Email has been sent to Management reiterating the request for a Letter to Shareholders ASAP / prior to the SHM - highlighting the key questions that must be answered - so that we can make a more informed decision regarding proxy item 3 dealing with the authorized share increase.
Some excerpts are below:
...myself and several other shareholders are torn over this issue. The last thing we want is for Neomedia to go into default. It is disconcerting that we are in this position of possible default when we don't have a good reason provided to us from Management. So it is natural for us to assume the worst...that Neomedia did not plan well when determining the financing for the acquisitions (i.e., it appears that Neomedia overspent its bounds). And, that assumption, then causes us to doubt Management, which is not a good situation.
We don't like that we have an all or nothing vote selection for the additional shares with no middle ground. By that I mean, we would feel much more comfortable authorizing say 2 billion shares that would prevent the default situation and still allow what we would consider a reasonable amount of additional shares for financing additional acquisitions or for other reasonable business purposes. The request for a total authorized shares of 5 billion just seems to be very much out of line for the size of Neomedia's business. Unfortunately, it appears we are being forced into a situation of being "between a rock and a hard place" since there is no middle voting ground on this issue.
...While it may not be enough to change the final vote, some will vote "no" as a protest vote for Neomedia failing to provide a compelling reason to vote "yes".
...Let me also say that we understand how important it is to manage what information is released and how it is released so regardless of the outcome from this email, I will respect your decision to do what's right for Neomedia Technologies and its faithful shareholders.
But, I don't give up easily so I am going to make one more appeal for Neomedia to issue additional information in advance of the proxy vote (and preferably ASAP) in whatever form you feel comfortable with so that shareholders can make a more informed decision on the proxy vote. While we welcome as much information as Neomedia can provide, the critical questions that must be answered are as follows:
1. Why are we in this position of possible default? Did we not adequately anticipate this situation during the planning process for funding of acquisition purchases?
2. If Item 3 of the proxy is approved, how many shares does Neomedia plan to register with the SEC within 30 and 90 days of the approval? What is the anticipated level of outstanding shares anticipated by January 1, 2007?
3. What actions are being taken, and what is the anticipated timing for Neomedia to achieve positive cash flow to minimize further share dilution?
4. What are the revenue and profit projections for each business and in total for the next 3 years?
5. When will Paperclick begin generating significant revenues?
6. How will this dramatic increase in authorized shares impact Neomedia's ability to attain relisting on the NASDAQ?
7. Is Neomedia considering a reverse split or share buy-back?
8. Has Neomedia been approached considering a takeover, 20% equity agreement or buyout?
SS9173
AI
