approval of the amendment to NeoMedia’s Certificate of Incorporation to increase the authorized shares of Common Stock will give NeoMedia greater flexibility by permitting such stock to be issued without the delay of obtaining stockholder approval. The Board of Directors believes it to be in the best interests of NeoMedia to increase the number of authorized shares of Common Stock to ensure that adequate shares are available for issuance if such issuance becomes desirable.
Some of the additionally authorized shares may be used for the following purposes:
$27 Million Preferred Stock Sale
On February 17, 2006, NeoMedia entered into an investment agreement (the “Investment Agreement”) with Cornell Capital Partners, LP (“Cornell”). Pursuant to the Investment Agreement, NeoMedia issued and sold to Cornell $27,000,000 of Series C Preferred Shares (the “Series C Preferred Shares”), of which (i) $3,208,702 were purchased by Cornell for consideration solely consisting of surrendering that certain promissory note, dated March 30, 2005 in the original principal amount of $10,000,000 issued in the name of Cornell, (ii) $18,791,298 were purchased by additional funding (consisting of $16,791,298 of immediately available funds and $2,000,000 of securities) from Cornell as of February 17, 2006, and (iii) $5,000,000 shall be purchased by an additional funding by Cornell on the date a registration statement filed by NeoMedia pursuant to the terms of that certain investor registration rights agreement, dated February 17, 2006 by and between NeoMedia and Cornell is declared effective by the U.S. Securities and Exchange Commission. The Series C Preferred Shares are convertible into shares of NeoMedia’s common stock, par value $0.01 per share in accordance with the terms of NeoMedia’s certificate of designations, preferences, and rights of the Series C Preferred Shares.
In addition, pursuant to the terms of the Investment Agreement, NeoMedia issued to Cornell (i) a warrant to purchase 20,000,000 shares of NeoMedia common stock exercisable for a period of 5 years at an exercise price of $0.50 per share; (ii) a warrant to purchase 25,000,000 shares of common stock exercisable for a period of 5 years at an exercise price of $0.40 per share; and (iii) a warrant to purchase 30,000,000 shares of common stock exercisable for a period of 5 years at an exercise price of $0.35 per share.
On February 17, 2006, NeoMedia and Cornell entered into an assumption agreement, whereby Cornell sold and assigned to NeoMedia those certain promissory notes issued by Pick Ups Plus, Inc., dated September 30, 2003, October 13, 2004, June 6, 2005, and August 4, 2005, in the aggregate principal amount of $1,365,000 and accrued interest of $246,232 for a purchase price equal to $1,611,231.
On February 17, 2006, NeoMedia and Cornell entered into an assignment of common stock, whereby Cornell sold and assigned to NeoMedia 20,000,000 shares of common stock, par value $0.001 per share, of Pick Ups Plus, Inc. for a purchase price equal to $388,768.
The Series C Preferred Shares convert at the lesser of (i) Fifty Cents ($0.50) or (ii) ninety seven percent (97%) of the lowest closing bid price of the Common Stock for the thirty (30) trading days immediately preceding the date of conversion. To the extent that the Series C Preferred Shares convert into more common shares than are currently authorized, the additional requested shares would be issued to satisfy such conversion. At a conversion price of $0.345 (the closing price on March 31, 2006) 78,260,870 common shares would be issued upon conversion of the Series C Preferred Shares. The shares have voting rights on an “as converted” basis.
AI
