Rocky et al: Neom has an equity distribution agreement with Cornell Capital.
At present Neom has a $4m promissory note with them. The note is being paid down by $160,000 per week. By June 18th the balance should be -0-.
The after hours trades are accounting totals that are reported for information purposes. As a guess, I would say the MM's work all day to short above the ask that Cornell wants so they can buy back the shares Cornell is selling for a profit.
But know this. Cornell has another deal with Neom which has effectively cost them .075 a share (above our current pps).
Here's what I THINK may be happening in the near future:
Neom has been saving up positive info (which is why we have not been getting PR's).
They can't get the remaining $2m from the warrants (this is in addition to the $4m loan they got, approx. $1m in misc warrants already exercised and a $1m bonus from Cornell (the bonus comes automatically when the warrants are declared effective) until the warrants are effectively registered AND the pps averages .10 for 5 consecutive days. To release info before the warrants are accepted by the SEC would be premature on Neom's part.
The next 10 Q is due May 15th. When they release it, I believe we will have positive info in the 10Q regarding increased sales from the Paint division and if Neom is going to acquire BSDS, then I also suspect that they may of already started funding BSDS which will show up in the 10 Q. However, it is still possible that BSDS deal will go through even if Neom has yet to start financing them because: Neom may be waiting to have the extra $2m first in hand. Either way, the underwriting by Cornell suggests that Neom has a good use for the money worth funding upfront. Now consider this: Neom wants the $2m and has saved info for the 10 Q and/or PR's that will help move the pps up to over .10 (at a min.) to trigger the exercise of the warrants. Or, they know when the Service Provider licenses are finalized in Europe we will blow by .10. BSDS stated in their filing that they will run out of funds by the end of July unless new financing has been arranged.
What's this mean for the near future?
We have an opportunity to move up with the filing of the 10Q which is due next week if it is not delayed. Press releases may also be timed with the filing. In the last filing (but not PR'd) Neom stated that their partner Seven Worldwide had several LOI's out on behalf of Neom for new clients/deals. At a min. the filing will confirm the $4m note being paid down and on schedule to be paid off by June 18th and prorata sales for the paint division.
I expect that ANY time within the next two months the pps will move north of .10 and Neom will get the extra $2m and acquire BSDS or be releasing some new roll-out campaign for the paint division or both. At least they are getting the bonus $1m regardless of the pps now (assuming the warrants were declared effective by the SEC).
The $4m loan will have been paid off.
Now here's the big question. Is Neom relying mainly on the signing of the SP's in Europe and the almost certain PR's of the Brand Managers already signed that will follow to get us past .10 or do they have some other goodies in store before that monumental announcement? I don't know. But it appears that mobile campaigns are being touted by our partners for the summer, so one would think the SP's will be licensing us by then.
What I would like to see at a min. is that news from the 10 Q with regard to BSDS and/or the paint division will sustain the last remaining dilution from the $4m with the help of some timely general PR's without much drifting on the pps. Once we are past June 18th, Neom will not be forced to sell shares to Cornell as the financing arrangement will have been met. Now that's not to say that Neom won't tap into the equity distribution down the road when the pps is higher and the dilution would be much less, but at least they will have that choice. With all the money they have been raising, I would assume mgmt. will avoid Cornell for a while after the mandatory shares to be released from escrow are finished by June 18th! Sound business principals dictate that they could at least wait until after the SP's and BM's are finalized, made public and the pps is soaring. Also, income from Paperclick and the paint division should help avoid or min. Cornell. Other events like settling Virgin or new license agreements could also help permanently say good bye to Cornell.
Broad vision from a "Long"(me) for the last half of 2004:
Cornell Loan paid off on June 18th.
Paint division sales increasing with commercial roll-out ramped up.
BSDS acquired and put to use servicing Neom's in-house business plan.
BSDS contracting for outside business.
Service Providers' licensing Paperclick in Europe this summer
Brand Manager campaigns launched in Europe
USA SP's sign on
USA Brand Managers signing on.
Virgin settles and license Neom IP
Other infringers, not yet sued, license Neom IP
More camera phones released that are paperclick ready...
Oh yes, just maybe a mega license with MSFT, Google ...
but I could be happy waiting for those in 2005.
This is a vision from a "Long". For those of you who email me, I can't tell you that we won't drift down from now until June 18th or that we will get a PR Monday morning and start moving north fast. That is beyond the scope of what I can offer this board. I bought more shares today. I'm holding Neom while their business plan is being executed. Obviously, I hope it moves forward sooner than later, but like my friend who emailed me today wanting to share his thoughts with everyone, I believe the potential for Neom to be staggering.
All the best. Enjoy the weekend.
AI
