NeoMedia Technologies, Inc (NEOM)

[RisknReturn]

It doesn't make sense unless you understand the death spiral dilution associated with $44.5 million of debentures and preferred stock held by YA. When trading opened this morning, the lowest conversion price was around $.0031 (after YA discount),which equates to an additional 14.4 billion shares. After today, that conversion price dropped to about $.0026, which equates to an additional 17.1 billion shares. So in one very bad day, the fullly diluted shares increased by 2.7 billion shares.

Since NEOM currently has over 2 billion shares outstanding and only has authorization to issue 5 billion shares, that means YA can only convert another $6 to $7 million of debt (assuming the price doesn't drop further). So even if YA converted right up to the 5 billion authorized share limit, NEOM would still owe YA $38 million with no way to pay it off by the maturity date next summer.

IMO, too late for RS but not too late for BK.