Replies to post #177459 on NeoMedia Technologies, Inc (NEOM)

[clawmann]

CSykes: the certificate of designations for the Series C Convertible Preferred gives the holder ther right to vote the shares into which the Series C is convertiible. So, under the terms of the Series C, the holder gets to vote the underlying common even without a conversion event. Under Rule 13d-3, that makes the holder the "beneficial owner" of the underlying common for reporting purposes; and in this case that represents far more than 5% of the common, a class of voting shares.

You also wrote: "It is legal, and common, for a note holder, to work in conjunction with a broker dealer, to short shares in anticipation of a conversion. Once the conversion is made, the shares are used to cover the shorted position."

First, in this case, the holder is contractually prohibited from short selling the isssuer's shares.

Second, in this case, shorting the shares would drive down the PPS and - under the conversion formula stipulated in the certificate of designations - the lower PPS would mean the holder gets more shares on conversion; so the short-selling could easily be theorized to be motivated by manipulative intent. I.e. possibly illegal as well as being contractually prohibited.