S3A Change Summary:
When compared to the December S3A, there were not many differences other than changes to dates and the outstanding shares. Based on the minor changes in the document, one would think we are almost through with the the red tape. A summary of the more notable changes are as follows:
Registration Statement
12/29/05 S3A
We currently have an additional offering outstanding in connection with our prending acqusition of BSD Software, Inc. ("BSD") On April 5, 2005, we filed a registration statement on Form S-4 (Registration No. 333-123848) to register up to 20,000,000 shares to be issued to BSD shareholders in exchange for all the outstanding shares of BSD. Because the number of shares to be issued in connection with the acquisition of BSD is based on a formula that is dependent on our stock price at the effective time of the merger, we will not know the actual number of shares we will issue until the effective date of the merger. As of December 5, 2005, based on 32,560,897 shares of BSD common stock outstanding, a volume-weighted 5-day average closing price of NeoMedia stock of $0.321, and the share exchange rate outlined in the merger agreement, we would issue an estimated 7,079,957 shares in connection with the acquisition of BSD. This calculation is given for reference only.
01/30/06 S3A
We currently have an additional offering outstanding in connection with our prending acqusition of BSD Software, Inc. ("BSD") On April 5, 2005, we filed a registration statement on Form S-4 (Registration No. 333-123848) to register up to 20,000,000 shares to be issued to BSD shareholders in exchange for all the outstanding shares of BSD. Because the number of shares to be issued in connection with the acquisition of BSD is based on a formula that is dependent on our stock price at the effective time of the merger, we will not know the actual number of shares we will issue until the effective date of the merger. As of January 23, 2006, based on 32,560,897 shares of BSD common stock outstanding, a volume-weighted 5-day average closing price of NeoMedia stock of $0.384, and the share exchange rate outlined in the merger agreement, we would issue an estimated 5,938,580 shares in connection with the acquisition of BSD.
Risks Specific To This Offering
12/29/05 S3A - Page 10
As of December 5, 2005, we had 466,111,091 shares of common stock outstanding, and options and warrants to purchase up to an aggregate 151,079,221 shares of common stock. We may also issue additional shares of common stock in connection with our pending acquisition of BSD Software, Inc. ("BSD"), and up to an additional 67,635,393 previously registered shares of common stock may be issued under our Standby Equity Distribution Agreement with Cornell Capital Partners, LP. On March 30, 2005, we and Cornell entered into a new Standby Equity Distribution Agreement under which Cornell agreed to purchase up to $100 million of our common stock over a two-year period, with the timing and amount of the purchase at our discretion. No shares underlying the new Standby Equity Distribution Agreement are registered with the SEC.
01/30/06 S3A - Page 10
As of January 23, 2006, we had 468,649,354 shares of common stock outstanding, and options and warrants to purchase up to an aggregate 171,798,596 shares of common stock. We may also issue additional shares of common stock in connection with our pending acquisition of BSD Software, Inc. ("BSD"). On March 30, 2005, we and Cornell entered into a Standby Equity distribution Agreement under which Cornell agreed to purchase up to $100 million of our common stock over a two-year period, with the timing and amount of the purchase at our discretion. No shares underlying the new Standby Equity Distribution Agreement are registered with the SEC.
12/29/05 S3A - Page 10
BSD's shareholders will receive, for each share of BSD stock owned, NeoMedia stock equivalent to .07 divided by the volume-weighted average price of NeoMedia stock for the five days prior to the effective time of the merger. Based on 32,560,897 outstanding shares of BSD common stock and 462,068,880 outstanding shares of NeoMedia common stock as of December 5, 2005, and assuming a NeoMedia stock price of $0.321 (the volume-weighted average stock price for the five days preceding December 5, 2005), we would issue 7,079,957 shares of common stock to BSD shareholders. However, the actual exchange ratio will vary due to changes in NeoMedia's stock price and any additional issuances of common stock by BSD prior to the effective time of the merger, and will not be known until such effective time of the merger. Such holders may sell the shares of common stock being registered in this offering in the public market, which may cause our stock price to decline.
01/30/06 S3A - Page 10
BSD's shareholders will receive, for each share of BSD stock owned, NeoMedia stock equivalent to .07 divided by the volume-weighted average price of NeoMedia stock for the five days prior to the effective time of the merger. Based on 32,560,897 outstanding shares of BSD common stock as of January 23, 2006, and assuming a NeoMedia stock price of $0.384 (the volume-weighted average stock price for the five days preceding January 23, 2006), we would issue 5,938,580 shares of common stock to BSD shareholders. However, the actual exchange ratio will vary due to changes in NeoMedia's stock price and any additional issuances of common stock by BSD prior to the effective time of the merger, and will not be known until such effective time of the merger. Such holders may sell the shares of common stock being registered in this offering in the public market, which may cause our stock price to decline.
The Market Price Of Our Securities May Be Volatile
12/29/05 S3A - Page 11
As of December 5, 2005, we had outstanding stock options and warrants to purchase 151,079,221 shares of common stock, some of which have exercise prices at or below the price of our common shares on the public market. To the extent such options or warrants are exercised, there will be further dilution. In addition, in the event that any future financing should be in the form of, be convertible into, or exchangeable for, equity securities, and upon the exercise of options and warrants, investors may experience additional dilution.
01/30/06 S3A - Page 11
As of January 23, 2006, we had outstanding stock options and warrants to purchase 171,798,596 shares of common stock, some of which have exercise prices at or below the price of our common shares on the public market. To the extent such options or warrants are exercised, there will be further dilution. In addition, in the event that any future financing should be in the form of, be convertible into, or exchangeable for, equity securities, and upon the exercise of options and warrants, investors may experience additional dilution.
Standby Equity Distribution Agreement with Cornell
12/29/05 S3A - Page 16
On October 27, 2003, NeoMedia and Cornell entered into a $20 million Standby Equity Distribution Agreement (the "2003 SEDA"). The terms of the agreement are identical to the terms of the previous Equity Line of Credit, except that the maximum "draw" under the new agreement is $280,000 per week, not to exceed $840,000 in any 30-day period, and Cornell will purchase up to $20 million of our common stock over a two-year period. As a commitment fee for Cornell to enter into the 2003 SEDA, we issued 10 million warrants to Cornell with an exercise price of $0.05 per share, and a term of five years. Cornell exercised the warrants in January 2004, resulting in $500,000 cash receipts to us. In November 2003, we registered 200 million shares under the 2003 SEDA. In April 2004, we registered 40 million shares of common stock underlying warrants granted to Cornell in connection with a promissory note issued by us to Cornell (see "Notes Payable to Cornell" below).
01/30/06 S3A - Page 16
On October 27, 2003, NeoMedia and Cornell entered into a $20 million Standby Equity Distribution Agreement (the "2003 SEDA"). The terms of the agreement are identical to the terms of the previous Equity Line of Credit, except that the maximum "draw" under the new agreement is $280,000 per week, not to exceed $840,000 in any 30-day period, and Cornell will purchase up to $20 million of our common stock over a two-year period. As a commitment fee for Cornell to enter into the 2003 SEDA, we issued 10 million warrants to Cornell with an exercise price of $0.05 per share, and a term of five years. Cornell exercised the warrants in January 2004, resulting in $500,000 cash receipts to us. In November 2003, we registered 200 million shares under the 2003 SEDA. In April 2004, we registered 40 million shares of common stock underlying warrants granted to Cornell in connection with a promissory note issued by us to Cornell (see "Notes Payable to Cornell" below). The 2003 SEDA expired on January 9, 2006.
12/29/05 S3A - Page 17
We expect to file a registration statement with the SEC during 2005 to register the shares underlying the 2005 SEDA. The 2005 SEDA would become available at the time the SEC declares effective a registration statement containing such shares.
01/30/06 S3A - Page 17
The 2005 SEDA would become available at the time the SEC declares effective a registration statement containing such shares.
Promissory Notes Payable to Cornell
12/29/05 S3A - Page 17
On March 30, 2005, we borrowed from Cornell the principal amount of $10,000,000 before discounts and fees in the form of a secured promissory note. Cornell withheld structuring and escrow fees of $68,000 related to the note. The note is scheduled to be repaid at a rate of $1,120,000 per month commencing May 1, 2005, which was subsequently changed to $840,000 per month, continuing until principal and interest are paid in full. The note accrues interest at a rate of 8% per annum on any unpaid principal. We have the option to prepay any remaining principal of the note in cash without penalty. In connection with the note, we and Cornell entered into a Security Agreement under which the note is secured by all of our assets other than our patents and patent applications. We also escrowed 25,000,000 shares of its common restricted stock as security for the note. As of December 5, 2005, we had made payments of $6,580,000 against the principal.
01/30/06 S3A - Page 17
On March 30, 2005, we borrowed from Cornell the principal amount of $10,000,000 before discounts and fees in the form of a secured promissory note. Cornell withheld structuring and escrow fees of $68,000 related to the note. The note is scheduled to be repaid at a rate of $1,120,000 per month commencing May 1, 2005, which was subsequently changed to $840,000 per month, continuing until principal and interest are paid in full. The note accrues interest at a rate of 8% per annum on any unpaid principal. We have the option to prepay any remaining principal of the note in cash without penalty. In connection with the note, we and Cornell entered into a Security Agreement under which the note is secured by all of our assets other than our patents and patent applications. We also escrowed 25,000,000 shares of its common restricted stock as security for the note. As of January 23, 2006, we had made payments of $7,210,000 against the principal.
INFORMATION WE INCORPORATE BY REFERENCE
12/29/05 S3A - Page 22
Beginning on page F-1 hereto, we have provided audited financial statements for the years ended December 31, 2005 and 2004, and unaudited interim financial sstatements for the nine months ended September 30, 2005, for Mobot, Inc., a material probable acquisition that is subject to a non-binding letter of intent.
01/30/06 S3A - Page 22
Beginning on page F-1 hereto, we have provided audited financial statements for the years ended December 31, 2004 and 2003, and unaudited interim financial sstatements for the nine months ended September 30, 2005, for Mobot, Inc., a material probable acquisition that is subject to a non-binding letter of intent.
SUPPLEMENTARY FINANCIAL INFORMATION
12/29/05 S3A - F16
The following information presents Mobot, Inc.'s unaudited quarterly operating results for the nine months ended September 30, 2005 and 2004. The data has been prepared by Mobot, Inc. on a basis consistent with the Consolidated Financial Statements included elsewhere in this registration statement, and includes all adjustments, consisting of normal recurring accruals, that we consider necessary for a fair presentation thereof. These operating results are not necessarily indicative of our future performance.
01/30/06 S3A - F16
The following information presents Mobot, Inc.'s unaudited quarterly operating results for the nine months ended September 30, 2005 and 2004. The data has been prepared by Mobot, Inc. on a basis consistent with the Financial Statements included elsewhere in this registration statement, and includes all adjustments, consisting of normal recurring accruals, that we consider necessary for a fair presentation thereof. These operating results are not necessarily indicative of our future performance.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCONTING FIRM (#1)
12/29/05 S3A
We consent to the incorporation by reference in this registration statement on Form S-3 Amendment No. 4 for the registration of a total of 54,000,000 warrants issued to Cornell Capital LP and Thornhill Capital, LLP, of our report dated February 11, 2005, on our audits of the consolidated financial statements of NeoMedia Technologies, Inc. as of December 31, 2004 and for the years ended December 31, 2004 and 2003 included in the Form 10-KSB for the year ended December 31, 2004.
01/30/06 S3A
We consent to the incorporation by reference in this Amendment No.5 to the registration statement on Form S-3 to be filed with the Securities and Exchange Commission on or about January 30, 2006 for the registration of a total of 54,000,000 warrants issued to Cornell Capital LP and Thornhill Capital, LLP, of our report dated February 11, 2005, on our audits of the consolidated financial statements of NeoMedia Technologies, Inc. as of December 31, 2004 and for the years ended December 31, 2004 and 2003 included in the Form 10-KSB for the year ended December 31, 2004.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCONTING FIRM (#2)
12/29/05 S3A
We consent to the incorporation by reference in this registration statement on Form S-3 Amendment No. 4 for the registration of a total of 54,000,000 warrants issued to Cornell Capital LP and Thornhill Capital, LLP, of our report dated October 11, 2005, on our audit of the financial statements of Mobot, Inc. as of December 31, 2004 and for the year ended December 31, 2004, and for the period from September 8, 2003 (inception) to December 31, 2004.
01/30/06 S3A
We consent to the incorporation by reference in this Amendment No. 5 to the registration statement on Form S-3 of Neomedia Technologies, Inc. for the registration of a total of 54,000,000 warrants issued to Cornell Capital LP and Thornhill Capital, LLP, of our report dated October 11, 2005, on our audits of the financial statements of Mobot, Inc. as of December 31, 2004 and for the year ended December 31, 2004 and for the period from September 8, 2003 (inception) to December 31, 2004, to be filed with the Securities and Exchange Commission on or about January 30, 2006.
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