NeoMedia Technologies, Inc (NEOM)

[jonesieatl]

"why would YA not keep selling this year?"

Speaking of YA selling things , below is an example of what YA will do when they feel like it. This is relevant to NEOM because NeoMedia finds itself in a very similar situation with respect to YAGI as SMTR found itself , and as such SMTR's experience might hold some clues as to potential future outcomes at NeoMedia. SMTR actually had a product , and shareholders got wiped out. If you believe NeoMedia actually has a product , consider what can still happen. Only time will tell , but mark this post.

You'll remember SMTR , one of the stable of 10 YAGI clients, including NeoMedia , with all sorts of interconnections to NeoMedia. Connections including YAGI itself , George O'Leary as a 'turn around expert' and/or on the BOD , David Dodge , I can't remember them all. Oh yeah , Tobin Smith pumped SMTR along with NEOM , MOBL and TREN. David Dodge , NeoMedia's ex-CFO who has also worked (or still works) for Thornhill Capital and DPFD , was as of October 29, 2008 still Interim Chief Financial Officer at SMTR. He really knows how to pick them. Or they know how to pick him I suppose?

Anyway , at one time it seemed like SMTR actually had a good product , and some good customers. Turns out , they might have actually had a viable product , or patents , or something worth money.

Recently YAGI , or their subsidiary/affiliate Xentenial, sold SMTR out from under the shareholders. They were able to do that because of all the financings/warrants/SEDA/Preferred Convertible Shares/etc , all of which resulted in YAGI/Xentenial owning well over half of the company. Meaning they can vote on whatever they want to have a vote on and make it so. Kind of like they can do with NeoMedia.

(For those who may be unaware of all the YAGI affiliates out there and how Mark Angelo controls them all: http://www.sec.gov/Archives/edgar/data/1271848/000114420408071538/xslF345/v135871_ex.xml )

A recent filing explains the sale and confirms YA Global's Security Interest as follows:

"On December 11, 2008, we completed the sale of substantially all of this business, comprising substantially all of our assets, and certain of our liabilities, to Bendix CVS Canada, Inc. and Bendix Commercial Vehicle Systems LLC pursuant to an asset purchase agreement dated December 4, 2008. The sale price was $2,500,000 cash at closing, plus an earn-out amount in each of the five years after closing based on a percentage of tire pressure monitoring system sales made by the buyers during that period, with a minimum earn-out of US$500,000, of which $250,000 is payable by March 1, 2009 and $250,000 is payable by March 1, 2010.

The earn-out is based on future revenues generated by the buyers from the tire pressure monitoring system business, and any amounts earned by our company above the minimum earn-out are payable on an annual basis for a period of five years. Pursuant to the terms of the asset purchase agreement, we retained the right to receive future earn-out payments due, as well as the right to proceed with litigation in respect of prior infringements of certain of our patents.

We also retained certain operating liabilities and all of the liabilities and obligations with respect to the convertible debt and the shares of our convertible preferred stock that were outstanding prior to the asset sale.

Finally, we agreed that we would change our name to TTC Technology, Inc. immediately after the closing. However, because the corporate laws of the Province of British Columbia prevents us from changing our name without the prior approval of our shareholders, we have not yet changed our name. At the date of this annual report we have not yet asked our shareholders to approve a name change.

Because all of our assets were subject to a pre-existing grant of security in favor of the holders of outstanding debt in the aggregate amount of approximately $44,150,000, we entered into a liquidation agreement with YA Global Investments, L.P., Xentenial Holdings Limited, Staraim Enterprises Limited and Starome Investments Limited pursuant to which we:

·*acknowledged our debt to the lenders in the aggregate amount of approximately $44,150,000.
*assured the lenders that we had no offsets, claims or counterclaims against any of them.
*ratified all of the loan documents pursuant to which we had borrowed the money owed and acknowledged that they, and the documents granting security for repayment of the loans, were in full force and effect."

(Courtesy of BSWB , a sometimes follower of YAGI goings-on: A couple of other interesting points from this filing:
On December 19, 2008, Xentenial Holdings Limited, a wholly owned subsidiary of YA Global Investments LP, converted face value in the aggregate amount of $1,065,986 of various secured convertible debentures issued by the Company into a total of 13,324,825,000 of the Company’s common shares.

After the conversion, the Company had 19,342,461,198 common shares outstanding, of which Xentenial Holdings Limited was the holder of 13,315,450,000, or 68.8%, of the Company’s total outstanding common shares.

The subsequent filings (forms 3 and SC13D) simply confirm the YA Global holdings.)

Now , it does appear SMTR had a worthwhile product. Bendix , or Bendix Commercial Vehicle Systems LLC, North American affiliate of the Munich, Germany-based Knorr-Bremse Group , is a well known company and they wouldn't buy something that was junk-on-paper. But when it came time to sell ... YAGI pocketed the proceeds and said "bye bye shareholders , it's been fun , thanks for playing and stay tuned for your next opportunity to win (wink wink) in a brand new game coming soon".

Oh yeah , over a lot of the time SMTR was dealing with YAGI they only had a few hundred million shares outstanding. Then towards the end they still only had 2 billion shares outstanding. I imagine their shareholders enjoyed speculating on a possible sale price of the company and divided those paltry outstanding share counts into it to yield what their future PPS might be , and how many islands could be bought with their gains. As you saw in the above filings when it came time for YAGI to cash in and eradicate common shareholders , somehow , magically , SMTR ended up with 19 billion shares outstanding with YAGI owning 13 billion of them.

YAGI will do whatever is in their best interests. I have yet to find a situation where YAGI's interests are aligned with common shareholders' interests for very long.

jonesie