UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
(1st Amendment)
| x |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 : For the Fiscal Year Ended December 31, 2013 |
| ¨ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 000-21743
NeoMedia Technologies, Inc.
(Exact name of registrant as specified
in its charter)
| Delaware |
36-3680347 |
| (State or other jurisdiction of |
(I.R.S. Employer |
| incorporation or organization) |
Identification No.) |
1515 Walnut Street, Suite 100, Boulder,
CO 80302
(Address, including zip code, of principal
executive offices)
303-546-7946
(Registrants’ telephone number, including
area code)
| Securities Registered Under Section 12(b) of the Act: |
None |
| Name of exchange on which registered: |
None – Quoted on the OTC Markets (OTCQB) |
| Securities registered pursuant to Section 12(g) of the Act: |
Common Stock, $0.001 par value per share |
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act. Yes ¨ No x
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes
x No
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is
not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
| Large accelerated filer ¨ |
Accelerated filer ¨ |
Non-accelerated filer ¨ |
Smaller Reporting Company x |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
The aggregate market
value of the common stock held by non-affiliates of the registrant as of June 30, 2013 was $2,945,890 based on the closing
sale price for the registrant’s common stock as quoted on the OTC Markets.
The number of outstanding shares of the registrant’s common
stock on April 25, 2014 was 4,984,827,279.
Documents Incorporated By Reference: None
EXPLANATORY NOTE
We are filing this amendment to amend our annual report on Form
10-K for the fiscal year ended December 31, 2013, which was originally filed with the Securities and Exchange Commission on March
17, 2014.
During the three month period ended March 31, 2014, for fair
value accounting of the derivative financial instruments and debentures payable, we reassessed the valuation techniques used to
estimate the liability fair values. Based on the assessment, we determined that the valuation technique should be modified
to consider the potentially dilutive impact on the stock price resulting from the issuance of additional shares of common stock
upon the conversion of the instruments as well as the resulting value in comparison to our market capitalization.
On July 16, 2014, after a series of comment letters beginning
November 22, 2013, we received correspondence from the Securities and Exchange Commission (“SEC”), requesting that
(i) we restate certain of our financial statements by filing amendments to the reports containing such financials, and (ii) we
file an 8-K to report non- reliance on such financials. In its correspondence, the SEC asserted that certain modifications in our
valuation methodology, deemed as accounting estimates, contained errors with respect to the valuation of convertible debentures
issued by us, in that such methodology did not capture the debentures’ potentially dilutive effect upon their conversion
into common stock.
We agreed with the SEC’s assertion that certain modifications
in our valuation methodology contained errors with respect to the valuation of convertible debentures issued by us. Thus,
we are restating our financial statements for the fiscal year ended December 31, 2013 and sections related therewith to reflect
the change in valuation technique and correction of the fair value accounting of the derivative financial instruments and debentures
payable.
Our operational performance remains unchanged. All other information
included in our annual report on Form 10-K for the fiscal year ended December 31, 2013 has not been amended. Except for the matter
described above, this amendment does not modify or update disclosures in the originally filed annual report on Form 10-K, or reflect
events occurring after March 17, 2014, which is the date of the filing of the originally filed annual report on Form 10-K.
NeoMedia Technologies, Inc.
FORM 10-K/A
(1st Amendment)
For the Fiscal Year Ended December 31,
2013
INDEX
NOTE
ABOUT FORWARD LOOKING STATEMENTS
The
information in this Annual Report on Form 10-K (this “Report”) contains “forward looking statements” and
information within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),
and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which may be subject
to the “safe harbor” created by those sections. These forward looking statements include, but are not limited to, statements
concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and
objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,”
“intends,” “may,” “plans,” “projects,” “will,” “would”
and similar expressions are intended to identify forward looking statements, although not all forward looking statements contain
these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward looking statements
and you should not place undue reliance on our forward looking statements. These forward looking statements involve known and unknown
risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those expressed
or implied by the forward looking statements, including, without limitation, the risks set forth in Part I, Item 1A, Risk
Factors in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission (“SEC”).
Except as required by law, we assume no obligation to update these forward looking statements publicly, or to update the reasons
actual results could differ materially from those anticipated in these forward looking statements, even if new information becomes
available in the future.
As used herein, “NeoMedia”,
“Company,” “we,” “us,” “our”, and similar terms include NeoMedia Technologies,
Inc., a Delaware corporation, and its subsidiaries unless the context indicates otherwise.
PART I
ITEM 1A. Risk Factors
You should carefully consider the following
factors and all other information contained in this Report before you make any investment decisions with respect to our securities.
Risks Related to Our
Business
We may be unable to continue as a going
concern based on our historical performance, which has included losses, an accumulated deficit, and a working capital deficit.
We may continue to generate losses and be unable to service our outstanding liabilities in the future.
We have historically incurred operating
losses and may continue to do so in the future. We must develop new customer relationships and substantially increase our revenue
derived from products, services and IP licensing. We have expended and intend to continue to expend resources to develop, improve
and to market our products and services. A number of factors could increase our operating expenses, such as: adapting infrastructure
and administrative resources to accommodate additional customers and future growth; developing products, distribution, marketing,
and management for the broadest possible market; broadening customer technical support capabilities; developing additional indirect
distribution partners; and, incurring legal fees and settlements associated with litigation and contingencies. To the extent that
operating expenses are not offset by increases in revenues, we could incur operating losses and negative free cash flow.
There can be no assurance that our efforts
to execute our business plan will be successful. The accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America (“US GAAP”), which contemplate our continuation
as a going concern. Our net income for the year ended December 31, 2013 was $28.5 million and our net loss for the year ended December
31, 2012 was $19.4 million, including $26.7 million net gain and $17.3 million net loss, respectively, related to our financing
instruments. Our operating income was $1.0 million for 2013 as compared to an operating loss in 2012 of $5.5 million. Net cash
used by operations during 2013 and 2012 was $0.4 million and $1.5 million, respectively. As of December 31, 2013, we have an accumulated
deficit of $236.9 million. We also have a working capital deficit of $41.3 million, including $39.2 million in current liabilities
for our derivative and debenture financing instruments.
We currently do not have sufficient cash
or commitments for financing to sustain our operations for the next 12 months if we are unable to generate sufficient cash flows
from operations. Our plan is to develop new customer relationships and substantially increase our revenue derived from our products/services
and IP licensing. If our revenues do not reach the level anticipated in our plan, we may require additional financing in order
to execute our operating plan; however, we believe that our revenues will reach such level and such additional financing will not
be necessary. If additional financing is required, we cannot predict whether this additional financing will be in the form of equity,
debt, or another form, and we may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms,
or at all. In the event that financing sources are not available, or that we are unsuccessful in increasing our revenues and profits,
we may be unable to implement our current plans for expansion, repay our debt obligations or respond to competitive pressures,
any of which would have a material adverse effect on our business, prospects, financial condition and results of operations.
In February 2014 as described in Note
11 – Subsequent Events, we initiated a merger with the intention to increase the quantity of authorized shares of common
stock available for issuance to satisfy the conversion rights under certain outstanding convertible securities and avoid
an event of default. We can provide no assurance that the additional quantity of authorized shares will be sufficient to
satisfy all future conversions of the outstanding convertible securities. If we have insufficient authorized shares in the future
due to security conversions or otherwise and are unable to respond to requests for conversion, we may be subject to an event of
default under the terms of such instruments.
Our management and Board may be unable
to execute their plans to grow our revenues and achieve continued profitability and positive cash flows, which could cause us to
discontinue our operations. The risk associated with a possible discontinuance of the business could prevent us from attracting
or retaining key personnel, which would have a material adverse effect on our business.
If our management and Board are unable
to maintain and execute our plans, then we may fail to grow our revenues, manage costs and achieve continued profitability and
positive cash flows, which may cause us to discontinue our operations. The risks associated with the possible discontinuance of
the business could further prevent us from attracting and retaining management and staff, which would have a material adverse effect
on our business.
All of our assets are pledged to secure
certain debt obligations. If we fail to repay and/or otherwise satisfy the debt obligations, our assets could be seized and liquidated
for the benefit of the debt holders.
The convertible debentures that were initially
issued to YA Global are secured by all of our assets. The secured convertible debentures mature on August 1, 2015. In the event
we are unable to repay and/or otherwise satisfy the secured convertible debentures in accordance with the related agreements, our
assets could be seized and liquidated for the benefit of the debt holders and result in the discontinuance of our business.
Our future profitability depends on
the timely introduction of new and updated products and the acceptance of these new and updated products in the marketplace.
Rapid technological change and market development
are typical for the industries we serve. Our future revenue and profitability will depend in large part on timely development and
introduction of new and upgraded products that address evolving market requirements. If we fail to effectively launch new and innovative
products or allow our current product offerings to become stale in our advancing industry, we may lose market share to our competitors.
Any inability, for technological or other reasons, to successfully grow and upgrade our product portfolio could materially adversely
affect our business.
Existing shareholders will experience
significant dilution when certain investors, such as YA Global, convert their preferred stock to common stock, convert convertible
debentures to common stock, or when the investors exercise their warrants for common stock.
The issuance of shares of common stock
pursuant to the conversion of our Series C and D convertible preferred stock, the conversion of convertible debentures to common
stock, or the exercise of warrants could result in a significant increase in the outstanding shares of common stock and will have
a material dilutive impact on our shareholders. Additionally, our net earnings per share would decrease and the market price of
our common stock per share would decline.
Our common stock is deemed to be “penny
stock” which may make it more difficult for investors to sell their shares due to suitability requirements.
Our common stock is deemed to be “penny
stock” as defined in Rule 3a51-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Certain requirements regarding penny stocks may reduce the potential market for our common stock by reducing the number of potential
investors. The penny stock designation could make it more difficult for investors in our common stock to sell shares to third parties
or to otherwise dispose of them. This could cause our stock price to decline.
Broker-dealers dealing in penny stocks
are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker-dealers are
required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. These requirements
reduce the potential market of investors in our stock and could cause the stock price to decline. The potential market for “penny
stocks” is further reduced by a Deposit Trust Company (“DTC”) “chill”, which prevents trading from
occurring on the electronic trading system as further described below.
The DTC placed a “chill”
on deposits of the Company’s common stock, which may negatively impact an investor’s ability to trade in our common
shares.
In November 2011, the DTC placed a “chill”
on deposits of our common stock and is not clearing or settling trades in our common stock through its electronic trading system.
The “chill” does not affect our normal business operations. However, shareholders with internet brokerage accounts
may not be able to trade in our common shares because the internet brokers clear and settle trades through the DTC. We believe
the “chill” may limit the ability of potential investors from purchasing our shares.
Due to the accounting treatment of the
convertible preferred stock, warrants and convertible debenture instruments issued by us, our net income or loss may not be reflective
of our operating performance and could have a material adverse impact on our market value.
During the years ended December 31, 2013
and 2012, we reported net income of $28.5 million and a net loss $19.4 million respectively. The net income for the year ended
December 31, 2013 was mostly attributable to a change in methodology for valuing these securities to incorporate dilution. The
net loss for the year ended December 31, 2012 resulted primarily from non-cash losses arising from the adjustment to value our
derivative and debenture liabilities at fair value. The adjustments are primarily due to modifications to the terms of the convertible
debentures including the extension of the maturity date to August 2015. We adjust the value of these liabilities to reflect the
estimated fair value at each balance sheet date. As a result, we could experience significant fluctuations in our reported net
income or losses in future periods from financing related gains or losses incurred to record the liabilities at fair value. The
financing related gains and losses incurred to record the liabilities at fair value have historically been significant and have
resulted in net losses that are not reflective of the Company’s operating performance as reporting in operating income or
loss. The complexity associated the fair value calculations and sophistication required by investors to distinguish and understand
our operating performance relative to the reported net income and losses may cause our financial statements to be difficult to
comprehend, analyze, and assess. As a result, the potential investor market for our common stock could be reduced resulting in
a material adverse impact on our market value.
A majority of our assets are intangible
assets, which will have little or no value if our operations do not generate current or future cash flow.
At December 31, 2013, a majority of our
total assets were intangible assets, consisting primarily of rights related to our patents, other intellectual property, and goodwill
arising from the excess of the purchase price over the fair value of tangible assets acquired in our purchase of NeoMedia Europe
GmbH. If our results of operations do not generate sufficient cash flows in the future, the assets will have little or no value,
which could lead to us recognizing impairment losses for such assets. This could materially adversely affect the value of our stock
and the ability of our shareholders to recoup their investments in our stock.
We review our amortizable intangible assets
for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. We test goodwill for
impairment annually or when events or changes in circumstances may warrant. We may be required to record a significant charge to
earnings in our financial statements during the period in which any impairment of our goodwill or amortizable intangible assets
is determined, resulting in a materially adverse impact on our results of operations.
We may not be able to compete effectively
in markets where our competitors have more resources, which could have a material adverse effect on our business.
Our market is highly competitive and characterized
by an increasing number of entrants that have introduced or developed products and services similar to those we offer. We believe
that competition will continue to intensify and increase in the near future. Our target market is rapidly evolving and is subject
to continuous technological change. As a result, our competitors may be better positioned to address these developments or may
react more favorably to these changes, which could have a material adverse effect on our business, prospects, financial condition,
and results of operations.
We may be unable to protect our intellectual
property rights and may be liable for infringing the intellectual property rights of others, which could have a material adverse
effect on our business.
Our success is dependent upon our proprietary
technology, including patents and other intellectual property, and on the ability to protect proprietary technology and other intellectual
property rights. In addition, we must conduct our operations without infringing on the proprietary rights of third parties. We
also intend to rely upon unpatented trade secrets and the know-how and expertise of our employees, as well as our patents. To protect
our proprietary technology and other intellectual property, we rely primarily on a combination of the protections provided by applicable
patent, copyright, trademark, and trade secret laws as well as on confidentiality procedures and licensing arrangements. Although
we believe that we have taken appropriate steps to protect our unpatented proprietary rights, including requiring that our employees
and third parties who are granted access to our proprietary technology enter into confidentiality agreements, we can provide no
assurance that these measures will be sufficient to protect our rights against third parties. Others may independently develop
or otherwise acquire patented or unpatented technologies or products similar or superior to ours.
Some provisions of our Certificate of
Incorporation and Bylaws may deter takeover attempts, which may limit the opportunity of our shareholders to sell their shares
at a premium to the then-current market price.
Some of the provisions of our Certificate
of Incorporation and Bylaws could make it more difficult for a third party to acquire us, even if doing so might be beneficial
to our shareholders by providing them with the opportunity to sell their shares at a premium to the then-current market price.
On December 10, 1999, our Board adopted a shareholders’ rights plan and declared a non-taxable dividend of the right to acquire
one-one hundredth of a share of our Series A Preferred Stock, par value $0.01 per share, on each outstanding share of our common
stock to shareholders of record on December 20, 1999 and each share of common stock issued thereafter until a pre-defined hostile
takeover date. The shareholders’ rights plan, or so-called “poison pill”, was adopted as an anti-takeover measure.
The shareholders’ rights plan was designed to enable all shareholders not engaged in a hostile takeover attempt to receive
fair and equal treatment in any proposed takeover of us and to guard against partial or two-tiered tender offers, open market accumulations,
and other hostile tactics to gain control of us. The shareholders’ rights plan was not adopted in response to any effort
to acquire control of us at the time of adoption, however it may have the effect of rendering more difficult, delaying, discouraging,
preventing, or rendering more costly an acquisition of us or a change in control of us. Certain shareholders, who were our founders,
Charles W. Fritz, William E. Fritz and The Fritz Family Limited Partnership and their holdings, were exempted from the triggering
provisions of our shareholders’ rights plan, as a result of the fact that, as of the plan’s adoption, their holdings
might have otherwise triggered the plan.
In addition, our Certificate of Incorporation
authorizes our Board to designate and issue preferred stock, in one or more series, the terms of which may be determined at the
time of issuance by our Board, without further action by shareholders, and may include voting rights, including the right to vote
as a series on particular matters, preferences as to dividends and liquidation, conversion, redemption rights, and sinking fund
provisions.
Preferred stock may have a negative
impact on other stockholders or the pursuit of certain corporate actions.
The issuance of any preferred stock could
have a material adverse effect on the rights of holders of our common stock, and, therefore, could reduce the value of shares of
our common stock. In addition, specific rights granted to future holders of preferred stock could be used to restrict our ability
to merge with, or sell our assets to, a third party. The ability of our Board to issue preferred stock could have the effect of
rendering more difficult, delaying, discouraging, preventing, or rendering more costly an acquisition of us or a change in our
control.
In the future, there could be government
regulations and legal uncertainties that could harm our business.
Any new legislation or regulation, the
application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of
existing laws and regulations to the internet and other online services, could have a material adverse effect on our business,
prospects, financial condition, and results of operations. The growth and development of the market for mobile commerce may prompt
calls for more stringent consumer protection laws to impose additional burdens on companies conducting business online. The adoption
of any additional laws or regulations may decrease the growth of the internet, mobile telecommunications or other mobile services,
which could, in turn, decrease the demand for our services and increase our cost of doing business, or otherwise have a material
adverse effect on our business, prospects, financial condition, and results of operations.
ITEM 7. Management‘s Discussion
and Analysis of Financial Condition and Results of Operations
Introduction
The
following discussion and analysis should be read in conjunction with the Consolidated Financial Statements, and the Notes thereto
included in this Report. The information contained below includes statements of management’s beliefs, expectations, hopes,
goals and plans that, if not historical, are forward looking statements subject to certain risks and uncertainties that could cause
actual results to differ materially from those anticipated in the forward looking statements. For a discussion on forward looking
statements, see the information set forth in the introductory note to this Report under the caption Note About Forward Looking
Statements, which information is incorporated herein by reference.
Overview
NeoMedia has positioned itself to lead
the world in mobile barcode technology and solutions that enable the mobile ecosystem. NeoMedia harnesses the power of the mobile
device in innovative ways with state-of-the-art mobile barcode technology. With this technology, mobile devices with cameras become
barcode scanners and this enables a range of practical applications including mobile marketing and mobile commerce. In addition,
we offer licensing of our extensive intellectual property portfolio. We are focusing our activities primarily in the United States
and Europe, although in other markets via partners or our self-service products.
Our key focus areas are to: 1) maximize
our patent portfolio through IP licensing monetization and enforcement, 2) provide service to enterprises, brands and retailers
to maximize the reach of our barcode creation and reader solutions, and 3) partner with key mobile marketing entities to expand
the depth of our offering to provide full end-to-end solutions for our customers.
NeoMedia has been active in, and strives
to be an innovator in, the mobile barcode field since the mid-1990s, and during that time has spearheaded the development of a
robust IP portfolio. In September 2011, we announced an agreement with Global IP Law Group to help further monetize our patent
portfolio, focusing on the US market. In 2013, we closed twenty five IP agreements and remain hopeful that our IP licensing activities
will continue to generate new agreements in 2014 and beyond. We intend to continue to vigorously pursue or defend, as applicable,
claims affecting the business interests and intellectual property of the Company and filed eight lawsuits, in this regard, in 2013.
In 2013, we have successfully caused approximately 10 companies in the United States to cease and desist their mobile
barcode operations that infringed upon our IP rights and have settled seven of the lawsuits we initiated.
On the product side of our business, our
barcode management solutions include our barcode reader (NeoReader) as well as our barcode creation solutions (NeoSphere and QodeScan).
Mobile barcodes continue to be an increasingly important activation element for brands and marketers and we continue to see growth
in terms of new customer additions and traffic across our network.
NeoMedia remains strong and consistent
in its approach to market and we believe that we will continue to differentiate ourselves on the basis of our high quality product
and service offerings, our responsive customer service and support organization, our customizable and full service solutions and
our robust intellectual property portfolio.
NeoReader has experienced continued growth
in 2013 particularly in enterprise implementations. NeoReader continues to be pre-installed on Sony Mobile devices and is available
for download from the key “app stores” including Apple App Store™, Google Play™, Nokia Ovi Store, BlackBerry
App World™, Windows® Marketplace, Facebook and Amazon. Our barcode reader now has approximately 50+ million installations
world-wide. Our reader is offered to consumers free of charge, leveraging an ad supported model, and we anticipate the growth
in consumer utilization will continue as barcodes continue to be utilized for a wide variety of vertical applications. We
also offer NeoReader SDK for enterprise opportunities. Our research suggests that we are one of the few providers in the global
ecosystem to offer Aztec code support, in addition to QR, Data Matrix, Code 39, PDF417 and a variety of 1D symbologies.
In 2013, we launched QodeScan, our low
cost self-service barcode creation product. QodeScan is for those users who don’t have high scan volumes but would like the
insight into analytics that a managed service provides. In addition to QodeScan, we continue to offer our NeoSphere product intended
for enterprises, agencies and other large volume users. We have many Fortune 500 brands using our NeoSphere product in their global
barcode operations. Our QR creation services utilize an indirect methodology for our customer, which is also embodied in our intellectual
property.
Legal costs continue to be high for us.
The costs to maintain our public company status, our IP licensing initiatives, satisfy our investor obligations as well as participate
in an unexpected arbitration have catapulted our legal fees to approximately 30% of total operating expenses for us in 2013. Unfortunately,
this has meant that funds earmarked for sales and marketing investment were spent on legal fees.
NeoMedia continues to operate on a self-sufficient
basis and has not taken funding since 2012. We continue to support operations entirely from cash generated from our business and
anticipate that we will continue to do so. NeoMedia had record revenue in 2013 and record operating profit/income. We believe that
we will continue to see success from our business based on both the product and IP strategies we are deploying.
Critical
Accounting Policies and Estimates
This discussion and analysis of financial
condition and results of operations has been prepared by our management based on our consolidated financial statements, which have
been prepared in accordance with US GAAP. The preparation of these financial statements requires management to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent
assets and liabilities. On an ongoing basis, our management evaluates our critical accounting policies and estimates, including
those related to revenue recognition, valuation of accounts receivable, intangible assets, derivative liabilities and contingencies.
Estimates are based on historical experience and on various assumptions believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources. These judgments and estimates affect the reported amounts of assets and liabilities and the reported amounts
of revenue and expenses during the reporting periods.
We consider the following accounting policies
important in understanding our operating results and financial condition:
| |
· |
Intangible Asset Valuation – Assessing the valuation of intangible assets is subjective in nature and involves significant estimates and assumptions as well as management’s judgment. We periodically perform impairment tests on our long-lived assets, including our intangible assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Long-lived assets are testing for impairment by first comparing the estimated future undiscounted cash flows from a particular asset or asset group to the carrying value. If the expected undiscounted cash flows are greater than the carrying value, no impairment is recognized. If the expected undiscounted cash flows are less than the carrying value, then an impairment charge is recorded for the difference between the carrying value and the expected discounted cash flows. The assumptions used in developing expected cash flow estimates are similar to those used in developing other information used by us for budgeting and other forecasting purposes. In instances where a range of potential future cash flows is possible, we use a probability-weighted approach to weigh the likelihood of those possible outcomes. As of December 31, 2013 and 2012, we do not believe any of our long-lived assets are impaired. |
| |
· |
Goodwill – Our goodwill represents the excess of the purchase price paid for NeoMedia Europe GmbH over the fair value of the identifiable net assets and liabilities acquired, based on an independent appraisal of the assets and liabilities acquired. Goodwill is not amortized but is tested annually for impairment, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Goodwill is tested for impairment by comparing the carrying amount of the asset to its fair value, which is estimated through the use of a discounted cash flows model. If the carrying amount exceeds fair value, an impairment loss is recognized for the difference. As of December 31, 2013 and 2012, we determined there were no impairments of our goodwill. |
| |
· |
Derivative Financial Instruments
– We do not use derivative financial instruments to hedge exposures to cash-flow risks or market-risks that may affect the
fair values of our financial instruments. However, certain financial instruments, such as warrants and the embedded conversion
features of our convertible preferred stock and convertible debentures, which are indexed to our common stock, are classified as
liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within
our control. In such instances, net-cash settlement is assumed for financial accounting and reporting purposes, even when the terms
of the underlying contracts do not provide for net-cash settlement. Derivative financial instruments are initially recorded, and
continuously carried, at fair value. Determining the fair value of these complex derivative financial instruments involves judgment
and the use of certain relevant assumptions including, but not limited to, interest rate risk, credit risk, and equivalent volatility
and conversion/redemption privileges. The use of different assumptions could have a material effect on the estimated fair value
amounts.
For our convertible debentures, we have
elected not to separately account for the embedded conversion feature as a derivative instrument but to account for the entire
hybrid instrument at fair value in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“FASB ASC”) 815, Derivatives and Hedging. For our convertible preferred stock, the underlying
instruments are carried at amortized cost and the embedded conversion feature is accounted for separately at fair value in accordance
with FASB ASC 815-40-05 and FASB ASC 815-40-15. |
| |
· |
Financial Instruments and Concentration of Credit Risk – We believe the carrying values of our financial instruments consisting of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses, derivative financial instruments, other current liabilities, convertible preferred stock, and convertible debenture financings approximate their fair values due to their short-term nature, or because they are carried at fair value. |
| |
· |
Revenue Recognition –
We derive revenues from the following primary sources: (1) license fees relating to intellectual
property, and (2) software and service revenues related to mobile marketing barcode management, barcode readers and custom developed
software.
We
recognized revenue when: (a) persuasive evidence of the sales arrangement exists, (b) the arrangement fee is fixed or determinable,
(c) service delivery or performance has occurred, (d) customer acceptance has been received, if contractually required, and (e)
collectability of the arrangement fee is probable. Revenue associated with licensing agreements primarily consists of non-refundable
upfront license fees. Non-refundable upfront license fees received under license agreements, whereby continued performance or future
obligations are considered inconsequential to the relevant license technology, are recognized as revenue upon delivery of the technology.
We typically use signed contractual agreements as persuasive evidence of a sales arrangement.
If
at the inception of an arrangement the fee is not fixed or determinable, we defer revenue until the arrangement fee becomes due
and payable. If we determine collectability is not probable, we defer revenue until we receive payment or collection becomes probable,
whichever is earlier. The determination of whether fees are collectible requires judgment of our management, and the amount and
timing of revenue recognition may change if different assessments are made. |
| |
|
|
| |
· |
Multiple Element Transactions – From time to time, we enter into transactions involving multiple elements, such as customer agreements involving multiple patents. We account for multiple element transactions by first obtaining evidence of the estimated selling price of each element using vendor specific objective evidence (“VSOE”), third-party evidence (“TPE”), or management’s best estimate of selling price if neither VSOE nor TPE of selling price exists. Based on the determined selling price of each element of the transaction, the value of the single agreement is allocated to each deliverable based on each element's proportional value and accounted for as a separate unit of accounting. Multiple element transactions require the exercise of judgment in determining the estimated selling price of the different elements. The judgments could impact the amount of revenues and expenses recognized over the term of the contract, as well as the period in which they are recognized. |
| |
· |
Contingencies – From time to time, we are involved in various legal actions arising in the normal course of business, both as claimant and defendant. Although it is not possible to determine with certainty the outcome of these matters, we believe the eventual resolution of any ongoing legal actions is unlikely to have a material impact on our financial position or operating results. If the resolution of ongoing legal actions is not in our favor, our financial position and operating results could be materially adversely impacted. |
| |
· |
Income Tax Valuation Allowance – Deferred tax assets are reduced by a valuation allowance when, in the opinion of our management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. We recorded a 100% valuation allowance at December 31, 2013 and 2012. |
Results
of Operations
Income (Loss) from Operations
The following table sets forth certain
data derived from our consolidated statements of operations (in thousands):
| | |
Year Ended December 31, | |
| | |
2013 | | |
2012 | |
| | |
| | |
| |
| Revenues | |
$ | 5,024 | | |
$ | 2,344 | |
| Cost of revenues | |
| (731 | ) | |
| (2,181 | ) |
| Gross profit | |
| 4,293 | | |
| 163 | |
| | |
| | | |
| | |
| Sales and marketing expenses | |
| (286 | ) | |
| (1,100 | ) |
| General and administrative expenses | |
| (2,549 | ) | |
| (3,593 | ) |
| Research and development costs | |
| (717 | ) | |
| (951 | ) |
| Other operating income | |
| 229 | | |
| - | |
| | |
| | | |
| | |
| Income (loss) from operations | |
$ | 970 | | |
$ | (5,481 | ) |
Revenues. Revenues for the
years ended December 31, 2013 and 2012 were $5,024,000 and $2,344,000, respectively, an increase of $2,680,000, or 114%. The increases
in revenues are primarily attributable to an increase in the quantity of new IP licensing agreements as well as an increase in
revenue from our NeoReader SDK.
Cost of Revenues. Cost
of revenues was $731,000 for the year ended December 31, 2013 compared with $2,181,000 in the prior year, a decrease of $1,450,000
or 66%. Cost of revenues primarily relates to third party professional fees incurred in connection with the sale of our IP licenses.
Cost of revenues typically varies in a manner consistent with changes in our IP licenses revenues. Cost of revenues in the
prior year period relative to revenue was unusually high due to the expensing of additional legal fees associated with monetization
of our patents.
Sales and Marketing. Sales
and marketing expenses were $286,000 and $1,100,000 for the years ended December 31, 2013 and 2012, respectively, a decrease of
$814,000, or 74%. The decrease in sales and marketing expenses is due to cost containment efforts. We expect sales and marketing
expenses will increase in future periods as we continue to develop and execute on our business goals.
General and Administrative.
General and administrative expenses were $2,549,000 and $3,593,000 for the years ended December 31, 2013 and 2012, respectively,
a decrease of $1,044,000, or 29%. Costs declined due to continued efforts to contain expenses and identify improved efficiencies
in performing the general and administrative functions of the Company. The expense reductions are related to various items including
lower personnel costs and lower service provider costs, such as accounting and legal related fees.
Research and Development.
Research and development expenses were $717,000 and $951,000 for the years ended December 31, 2013 and 2012, respectively, a decrease
of $234,000, or 25%. Research and development expenses decreased as we focused our development efforts in our 2D Core services
and subsequently launched our QodeScan self-service barcode management platform, resulting in a reduced requirement for ongoing
development services.
Other
Operating Income. The $229,000 of other operating income
realized during the year ended December 31, 2013 primarily related to an arbitration proceeding and settlement in our favor, which
concluded during the three months ended June 30, 2013. There was no similar activity in the prior year.
Other Income (Expense)
The following table sets forth certain
data derived from our consolidated statements of operations (in thousands):
| | |
Year Ended December 31, | |
| | |
2013 | | |
2012 | |
| | |
(Restated) | | |
| |
| Gain (loss) from change in fair value of hybrid financial instruments | |
$ | 21,809 | | |
$ | 11,926 | |
| Gain from change in fair value of derivative liability - warrants | |
| 3,067 | | |
| 11,347 | |
| Loss from change in fair value of derivative liability - Series C and D preferred stock and debentures | |
| 1,841 | | |
| (13,035 | ) |
| Gain (loss) on extinguishment of debt | |
| 53 | | |
| (27,479 | ) |
| Impairment loss on cash surrender value of life insurance policy | |
| - | | |
| (527 | ) |
| Gain on de-recognition of accrued expenses and purchase price guarantee | |
| - | | |
| 8,300 | |
| Interest income (expense), net | |
| 16 | | |
| (4,437 | ) |
| | |
| | | |
| | |
| Total other expense | |
$ | 26,786 | | |
$ | (13,905 | ) |
Gain (Loss) from Change in Fair Value
of Hybrid Financial Instruments. We carry our debentures at fair value in accordance with the applicable accounting codification
and do not separately account for the embedded conversion feature. The change in the fair value of these liabilities includes changes
in the value of the accrued interest due under these instruments, as well as changes in the fair value of the common stock underlying
the instruments. For year ended December 31, 2013 and 2012, the liability related to these hybrid instruments fluctuated resulting
in a net gain of $21.8 million and $11.9 million, respectively. See Note 4 within the Notes to Consolidated Financial Statements
for additional detailed discussion.
Gain from Change in Fair Value of
Derivative Liability – Warrants. We account for our outstanding common stock warrants that were issued in connection
with our preferred stock and debentures at fair value. For the years ended December 31, 2013 and 2012, the liability related to
these instruments fluctuated, resulting in a net gain of $3.1 million and $11.3 million, respectively. See Note 4 within the Notes
to Consolidated Financial Statements for additional detailed discussion.
Loss from Change in Fair Value of
Derivative Liability – Series C and D Preferred Stock and Debentures. For our Series C and D Preferred Stock, and
certain of our debentures, we account for the embedded conversion feature separately as a derivative financial instrument. We carry
these derivative financial instruments at fair value. For the year ended December 31, 2013 and 2012, the liability related to these
hybrid instruments fluctuated, resulting in a net gain of $1.8 million and a net loss of $13.0 million, respectively. See Note
4 within the Notes to Consolidated Financial Statements for additional detailed discussion.
The changes in the fair values of our hybrid
and derivative financial instruments were primarily the result of fluctuations in the value of our common stock during the period
as well as changes in the terms of the related financial instruments. Because our common stock price has been volatile and our
hybrid and derivative financial instruments include variable discount conversion prices, further fluctuations in the market price
of our common stock could cause the fair value of these instruments to be volatile and increase or decrease significantly in the
future, resulting in future significant gains and losses from the change in the fair value of the instruments.
Impairment Loss On Cash Surrender
Value of Life Insurance Policy. During the third quarter of 2012, we determined that we would be unable to collect the
cash surrender value of a life insurance policy due to a dispute with the insurance company. Accordingly, we recorded a loss of
$527,000 to impair the value of the policy as reflected in the results for the year ended December 31, 2012. There was no similar
activity in 2013.
Gain on De-recognition of Accrued
Expenses and Purchase Price Guarantee. We determined during the third quarter of 2012 that certain accrued purchase price
obligations and disputed expenses associated with a 2006 acquisition were no longer legally enforceable due to the expiration of
the statute of limitations. As a result, we de-recognized the liabilities, which resulted in an $8.3 million gain as reflected
in the results for the year ended December 31, 2012. There was no similar activity in 2013.
Gain (Loss) on Extinguishment of
Debt. During the year ended December 31, 2013, we modified and consolidated our outstanding debentures resulting in a $53,000
gain on extinguishment. During the year ended December 31 2012, we modified our debt causing the existing debentures to be
effectively retired and new debentures issued. The differences in the fair values of the debt before and after the modification
resulted in an extinguishment loss of $27.5 million.
Interest Income (Expense), Net.
Following the May 25, 2012 modification of the debentures, which extended the due date, the debentures are no longer carried at
amortized cost but are carried as hybrid financial instruments at fair value. As a result, the interest on these debentures subsequent
to May 25, 2012 is reported as part of the Gain (Loss) from Change in Fair Value of Hybrid Financial Instruments and is no longer
separately reported as interest expense. The $16,000 of net interest income reported for the year ended December 31, 2013 primarily
relates to interest accrued on payments received in connection with an arbitration proceeding that settled in our favor during
the year.
Other Comprehensive Income (Loss)
For the year ended December 31, 2013, other
comprehensive gains were $133,000 as compared to other comprehensive losses of $56,000 for 2012. The other comprehensive
gains and losses were due to the impact of fluctuations in currency exchange rates associated with our translation of the NeoMedia
Europe GmbH subsidiary financial statements from its local currency, the Euro, to U.S. dollars. We determined during the third
quarter of 2013 that the functional currency of the foreign subsidiary changed to the U.S. dollar and as a result of the change
in functional currency, translation gains and losses associated with the conversion of the NeoMedia Europe GmbH financial statements
are recorded in our results from operations rather than through other comprehensive income (loss) effective July 1, 2013.
Income Tax Benefit
During the year ended December 31, 2013,
we determined that a deferred tax liability previously estimated to be realized by NeoMedia Europe GmbH should be reduced to zero
based on certain economic changes of the subsidiary during 2013. The economic changes included, but were not limited to, the termination
of its hardware business and related sales activities that allowed it to generate revenue independently in the local market or
otherwise, and the completion of a repositioning of the subsidiary from a self-contained, revenue generating operation to a cost
center primarily focused on research and development. As a result of the change in estimate, we recorded an income tax benefit
of $706,000 to reduce the deferred tax liability to zero.
Liquidity
| | |
Year Ended December 31, | |
| | |
2013 | | |
2012 | |
| | |
(in thousands) | |
| | |
| | |
| |
| Cash and cash equivalents | |
$ | 267 | | |
$ | 611 | |
| | |
| | | |
| | |
| Net cash used in operating activities | |
$ | (399 | ) | |
$ | (1,536 | ) |
| Net cash provided by investing activities | |
| - | | |
| 123 | |
| Net cash provided by financing activities | |
| 56 | | |
| 2,050 | |
| Effect of exchange rate changes on cash | |
| (1 | ) | |
| (56 | ) |
| Net change in cash and cash equivalents | |
$ | (344 | ) | |
$ | 581 | |
We funded our liquidity requirements in
2013 with existing cash resources. During 2012, we funded our liquidity requirements through our existing cash resources and borrowings
under our convertible debentures with YA Global. As of December 31, 2013, we had $267,000 in cash and cash equivalents.
Going Concern
While we have historically incurred operating
losses, and we may continue to generate negative cash flows as we implement our business plan, the business has been operating
on a self-sufficient basis. However, there can be no assurance that our success in executing our business plan will continue. The
accompanying consolidated financial statements have been prepared in conformity with US GAAP, which contemplates our continuation
as a going concern given fair value accounting related to our debentures. Our net income for the year ended December 31, 2013 was
$28.5 million and our net loss for the year ended December 31, 2012 was $19.4 million, including $26.7 million net gain and $17.3
million net loss, respectively, related to our financing instruments. The impact of our successful implementation strategy shows
our operating income was $1.0 million for 2013 as compared to an operating loss in 2012 of $5.5 million.
Net cash used in operations during 2013
and 2012 was $0.4 million and $1.5 million, respectively. As of December 31, 2013, we have an accumulated deficit of $236.9 million.
We also have a working capital deficit of $36.7 million, including $39.2 million in current liabilities for our derivative and
debenture financing instruments.
We currently do not have sufficient cash
or commitments for financing to sustain our operations for the next twelve months if we are unable to generate sufficient cash
flows from operations. Our plan is to develop new client and customer relationships and substantially increase our revenue derived
from our products/services and IP licensing. If our revenues do not reach the level anticipated in our plan, we may require additional
financing in order to execute our operating plan; however, we believe that our revenues will reach such level and such additional
financing will not be necessary. If additional financing is required, we cannot predict whether this additional financing will
be in the form of equity, debt, or another form, and we may not be able to obtain the necessary additional capital on a timely
basis, on acceptable terms, or at all. In the event that financing sources are not available, or that we are unsuccessful in increasing
our revenues and profits, we may be unable to implement our current plans for expansion, repay our debt obligations or respond
to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition and
results of operations.
The convertible debentures and preferred
stock used to finance the Company, which may be converted into common stock at the sole option of the holders, have a highly dilutive
impact when they are converted, greatly increasing the number of common shares outstanding. During 2013, there were 2,879 million
shares of common stock issued for these conversions. We cannot predict if or when each holder may or may not elect to convert into
common shares.
Our financial statements do not include
any adjustments relating to the recoverability and reclassification of recorded asset amounts or the amounts and classification
of liabilities that might be necessary should we be unable to continue as a going concern.
Significant
Liquidity Events
Financing Provided By YA Global.
In 2012, all of our external financing was provided by YA Global. We received a gross total of $2.65 million from YA Global
through the issuance of a series of six convertible debentures and common stock warrants. The debentures initially bore interest
at 9.5% per annum and matured on August 1, 2014. We paid cash fees to YA Global from the proceeds of the secured convertible debentures
and warrants of $150,000, resulting in net proceeds of $2.5 million. We also received two short-term loans, fully repaid within
approximately 30 days of receipt, from YA Global totaling $112,000. We also repaid in full the July 20, 2012 debenture of $450,000.
Since July 2012, we have not received any
debenture based financing from YA Global. We do not anticipate receiving additional financing in 2014. We believe our business
plan will provide adequate cash flow to meet our operational requirements for the next twelve months.
At December 31, 2013, financial instruments
arising from our financing transactions with YA Global, included shares of our Series C preferred stock issued in February 2006,
Series D preferred stock issued in January 2010, a series of six consolidated secured convertible debentures (the “Consolidated
Debentures”) issued July 1, 2013 and various warrants to purchase shares of our common stock. All of our assets are pledged
to secure our obligations under the debt securities. At various times, YA Global has assigned or distributed portions of its holdings
of these securities to other holders, including persons who are officers of YA Global and its related entities, as well as to other
holders who are investors in YA Global’s funds. The rights of the assignees of the YA Global holdings are bound by the terms
of the financial instruments held by YA Global, and amendments to the terms of the financial instruments held by YA Global could
also impact the terms of the financial securities held by the assignees.
We
had originally entered into financing transactions with YA Global, which included a series of twenty-seven secured convertible
debentures issued between August 2006 and July 2012. Effective July 1, 2013, the terms of the debentures held by YA Global were
modified to consolidate the principal and interest amounts outstanding under all of the outstanding secured convertible debentures
previously issued by us to YA Global, such that, upon the issuance of the Consolidated Debentures and cancellation of the prior
debentures, the amount of outstanding debentures issued to YA Global decreased from twenty-seven to six debentures. The maturity
dates of these secured convertible debentures were also extended from August 1, 2014 to August 1, 2015.
The
underlying agreements for each of the Consolidated Debentures are very similar in form. The Consolidated Debentures are convertible
into our common stock, at the option of the holder, at the lower of a fixed conversion price per share or a percentage of the lowest
volume-weighted average price (“VWAP”) for a specified number of days prior to the conversion (the “look-back
period”). The conversion is limited such that the holder cannot exceed 9.99% ownership of the outstanding common stock, unless
the holder waives their right to such limitation. All of the debentures are secured according to the terms of a Security Pledge
Agreement dated August 23, 2006, which was entered into in connection with the first convertible debenture issued to YA Global
and which provides YA Global with a security interest in substantially all of our assets. The debentures are also secured by a
Patent Security Agreement dated July 29, 2008. On August 13, 2010, our wholly owned subsidiary, NeoMedia Europe GmbH, became a
guarantor of all outstanding financing transactions between us and YA Global, through pledges of their intellectual property and
other movable assets. As security for our obligations to YA Global, all of our Pledged Property, Patent Collateral and other collateral
is affirmed through the several successive Ratification Agreements executed in connection with each of the 2010, 2011 and 2012
financings. The 2013 modification and consolidation of the outstanding secured convertible debentures as well as the execution
of an Amended and Restated Patent Security Agreement in October 2013 reaffirmed the Pledged Property, Patent Collateral and other
collateral pledged as security for our obligations to YA Global.
YA
Global holds warrants to purchase shares of our common stock that were issued in connection with the convertible debentures and
the Series C and Series D preferred stock. The warrants are exercisable at a fixed exercise price which, from time to time, has
been reduced due to anti-dilution provisions when we have entered into subsequent financing arrangements with a lower price. The
exercise prices may be reset again in the future if we subsequently issue stock or enter into a financing arrangement with a lower
price. In addition, upon each adjustment in the exercise price, the number of warrant shares issuable is adjusted to the number
of shares determined by multiplying the warrant exercise price in effect prior to the adjustment by the number of warrant shares
issuable prior to the adjustment divided by the warrant exercise price resulting from the adjustment.
See Note 4 within the Notes to Consolidated
Financial Statements for additional detailed discussion on our financings.
Contractual
Obligations
We are a “smaller reporting company” as defined
by Rule 12b-2 of the Exchange Act and, as such, are not required to provide this information.
Recently
Issued Accounting Standards
See Recent Accounting Pronouncements in Note 2 - Summary
of Significant Accounting Policies within the Notes to Consolidated Financial Statements.
Off-Balance
Sheet Arrangements
We are not currently engaged in the use
of off-balance sheet derivative financial instruments to hedge or partially hedge interest rate exposure nor do we maintain any
other off-balance sheet arrangements for the purpose of credit enhancement, hedging transactions, or other financial or investment
purposes.
ITEM 8. Financial Statements and Supplementary
Data
Restatement of 2013 Financial Statements
As discussed in Note 1 and Note 2 to the
Condensed Consolidated Financial Statements, the Company restated its financial statements.
Index to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
of NeoMedia Technologies, Inc.:
We have audited the accompanying consolidated
balance sheet of NeoMedia Technologies, Inc. (the “Company”), as of December 31, 2013, and the related consolidated
statements of operations and comprehensive loss, shareholders’ deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013, and
the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted
in the United States of America.
The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to such financial
statements, the Company has suffered recurring losses from operations, has significant working capital and shareholders’
deficits and may have ongoing requirements for additional capital investment. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 2. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
As discussed in Note 2 to the financial
statements, the entity’s 2013 fair value accounting of derivative financial instruments and debentures payable previously
reported as $284,576,000 should have been $42,001,000. This discovery was made subsequent to the issuance of the financial statements.
The financial statements have been restated to reflect this correction.
/s/ StarkSchenkein, LLP
Denver, CO
March
17, 2014 except for Note 2, Restatement to 2013 Reporting,
as to which the date is September 19, 2014
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
of NeoMedia Technologies, Inc.:
We have audited the accompanying consolidated
balance sheet of NeoMedia Technologies, Inc. (the “Company”), as of December 31, 2012, and the related consolidated
statements of operations and comprehensive loss, shareholders’ deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012, and
the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted
in the United States of America.
The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to such financial
statements, the Company has suffered recurring losses from operations, has significant working capital and shareholder deficits
and may have ongoing requirements for additional capital investment. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Kingery & Crouse, P.A.
Certified Public Accountants
Tampa, FL
April 1, 2013
NeoMedia Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share data)
| | |
December 31, | | |
December 31, | |
| | |
2013 | | |
2012 | |
| | |
(RESTATED) | | |
| |
| ASSETS | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 267 | | |
$ | 611 | |
| Accounts receivable, less allowances of $0 | |
| 295 | | |
| 217 | |
| Prepaid expenses and other current assets | |
| 107 | | |
| 120 | |
| Total current assets | |
| 669 | | |
| 948 | |
| Property and equipment, net | |
| 5 | | |
| 44 | |
| Goodwill | |
| 3,418 | | |
| 3,418 | |
| Proprietary software, net | |
| - | | |
| 99 | |
| Patents and other intangible assets, net | |
| 1,213 | | |
| 1,490 | |
| Other long-term assets | |
| - | | |
| 40 | |
| Total assets | |
$ | 5,305 | | |
$ | 6,039 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | 236 | | |
$ | 506 | |
| Accrued expenses | |
| 291 | | |
| 399 | |
| Deferred revenues and customer prepayments | |
| 2,252 | | |
| 3,735 | |
| Note payable | |
| 56 | | |
| 50 | |
| Deferred tax liability | |
| - | | |
| 706 | |
| Derivative financial instruments – warrants | |
| 620 | | |
| 3,687 | |
| Derivative financial instruments - Series C and D preferred stock and debentures payable | |
| 296 | | |
| 2,147 | |
| Debentures payable - carried at amortized cost | |
| - | | |
| 53 | |
| Debentures payable - carried at fair value | |
| 38,250 | | |
| 64,292 | |
| Total current liabilities | |
| 42,001 | | |
| 75,575 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| | | |
| | |
| | |
| | | |
| | |
| Series C convertible preferred stock, $0.01 par value, 27,000 shares authorized, 4,816 and 4,840 shares issued and outstanding, liquidation value of $4,816 and $4,840 as of December 31, 2013 and 2012, respectively | |
| 4,816 | | |
| 4,840 | |
| Series D convertible preferred stock, $0.01 par value, 25,000 shares authorized, 3,481 and 3,481 shares issued and outstanding, liquidation value of $348 and $348 as of December 31, 2013 and 2012, respectively | |
| 348 | | |
| 348 | |
| | |
| | | |
| | |
| Shareholders’ deficit: | |
| | | |
| | |
| Common stock, $0.001 par value, 5,000,000,000 shares authorized, 4,984,827,279 and 2,106,035,882 shares issued and outstanding as of December 31, 2013 and 2012, respectively | |
| 4,985 | | |
| 2,106 | |
| Additional paid-in capital | |
| 190,946 | | |
| 188,814 | |
| Accumulated deficit | |
| (236,910 | ) | |
| (264,630 | ) |
| Accumulated other comprehensive loss | |
| (102 | ) | |
| (235 | ) |
| Treasury stock, at cost, 2,012 shares of common stock | |
| (779 | ) | |
| (779 | ) |
| Total shareholders’ deficit | |
| (41,860 | ) | |
| (74,724 | ) |
| Total liabilities and shareholders’ deficit | |
$ | 5,305 | | |
$ | 6,039 | |
See accompanying notes.
NeoMedia Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations
and Comprehensive Loss
(in thousands, except share and per share
data)
| | |
Year Ended December 31, | |
| | |
2013 | | |
2012 | |
| | |
(RESTATED) | | |
| |
| Revenues | |
$ | 5,024 | | |
$ | 2,344 | |
| Cost of revenues | |
| (731 | ) | |
| (2,181 | ) |
| Gross profit | |
| 4,293 | | |
| 163 | |
| | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | |
| Sales and marketing expenses | |
| (286 | ) | |
| (1,100 | ) |
| General and administrative expenses | |
| (2,549 | ) | |
| (3,593 | ) |
| Research and development costs | |
| (717 | ) | |
| (951 | ) |
| Other operating income | |
| 229 | | |
| - | |
| Total operating expenses | |
| (3,323 | ) | |
| (5,644 | ) |
| | |
| | | |
| | |
| Income (loss) from operations | |
| 970 | | |
| (5,481 | ) |
| | |
| | | |
| | |
| Other income (expense): | |
| | | |
| | |
| Gain from change in fair value of hybrid financial instruments | |
| 21,809 | | |
| 11,926 | |
| Gain from change in fair value of derivative liability - warrants | |
| 3,067 | | |
| 11,347 | |
| Gain from change in fair value of derivative liability - Series C and D preferred stock and debentures | |
| 1,841 | | |
| (13,035 | ) |
| Gain (loss) on extinguishment of debt | |
| 53 | | |
| (27,479 | ) |
| Impairment loss on cash surrender value of life insurance policy | |
| - | | |
| (527 | ) |
| Gain on derecognition of accrued expenses and purchase price guarantee | |
| - | | |
| 8,300 | |
| Interest income (expense), net | |
| 16 | | |
| (4,437 | ) |
| Total other income (expense) | |
| 26,786 | | |
| (13,905 | ) |
| | |
| | | |
| | |
| Net income (loss) before taxes | |
| 27,756 | | |
| (19,386 | ) |
| | |
| | | |
| | |
| Income tax benefit | |
| 706 | | |
| - | |
| | |
| | | |
| | |
| Net income (loss) | |
| 28,462 | | |
| (19,386 | ) |
| | |
| | | |
| | |
| Deemed dividends on convertible preferred stock | |
| (16 | ) | |
| - | |
| | |
| | | |
| | |
| Deemed dividends on convertible debentures | |
| (726 | ) | |
| - | |
| | |
| | | |
| | |
| Net income (loss) available to common shareholders | |
$ | 27,720 | | |
$ | (19,386 | ) |
| | |
| | | |
| | |
| Comprehensive income (loss): | |
| | | |
| | |
| Net income (loss) | |
$ | 28,462 | | |
$ | (19,386 | ) |
| Foreign currency translation adjustment | |
| 133 | | |
| (56 | ) |
| | |
| | | |
| | |
| Comprehensive income (loss) | |
$ | 28,595 | | |
$ | (19,442 | ) |
| | |
| | | |
| | |
| Net income (loss) per common share, basic and diluted: | |
| | | |
| | |
| Basic | |
$ | 0.007 | | |
$ | (0.02 | ) |
| Fully diluted | |
$ | 0.007 | | |
$ | (0.02 | ) |
| | |
| | | |
| | |
| Weighted average number of common shares: | |
| | | |
| | |
| Basic | |
| 4,119,387,609 | | |
| 1,276,601,569 | |
| Fully diluted | |
| 4,119,387,609 | | |
| 1,276,601,569 | |
See accompanying notes.
NeoMedia Technologies, Inc. and Subsidiaries`
Consolidated Statements of Shareholders’
Deficit
(In thousands, except share data)
| | |
Common Stock | | |
| | |
| | |
| | |
Treasury Stock | | |
| |
| | |
| | |
| | |
| | |
| | |
Accumulated | | |
| | |
| | |
| |
| | |
| | |
| | |
Additional Paid–in | | |
Accumulated | | |
Other
Comprehensive | | |
| | |
| | |
Total
Shareholders' | |
| | |
Shares | | |
Amount | | |
Capital | | |
Deficit | | |
Loss | | |
Shares | | |
Amount | | |
Deficit | |
Balance, December 31,
2011 | |
| 541,984,111 | | |
$ | 542 | | |
$ | 170,006 | | |
$ | (245,244 | ) | |
$ | (179 | ) | |
| 2,012 | | |
$ | (779 | ) | |
$ | (75,654 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Shares issued upon conversions of Series C preferred
stock | |
| 34,168,248 | | |
| 34 | | |
| 844 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 878 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Shares issued upon conversions of Series D preferred
stock | |
| 142,457,436 | | |
| 143 | | |
| 2,199 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,342 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Shares issued upon conversions of convertible
debentures | |
| 1,387,426,087 | | |
| 1,387 | | |
| 15,751 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 17,138 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock-based compensation expense | |
| - | | |
| - | | |
| 14 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 14 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Comprehensive (loss – foreign currency
translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| (56 | ) | |
| - | | |
| - | | |
| (56 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net loss | |
| - | | |
| - | | |
| - | | |
| (19,386 | ) | |
| - | | |
| - | | |
| - | | |
| (19,386 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, December 31, 2012 | |
| 2,106,035,882 | | |
| 2,106 | | |
| 188,814 | | |
| (264,630 | ) | |
| (235 | ) | |
| 2,012 | | |
| (779 | ) | |
| (74,724 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Shares issued upon conversions of Series C preferred
stock | |
| 41,237,113 | | |
| 41 | | |
| 10 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 51 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Shares issued upon conversions of convertible
debentures | |
| 2,837,554,284 | | |
| 2,838 | | |
| 2,121 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 4,959 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Deemed dividend on Series C preferred stock | |
| - | | |
| - | | |
| - | | |
| (16 | ) | |
| - | | |
| - | | |
| - | | |
| (16 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Deemed dividend on convertible debentures | |
| - | | |
| - | | |
| - | | |
| (726 | ) | |
| - | | |
| - | | |
| - | | |
| (726 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Stock-based compensation expense | |
| - | | |
| - | | |
| 1 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Comprehensive income – foreign
currency translation adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| 133 | | |
| - | | |
| - | | |
| 133 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Net income (Restated) | |
| - | | |
| - | | |
| - | | |
| 28,462 | | |
| - | | |
| - | | |
| - | | |
| 32,705 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Balance, December 31, 2013 (Restated) | |
| 4,984,827,279 | | |
$ | 4,985 | | |
$ | 190,946 | | |
$ | (236,910 | ) | |
$ | (102 | ) | |
| 2,012 | | |
$ | (779 | ) | |
$ | (41,860 | ) |
See accompanying notes.
NeoMedia Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
| | |
Year Ended December 31, | |
| | |
2013 | | |
2012 | |
| | |
(RESTATED) | | |
| |
| Cash Flows from Operating Activities: | |
| | | |
| | |
| Net income (loss) | |
$ | 28,462 | | |
$ | (19,386 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 410 | | |
| 972 | |
| (Gain) loss on extinguishment of debt | |
| (53 | ) | |
| 27,479 | |
| Gain from change in fair value of hybrid financial instruments | |
| (21,809 | ) | |
| (11,926 | ) |
| Gain from change in fair value of derivative liability – warrants | |
| (3,067 | ) | |
| (11,347 | ) |
| (Gain) loss from change in fair value of derivative liability - Series C and D preferred stock and debentures | |
| (1,841 | ) | |
| 13,035 | |
| Deferred taxes | |
| (706 | ) | |
| - | |
| Stock-based compensation expense | |
| 1 | | |
| 14 | |
| Bad debt expense | |
| - | | |
| 457 | |
| Interest expense added to liabilities | |
| - | | |
| 4,406 | |
| Gain on derecognition of accrued expenses and purchase price guarantee | |
| - | | |
| (8,300 | ) |
| Impairment loss on cash surrender value of life insurance policy | |
| - | | |
| 527 | |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| (68 | ) | |
| - | |
| Prepaid expenses and other assets | |
| 84 | | |
| 63 | |
| Accounts payable and accrued liabilities | |
| (331 | ) | |
| 555 | |
| Deferred revenue and other current liabilities | |
| (1,481 | ) | |
| 1,915 | |
| Net cash used in operating activities | |
| (399 | ) | |
| (1,536 | ) |
| | |
| | | |
| | |
| Cash Flows from Investing Activities: | |
| | | |
| | |
| Acquisition of property and equipment | |
| - | | |
| (3 | ) |
| Proceeds received from life insurance policy | |
| - | | |
| 126 | |
| Net cash provided by investing activities | |
| - | | |
| 123 | |
| | |
| | | |
| | |
| Cash Flows from Financing Activities: | |
| | | |
| | |
| Payments on convertible debt instruments | |
| - | | |
| (450 | ) |
| Borrowings under convertible debentures | |
| - | | |
| 2,500 | |
| Borrowings under short-term notes payable | |
| 110 | | |
| - | |
| Payments on short-term notes payable | |
| (54 | ) | |
| - | |
| Net cash provided by financing activities | |
| 56 | | |
| 2,050 | |
| | |
| | | |
| | |
| Effect of exchange rate changes on cash | |
| (1 | ) | |
| (56 | ) |
| | |
| | | |
| | |
| Net change in cash and cash equivalents | |
| (344 | ) | |
| 581 | |
| | |
| | | |
| | |
| Cash and cash equivalents, beginning of year | |
| 611 | | |
| 30 | |
| Cash and cash equivalents, end of year | |
$ | 267 | | |
$ | 611 | |
| | |
| | | |
| | |
| Supplemental cash flow information: | |
| | | |
| | |
| Interest paid during the period | |
$ | 5 | | |
$ | 31 | |
| Series C preferred stock converted to common stock | |
$ | 10 | | |
$ | 878 | |
| Series D preferred stock converted to common stock | |
$ | - | | |
$ | 2,342 | |
| Convertible debentures converted to common stock | |
$ | 4,233 | | |
$ | 17,138 | |
| Deemed dividend on Series C preferred stock conversion | |
$ | 16 | | |
$ | - | |
| Deemed dividend on convertible debentures conversion | |
$ | 726 | | |
$ | - | |
See accompanying notes.
NeoMedia Technologies, Inc.
Notes to Consolidated Financial Statements
December 31, 2013
Note 1 – General
Business – NeoMedia,
a Delaware corporation, was founded in 1989 and is headquartered in Boulder, Colorado. We have positioned ourselves to lead the
development of 2D mobile barcode technology and infrastructure solutions that enable the mobile barcode ecosystem world-wide. NeoMedia
harnesses the power of the mobile phone in innovative ways with state-of-the-art mobile barcode technology solutions. With this
technology, mobile devices with cameras become barcode scanners, and this enables a range of practical applications including mobile
marketing and mobile commerce. In addition, we offer licensing of our extensive intellectual property portfolio.
As we communicated in a Periodic Report
on Form 8-K on July 29, 2014, we are restating certain of our financial statements by filing amendments to our previously filed
Form 10-K for December 31, 2013 (and interim periodic reports on Form 10-Q). We and the SEC have concluded that certain modifications
in the Company’s valuation methodology, deemed as accounting estimates by the Company, contained errors with respect to the
valuation of convertible debentures and preferred shares issued by the Company, in that such methodology did not capture the potentially
dilutive effect upon their conversion into common stock. Please see the disclosure in Note 2 entitled “Restatement
to 2013 Reporting” for further information as these changes in valuation methodology has affected our previously filed report
on Form 10-K for December 31, 2013.
Note 2 – Summary of Significant
Accounting Policies
The accompanying audited consolidated financial
statements have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”).
All normal adjustments considered necessary for a fair presentation have been included.
Basis of Presentation –
The consolidated financial statements include the accounts of NeoMedia Technologies, Inc. and our wholly-owned subsidiaries (collectively
herein referred to as “NeoMedia,” the “Company,” “we,” “us,” “our,”
and similar terms). We operate as one reportable segment. All intercompany accounts, transactions and profits have been eliminated
in consolidation. Certain prior year amounts in the consolidated financial statements and notes thereto have been reclassified
to conform to the current year's presentation.
Use of Estimates –
The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting period. Changes in facts and circumstances
may result in revised estimates, which are recorded in the period in which they become known.
Restatement to 2013 Reporting – As
noted above and disclosed initially in our Periodic Report on Form 8-K on July 29, 2014, during the three month period ended March
31, 2014, we reassessed the valuation techniques used to estimate the fair values of our derivative financial instruments and debentures
payable. Based on the reassessment, including discussions with the third-party valuation firm assisting us with the calculation,
we determined that the valuation technique should be modified to consider the potentially dilutive impact on the stock price resulting
from the issuance of additional shares of common stock upon the conversion of the instruments as well as the resulting value in
comparison to our market capitalization.
We agree with the SEC’s assertion
that certain modifications in our valuation methodology contained errors with respect to the valuation of convertible debentures
issued by us. We restated the year ended December 31, 2013 to reflect the change in valuation technique and correction of the fair
value accounting of the derivative financial instruments and debentures payable. In addition, we also restated our December 31,
2013 Balance Sheet as it pertains to the Fair Value of our Warrants, Preferred Series C & D and Convertible Debentures to amounts
as stated below from how they were originally reported as of December 31, 2013 in our Form 10-K:
| | |
December 31, 2013
(as previously reported) | | |
Adjustments | | |
December 31, 2013
(Restated) | |
| | |
| | |
| | |
| |
| Derivative Financial Instruments – warrants | |
$ | 684 | | |
$ | (64 | ) | |
$ | 620 | |
| | |
| | | |
| | | |
| | |
| Derivative Financial Instruments – Series C and D | |
$ | 23,606 | | |
$ | (23,310 | ) | |
$ | 296 | |
| | |
| | | |
| | | |
| | |
| Debentures payable – carried at fair value | |
$ | 257,451 | | |
$ | (219,201 | ) | |
$ | 38,250 | |
| | |
| | | |
| | | |
| | |
| Total Liabilities | |
$ | 284,576 | | |
$ | (242,575 | ) | |
$ | 42,001 | |
| | |
| | | |
| | | |
| | |
| Accumulated deficit | |
$ | (479,485 | ) | |
$ | 242,575 | | |
$ | (236,910 | ) |
| | |
| | | |
| | | |
| | |
| Total shareholders’ deficit | |
$ | (284,435 | ) | |
$ | 242,575 | | |
$ | (41,860 | ) |
The
table below reflects the changes in restating the derivative liabilities for the year ended December 31, 2013 (in thousands):
Derivative
Liability Restatement for the 12 months ended December 31, 2013:
| | |
Year Ended December
31, 2013
(as previously reported) | | |
Adjustments | | |
Year Ended December 31,
2013
(Restated) | |
| | |
| | |
| | |
| |
| Gain (loss) from change in fair value of hybrid financial instruments | |
$ | (197,392 | ) | |
$ | 219,201 | | |
$ | 21,809 | |
| | |
| | | |
| | | |
| | |
| Gain (loss) from change in fair value of derivative liability – warrants | |
$ | 3,003 | | |
$ | 64 | | |
$ | 3,067 | |
| | |
| | | |
| | | |
| | |
| Gain (loss) from change in fair value of derivative liability – Series C & D | |
$ | (21,469 | ) | |
$ | 23,310 | | |
$ | 1,841 | |
| | |
| | | |
| | | |
| | |
| Net income (loss) | |
$ | (214,113 | ) | |
$ | 242,575 | | |
$ | 28,462 | |
| | |
| | | |
| | | |
| | |
| Net income (loss) available to common shareholders | |
$ | (214,855 | ) | |
$ | 242,575 | | |
$ | 27,720 | |
| | |
| | | |
| | | |
| | |
| Comprehensive income (loss) | |
$ | (213,980 | ) | |
$ | 242,575 | | |
$ | 28,595 | |
The
table below reflects the changes in restating the Statement of Cash Flows for the year ended December 31, 2013 (in thousands):
Statement
of Cash Flow:
| | |
Year Ended December
31, 2013
(as previously reported) | | |
Adjustments | | |
Year Ended December 31,
2013
(Restated) | |
| | |
| | |
| | |
| |
| Net income (loss) | |
$ | (214,113 | ) | |
$ | 242,575 | | |
$ | 28,462 | |
| | |
| | | |
| | | |
| | |
| Gain (loss) from change in fair value of hybrid financial instruments | |
$ | (197,392 | ) | |
$ | 219,201 | | |
$ | 21,809 | |
| | |
| | | |
| | | |
| | |
| Gain (loss) from change in fair value of derivative liability – warrants | |
$ | 3,003 | | |
$ | 64 | | |
$ | 3,067 | |
| | |
| | | |
| | | |
| | |
| Gain (loss) from change in fair value of derivative liability – Series C & D | |
$ | (21,469 | ) | |
$ | 23,310 | | |
$ | 1,841 | |
| | |
| | | |
| | | |
| | |
| Net cash used in operating activities | |
$ | (399 | ) | |
$ | - | | |
$ | (399 | ) |
Going Concern – While
we have historically incurred operating losses, and we may continue to generate negative cash flows as we implement our business
plan, the business has been operating on a self-sufficient basis. However, there can be no assurance that our success in executing
our business plan will continue. The accompanying consolidated financial statements have been prepared in conformity with US GAAP,
which contemplates our continuation as a going concern given fair value accounting related to our debentures. Our net income for
the year ended December 31, 2013 and our net loss for the year ended December 31.2012 was $28.5 million and $19.4 million, respectively,
including $26.7 million gain and $17.3 million loss, respectively, related to our financing instruments. The impact of our successful
implementation strategy shows our operating income was $1.0 million for 2013 as compared to an operating loss in 2012 of $5.5 million.
Net cash used in operations during 2013
and 2012 was $0.4 million and $1.5 million, respectively. As of December 31, 2013, we have an accumulated deficit of $236.9 million.
We also have a working capital deficit of $36.7 million, including $39.2 million in current liabilities for our derivative and
debenture financing instruments.
We currently do not have sufficient cash
or commitments for financing to sustain our operations for the next twelve months if we are unable to generate sufficient cash
flows from operations. Our plan is to develop new client and customer relationships and substantially increase our revenue derived
from our products/services and IP licensing. If our revenues do not reach the level anticipated in our plan, we may require additional
financing in order to execute our operating plan; however, we believe that our revenues will reach such level and such additional
financing will not be necessary. If additional financing is required, we cannot predict whether this additional financing will
be in the form of equity, debt, or another form, and we may not be able to obtain the necessary additional capital on a timely
basis, on acceptable terms, or at all. In the event that financing sources are not available, or that we are unsuccessful in increasing
our revenues and profits, we may be unable to implement our current plans for expansion, repay our debt obligations or respond
to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition and
results of operations.
The convertible debentures and preferred
stock used to finance the Company, which may be converted into common stock at the sole option of the holders, have a highly dilutive
impact when they are converted, greatly increasing the number of common shares outstanding. During 2013, there were 2,879 million
shares of common stock issued for these conversions. We cannot predict if or when each holder may or may not elect to convert into
common shares.
Our financial statements do not include
any adjustments relating to the recoverability and reclassification of recorded asset amounts or the amounts and classification
of liabilities that might be necessary should we be unable to continue as a going concern.
Cash and Cash Equivalents – Cash and cash
equivalents include cash in financial institutions, which are highly liquid investment instruments with original maturities of
less than 90 days.
Revenue
Recognition – We derive revenues from the following primary sources: (1) license fees relating to intellectual property,
and (2) software and service revenues related to mobile marketing barcode infrastructure management and development, barcode readers
and custom developed software.
We
recognized revenue when: (a) persuasive evidence of the sales arrangement exists, (b) the arrangement fee is fixed or determinable,
(c) service delivery or performance has occurred, (d) customer acceptance has been received, if contractually required, and (e)
collectability of the arrangement fee is probable. Revenue associated with licensing agreements primarily consists of non-refundable
upfront license fees. Non-refundable upfront license fees received under license agreements, whereby continued performance or future
obligations are considered inconsequential to the relevant license technology, are recognized as revenue upon delivery of the technology.
We typically use signed contractual agreements as persuasive evidence of a sales arrangement.
If
at the inception of an arrangement the fee is not fixed or determinable, we defer revenue until the arrangement fee becomes due
and payable. If we determine collectability is not probable, we defer revenue until we receive payment or collection becomes probable,
whichever is earlier. The determination of whether fees are collectible requires judgment of our management, and the amount and
timing of revenue recognition may change if different assessments are made.
Deferred
revenues and customer prepayments on our consolidated balance sheets primarily represents amounts invoiced or cash payments received
in advance of our performance related to the underlying agreement.
Change in Accounting Policy
– In early 2013, we expanded our business strategy related to the monetization of intellectual property rights and have been
pursuing brand licenses with major corporations. In connection with the strategy expansion, we reevaluated our revenue recognition
accounting principles during the second quarter of 2013 and determined that the completed performance methodology for recognizing
intellectual properly revenue was preferable to the historically used proportional performance methodology. The completed performance
methodology is further described above within the revenue recognition discussion. As part of this change in accounting principle,
we conducted a quantitative analysis to determine the impact the accounting policy change would have had on our 2012 balance sheet
and statement of operations. The impact to our balance sheet as of December 31, 2012 would have been a decrease in each of the
deferred revenues and customer prepayments, total current liabilities, and accumulated deficit of $208,000. The impact to our 2012
statement of operations would have been an increase in revenues and decrease in the net loss available to common shareholders of
$208,000, and there would have been no impact on basic and diluted net loss per common share. Based on the analysis, the impact
was deemed immaterial to the overall financial statements.
Multiple Element Transactions
– From time to time, we enter into transactions involving multiple elements, such as customer agreements involving multiple
patents. We account for multiple element transactions by first obtaining evidence of the estimated selling price of each element
using vendor specific objective evidence (“VSOE”), third-party evidence (“TPE”), or management’s
best estimate of selling price if neither VSOE nor TPE of selling price exists. Based on the determined selling price of each element
of the transaction, the value of the single agreement is allocated to each deliverable based on each element's proportional value
and accounted for as a separate unit of accounting. Multiple element transactions require the exercise of judgment in determining
the estimated selling price of the different elements. The judgments could impact the amount of revenues and expenses recognized
over the term of the contract, as well as the period in which they are recognized.
Basic and Diluted Loss Per Common
Share – Basic net loss per common share is computed by dividing net loss available to common shareholders by the
weighted average number of shares of common stock outstanding during the period. During the years ended December 31, 2013 and 2012,
we reported a net loss available to common shareholders and excluded all outstanding stock options, warrants and convertible instruments
from the calculation of diluted net loss per common share because inclusion of these securities would have been anti-dilutive.
The following table reflects the outstanding
stock options, warrants, convertible debt and convertible preferred securities as of December 31, 2013 and 2012, which have been
excluded from the diluted loss per common share calculation because inclusion of the securities would be anti-dilutive:
| | |
December 31, | |
| | |
2013 | | |
2012 | |
| Stock options | |
| 1,173,020 | | |
| 1,340,000 | |
| Warrants | |
| 499,990,063 | | |
| 1,882,492,690 | |
| Convertible debt | |
| 234,287,861,850 | | |
| 22,696,138,542 | |
| Convertible preferred stock | |
| 26,617,345,361 | | |
| 990,409,508 | |
| | |
| 261,406,370,294 | | |
| 25,570,380,740 | |
Foreign
Currency – Historically, the functional currency of NeoMedia Europe GmbH was the euro, its local currency, and we
recorded translation gains and losses associated with the conversion of the subsidiary financial statements to U.S. dollars in
accumulated other comprehensive loss as a component of shareholders’ deficit. During the third quarter of 2013, we determined
that changes in economic facts and circumstances indicated that the functional currency of NeoMedia Europe GmbH had changed from
the euro to the U.S. dollar. The changes included, among other things, the termination of the hardware business and related
sales activities that would allow the subsidiary to generate revenue independently in the local market or otherwise, and the completion
of a repositioning of the subsidiary from a self-contained, revenue generating operation to a cost center focused primarily on
research and development. As a result of the change in functional currency, translation gains and losses associated with
the conversion of the NeoMedia Europe GmbH financial statements will be prospectively recorded in our results from operations effective
July 1, 2013.
Fair-valued Financial Instruments
– Fair value measurement within the financial statements is primarily reflected in the accounting for our Convertible
Preferred Stock, Convertible Debentures and Warrants, where we determine the fair value of certain hybrid instruments carried at
fair value, and certain derivative liabilities which are recorded at fair value. See additional details below and at Note 4 –
Financing.
Derivative Financial Instruments
– We do not use derivative financial instruments to hedge exposures to cash flow risks or market risks that may affect
the fair values of our financial instruments. However, certain financial instruments, such as warrants and the embedded conversion
features of our convertible preferred stock and convertible debentures, which are indexed to our common stock, are classified as
liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within
our control. In such instances, net-cash settlement is assumed for financial accounting and reporting purposes, even when the terms
of the underlying contracts do not provide for net-cash settlement. Derivative financial instruments are initially recorded, and
continuously carried, at fair value. Determining the fair value of these complex derivative financial instruments involves judgment
and the use of certain relevant assumptions including, but not limited to, interest rate risk, credit risk, and equivalent volatility
and conversion/redemption privileges. The use of different assumptions could have a material effect on the estimated fair value
amounts.
For our convertible debentures, we have
elected not to separately account for the embedded conversion feature as a derivative instrument but to account for the entire
hybrid instrument at fair value in accordance with FASB ASC 815, Derivatives and Hedging. For our convertible preferred
stock, the underlying instruments are carried at amortized cost and the embedded conversion feature is accounted for separately
at fair value in accordance with FASB ASC 815-40-05 and FASB ASC 815-40-15.
Financial Instruments and Concentration
of Credit Risk – We believe the carrying values of our financial instruments consisting of cash and cash equivalents,
accounts receivable, accounts payable, accrued expenses, derivative financial instruments, other current liabilities, convertible
preferred stock, and convertible debenture financings approximate their fair values due to their short-term nature, or because
they are carried at fair value.
Our cash balances in the United States
periodically exceed federally insured limits. We have not experienced any losses in such accounts. The cash balances maintained
by our wholly owned subsidiary, NeoMedia Europe GmbH, are also maintained in financial institutions that provide deposit guarantees
and are governed by local public law. Our policies limit the concentration of accounts receivable credit exposure by requiring
the majority of customers to prepay their renewal licenses prior to initiating services.
Accounts Receivable –
We report accounts receivable at net realizable value. Our terms of sale provide the basis for when accounts become delinquent
or past due. We provide an allowance for doubtful accounts equal to the estimated uncollectible amounts, based on historical collection
experience and a review of the current status of accounts receivable. We do not require collateral and to the extent credit
is granted to our customers, all open accounts receivable beyond 90 days are evaluated for recovery.
Goodwill – Our goodwill
represents the excess of the purchase price paid for NeoMedia Europe GmbH over the fair value of the identifiable net assets and
liabilities acquired, based on an independent appraisal of the assets and liabilities acquired. Goodwill is not amortized but is
tested annually for impairment, and between annual tests if an event occurs or circumstances change that would more likely than
not reduce the fair value of a reporting unit below its carrying value. Goodwill is tested for impairment by comparing the carrying
amount of the asset to its fair value, which is estimated through the use of a discounted cash flows model. If the carrying amount
exceeds fair value, an impairment loss is recognized for the difference. As of December 31, 2013, we determined there were no impairments
of our goodwill.
Intangible Assets –
Intangible assets consist of patents, customer contracts, copyrighted material, acquired software products, and brand names. Intangible
assets acquired as part of a business combination are recognized apart from goodwill if the intangible asset arises from contractual
or other legal rights or the asset is capable of being separated from the acquired enterprise. Intangible assets are reviewed for
impairment by comparing the carrying amount of the intangible asset to its fair value. If the carrying amount exceeds fair value,
an impairment loss is recognized for the difference. Intangible assets are amortized, using the straight-line method, over the
estimated period of benefit as noted below:
| Capitalized patents |
|
|
5 - 17 years |
|
| Customer contracts |
|
|
5 years |
|
| Copyrighted materials |
|
|
5 years |
|
| Acquired software products |
|
|
7 years |
|
| Brand names |
|
|
10 years |
|
Evaluation of Long-Lived Assets –
We periodically perform impairment tests on each of our long-lived assets, including capitalized patent costs, customer contracts,
copyrighted materials, brand names, and capitalized and purchased software costs, whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. Long-lived assets are testing for impairment by first comparing the estimated
future undiscounted cash flows from a particular asset or asset group to the carrying value. If the expected undiscounted cash
flows are greater than the carrying value, no impairment is recognized. If the expected undiscounted cash flows are less than the
carrying value, then an impairment charge is recorded for the difference between the carrying value and the expected discounted
cash flows. The assumptions used in developing expected cash flow estimates are similar to those used in developing other information
used by us for budgeting and other forecasting purposes. In instances where a range of potential future cash flows is possible,
we use a probability-weighted approach to weigh the likelihood of those possible outcomes.
As of December 31, 2013 and 2012, we do
not believe any of our long-lived assets are impaired.
Property and Equipment –
Property and equipment, including software, are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line
basis over the estimated useful lives of the assets as noted below:
| Furniture and fixtures |
|
|
3 - 7 years |
|
| Equipment |
|
|
2 - 5 years |
|
Research and Development
– Costs associated with the planning and design phase of software development, including coding and testing activities, and
related overhead, necessary to establish technological feasibility of our internally-developed software products, are classified
as research and development and are expensed as incurred.
Stock-Based Compensation –
We record the grant date fair value of stock-based compensation awards as an expense using a straight-line attribution method over
the vesting period of the related stock options. In order to determine the fair value of the stock options on the date of grant,
we use the Black-Scholes-Merton option-pricing model. Inherent in this model are assumptions related to expected stock-price volatility,
forfeiture and option life, risk-free interest rate and dividend yield. Although the risk-free interest rates and dividend yield
are less subjective assumptions based on factual data derived from public sources, the expected stock-price volatility, forfeiture
rate and option life assumptions require a greater level of judgment. We use an expected stock-price volatility assumption that
is based on historical volatilities of our common stock and estimate the forfeiture rate and option life based on historical data
related to prior option grants.
We account for modifications of the terms
of existing option grants as exchanges of the existing equity instruments for new instruments. The fair value of the modified
option at the grant date is compared with the value at that date of the original option immediately before its terms are modified.
Any excess fair value of the modified option over the original option is recognized as additional compensation expense.
Income Taxes – Deferred
tax liabilities and assets reflect the difference between the financial statement and tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the difference is expected to reverse. Deferred tax assets are reduced by a
valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized.
We have recorded full valuation allowance as of December 31, 2013 and 2012.
Recent Accounting Pronouncements
In February 2013, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts
Reclassified out of Accumulated Other Comprehensive Income. The update improves the reporting of reclassifications out of
accumulated other comprehensive income for certain transactions and is applied prospectively for periods beginning January 1,
2013. We do not anticipate that the accounting pronouncement will have a material impact on our consolidated financial statements
in future periods.
In March 2013, the FASB issued
ASU No. 2013-05, Liabilities (Topic 830): Parent’s Accounting for Cumulative Translation Adjustment upon Derecognition
of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. The ASU is effective
beginning after December 15, 2013 and requires the release of any cumulative translation adjustment into net income upon derecognition
of certain subsidiaries or groups of assets within a foreign entity or of an investment in foreign entity. We do not anticipate
that the accounting pronouncement will have a material impact on our consolidated financial statements in future periods.
In
July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When
a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The ASU is effective for periods
beginning after December 15, 2013 and standardizes the presentation of an unrecognized tax benefit when a net operating loss carryforward,
a similar tax loss, or a tax credit carryforward exists. We do not anticipate that the accounting pronouncement will have a material
impact on our consolidated financial statements in future periods.
From time to time, various other new accounting pronouncements
are issued that we adopt as of the specified effective date. We believe that the impact of any other recently issued standards
that are not yet effective will not have a material impact on our results of operations and financial position.
Note 3 – Capital Stock
Common Stock – Holders
of common stock are entitled to one vote for each share held of record on each matter submitted to a vote of shareholders. Holders
of our common stock do not have a cumulative voting right. Upon a liquidation, dissolution, or winding up event, holders of common
stock would be entitled to share ratably in all assets remaining after payment of liabilities and payment of accrued dividends
and liquidation preferences on the preferred stock, if any. Shares of common stock that have been repurchased are held as treasury
shares and used for general corporate purposes including, but not limited to, satisfying obligations under our employee benefit
plans. Treasury stock is recorded at cost.
Preferred Stock –
We are authorized to issue 25 million shares of preferred stock with a par value $0.01 per share. Preferred stock may be issued
in the future in connection with acquisitions, financings, or other matters, as our Board of Directors deems appropriate. The
issuance of preferred stock could have the effect of delaying, deferring, or preventing a change in control of our company without
further action by our shareholders, and may adversely affect the voting and other rights of the holders of our common stock. The
issuance of preferred stock with voting and conversion rights may also adversely affect the voting power of the holders of our
common stock, including the loss of voting control to others.
Series A Preferred Stock –
In December 1999, 200,000 shares of Series A Preferred Stock with a par value of $0.01 per share were authorized for issuance.
The Series A Preferred Stock has the following rights:
| · | The
right to receive mandatory cash dividends equal to the greater of $0.001 per share or 100 times the amount of all dividends (cash
or non-cash, other than dividends of shares of common stock) paid to holders of the common stock, which dividend is payable 30
days after the conclusion of each calendar quarter and immediately following the declaration of a dividend on common stock; |
| · | One
hundred votes per share of Series A Preferred on each matter submitted to a vote of our shareholders; |
| · | The
right to elect two directors at any meeting at which directors are to be elected, and to fill any vacancy on our Board of Directors
previously filled by a director appointed by the Series A Preferred holders; |
| · | The
right to receive an amount, in preference to the holders of common stock, equal to the amount per share payable to holders of
common stock, plus all accrued and unpaid dividends, and following payment of 1/100th of the liquidation preference to the holders
of each share of common stock, an additional amount per share equal to 100 times the per share amount paid to the holders of common
stock; |
| · | The
right to exchange each share of Series A Preferred for 100 times the consideration received per share of common stock in connection
with any merger, consolidation, combination or other transaction in which shares of common stock are exchanged for or converted
into cash, securities or other property; and |
| · | The
right to be redeemed in accordance with our shareholder rights plan. |
If accrued mandatory dividends associated
with Series A Preferred stock are unpaid, we may not declare or pay dividends or distributions on, or redeem, repurchase or reacquire,
shares of any class or series of junior or parity stock.
The Series A Preferred Stock was created
in connection with our shareholders rights plan and as of December 31, 2013 and 2012, there were no issued or outstanding shares
of Series A Preferred Stock.
Series A Convertible Preferred Stock
– In June 2001, 47,511 shares of Series A Convertible Preferred Stock with a $0.01 par value per share were authorized
for issuance. The Series A Convertible Preferred Stock has the following rights:
| · | Series
A Convertible Preferred Stock is convertible into shares of common stock at a one-to-one ratio, which was proportionally adjusted
to a one-to-one hundred ratio pursuant to a reverse stock split in 2011, and which is subject to proportional adjustment in the
event of further stock splits or combinations, and dividends or distributions of shares of common stock. At the option of the
holder, shares are subject to automatic conversion as determined in each agreement relating to the purchase of shares of Series
A Convertible Preferred Stock; |
| · | Each
share of Series A Convertible Preferred Stock is entitled to receive a liquidation preference equal to the original purchase price
of such share in the event of liquidation, dissolution, or winding up; |
| · | Upon
merger or consolidation, or the sale, lease or other conveyance of all or substantially all of our assets, shares of Series A
Convertible Preferred are automatically convertible into the number of shares of stock or other securities or property (including
cash) to which the common stock into which it is convertible would have been entitled; and |
| · | Shares
of Series A Convertible Preferred Stock are entitled to one vote per share of such stock, and vote together with holders of common
stock. |
As of December 31, 2013 and 2012, there
were no shares of Series A Convertible Preferred Stock issued or outstanding.
Series B Convertible Redeemable Preferred
Stock – In January 2002, 100,000 shares of Series B 12% Convertible Redeemable Preferred Stock with a par value of
$0.01 per share were authorized for issuance. The Series B Convertible Redeemable Preferred Stock has the following rights:
| · | Series
B Preferred shares accrue dividends at a rate of 12% per annum, or $1.20 per share, between the date of issuance and the first
anniversary of issuance; |
| · | Series
B Preferred is redeemable to the maximum extent permitted by law (based on funds legally available for redemption) at a price
per share of $15.00, plus accrued dividends (a total of $16.20 per share) on the first anniversary of issuance; |
| · | Series
B Preferred receive proceeds of $12.00 per share upon our liquidation, dissolution or winding up; |
| · | To
the extent not redeemed on the first anniversary of issuance, Series B Preferred is automatically convertible into the then existing
general class of common stock on the first anniversary of issuance at a price equal to $16.20 divided by the greater of $20.00
or the lowest publicly-sold share price during the 90 day period preceding the conversion date, but in no event more than 19.9%
of our outstanding capital stock as of the date immediately prior to conversion; |
| · | Upon
merger or consolidation, or the sale, lease or other conveyance of all or substantially all of our assets, shares of Series B
Preferred are automatically convertible into the number of shares of stock or other securities or property (including cash) to
which the common stock into which it is convertible would have been entitled; and |
| · | Shares
of Series B Preferred are entitled to one vote per share and vote with common stock, except where the proposed action would adversely
affect the Series B Preferred or where the non-waivable provisions of applicable law mandate that the Series B Preferred vote
separately, in which case Series B Preferred vote separately as a class, with one vote per share. |
As of December 31, 2013 and 2012, there
were no shares of Series B Convertible Redeemable Preferred Stock issued or outstanding.
Series C Convertible Preferred Stock
– In February 2006, 27,000 shares of Series C Convertible Preferred Stock with a par value of $0.01 per share were
authorized for issuance. The Series C Convertible Preferred Stock has the following rights:
| · | Series
C preferred shares are entitled to dividends at a rate of 8% per annum, if, as and when
declared by the Board of Directors; |
| · | Series
C preferred shares receive proceeds of $1,000 per share upon our liquidation, dissolution
or winding up; |
| · | Each
share of Series C preferred stock is convertible, at the option of the holder, into shares
of our common stock at the lesser of (i) $50.00 or (ii) 97% of the lowest
closing bid price of our common stock for the 125 trading days immediately preceding
the date of conversion; and |
| · | Series
C preferred shares have voting rights on an as-converted basis with the common stock. |
As of December 31, 2013 and 2012, there
were 4,816 shares and 4,840 shares of Series C Convertible Preferred Stock issued and outstanding, respectively. The holders of
our outstanding shares are limited by the certificate of designation and by the contractual provisions of the related Securities
Purchase Agreements under which the Series C Convertible Preferred Stock was issued and other related transaction documents from
beneficial control of more than 9.99% of our voting securities. Therefore, unless the holder waives this limitation upon 61 days’
notice to us, the holders may not exercise all the voting rights otherwise described in the certificate of designation of these
securities (see Note 4 – Financing).
Series D Convertible Preferred Stock
– In January 2010, 25,000 shares of Series D Convertible Preferred Stock with a par value of $0.01 per share was
authorized for issuance. The Series D Convertible Preferred Stock has the following rights:
| · | Series
D preferred shares are entitled to dividends at a rate of 8% per annum, if, as and when declared by the Board of Directors; |
| · | Series
D preferred shares receive proceeds of $100 per share upon our liquidation, dissolution or winding up; |
| · | Each
share of Series D preferred stock is convertible, at the option of the holder, into shares of our common stock at the lesser of (i)
$2.00 or (ii) 97% of the lowest closing bid price of our common stock for the 125 trading days immediately preceding
the date of conversion; and |
| · | Series
D preferred shares have voting rights on an as-converted basis with the common stock. |
As of December 31, 2013 and 2012, 3,481
shares of Series D preferred stock were issued and outstanding.
Shareholder Rights Plan –
On December 10, 1999, our Board of Directors adopted a shareholder rights plan and declared a non-taxable dividend that provides
shareholders with the right to acquire one-one hundredth of a share of our Series A Preferred Stock for each outstanding share
of our common stock to shareholders of record on December 20, 1999 and each share of common stock issued thereafter until a pre-defined
hostile takeover date. As further defined in detail within the shareholder rights plan, the rights generally will be exercisable
only if (1) an Acquiring Person or Adverse Person acquires beneficial ownership equal to or greater than 25% or 15%, respectively,
or (2) commences a tender offer upon consummation of which the Acquiring Person or Adverse Person would have beneficial ownership
equal to or greater than 25% or 15%, respectively. The shareholder rights plan was designed to enable all shareholders not engaged
in a hostile takeover attempt to receive fair and equal treatment in any proposed takeover and to guard against partial or two-tiered
tender offers, open market accumulations, and other hostile tactics to gain control of us. This shareholder rights plan may have
the effect of rendering more difficult, delaying, discouraging, preventing, or rendering more costly an acquisition or a change
in control.
In addition, our Certificate of Incorporation
authorizes our Board of Directors to designate and issue our preferred stock, in one or more series, the terms of which may be
determined at the time of issuance by our Board of Directors, without further action by shareholders, and may include voting rights,
including the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion, redemption
rights, and sinking fund provisions.
Note 4 – Financing
At December 31, 2013, financial instruments
arising from our financing transactions with YA Global Investments, L.P. (“YA Global”), an accredited investor, included
shares of our Series C preferred stock issued in February 2006, Series D preferred stock issued in January 2010, a series of six
consolidated secured convertible debentures (the “Consolidated Debentures”) issued July 1, 2013 and various warrants
to purchase shares of our common stock. All of our assets are pledged to secure our obligations under the debt securities. At various
times, YA Global has assigned or distributed portions of its holdings of these securities to other holders, including persons who
are officers of YA Global and its related entities, as well as to other holders who are investors in YA Global’s funds.
Secured
Debentures – We had originally entered into financing transactions with YA Global, which included a series of twenty-seven
secured convertible debentures issued between August 2006 and July 2012. Effective July 1, 2013, the terms of the debentures held
by YA Global were modified to consolidate the principal and interest amounts outstanding under all of the outstanding secured convertible
debentures previously issued by us to YA Global, such that, upon the issuance of the Consolidated Debentures and cancellation of
the prior debentures, the amount of outstanding debentures issued to YA Global decreased from twenty-seven to six debentures. The
maturity dates of these secured convertible debentures were also extended from August 1, 2014 to August 1, 2015.
The
underlying agreements for each of the Consolidated Debentures are very similar in form. The Consolidated Debentures are convertible
into our common stock, at the option of the holder, at the lower of a fixed conversion price per share or a percentage of the lowest
volume-weighted average price (“VWAP”) for a specified number of days prior to the conversion (the “look-back
period”). The conversion is limited such that the holder cannot exceed 9.99% ownership of the outstanding common stock, unless
the holder waives their right to such limitation. All of the debentures are secured according to the terms of a Security Pledge
Agreement dated August 23, 2006, which was entered into in connection with the first convertible debenture issued to YA Global
and which provides YA Global with a security interest in substantially all of our assets. The debentures are also secured by a
Patent Security Agreement dated July 29, 2008. On August 13, 2010, our wholly owned subsidiary, NeoMedia Europe GmbH, became a
guarantor of all outstanding financing transactions between us and YA Global, through pledges of their intellectual property and
other movable assets. As security for our obligations to YA Global, all of our Pledged Property, Patent Collateral and other collateral
is affirmed through the several successive Ratification Agreements executed in connection with each of the 2010, 2011 and 2012
financings. The 2013 modification and consolidation of the outstanding secured convertible debentures as well as the execution
of an Amended and Restated Patent Security Agreement in 2013 reaffirmed the Pledged Property, Patent Collateral and other collateral
pledged as security for our obligations to YA Global.
We
evaluated the financing transactions in accordance with ASC 815, Derivatives and Hedging, and determined that the conversion
features of the Series C and Series D preferred stock and the Consolidated Debentures were not afforded the exemption for conventional
convertible instruments due to their variable conversion rates. The contracts have no explicit limit on the number of shares issuable,
so they did not meet the conditions set forth in current accounting standards for equity classification. Accordingly, either the
embedded derivative instruments, including the conversion option, must be bifurcated and accounted for as derivative instrument
liabilities or, as permitted by ASC 815-15-25-4, Recognition of Embedded Derivatives, the instruments may be carried in
their entirety at fair value.
At
inception, we elected to bifurcate the embedded derivatives related to the Series C and Series D preferred stock, while electing
the fair value option for the Consolidated Debentures. ASC 825, Financial Instruments, allows us to elect the fair value
option for recording financial instruments when they are initially recognized or if there is an event that requires re-measurement
of the instruments at fair value, such as a significant modification of the debt.
The
terms of the debentures held by YA Global prior to the consolidation were modified on May 25, 2012 to extend the stated maturity
dates to August 1, 2013 and reduce the interest rates to 9.5% per year, with interest being payable on the maturity date in cash
or, provided certain equity conditions are satisfied, in shares of our common stock at the applicable conversion price. Because
the effect of the modifications exceeded a significance threshold relative to cash flows prescribed by ASC 470-50, Debt Modifications
and Extinguishments, the modifications of the amounts due under these arrangements were accounted for as extinguishments, whereby
the existing debentures are considered to be retired and new debentures issued. The existing instruments were first adjusted to
fair value as of May 25, 2012 using the interest rate and maturity date prior to the amendment. The fair value of the new instruments
was then calculated using the modified interest rate and maturity date to determine the fair value of the instrument subsequent
to the amendment. The differences in the fair values before and after the amendment were recorded as an extinguishment loss of
approximately $27.5 million in the accompanying statements of operations for the year ended December 31, 2012.
On
February 4, 2013, we entered into a Debenture Extension Agreement with YA Global to extend the maturity dates of the secured convertible
debentures to August 1, 2014.
Because the effect of the extension did not exceed a significance threshold relative to cash flows prescribed by ASC 470-50,
Debt Modifications and Extinguishments, extinguishment accounting was
not applicable. On July 1, 2013, in addition to consolidating the
secured debentures into six Consolidated Debentures, the maturity date was extended to August 1, 2015. Four of the Consolidated
Debentures are non-interest bearing while the remaining two Consolidated Debentures accrue interest at 9.5% as outlined in further
detail below. Debentures assigned to other investors by YA Global were also modified effective July 1, 2013 to extend the maturity
date to August 1, 2015. We evaluated the impact of the modification on the accounting for the Consolidated Debentures in accordance
with ASC 470-50-40-6 through 12 to determine whether extinguishment accounting was appropriate. Because the effect of the extension
did not exceed a significance threshold relative to cash flows prescribed by ASC 470-50, Debt Modifications and Extinguishments,
extinguishment accounting was not applicable.
The following table summarizes the significant
terms of each of the debentures for which the entire hybrid instrument is recorded at fair value as of December 31, 2013:
| | |
| | |
| | |
| | |
Conversion Price – Lower of Fixed
Price or Percentage of VWAP for
Look-back period | |
| | |
| | |
| | |
| | |
Anti-
Dilution | | |
| | |
| |
| Debenture | |
Face | | |
Interest | | |
Fixed | | |
Adjusted | | |
| | |
Look-back | |
| Issuance Year | |
Amount | | |
Rate | | |
Price | | |
Price | | |
% | | |
Period | |
| | |
(in thousands) | | |
| | |
| | |
| | |
| | |
| |
| 2006 | |
$ | 1,962 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.00018 | | |
| 90 | % | |
| 125 Days | |
| 2007 | |
| 567 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.00018 | | |
| 90 | % | |
| 125 Days | |
| 2007 | |
| 272 | | |
| - | | |
$ | 2.00 | | |
$ | 0.00019 | | |
| 95 | % | |
| 125 Days | |
| 2008 | |
| 1,217 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.00018 | | |
| 90 | % | |
| 125 Days | |
| 2008 | |
| 830 | | |
| - | | |
$ | 2.00 | | |
$ | 0.00019 | | |
| 95 | % | |
| 125 Days | |
| 2009 | |
| 134 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.00018 | | |
| 90 | % | |
| 125 Days | |
| 2011 | |
| 852 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.00018 | | |
| 90 | % | |
| 125 Days | |
| 2012 | |
| 762 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.00018 | | |
| 90 | % | |
| 125 Days | |
| 2012 | |
| 210 | | |
| - | | |
$ | 2.00 | | |
$ | 0.00019 | | |
| 95 | % | |
| 125
Days | |
| 2013 | |
| 22,084 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.00018 | | |
| 90 | % | |
| 125
Days | |
| 2013 | |
| 12,127 | | |
| - | | |
$ | 2.00 | | |
$ | 0.00019 | | |
| 95 | % | |
| 125
Days | |
| Total | |
$ | 41,017 | | |
| | | |
| | | |
| | | |
| | | |
| | |
We bifurcate the compound embedded derivatives
related to the Series C and Series D preferred stock and carry these financial instruments as liabilities in the accompanying
balance sheet. Election to carry the instruments at fair value in their entirety is not available since their terms have
not been modified. Significant components of the compound embedded derivative include (i) the embedded conversion feature, (ii)
down-round anti-dilution protection features and (iii) default, non-delivery and buy-in puts, all of which were combined into
one compound instrument that is carried at fair value as a derivative liability. Changes in the fair value of the compound derivative
liability are recorded within income each period.
Conversions and Repayments
– Our preferred stock and convertible debentures are convertible into shares of our common stock. Upon conversion of any
of the convertible financial instruments in which the compound embedded derivative is bifurcated, the carrying amount of the debt,
including any unamortized premium or discount, and the related derivative instrument liability are credited to the capital accounts
upon conversion to reflect the stock issued and no gain or loss is recognized. For instruments that are recorded in their entirety
at the fair value of the hybrid instrument, the fair value of the hybrid instrument converted is credited to the capital accounts
upon conversion to reflect the stock issued and no gain or loss is recognized. Beginning in April 2013, the trading market price
of our common stock (and the conversion price) was less than its par value. We are limited to issuing shares of common stock at
no less than the par value, and all shares of our common stock issued in those conversions were issued at par value. However,
the methodology used to estimate the number of shares of convertible debentures and preferred stock converted during this time
are based upon the value received for the shares issued, with the difference between that value and the par value recorded
as a deemed dividend.
The following table provides a summary
of the preferred stock conversions that have occurred since inception and the number of common shares issued upon conversion.
| | |
Preferred
shares | | |
Preferred
shares | | |
Preferred
shares | | |
Common
shares | |
| | |
issued | | |
converted | | |
remaining | | |
issued | |
| | |
(in thousands) | |
| | |
| | |
| | |
| | |
| |
| Series C Preferred Stock | |
| 22 | | |
| 17 | | |
| 5 | | |
| 314,619 | |
| Series D Preferred Stock | |
| 25 | | |
| 22 | | |
| 3 | | |
| 245,162 | |
The outstanding principal and accrued interest
for the debentures as of December 31, 2013 is reflected in the following table in addition to the principal and interest converted
since inception and the number of common shares issued upon conversion.
| |
|
Outstanding
principal and
accrued interest
at December
31, 2013 |
|
Principal and
accrued interest
converted since
inception |
|
Common
Shares
issued |
|
| |
|
(in thousands) |
|
| |
|
|
|
|
|
|
|
|
|
| Debentures |
|
$ |
42,811 |
|
$ |
11,747 |
|
4,403,415 |
|
Warrants – YA Global
holds warrants to purchase shares of our common stock that were issued in connection with the convertible debentures and the Series
C and Series D preferred stock. The warrants are exercisable at a fixed exercise price which, from time to time, has been reduced
due to anti-dilution provisions when we have entered into subsequent financing arrangements with a lower price. The exercise prices
may be reset again in the future if we subsequently issue stock or enter into a financing arrangement with a lower price. In addition,
upon each adjustment in the exercise price, the number of warrant shares issuable is adjusted to the number of shares determined
by multiplying the warrant exercise price in effect prior to the adjustment by the number of warrant shares issuable prior to the
adjustment divided by the warrant exercise price resulting from the adjustment.
The warrants issued to YA Global do not
meet all of the established criteria for equity classification in ASC 815-40, Derivatives and Hedging – Contracts in Entity’s
Own Equity, and accordingly, are recorded as derivative liabilities at fair value. Changes in the fair value of the warrants
are charged or credited to income each period.
Effective February 1, 2013, 1.4 billion
of the 1.9 billion warrants held by YA Global were cancelled and the remaining 500 million had their exercise price reduced to
$0.0001 per share. These changes resulted in a decrease in fair value of the warrants of approximately $1.6 million during the
first quarter of 2013 as reflected in the Gain from change in fair value of derivative liabilities - warrants.
Fair value disclosures for Series
C and D Bifurcated Embedded Derivative Instruments – For financings in which the embedded derivative instruments
are bifurcated and recorded separately, the compound embedded derivative instruments are valued using a Monte Carlo Simulation
methodology because that model embodies certain relevant assumptions (including, but not limited to, interest rate risk, credit
risk, and conversion/redemption privileges) that are necessary to value these complex derivatives.
The conversion price in each of the convertible
debentures is subject to adjustment for down-round, anti-dilution protection. Accordingly, if we sell common stock or common share
indexed financial instruments below the stated or variable conversion price of the debenture, the conversion price adjusts to that
lower amount.
The assumptions included in the calculations
are highly subjective and subject to interpretation. Assumptions used as of December, 2013 included exercise estimates/behaviors
and the following other significant estimates: (i) Preferred Stock: remaining term of 1.59 years, equivalent volatility range of
203% to 206%, stated dividend of 8%, equivalent credit-risk adjusted rate of 13.0% and conversion price of $0.000194. Equivalent
amounts reflect the net results of multiple modeling simulations that the Monte Carlo Simulation methodology applies to underlying
assumptions.
Due to the variability of the conversion
prices, fluctuations in the trading market price of our common stock may result in significant variations to the calculated conversion
price. For each debenture, we analyze the ratio of the conversion price (as calculated based on the percentage of VWAP for the
appropriate look-back period) to the trading market price for a period of time equal to the term of the debenture to determine
the average ratio for the term of the note. Each quarter, the ratio in effect on the date of the valuation is compared with the
average ratio over the term of the debenture to determine if the calculated conversion price is representative of past trends or
if it is considered unrepresentative due to a large fluctuation in the common stock price over a short period of time. If the calculated
conversion price results in a ratio that deviates significantly from the average ratio over the term of the agreement, the average
ratio of the conversion price to the trading market price is then multiplied by the current trading market price to determine the
variable conversion price for use in the fair value calculations. This variable conversion price is then compared with the fixed
conversion price and, as required by the terms of the debentures, the lower of the two amounts is used as the conversion price
in the Monte Carlo Simulation model used for valuation purposes. On December 31, 2013, the fixed conversion price for each of the
debentures was equal to or higher than the calculated variable conversion price. Accordingly, the variable conversion price was
used in the Monte Carlo Simulation model. This analysis is performed each quarter to determine if the calculated conversion price
is reasonable for purposes of determining the fair value of the embedded conversion features (for instruments recorded under ASC
815-15-25-1) or the fair value of the hybrid instrument (for instruments recorded under ASC 815-15-25-4).
The following table reflects the face value
of the instruments, their amortized carrying value and the fair value of the separately-recognized compound embedded derivative,
as well the number of common shares into which the instruments are convertible as of December 31, 2013 and 2012.
| December 31, 2013 (Restated) | |
| | |
| | |
| | |
| |
| | |
Face | | |
Carrying | | |
Embedded
Conversion | | |
Common
Stock | |
| | |
Value | | |
Value | | |
Feature | | |
Shares | |
| | |
(in thousands) | |
| | |
| | |
| | |
| | |
| |
| Series C Preferred Stock | |
$ | 4,816 | | |
$ | 4,816 | | |
$ | 276 | | |
| 24,823,015 | |
| Series D Preferred Stock | |
| 348 | | |
| 348 | | |
| 20 | | |
| 1,794,330 | |
| Total | |
$ | 5,164 | | |
$ | 5,164 | | |
$ | 296 | | |
| 26,617,345 | |
| December 31, 2012 | |
| | |
| | |
| | |
Embedded | | |
Common | |
| | |
Face | | |
Carrying | | |
Accrued | | |
Conversion | | |
Stock | |
| | |
Value | | |
Value | | |
Interest | | |
Feature | | |
Shares | |
| | |
(in thousands) | |
| | |
| | |
| | |
| | |
| | |
| |
| Series C Preferred Stock | |
$ | 4,840 | | |
$ | 4,840 | | |
$ | - | | |
$ | 1,988 | | |
| 923,953 | |
| Series D Preferred Stock | |
| 348 | | |
| 348 | | |
| - | | |
| 143 | | |
| 66,457 | |
| Total | |
$ | 5,188 | | |
$ | 5,188 | | |
$ | - | | |
$ | 2,131 | | |
| 990,410 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Debentures: | |
| | | |
| | | |
| | | |
| | | |
| | |
| 2006 | |
$ | 53 | | |
$ | 53 | | |
$ | 7 | | |
| 16 | | |
| 11,871 | |
The terms of the embedded conversion features
in the convertible instruments presented above provide for variable conversion rates that are indexed to our quoted common stock
price. As a result, the number of indexed shares is
subject to continuous fluctuation. For
presentation purposes, the number of shares of common stock into which the embedded conversion feature of the Series C and Series
D preferred stock was convertible as of December 31, 2013
and 2012 was calculated as face value plus
assumed dividends (if declared), divided by the lesser of the fixed rate or the calculated variable conversion price using the
125 day look-back period.
Changes in the fair value of derivative
instrument liabilities related to the bifurcated embedded derivative features of convertible instruments not carried at fair value
are reported as Loss from Change in Fair Value of Derivative Liability – Series C and Series D Preferred Stock and Debentures
in the accompanying consolidated statements of operations.
Gain (loss) from change in fair value of derivative liability
– Series C and D Preferred Stock and debentures
| | |
Year ended
December 31, | |
| | |
2013 | | |
2012 | |
| | |
(Restated) | | |
| |
| | |
(in thousands) | |
| Series C Preferred Stock | |
$ | 1,712 | | |
$ | (2,066 | ) |
| Series D Preferred Stock | |
| 123 | | |
| (1,286 | ) |
| | |
| | | |
| | |
| Debentures: | |
| | | |
| | |
| 2006 | |
| 6 | | |
| (3,005 | ) |
| 2008 | |
| - | | |
| (1,350 | ) |
| 2009 | |
| - | | |
| (484 | ) |
| 2010 | |
| - | | |
| (34 | ) |
| 2011 | |
| - | | |
| (4,825 | ) |
| 2012 | |
| - | | |
| 15 | |
| Gain (loss) from change in fair value of derivative liability | |
$ | 1,841 | | |
$ | (13,035 | ) |
Hybrid Financial Instruments Carried
at Fair Value – At inception, the March 2007, August 2007, April 2008, May 2008 and April 2012 convertible debentures
were recorded in their entirety at fair value as hybrid instruments in accordance with ASC 815-15-25-4 with subsequent changes
in fair value charged or credited to income each period. As of May 25, 2012, we elected the fair value option for all other convertible
debentures held by YA Global upon a re-measurement date that was triggered by significant modifications of the financial instruments.
The convertible debentures continued to be recorded in their entirety at fair value upon their consolidation into six Consolidated
Debentures effective July 1, 2013.
Because these debentures are carried in
their entirety at fair value, the value of the embedded conversion feature is embodied in those fair values. We estimate the fair
value of the hybrid instrument as the present value of the cash flows of the instrument, using a risk-adjusted interest rate,
enhanced by the value of the conversion option, valued using a Monte Carlo model. This method was considered by our management
to be the most appropriate method of encompassing the credit risk and exercise behavior that a market participant would consider
when valuing the hybrid financial instrument. Inputs used to value the hybrid instruments as of December 31, 2013 included: (i)
present value of future cash flows for the debentures using an effective market interest rate of 13.0%, (ii) remaining term of
1.59 years, (iii) equivalent volatility range of 203% to 209% and anti-dilution adjusted conversion prices ranging from $0.00018
- $0.00019.
The following table reflects the face value
of the financial instruments, the fair value of the hybrid financial instrument and the number of common shares into which the
instruments are convertible as of December 31, 2013 and 2012.
| December 31, 2013 | |
| | |
| | |
Common | |
| | |
Face | | |
Fair | | |
Stock | |
| | |
Value | | |
Value | | |
Shares | |
| | |
(in thousands) | |
| | |
(Restated) | |
| Debentures: | |
| | | |
| | | |
| | |
| 2006 | |
$ | 1,962 | | |
$ | 2,008 | | |
| 819,019 | |
| 2007 | |
| 839 | | |
| 533 | | |
| 216,720 | |
| 2008 | |
| 2,047 | | |
| 1,905 | | |
| 779,294 | |
| 2009 | |
| 134 | | |
| 151 | | |
| 61,563 | |
| 2011 | |
| 852 | | |
| 854 | | |
| 348,437 | |
| 2012 | |
| 972 | | |
| 1,392 | | |
| 568,305 | |
| 2013 | |
| 34,211 | | |
| 31,407 | | |
| 12,826,301 | |
| Total | |
$ | 41,017 | | |
$ | 38,250 | | |
| 15,619,639 | |
| December 31, 2012 | |
| | |
| | |
Common | |
| | |
Face | | |
Fair | | |
Stock | |
| | |
Value | | |
Value | | |
Shares | |
| | |
(in thousands) | |
| Debentures: | |
| | | |
| | | |
| | |
| 2006 | |
$ | 6,180 | | |
$ | 14,758 | | |
| 5,196,283 | |
| 2007 | |
| 6,856 | | |
| 17,172 | | |
| 6,098,480 | |
| 2008 | |
| 6,468 | | |
| 15,492 | | |
| 5,487,497 | |
| 2009 | |
| 1,644 | | |
| 3,565 | | |
| 1,243,390 | |
| 2010 | |
| 3,806 | | |
| 7,178 | | |
| 2,512,724 | |
| 2011 | |
| 1,954 | | |
| 3,080 | | |
| 1,084,237 | |
| 2012 | |
| 1,979 | | |
| 3,047 | | |
| 1,073,527 | |
| Total | |
$ | 28,887 | | |
$ | 64,292 | | |
| 22,696,138 | |
Changes in the fair value of convertible
instruments that are carried in their entirety at fair value are reported as Gain (loss) from change in fair value of hybrid financial
instruments in the accompanying consolidated statements of operations. The changes in fair value of these hybrid financial instruments
were as follows:
Gain from change in fair value of hybrid financial instruments
| | |
Year ended
December 31, | |
| | |
2013 | | |
2012 | |
| | |
(in thousands) | |
| | |
(Restated) | | |
| |
| 2006 | |
$ | 11,604 | | |
$ | 2,680 | |
| 2007 | |
| 16,381 | | |
| 798 | |
| 2008 | |
| 13,291 | | |
| 5,433 | |
| 2009 | |
| 2,113 | | |
| 708 | |
| 2010 | |
| 7,177 | | |
| 1,858 | |
| 2011 | |
| 1,748 | | |
| 840 | |
| 2012 | |
| 1,321 | | |
| 771 | |
| 2013 | |
| (31,826 | ) | |
| - | |
| | |
| 21,809 | | |
| 13,088 | |
| Less: Day-one loss from debenture financings | |
| - | | |
| (1,162 | ) |
| Gain from changes in fair value of hybrid instruments | |
$ | 21,809 | | |
$ | 11,926 | |
Warrants – The following table summarizes
the warrants outstanding, their fair value and their exercise price after adjustment for anti-dilution provisions:
| |
|
|
|
December 31, 2013 |
|
December 31, 2012 |
|
| |
|
|
|
Anti-
Dilution |
|
|
|
|
|
|
Anti-
Dilution |
|
|
|
|
|
|
| |
|
|
|
Adjusted |
|
|
|
|
|
|
Adjusted |
|
|
|
|
|
|
| |
|
Expiration |
|
Exercise |
|
|
|
|
Fair |
|
Exercise |
|
|
|
|
Fair |
|
| |
|
Year |
|
Price
($) |
|
Warrants |
|
|
Value |
|
Price
($) |
|
Warrants |
|
|
Value |
|
| |
|
|
|
(in thousands) |
|
(in thousands) |
|
| |
|
|
|
(Restated) |
|
|
|
| Warrants issued with preferred
stock: |
|
|
|
|
|
|
|
| Series D Preferred Stock |
|
2017 |
|
0.000100 |
|
87,368 |
|
$ |
110 |
|
0.00684 |
|
328,947 |
|
$ |
709 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Warrants issued with debentures: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2008 |
|
2015 |
|
0.000100 |
|
238,079 |
|
|
294 |
|
0.00684 |
|
896,382 |
|
|
1,691 |
|
| 2010 |
|
2015 |
|
0.000100 |
|
81,350 |
|
|
101 |
|
0.00684 |
|
306,287 |
|
|
571 |
|
| 2011 |
|
2016 |
|
0.000100 |
|
58,246 |
|
|
72 |
|
0.00684 |
|
219,298 |
|
|
453 |
|
| 2012 |
|
2017 |
|
0.000100 |
|
34,947 |
|
|
43 |
|
0.00684 |
|
131,579 |
|
|
263 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
|
|
|
499,990 |
|
$ |
620 |
|
|
|
1,882,493 |
|
$ |
3,687 |
|
The warrants are valued using a binomial
lattice option valuation methodology because that model embodies all of the significant relevant assumptions that address the features
underlying these instruments. Significant assumptions used in this model as of December 31, 2013 included an expected life equal
to the remaining term of the warrants, an expected dividend yield of zero, estimated volatility ranging from 203% to 209%, and
risk-free rates of return ranging from 0.13% to 0.44%. For the risk-free rates of return, we use the published yields on zero-coupon
Treasury Securities with maturities consistent with the remaining term of the warrants and volatility is based upon our expected
common stock price volatility over the remaining term of the warrants. As a result of the repricing on February 1, 2013, the exercise
price of the warrants is currently $0.0001. The anti-dilution provisions are still applicable so in the future the fixed
exercise price of the warrants may be reset to equal to the lowest price of any subsequently issued common share indexed instruments
with a conversion price below the current exercise price of the warrant.
Changes in the fair value of the warrants
are reported as Gain from change in fair value of derivative liability – warrants in the accompanying consolidated statement
of operations. The changes in the fair value of the warrants were as follows:
Gain from change in fair value of derivative liability –
warrants
| | |
Year ended
December 31, | |
| | |
2013 | | |
2012 | |
| | |
(Restated) | | |
| |
| | |
(in thousands) | |
| Warrants issued with preferred stock: | |
| | | |
| | |
| Series D Preferred Stock | |
$ | 58 | | |
$ | 1,826 | |
| | |
| | | |
| | |
| Warrants issued with debentures: | |
| | | |
| | |
| 2007 | |
| - | | |
| 1,510 | |
| 2008 | |
| 1,370 | | |
| 5,185 | |
| 2010 | |
| 1,051 | | |
| 1,764 | |
| 2011 | |
| 374 | | |
| 1,233 | |
| 2012 | |
| 214 | | |
| (171 | ) |
| Total | |
$ | 3,067 | | |
$ | 11,347 | |
Reconciliation of changes in fair
value – Assets and liabilities measured at fair value are classified in their entirety based on the lowest level
of input that is significant to their fair value measurement. Our derivative financial instruments that are measured at fair value
on a recurring basis are all measured at fair value using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported
by little or no market activity and that are significant to the fair value of the assets or liabilities.
The following represents a reconciliation
of the changes in fair value of financial instruments measured at fair value using Level 3 inputs and changes in the fair value
of hybrid instruments carried at fair value during the year ended December 31, 2013 (in thousands):
| | |
Compound | | |
| | |
| | |
| |
| | |
Embedded | | |
Warrant | | |
Hybrid | | |
| |
| | |
Derivatives | | |
Derivatives | | |
Instruments | | |
Total | |
| | |
| | |
| | |
| | |
| |
| Beginning balance, December 31, 2012: | |
$ | 2,147 | | |
$ | 3,687 | | |
$ | 64,292 | | |
$ | 70,126 | |
| | |
| | | |
| | | |
| | | |
| | |
| Fair value adjustments (Restated): | |
| | | |
| | | |
| | | |
| | |
| Compound embedded derivatives | |
| (1,841 | ) | |
| - | | |
| - | | |
| (1,841 | ) |
| Warrant derivatives | |
| - | | |
| (3,067 | ) | |
| - | | |
| (3,067 | ) |
| Hybrid instruments | |
| - | | |
| - | | |
| (21,809 | ) | |
| (21,809 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Conversions (Restated): | |
| | | |
| | | |
| | | |
| | |
| Series C Preferred Stock | |
| (10 | ) | |
| - | | |
| - | | |
| (10 | ) |
| August 24, 2006 financing | |
| - | | |
| - | | |
| (644 | ) | |
| (644 | ) |
| December 29, 2006 financing | |
| - | | |
| - | | |
| (503 | ) | |
| (503 | ) |
| March 27, 2007 financing | |
| - | | |
| - | | |
| (242 | ) | |
| (242 | ) |
| April 11, 2008 financing | |
| - | | |
| - | | |
| (71 | ) | |
| (71 | ) |
| July 29, 2008 financing | |
| - | | |
| - | | |
| (234 | ) | |
| (234 | ) |
| October 18, 2008 financing | |
| - | | |
| - | | |
| (23 | ) | |
| (23 | ) |
| July 15, 2009 financing | |
| - | | |
| - | | |
| (823 | ) | |
| (823 | ) |
| August 14, 2009 financing | |
| - | | |
| - | | |
| (475 | ) | |
| (475 | ) |
| February 8, 2011 financing | |
| - | | |
| - | | |
| (28 | ) | |
| (28 | ) |
| April 13, 2011 financing | |
| - | | |
| - | | |
| (199 | ) | |
| (199 | ) |
| October 25, 2011 financing | |
| - | | |
| - | | |
| (37 | ) | |
| (37 | ) |
| December 8, 2011 financing | |
| - | | |
| - | | |
| (217 | ) | |
| (217 | ) |
| February 6, 2012 financing | |
| - | | |
| - | | |
| (29 | ) | |
| (29 | ) |
| March 26, 2012 financing | |
| - | | |
| - | | |
| (141 | ) | |
| (141 | ) |
| June 1, 2012 financing | |
| - | | |
| - | | |
| (567 | ) | |
| (567 | ) |
| Ending balance, December 31, 2013 (Restated) | |
$ | 296 | | |
$ | 620 | | |
$ | 38,250 | | |
$ | 39,166 | |
Estimating fair values of derivative financial
instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration
of the instrument with related changes in internal and external market factors. In addition, valuation techniques are sensitive
to changes in the trading market price of our common stock, which has a high estimated historical volatility. Because derivative
financial instruments are initially and subsequently carried at fair values, our income will reflect the volatility in these estimate
and assumption changes.
Note 5 – Goodwill and Other Intangible
Assets
At December 31, 2013 and 2012, we had goodwill
of $3.4 million, representing the excess of the purchase price paid for NeoMedia Europe GmbH over the fair value of the identifiable
net assets and liabilities acquired, based on an independent appraisal of the assets and liabilities acquired.
The following table summarizes other intangible
assets:
| | |
| | |
| | |
Total
Intangibles | |
| | |
Patents and
Other | | |
Proprietary | | |
and
Proprietary | |
| | |
Intangibles | | |
Software | | |
Software | |
| | |
(in thousands) | |
| December 31, 2011 | |
$ | 1,764 | | |
$ | 757 | | |
$ | 2,521 | |
| | |
| | | |
| | | |
| | |
| Additions | |
| - | | |
| - | | |
| - | |
| Amortization | |
| (275 | ) | |
| (657 | ) | |
| (932 | ) |
| December 31, 2012 | |
| 1,489 | | |
| 100 | | |
| 1,589 | |
| | |
| | | |
| | | |
| | |
| Additions | |
| - | | |
| - | | |
| - | |
| Amortization | |
| (276 | ) | |
| (100 | ) | |
| (376 | ) |
| December 31, 2013 | |
$ | 1,213 | | |
$ | - | | |
$ | 1,213 | |
| | |
| | | |
| | | |
| | |
| Weighted-average remaining amortization period in years | |
| 5.7 | | |
| - | | |
| | |
As of December 31, 2013, we estimate future
amortization expense of intangible assets to be (in thousands):
| 2014 | |
$ | 259 | |
| 2015 | |
| 244 | |
| 2016 | |
| 216 | |
| 2017 | |
| 134 | |
| 2018 and thereafter | |
| 360 | |
| Total future amortization expense | |
$ | 1,213 | |
Note 6 – Accrued Liabilities
The following table summarizes our accrued
liabilities of December 31, 2013 and 2012:
| | |
As of December 31, | |
| | |
2013 | | |
2012 | |
| | |
(in thousands) | |
| | |
| | |
| |
| Accrued operating expenses | |
$ | 112 | | |
$ | 347 | |
| Accrued legal | |
| 114 | | |
| 27 | |
| Accrued payroll related expenses | |
| 65 | | |
| 6 | |
| Accrued interest | |
| - | | |
| 19 | |
| Total | |
$ | 291 | | |
$ | 399 | |
On May 25, 2012, the terms of the debentures
held by YA Global were modified to extend the stated maturity dates and reduce the interest rates to 9.5% per year. The effect
of the modifications exceeded a significance threshold relative to the debentures’ cash flows resulting in an effective extinguishment
whereby the existing debentures were considered to be retired and new debentures issued. Following the modification, the debentures
are carried as hybrid instruments and are recorded at fair value. As a result, interest associated with the debentures is considered
and accounted for in the consolidated statements of operations within the change in fair value of hybrid financial instruments
line item rather than being reflected as an interest expense. Similarly, amounts previously reflected in the consolidated balance
sheets as accrued interest are now considered and accounted for within the debentures payable – carried at fair value line
item.
Note 7 – Income Taxes (Restated)
As of December 31, 2013 and 2012, the types
of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts which gave rise
to deferred taxes, and their tax effects were as follows:
| | |
As of December 31, | |
| | |
2013 | | |
2012 | |
| | |
Restated (in thousands) | |
| | |
| |
| Net operating loss carry forwards (NOL) | |
$ | 66,322 | | |
$ | 63,714 | |
| Capital loss | |
| 3,515 | | |
| 3,515 | |
| Write-off of long-lived assets | |
| 526 | | |
| 526 | |
| Amortization of intangibles | |
| (210 | ) | |
| (670 | ) |
| Stock-based compensation | |
| 2,596 | | |
| 2,596 | |
| Capitalized software development costs and fixed assets | |
| - | | |
| 136 | |
| Deferred revenue | |
| 870 | | |
| 1,568 | |
| Alternative minimum tax credit carry forward | |
| 43 | | |
| 43 | |
| Accruals | |
| 3,206 | | |
| 2,554 | |
| Impairment loss | |
| 2,752 | | |
| 2,752 | |
| Derivative gain/loss | |
| 10,296 | | |
| 9,375 | |
| Interest expense | |
| 4,437 | | |
| 4,437 | |
| Total deferred tax assets | |
| 95,354 | | |
| 90,546 | |
| Valuation allowance | |
| (95,354 | ) | |
| (90,546 | ) |
| Net deferred tax asset | |
$ | - | | |
$ | - | |
Due to the uncertainty of the utilization
and recoverability of the loss carry-forwards and other deferred tax assets, we have provided a valuation allowance for the deferred
tax assets, as it is more likely than not that the deferred tax assets will not be realizable.
For the years ended December 31, 2013 and
2012, the income tax benefit differed from the amount computed by applying the statutory federal rate of 34% as follows:
| | |
Year Ended December 31, | |
| | |
2013 | | |
2012 | |
| | |
Restated (in thousands) | |
| Benefit at federal statutory rate | |
$ | (9,830 | ) | |
$ | (6,610 | ) |
| State income taxes, net of federal benefit | |
| (883 | ) | |
| (753 | ) |
| Permanent and other difference, net | |
| 5,906 | | |
| 2,803 | |
| Increase in valuation allowance | |
$ | 4,808 | | |
$ | (4,560 | ) |
During the year ended December 31, 2013,
we determined that a deferred tax liability previously estimated to be realized by NeoMedia Europe GmbH should be reduced to zero
based on certain economic changes of the subsidiary during 2013. The economic changes included, but were not limited to, the termination
of its hardware business and related sales activities that allowed it to generate revenue independently in the local market or
otherwise, and the completion of a repositioning of the subsidiary from a self-contained, revenue generating operation to a cost
center primarily focused on research and development. As a result of the change in estimate, we recorded an income tax benefit
of $706,000 to reduce the deferred tax liability to zero.
As of December 31, 2013, we had net operating
loss carry forwards for federal tax purposes totaling approximately $111 million, which may be used to offset future taxable income
and which, if unused, expire between 2014 and 2033, and net operating loss carry-forwards for Colorado tax purposes totaling $7.2
million. As a result of certain of our equity activities, we anticipate that the annual usage of our pre-1998 net operating loss
carry forwards may be further restricted pursuant to the provisions of Section 382 of the Internal Revenue Code.
In addition to the above, our subsidiary
NeoMedia Europe GmbH, had foreign operations and is not included in our consolidated income tax balances above. NeoMedia Europe
GmbH did not have income tax expense during the years ended December 31, 2013 and 2012.
NeoMedia Europe GmbH has net operating
loss carry forwards that are estimated to be $11.5 million and $11.4 million as of December 31, 2013 and 2012, respectively. Due
to the uncertainty of the utilization and recoverability of the loss carry forwards, we have reserved for the deferred tax assets
through a valuation allowance, as it is more likely than not that the deferred tax assets will not be realizable.
We have not taken any uncertain tax positions
on any of our open income tax returns filed through the period ended December 31, 2013. Our methods of accounting are based on
established income tax principles in the Internal Revenue Code and are properly calculated and reflected within our income tax
returns. In addition, we have filed income tax returns in all applicable jurisdictions in which we had material nexus warranting
an income tax return filing.
We re-assess the validity of our conclusions
regarding uncertain tax positions on a quarterly basis to determine if facts or circumstances have arisen that might cause us
to change our judgment regarding the likelihood of a tax position’s sustainability under audit. We have determined that
there were no uncertain tax positions for the years ended December 31, 2013 and 2012. Due to the carry forward of NOL’s,
Federal and state income tax returns are subject to audit for varying periods beginning in 1992.
Note 8 – Commitments and Contingencies
We are party to various commitments and
contingencies, including:
| · | Operating
leases for office facilities, which include minimum rents and reimbursed operating expenses as well as options to renew for additional
periods; |
| · | Employment
agreement with future payment obligations; |
| · | Long-term
debt obligations include principal for convertible debentures and related estimated interest over the life of the debentures. Any
future settlement of convertible debt would impact our cash payments. |
The following table sets forth the future
minimum payments due under the above commitments as of December 31, 2013:
| | |
2014 | | |
2015 | | |
2016 | | |
2017 | | |
Total | |
| | |
| | |
| | |
| | |
| | |
| |
| Operating leases | |
$ | 54 | | |
$ | 11 | | |
$ | - | | |
$ | - | | |
$ | 65 | |
| Employment agreements | |
| 175 | | |
| - | | |
| - | | |
| - | | |
| 175 | |
| Long-term debt | |
| - | | |
| 47,241 | | |
| - | | |
| - | | |
| 47,241 | |
| Total | |
$ | 229 | | |
$ | 47,252 | | |
$ | - | | |
$ | - | | |
$ | 47,481 | |
The above table does not include future
obligations associated with a new lease agreement we entered into for our corporate headquarters in Boulder, Colorado on February
19, 2014. The agreement provides for a five year lease of 2,303 square feet expiring on March 31, 2019 with estimated rent and
monthly rent payments over the term of $5,689. We intend to sublease certain portions of the lease that are unused by us. Additionally,
we entered into an amended lease arrangement for NeoMedia Europe GmbH’s office lease in February 2014 to reduce the rented
area to approximately 125 square meters with the same lease expiration date and reduced monthly rent of approximately $1,400. The
amended NeoMedia Europe GmbH lease is also not reflected in the above table.
Legal Proceedings –
From time to time, we are involved in various legal actions arising in the normal course of business, both as claimant and defendant.
Although it is not possible to determine with certainty the outcome of these matters, we believe the eventual resolution of any
ongoing legal actions is unlikely to have a material impact on our financial position or operating results. If the resolution of
ongoing legal actions is not in our favor, our financial position and operating results could be materially adversely impacted.
Note 9 – Stock-Based Compensation
We have five stock option plans, as summarized
below. Options issued under these plans have a term of 10 years. The plans allow for exercise prices of options issued under the
Option Plans to be set at amounts less than the fair market value per share of our common stock on the date of grant. Options may
be granted with any vesting schedule as approved by the stock option committee of our Board of Directors, but generally the vesting
periods range from immediate to 5 years. Common shares required to be issued on the exercise of stock options would be issued from
our authorized and unissued shares. We have not registered the 600,000 shares underlying the options in the 2005 Plan and as a
result, all 600,000 options remain available for issuance. Generally, the stock option plans provide for issuance of awards to
employees, former employees, consultants, and non-employee directors.
| |
|
|
|
|
|
|
Shares Available For |
|
| |
|
|
|
Shares Reserved |
|
|
Issuance at |
|
| Plan |
|
Date Adopted |
|
For Issuance |
|
|
December 31, 2013 |
|
| |
|
|
|
|
|
|
|
|
|
|
| 2011 Stock Incentive Plan |
|
April 7, 2011 |
|
|
2,000,000 |
|
|
|
1,250,105 |
|
| 2005 Stock Option Plan |
|
December 16, 2005 |
|
|
600,000 |
|
|
|
600,000 |
|
| 2003 Stock Option Plan |
|
September 24, 2003 |
|
|
1,500,000 |
|
|
|
1,102,387 |
|
| 2003 Stock Incentive Plan |
|
October 31, 2003 |
|
|
300,000 |
|
|
|
300,000 |
|
| 2002 Stock Option Plan |
|
June 6, 2002 |
|
|
100,000 |
|
|
|
100,000 |
|
| |
|
|
|
|
|
|
|
|
3,352,492 |
|
No stock-based awards were issued during
the year ended December 31, 2013. The fair value of stock-based awards issued during the year ended December 31, 2012 was estimated
using the Black-Scholes-Merton model with the following weighted-average assumptions:
| |
|
|
| Volatility |
|
156%-169% |
| Expected dividends |
|
- |
| Expected term (in years) |
|
5.8 |
| Risk-free rate |
|
2.7%-2.9% |
A summary of the transactions during the
year ended December 31, 2013 with respect to our stock option plans follows:
| | |
| | |
| | |
| | |
Weighted- | |
| | |
| | |
| | |
| | |
Average | |
| | |
| | |
Weighted- | | |
| | |
Contractual | |
| | |
| | |
Average | | |
Aggregate | | |
Life | |
| | |
| | |
Exercise | | |
Intrinsic | | |
Remaining | |
| | |
Shares | | |
Price | | |
Value | | |
in Years | |
| | |
(in thousands) | | |
| | |
(in thousands) | | |
| |
| Outstanding at January 1, 2012 | |
| 1,340 | | |
$ | 0.017 | | |
| | | |
| | |
| Forfeited | |
| (167 | ) | |
$ | 0.012 | | |
| | | |
| | |
| Outstanding at December 31, 2013 | |
| 1,173 | | |
$ | 0.017 | | |
$ | - | | |
| 7.7 | |
| Exercisable at December 31, 2013 | |
| 938 | | |
$ | 0.018 | | |
$ | - | | |
| 7.5 | |
Total stock-based compensation expense
for the years ended December 31, 2013 and 2012 was $1,000 and $14,000, respectively As of December 31, 2013, the total unrecognized
compensation cost related to non-vested stock options was $2,000, net of expected forfeitures. The unrecognized compensation expense
is expected to be recognized over a weighted-average period of 0.9 years.
The following table summarizes information
about our stock options outstanding as of December 31, 2013:
| Options Outstanding | |
Options Exercisable | |
| | |
| | |
| | |
| | |
| | |
| |
| Exercise Prices | |
Number of
Shares | | |
Weighted-
Average
Remaining
Life | | |
Weighted-
Average
Exercise Price | | |
Number of
Shares | | |
Weighted-
Average
Exercise
Price | |
| | |
(in thousands) | | |
(in years) | | |
| | |
(in thousands) | | |
| |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| $0.008 | |
| 200 | | |
| 8.7 | | |
$ | 0.008 | | |
| 52 | | |
$ | 0.008 | |
| $0.014 to $0.017 | |
| 884 | | |
| 7.5 | | |
$ | 0.015 | | |
| 797 | | |
$ | 0.016 | |
| $0.050 | |
| 89 | | |
| 7.2 | | |
$ | 0.047 | | |
| 89 | | |
$ | 0.047 | |
| | |
| 1,173 | | |
| 7.7 | | |
$ | 0.017 | | |
| 938 | | |
$ | 0.018 | |
Note 10 – Geographic
and Customer Information
Revenue, classified by geographic location from which the revenue
was originated, was as follows (in thousands):
| | |
Year Ended December 31, | |
| | |
2013 | | |
2012 | |
| | |
| | |
| |
| Revenue: | |
| | | |
| | |
| United States | |
$ | 4,856 | | |
$ | 2,099 | |
| Germany | |
| 168 | | |
| 245 | |
| Total | |
$ | 5,024 | | |
$ | 2,344 | |
Approximately $142,000 and $137,000 of
total assets were located in Germany as of December 31, 2013 and 2012, respectively. All other assets were located in the U.S.
For the year ended December 31, 2013, one customer accounted for 14% of our revenue. For the year ended December 31, 2012, two
customers accounted for 17% and 13% of our revenue. No other customers accounted for more than 10% of revenue for the years ended
December 31, 2013 and 2012.
Note 11 – Subsequent Events
On February 21, 2014, the Company entered
into an Agreement and Plan of Merger (the “Merger Agreement”) with Qode Services Corporation (“Qode”),
a wholly owned subsidiary of the Company. Under the terms of the Merger Agreement, Qode merged into the Company and will cease
to exist upon the completion of certain conditions. The Company shall continue as the surviving corporation.
Under the terms of the Merger Agreement,
the Company’s charter shall be amended to provide for an increase in the amount of common stock authorized shares, and each
share of the Company’s common stock issued and outstanding immediately prior to merger shall continue to remain outstanding
and remain unchanged, except that (i) the par value shall change from $0.001 per share to no par value per share, and (ii) each
fifteen (15) shares of common stock issued and outstanding shall be combined and converted into one (1) share of common stock.
Upon the consummation of the merger and reverse stock split effected thereunder, the amount of authorized shares of common stock
shall be increased from 5 billion to 7.5 billion shares.
The Company’s Board of Directors
determined that the Merger Agreement was the only option available to avoid default after the holder of a majority of the outstanding
secured convertible debentures communicated its intent to foreclose on all of the Company’s assets in the event that the
Company’s share reserves were not sufficient to honor conversions under such instruments (a potential default thereunder).
Further, the holder of the secured convertible debentures agreed to enter into amendments to the secured convertible debentures
to decrease the aggregate amount of debt by $5.0 million if the Company resolved the issue.
On February 21, 2014, the Company received
a correspondence (the “Delta Notice”) from Delta Capital Partners LLC (“Delta”), asserting a claim for
certain amounts owed under a secured convertible debenture. The principal amount outstanding and conversion rights under such
instrument had been assigned to Delta by YA Global (the “Assignment”), several years subsequent to the original issuance
of the instrument by the Company to YA Global. The Company’s understanding is that pursuant to the terms of the Assignment,
YA Global, as collateral agent, retained all rights in connection with the enforcement of any claims under Delta’s secured
convertible debenture. YA Global has indicated that it does not intend to assert any of the claims described by Delta in
the Delta Notice.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Based on management’s evaluation, with the participation
of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), as of the end of the period
covered by this report, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act, were deemed not effective based upon valuation revisions required in our 2013 filings in
providing reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange
Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated
and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to
allow timely decisions regarding required disclosure.
On July 25, 2014, management concluded,
after consultation with the Audit Committee and external auditors that the Company had not properly assessed the underlying assumptions
in its fair value accounting. This error had a material effect on our previously issued consolidated financial statements for
the year ended December 31, 2013 and the quarters ended March 31, 2013, June 30, 2013 and September 30, 2013, which is requiring
us to restate the financial statements for such periods.
Changes in Internal Control over Financial Reporting
In connection with the evaluation of disclosure controls and
procedures as discussed in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, management concluded
it had a material weakness related to the internal control over financial reporting and specifically, a lack of sufficient
internal control procedures over our external reporting sufficient to prevent errors reflected in previously filed 2013 Quarterly
Reports on Form 10-Q. As a result of the material weaknesses, we identified an understatement in the general and administrate
expenses of $51,000 for the six months ended June 30, 2013; an absence of reporting debenture and Series C Preferred Stock deemed
dividends of $681,000 and $16,000, respectively, during the three and six months ended June 30, 2013; consolidation errors associated
with the NeoMedia Europe GmbH entity resulting in an understatement of accounts payable and accrued expenses of $163,000 and $38,000,
respectively, as well as a misstatement of accumulated other comprehensive loss of $201,000 as of June 30, 2013; and an overstatement
of net cash used in operating activities and the effect of exchange rate changes on cash of approximately $334,000 for the six
months ended June 30, 2013. During the three month period ended December 31, 2013, management implemented additional controls
and procedures over the external reporting. We believed the changes remediated the identified material weakness.
However, in conjunction with the matter
described above, management re-evaluated its previously provided assessments as of March 31, 2013, June 30, 2013, September 30,
2013 and December 31, 2013 regarding the effectiveness of the Company’s disclosure controls and procedures and determined
that as of these periods, the disclosure controls and procedures were properly designed to detect a material misstatement of its
financial statements from occurring in the future. However, due to a misinterpretation of an accounting standard on beneficial
conversion features, the filings and disclosures made on the financial statements representing March 31, 2013, June 30, 2013,
September 30, 2013 and December 31, 2013, the disclosure control was not effective.
Inherent Limitations on Effectiveness of Controls
Our management, including the CEO and
CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all
errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance
that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will
not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls
is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness
of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions
or deterioration in the degree of compliance with policies or procedures.
ITEM
15. Exhibits, Financial Statement Schedules
(a) Financial Statements and Schedules
The financial statements are set forth
under Item 8 of this Report. Financial statement schedules have been omitted because they are either not required, not applicable,
or the information is otherwise included.
Exhibit
Number |
|
Description |
|
Filed
Herewith |
|
Form |
|
Exhibit |
|
Filing
Date |
| |
|
|
|
|
|
|
|
|
|
|
| 3.1 |
|
Articles of Incorporation of Dev-Tech
Associates, Inc. and amendment thereto |
|
|
|
SB-2 |
|
3.1 |
|
11/25/1996 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.2 |
|
By-laws of the Company |
|
|
|
8-K |
|
3.2 |
|
12/21/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.3 |
|
Restated Certificate of Incorporation
of DevSys, Inc. |
|
|
|
SB-2 |
|
3.3 |
|
11/25/1996 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.4 |
|
Articles of Merger and Agreement and
Plan of Merger of DevSys, Inc. and Dev-Tech Associates, Inc. |
|
|
|
SB-2 |
|
3.5 |
|
11/25/1996 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.5 |
|
Certificate of Merger of Dev-Tech Associates,
Inc. into DevSys, Inc. |
|
|
|
SB-2 |
|
3.6 |
|
11/25/1996 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.6 |
|
Articles of Incorporation of Dev-Tech
Migration, Inc. and amendment thereto |
|
|
|
SB-2 |
|
3.7 |
|
11/25/1996 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.7 |
|
Restated Certificate of Incorporation
of DevSys Migration, Inc. |
|
|
|
SB-2 |
|
3.9 |
|
11/25/1996 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.8 |
|
Form of Agreement and Plan of Merger
of Dev-Tech Migration, Inc. into DevSys Migration, Inc. |
|
|
|
SB-2 |
|
3.11 |
|
11/25/1996 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.9 |
|
Form of Certificate of Merger of Dev-Tech
Migration, Inc. into DevSys Migration, Inc. |
|
|
|
SB-2 |
|
3.12 |
|
11/25/1996 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.10 |
|
Certificate of Amendment to Certificate
of Incorporation of DevSys, Inc. changing our name to NeoMedia Technologies, Inc. |
|
|
|
SB-2 |
|
3.13 |
|
11/25/1996 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.11 |
|
Form of Certificate of Amendment to
Certificate of Incorporation of the Company authorizing a reverse stock split |
|
|
|
SB-2 |
|
3.14 |
|
11/25/1996 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.12 |
|
Form of Certificate of Amendment to
Restated Certificate of Incorporation of the Company increasing authorized capital and creating preferred stock |
|
|
|
SB-2 |
|
3.15 |
|
11/25/1996 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.13 |
|
Certificate of Designation of the Series
C Convertible Preferred Stock dated February 17, 2006 |
|
|
|
8-K |
|
10.9 |
|
2/21/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.14 |
|
Certificate of Amendment to the Certificate
of Designation of the Series C Convertible Preferred Stock dated January 5, 2010 |
|
|
|
8-K |
|
3.1 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.15 |
|
Certificate of Designation of the Series D
Convertible Preferred Stock dated January 5, 2010 |
|
|
|
8-K |
|
3.2 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 3.16 |
|
Certificate of Amendment
to the Certificate of Designation of the Series D Convertible Preferred Stock dated January 7, 2010 |
|
|
|
8-K |
|
3.3 |
|
1/11/2010 |
| 3.17 |
|
Certificate of Amendment to the Certificate
of Designation of the Series D Convertible Preferred Stock dated March 5, 2010 |
|
|
|
8-K |
|
3.1 |
|
3/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 4.1* |
|
2011 Stock Incentive Plan effective
April 7, 2011 |
|
|
|
S-8 |
|
4.1 |
|
4/22/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.3 |
|
Definitive Sale and Purchase Agreement
between the Company and Gavitec |
|
|
|
8-K |
|
16.1 |
|
2/21/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.4 |
|
Definitive Sale and Purchase Agreement
between the Company and Sponge |
|
|
|
8-K |
|
16.1 |
|
2/22/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.5 |
|
Investment Agreement, dated February
17, 2006 between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.1 |
|
2/21/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.6 |
|
Investor Registration Rights Agreement,
dated February 17, 2006 between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.2 |
|
2/21/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.7 |
|
Irrevocable Transfer Agent Instruction,
dated February 17, 2006, by and among the Company, Cornell Capital Partners, LP and American Stock Transfer & Trust
Co. |
|
|
|
8-K |
|
10.3 |
|
2/21/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.8 |
|
“A” Warrant, dated February
17, 2006 |
|
|
|
8-K |
|
10.4 |
|
2/21/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.9 |
|
“B” Warrant, dated February
17, 2006 |
|
|
|
8-K |
|
10.5 |
|
2/21/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.10 |
|
“C” Warrant, dated February
17, 2006 |
|
|
|
8-K |
|
10.6 |
|
2/21/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.11 |
|
Assignment Agreement, dated February
17, 2006 by the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.7 |
|
2/21/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.12 |
|
Assignment of Common Stock, dated February
17, 2006 between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.8 |
|
2/21/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.13 |
|
Securities Purchase Agreement, dated
August 24, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.1 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.14 |
|
Investor Registration Rights Agreement,
dated August 24, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.2 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.15 |
|
Pledge and Security Agreement, dated
August 24, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.3 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.16 |
|
Secured Convertible Debenture CCP-1,
dated August 24, 2006, issued by the Company to Cornell Capital Partners, LP (amended by the Amendment filed at Exhibit 10.6
to the Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.4 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.17 |
|
Irrevocable Transfer Agent Instructions,
dated August 24, 2006, by and among the Company, Cornell Capital Partners, LP and American Stock Transfer & Trust Co. |
|
|
|
8-K |
|
10.5 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.18 |
|
“A” Warrant, dated August
24, 2006 |
|
|
|
8-K |
|
10.6 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.19 |
|
“B” Warrant,
dated August 24, 2006 |
|
|
|
8-K |
|
10.7 |
|
8/30/2006 |
| 10.20 |
|
“C” Warrant, dated August
24, 2006 |
|
|
|
8-K |
|
10.8 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.21 |
|
“D” Warrant, dated August
24, 2006 |
|
|
|
8-K |
|
10.9 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.22 |
|
Amendment to Warrant No. CCP-002, dated
August 24, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.10 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.23 |
|
Amendment to “A” Warrant
No. CCP-001, dated August 24, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.11 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.24 |
|
Amendment to “B” Warrant
No. CCP-002, dated August 24, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.12 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.25 |
|
Amendment to “C” Warrant
No. CCP-003, dated August 24, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.13 |
|
8/30/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.26 |
|
Definitive Share Purchase and Settlement
Agreement between the Company and Sponge, dated November 14, 2006 |
|
|
|
8-K |
|
16.1 |
|
11/20/2006 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.27 |
|
Securities Purchase Agreement, dated
December 29, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.1 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.28 |
|
Investor Registration Rights Agreement,
dated December 29, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.2 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.29 |
|
Secured Convertible Debenture CCP-2,
dated December 29, 2006, issued by the Company to Cornell Capital Partners, LP (amended by the Amendment filed at Exhibit
10.7 to the Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.3 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.30 |
|
Irrevocable Transfer Agent Instructions,
dated December 29, 2006, by and among the Company, Cornell Capital Partners, LP and American Stock Transfer & Trust Co. |
|
|
|
8-K |
|
10.4 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.31 |
|
“A” Warrant, dated December
29, 2006 |
|
|
|
8-K |
|
10.5 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.32 |
|
Amendment to Warrant No. CCP-002, dated
December 29, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.6 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.33 |
|
Amendment to “A” Warrant
No. CCP-001, dated December 29, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.7 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.34 |
|
Amendment to “B” Warrant
No. CCP-002, dated December 29, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.8 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.35 |
|
Amendment to “C” Warrant
No. CCP-003, dated December 29, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.9 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.36 |
|
Amendment to “A” Warrant
No. CCP-001, dated December 29, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.10 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.37 |
|
Amendment to “B”
Warrant No. CCP-001, dated December 29, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.11 |
|
1/8/2007 |
| 10.38 |
|
Amendment to “C” Warrant
No. CCP-001, dated December 29, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.12 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.39 |
|
Securities Purchase Agreement, dated
December 29, 2006, between the Company and Cornell Capital Partners, LP |
|
|
|
8-K |
|
10.1 |
|
1/8/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.40 |
|
Amendment Agreement I to the Sale and
Purchase Agreement between the Company and certain former shareholders of Gavitec AG, dated February 17, 2006 |
|
|
|
8-K |
|
10.1 |
|
1/29/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.41* |
|
Consulting Agreement between the Company
and SKS Consulting of South Florida Corp. |
|
|
|
8-K |
|
10.1 |
|
2/6/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.42 |
|
Securities Purchase Agreement between
the Company and Cornell Capital Partners LP, dated March 27, 2007 |
|
|
|
8-K |
|
10.1 |
|
4/3/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.43 |
|
Investor Registration Rights Agreement
between the Company and Cornell Capital Partners LP, dated March 27, 2007 |
|
|
|
8-K |
|
10.2 |
|
4/3/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.44 |
|
Secured Convertible Debenture NEOM
4-1, issued by the Company to Cornell Capital Partners, LP, dated March 27, 2007 (amended by the Amendment filed at Exhibit
10.8 to the Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.3 |
|
4/3/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.45 |
|
Irrevocable Transfer Agent Instructions,
by and among the Company, Cornell Capital Partners, LP and Worldwide Stock Transfer, dated March 27, 2007 |
|
|
|
8-K |
|
10.4 |
|
4/3/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.46 |
|
Warrant, issued by the Company to Cornell
Capital Partners, LP, dated March 27, 2007 |
|
|
|
8-K |
|
10.5 |
|
4/3/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.47 |
|
Master Amendment Agreement, by and
between the Company and Cornell Capital Partners, LP, dated March 27, 2007 |
|
|
|
8-K |
|
10.6 |
|
4/3/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.48 |
|
Security Agreement, by and between
the Company and Cornell Capital Partners, LP, dated on or about August 24, 2006 |
|
|
|
8-K |
|
10.7 |
|
4/3/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.49 |
|
Security Agreement, by and between
the Company and Cornell Capital Partners, LP, dated March 27,2007 |
|
|
|
8-K |
|
10.8 |
|
4/3/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.50 |
|
Security Agreement (Patent), by and
between the Company and Cornell Capital Partners, LP, dated March 27, 2007 |
|
|
|
8-K |
|
10.9 |
|
4/3/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.51 |
|
Pledge Shares Escrow Agreement, by
and between the Company and Cornell Capital Partners, dated March 27, 2007 |
|
|
|
8-K |
|
10.1 |
|
4/3/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.52 |
|
Securities Purchase Agreement dated
August 24, 2007, by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
8/30/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.53 |
|
Registration Rights Agreement, by and
between the Company and YA Global Investments, L.P., dated August 24, 2007 |
|
|
|
8-K |
|
10.2 |
|
8/30/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.54 |
|
Secured Convertible Debenture
NEOM 1-1, issued by the Company to YA Global Investments, LP, dated August 24, 2007 (amended by the Amendment filed at Exhibit
10.9 to the Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.3 |
|
8/30/2007 |
| 10.55 |
|
Irrevocable Transfer Agent Instructions,
by and among the Company, YA Global Investments, L.P. and Worldwide Stock Transfer, LLC, dated August 24, 2007 |
|
|
|
8-K |
|
10.4 |
|
8/30/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.56 |
|
Warrant issued by the Company to YA
Global Investments, L.P., dated August 24, 2007 |
|
|
|
8-K |
|
10.5 |
|
8/30/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.57 |
|
Repricing Agreement, by and between
the Company and YA Global Investments, L.P., dated August 24, 2007 |
|
|
|
8-K |
|
10.6 |
|
8/30/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.58 |
|
Security Agreement, by and between
the Company and YA Global Investments, L.P., dated August 24, 2007 |
|
|
|
8-K |
|
10.7 |
|
8/30/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.59 |
|
Security Agreement (Patent),
by and between the Company and YA Global Investments, L.P., dated August 24, 2007 |
|
|
|
8-K |
|
10.8 |
|
8/30/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.60 |
|
Secured Convertible Debenture NEOM
2008-1, dated April 11, 2008, issued by the Company to YA Global Investments, L.P. (amended by the Amendment filed at Exhibit
10.10 to Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.1 |
|
4/17/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.61 |
|
Secured Convertible Debenture NEOM
2008-2, dated May 16, 2008, issued by the Company to YA Global Investments, L.P. (amended by the Amendment filed at Exhibit
10.11 to Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.1 |
|
5/22/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.62 |
|
Warrant, dated May 16, 2008, issued
by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.2 |
|
5/22/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.63 |
|
Secured Convertible Debenture NEOM
2008-3, dated May 30, 2008, issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.12
to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits 10.1 to
the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.1 |
|
06/05/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.64 |
|
Warrant, dated May 30, 2008, issued
by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.2 |
|
06/05/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.65* |
|
Severance Agreement and Release, dated
June 3, 2008, by and between the Company and William Hoffman |
|
|
|
8-K |
|
10.5 |
|
06/05/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.66* |
|
Employment Agreement, dated June 10,
2008, by and between the Company and Iain McCready |
|
|
|
8-K |
|
10.1 |
|
06/16/2008 |
| 10.67 |
|
Secured Convertible Debenture NEOM
2008-4, dated July 10, 2008, issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.13
to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits 10.1 to
the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.1 |
|
07/16/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.68 |
|
Securities Purchase Agreement,
dated July 29, 2008, by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
08/04/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.69 |
|
Secured Convertible Debenture NEOM
9-1, dated July 29, 2008, issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.14
to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits 10.1 to
the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
08/04/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.70 |
|
Security Agreement, dated July 29,
2008, by and among the Company, each of the Company’s subsidiaries made a party thereto and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
08/04/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.71 |
|
Patent Security Agreement, dated July
29, 2008, by and among the Company, each of the Company’s subsidiaries made a party thereto and YA Global Investments,
L.P. |
|
|
|
8-K |
|
10.4 |
|
08/04/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.72 |
|
Warrant 9-1A, dated July 29, 2008,
issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.5 |
|
08/04/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.73 |
|
Warrant 9-1B, dated July 29, 2008,
issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.20 to Company’s 8-K filed
with the SEC on January 11, 2010) |
|
|
|
8-K |
|
10.6 |
|
08/04/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.74 |
|
Warrant 9-1C, dated July 29, 2008,
issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.21 to Company’s 8-K filed
with the SEC on January 11, 2010) |
|
|
|
8-K |
|
10.7 |
|
08/04/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.75 |
|
Warrant 9-1D, dated July 29, 2008,
issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.22 to Company’s 8-K filed
with the SEC on January 11, 2010) |
|
|
|
8-K |
|
10.8 |
|
08/04/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.76 |
|
Escrow Agreement, dated July 29, 2008,
by and among the Company, YA Global Investments, L.P., Yorkville Advisors, LLC and David Gonzalez, Esq. |
|
|
|
8-K |
|
10.9 |
|
08/04/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.77 |
|
Irrevocable Transfer Agent Instructions,
dated July 29, 2008, by and among the Company, the Investor, David Gonzalez, Esq. and Worldwide Stock Transfer, LLC |
|
|
|
8-K |
|
10.10 |
|
08/04/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.78 |
|
Letter Agreement, dated September 24,
2008, by and among the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
10/01/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.79 |
|
Second Secured Convertible Debenture
NEOM 9-2, dated October 28, 2008, issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit
10.15 to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
10.1 to the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.3 |
|
11/03/2008 |
| 10.80 |
|
Revised Exhibit A to Escrow Agreement,
dated October 28, 2008 |
|
|
|
8-K |
|
10.12 |
|
11/03/2008 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.81 |
|
Letter Agreement, dated March 27, 2009, by and between the Company
and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.13 |
|
04/13/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.82 |
|
Amendment Agreement, dated
April 6, 2009, by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.14 |
|
04/13/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.83 |
|
Third Secured Convertible Debenture
(first closing), dated April 6, 2009, issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at
Exhibit 10.16 to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
10.1 to the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.15 |
|
04/13/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.84 |
|
Waiver, effective as of December 31,
2008, by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.16 |
|
04/13/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.85 |
|
Fourth Secured Convertible Debenture
NEOM 9-4 (second amended third closing), dated May 1, 2009, issued by the Company to YA Global Investments, L.P. (amended
by Amendment filed at Exhibit 10.16 to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension
Agreements filed at Exhibits 10.1 to the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.15 |
|
05/07/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.86 |
|
Agreement, dated June 5, 2009 (Additional
Agreement), by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.16 |
|
6/5/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.87 |
|
Fifth Convertible Debenture NEOM 9-5
(Additional Agreement closing), dated June 5, 2009, issued by the Company to YA Global Investments, L.P. (amended by the Amendment
filed at Exhibit 10.17 to Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements
filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.17 |
|
6/5/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.88 |
|
Agreement, dated July 15, 2009 (Second
Additional Agreement), by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.18 |
|
7/21/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.89 |
|
Sixth Convertible Debenture NEOM 9-6
dated July 15, 2009, (Second Additional Debenture), issued by the Company to YA Global Investments, L.P. (amended by the Amendment
filed at Exhibit 10.18 to Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements
filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.19 |
|
7/21/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.90 |
|
Asset Purchase and Sale Agreement,
dated July 17, 2009, by and between the Company and Silver Bay Software, LLC. |
|
|
|
8-K |
|
10.2 |
|
7/21/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.91 |
|
Asset Purchase and Sale Agreement,
dated July 17, 2009, by and between the Company and Mr. Greg Lindholm. |
|
|
|
8-K |
|
10.21 |
|
7/21/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.92 |
|
Non-Exclusive License Agreement between
the Company and Mobile Tag, Inc. dated July 28, 2009 |
|
|
|
8-K |
|
10.1 |
|
7/30/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.93 |
|
Agreement dated August 14, 2009 (Third
Additional Agreement) by and between the Company and Y.A. Global Investments, L.P. |
|
|
|
10-Q |
|
10.124 |
|
8/14/2009 |
| 10.94 |
|
Seventh Convertible Debenture
NEOM 9-7 dated August 14, 2009 (Fifth Additional Debenture) issued by the Company to Y.A. Global Investments, L.P. (amended
by Amendment filed at Exhibit 10.19 to Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension
Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
10-Q |
|
10.125 |
|
8/14/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.95 |
|
Non-exclusive License Agreement with
exclusive right to sub-license provision between Company and Neustar, Inc. dated October 2, 2009 |
|
|
|
8-K |
|
10.1 |
|
10/6/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.96 |
|
License and Support Services Agreement
to use the Licensed Platform between the Company and Brand Extension Mobile Solutions, S.A., a Madrid (Spain) corporation
(“BEMS"), dated October 7, 2009 |
|
|
|
8-K |
|
10.1 |
|
10/13/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.97 |
|
Settlement Agreement and License Agreement
between the Company and Scanbuy, Inc., dated October 16, 2009 |
|
|
|
8-K |
|
10.1 |
|
10/20/2009 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.98 |
|
Investment Agreement between Company
and YA Global dated January 5, 2010. |
|
|
|
8-K |
|
10.1 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.99 |
|
Irrevocable Transfer Agent Instructions
letter issued by Company to WorldWide Stock Transfer, LLC dated January 5, 2010 |
|
|
|
8-K |
|
10.2 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.100 |
|
Monitoring Fee Escrow Agreement between
the Company and YA Global, Yorkville Advisors LLC and David Gonzalez, Esq. dated January 5, 2010 |
|
|
|
8-K |
|
10.3 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.101 |
|
Investor Registration Rights Agreement
between Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.4 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.102 |
|
Warrant dated January 5, 2010 |
|
|
|
8-K |
|
10.5 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.103 |
|
Amendment to the August 24, 2006 Secured
Convertible Debenture No. CCP-1 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.6 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.104 |
|
Amendment to the December 29, 2006
Secured Convertible Debenture No. CCP-2 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.7 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.105 |
|
Amendment to the March 27, 2007 Secured
Convertible Debenture No. NEOM-4-1 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.8 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.106 |
|
Amendment to the August 24, 2007 Secured
Convertible Debenture No. NEOM-1-1 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.9 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.107 |
|
Amendment to the April 11, 2008 Secured
Convertible Debenture No. NEO-2008-1 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.10 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.108 |
|
Amendment to the May 16, 2008 Secured
Convertible Debenture No. NEO-2008-2 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.11 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.109 |
|
Amendment to the May 29, 2008 Secured
Convertible Debenture No. NEO-2008-3 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.12 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.110 |
|
Amendment to the July 10,
2008 Secured Convertible Debenture No. NEO-2008-4 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.13 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.111 |
|
Amendment to the July 29, 2008 Secured
Convertible Debenture No. NEOM-9-1 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.14 |
|
1/11/2010 |
| 10.112 |
|
Amendment to the October 28, 2008 Secured
Convertible Debenture No. NEOM-9-2 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.15 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.113 |
|
Amendment to the May 1, 2009 Secured
Convertible Debenture No. NEOM-9-4 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.16 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.114 |
|
Amendment to the June 5, 2009 Secured
Convertible Debenture No. NEOM-9-5 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.17 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.115 |
|
Amendment to the July 15, 2009 Secured
Convertible Debenture No. NEOM-9-6 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.18 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.116 |
|
Amendment to the August 14, 2009 Secured
Convertible Debenture No. NEOM-9-7 between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.19 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.117 |
|
Amendment to the July 29, 2008 Warrant
NEOM-9-1B between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.20 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.118 |
|
Amendment to the July 29, 2008 Warrant
NEOM-9-1C between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.21 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.119 |
|
Amendment to the July 29, 2008 Warrant
NEOM-9-1D between the Company and YA Global dated January 5, 2010 |
|
|
|
8-K |
|
10.22 |
|
1/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.120 |
|
First Amendment to Employment Agreement
dated June 10, 2008 by and between the Company and Iain A. McCready |
|
|
|
8-K |
|
10.2 |
|
1/20/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.121 |
|
Amended and Restated License Agreement
dated January 22, 2010 with NeuStar, Inc. |
|
|
|
8-K |
|
10.1 |
|
1/28/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.122 |
|
NeuStar Mobile Codes Pilot Program
Agreement dated February 12, 2010 |
|
|
|
8-K |
|
10.1 |
|
2/16/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.123 |
|
First Amendment to Investment Agreement
between Company and YA Global dated March 5, 2010 |
|
|
|
8-K |
|
10.1 |
|
3/11/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.124 |
|
Securities Purchase Agreement, dated
May 27, 2010, by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
6/3/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.125 |
|
Secured Convertible Debenture
NEOM 10-1, dated May 27, 2010, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension
Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
6/3/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.126 |
|
Warrant No. 0510, dated May 27, 2010,
issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
6/3/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.127 |
|
Global Warrant Amendment, dated May
28, 2010, by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.4 |
|
6/3/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.128 |
|
Ratification Agreement, dated May 27,
2010, by and among the Company, each of the Company’s subsidiaries made a party thereto and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.7 |
|
6/3/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.129 |
|
Irrevocable Transfer Agent Instructions,
dated May 27, 2010, by and among the Company, the Investor, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.1 |
|
6/3/2010 |
| 10.130 |
|
Agreement, dated August 13, 2010, by
and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
8/19/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.131 |
|
Secured Convertible Debenture, No.
NEOM-10-2, dated August 13, 2010, issued by the Company to YA Global Investments, L.P. (as amended by Debenture
Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February
8, 2013) |
|
|
|
8-K |
|
10.2 |
|
8/19/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.132 |
|
Warrant, No. NEOM-0810, dated August
13, 2010, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
8/19/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.133 |
|
Agreement on the Pledge of Intellectual
Property Rights as Collateral, dated August 13, 2010, by and between the Company’s wholly-owned subsidiary the Company
Europe AG, and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
8/19/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.134 |
|
Second Ratification Agreement, dated
August 13, 2010, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments,
L.P. |
|
|
|
8-K |
|
10.7 |
|
8/19/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.135 |
|
Irrevocable Transfer Agent Instructions,
dated August 13, 2010, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.8 |
|
8/19/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.136 |
|
Security Transfer of Moveable Assets,
dated August 13, 2010, by and between the Company’s wholly-owned subsidiary, NeoMedia Europe AG, and YA Global Investments,
L.P. |
|
|
|
8-K |
|
10.9 |
|
8/19/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.137 |
|
Agreement, dated September 29, 2010,
by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
10/1/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.138 |
|
Secured Convertible Debenture, No.
NEOM-10-3, dated September 29, 2010, issued by the Company to YA Global Investments, L.P. (as amended by Debenture
Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February
8, 2013) |
|
|
|
8-K |
|
10.2 |
|
10/1/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.139 |
|
Warrant, No. NEOM-0910, dated September
29, 2010, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
10/1/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.140 |
|
Third Ratification Agreement,
dated September 29, 2010, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA
Global Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
10/1/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.141 |
|
Irrevocable Transfer Agent Instructions,
dated September 29, 2010, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
10/1/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.142* |
|
Compromise Agreement dated October
19, 2010, by and between the Company and Iain A. McCready |
|
|
|
8-K |
|
10.1 |
|
10/20/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.143 |
|
Agreement, dated October 28, 2010,
by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
11/3/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.144 |
|
Secured Convertible Debenture, No.
NEOM-10-4, dated October 28, 2010, issued by the Company to YA Global Investments, L.P. (as amended by Debenture
Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February
8, 2013) |
|
|
|
8-K |
|
10.2 |
|
11/3/2010 |
| 10.145 |
|
Warrant, No. NEOM-1010, dated October
28, 2010, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
11/3/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.146 |
|
Fourth Ratification Agreement, dated
September 29, 2010, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global
Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
11/3/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.147 |
|
Irrevocable Transfer Agent Instructions,
dated October 28, 2010, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
11/3/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.148 |
|
Confidential Settlement Agreement,
dated December 14, 2010, by and between the Company and Rothschild Trust Holdings, LLC and BP BL Section 3.4, LLC |
|
|
|
8-K |
|
10.1 |
|
12/15/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.149 |
|
Agreement, dated December 15, 2010,
by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
12/21/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.150 |
|
Secured Convertible Debenture, No.
NEOM-10-5, dated December 15, 2010, issued by the Company to YA Global Investments, L.P. (as amended by Debenture
Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February
8, 2013) |
|
|
|
8-K |
|
10.2 |
|
12/21/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.151 |
|
Warrant, No. NEOM-1010, dated December
15, 2010, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
12/21/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.152 |
|
Fifth Ratification Agreement, dated
December 15, 2010, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global
Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
12/21/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.153 |
|
Irrevocable Transfer Agent Instructions,
dated December 15, 2010, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
12/21/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.154 |
|
Confidential License Agreement,
dated December 21, 2010, by and between the Company and eBay Inc. |
|
|
|
8-K |
|
10.1 |
|
12/22/2010 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.155 |
|
Agreement, dated January 10, 2011,
by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
1/14/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.156 |
|
Secured Convertible Debenture, No.
NEOM-11-1, dated January 10, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture
Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February
8, 2013) |
|
|
|
8-K |
|
10.2 |
|
1/14/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.157 |
|
Warrant, No. NEOM-0111, dated January
10, 2011, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
1/14/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.158 |
|
Sixth Ratification Agreement, dated
January 10, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments,
L.P. |
|
|
|
8-K |
|
10.6 |
|
1/14/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.159 |
|
Irrevocable Transfer Agent Instructions,
dated January 10, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
1/14/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.160 |
|
Agreement, dated February 8, 2011,
by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
2/11/2011 |
| 10.161 |
|
Secured Convertible Debenture, No.
NEOM-11-2, dated February 8, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture
Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February
8, 2013) |
|
|
|
8-K |
|
10.2 |
|
2/11/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.162 |
|
Warrant, No. NEOM-0211, dated February
8, 2011, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
2/11/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.163 |
|
Seventh Ratification Agreement, dated
February 8, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments,
L.P. |
|
|
|
8-K |
|
10.6 |
|
2/11/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.164 |
|
Irrevocable Transfer Agent Instructions,
dated February 8, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
2/11/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.165 |
|
Confidential License Agreement, dated
December 21, 2010, by and between the Company and eBay Inc. |
|
|
|
8-K |
|
10.1 |
|
2/22/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.166 |
|
Agreement, dated March 11, 2011, by
and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
3/17/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.167 |
|
Secured Convertible Debenture, No.
NEOM-11-3, dated March 11, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension
Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
3/17/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.168 |
|
Warrant, No. NEOM-0311, dated March
11, 2011, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
3/17/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.169 |
|
Eighth Ratification Agreement,
dated March 11, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global
Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
3/17/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.170 |
|
Irrevocable Transfer Agent Instructions,
dated March 11, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
3/17/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.171 |
|
Agreement, dated April 13, 2011, by
and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
4/19/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.172 |
|
Secured Convertible Debenture, No.
NEOM-11-4, dated April 13, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture
Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February
8, 2013) |
|
|
|
8-K |
|
10.2 |
|
4/19/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.173 |
|
Warrant, No. NEOM-0411, dated April
13, 2011, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
4/19/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.174 |
|
Ninth Ratification Agreement, dated
April 13, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments,
L.P. |
|
|
|
8-K |
|
10.6 |
|
4/19/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.175 |
|
Irrevocable Transfer Agent Instructions,
dated April 13, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
4/19/2011 |
| 10.176 |
|
Agreement, dated May 31, 2011, by and
between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
6/3/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.177 |
|
Secured Convertible Debenture, No.
NEOM-11-5, dated May 31, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension
Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
6/3/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.178 |
|
Warrant, No. NEOM-0511, dated May 31,
2011, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
6/3/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.179 |
|
Ratification Agreement, dated May 31,
2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments,
L.P. |
|
|
|
8-K |
|
10.6 |
|
6/3/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.180 |
|
Irrevocable Transfer Agent Instructions,
dated May 31, 2011, by and among the Company, YA Global Investments, L.P., David Gonzalez, Esq. and WorldWide Stock Transfer,
LLC |
|
|
|
8-K |
|
10.7 |
|
6/3/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.181 |
|
Agreement, dated June 28, 2011, by
and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
7/1/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.182 |
|
Secured Convertible Debenture, No.
NEOM-11-6, dated June 28, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension
Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
7/1/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.183 |
|
Warrant, No. NEOM-0611, dated June
28, 2011, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
7/1/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.184 |
|
Eleventh Ratification Agreement,
dated June 28, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global
Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
7/1/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.185 |
|
Irrevocable Transfer Agent Instructions,
dated June 28, 2011, by and among the Company, YA Global Investments, L.P., David Gonzalez, Esq. and WorldWide Stock Transfer,
LLC |
|
|
|
8-K |
|
10.7 |
|
7/1/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.186 |
|
Secured Convertible Debenture, No.
NEOM-11-7, dated July 13, 2011, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
7/19/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.187 |
|
Secured Convertible Debenture, No.
NEOM-11-8, dated August 12, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension
Agreements filed at Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.1 |
|
8/18/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.188 |
|
Agreement, dated September 15, 2011,
by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
9/21/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.189 |
|
Secured Convertible Debenture, No.
NEOM-11-9, dated September 15, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension
Agreement filed at Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
9/21/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.190 |
|
Warrant, No. NEOM-0911, dated September
15, 2011, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
9/21/201 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.191 |
|
Twelfth Ratification Agreement, dated
September 15, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global
Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
9/21/2011 |
| 10.192 |
|
Irrevocable Transfer Agent Instructions,
dated September 15, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
9/21/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.193 |
|
Agreement, dated October 25, 2011,
by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
10/28/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.194 |
|
Secured Convertible Debenture, No.
NEOM-11-10, dated October 25, 2011, issued by the Company to YA Global Investments, L.P (as amended by Debenture Extension
Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
10/28/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.195 |
|
Warrant, No. NEOM-1011, dated October
25, 2011, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
10/28/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.196 |
|
Thirteenth Ratification Agreement,
dated October 25, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global
Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
10/28/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.197 |
|
Irrevocable Transfer Agent Instructions,
dated October 25, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
10/28/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.198 |
|
Agreement, dated December
8, 2011, by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
12/14/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.199 |
|
Secured Convertible Debenture, No.
NEOM-11-11, dated December 8, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension
Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
12/14/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.200 |
|
Warrant, No. NEOM-1211, dated December
8, 2011, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
12/14/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.201 |
|
Fourteenth Ratification Agreement,
dated December 8, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global
Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
12/14/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.202 |
|
Irrevocable Transfer Agent Instructions,
dated December 8, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
12/14/2011 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.203 |
|
Agreement, dated January 11, 2012,
by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
1/18/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.204 |
|
Secured Convertible Debenture, No.
NEOM-12-1, dated January 11, 2012, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension
Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
1/18/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.205 |
|
Warrant, No. NEOM-0112, dated January
11, 2012, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
1/18/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.206 |
|
Fifteenth Ratification Agreement, dated
January 11, 2012, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments,
L.P. |
|
|
|
8-K |
|
10.6 |
|
1/18/2012 |
| 10.207 |
|
Irrevocable Transfer Agent Instructions,
dated January 11, 2012, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
1/18/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.208 |
|
Agreement, dated February 6, 2012,
by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
2/10/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.209 |
|
Secured Convertible Debenture, No.
NEOM-12-2, dated February 6, 2012, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension
Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
2/10/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.210 |
|
Warrant, No. NEOM-0212, dated February
6, 2012, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
2/10/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.211 |
|
Sixteenth Ratification Agreement, dated
February 9, 2012, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments,
L.P. |
|
|
|
8-K |
|
10.6 |
|
2/10/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.212 |
|
Irrevocable Transfer Agent Instructions,
dated February 6, 2012, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
2/10/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.213 |
|
Agreement, dated March
26, 2012, by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
3/27/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.214 |
|
Secured Convertible Debenture, No.
NEOM-12-3, dated March 26, 2012, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements
filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
3/27/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.215 |
|
Warrant, No. NEOM-0312, dated March
26, 2012, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
3/27/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.216 |
|
Seventeenth Ratification Agreement,
dated March 26, 2012, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global
Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
3/27/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.217 |
|
Irrevocable Transfer Agent Instructions,
dated March 26, 2012, by and among the Company, the Buyer, David Gonzalez, Esq. and Worldwide Stock Transfer, LLC |
|
|
|
8-K |
|
10.7 |
|
3/27/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.218 |
|
Agreement, dated April 26, 2012, by
and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
5/1/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.219 |
|
Secured Convertible Debenture, No.
NEOM 12-4, dated April 26, 2012, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements
filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |
|
|
|
8-K |
|
10.2 |
|
5/1/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.220 |
|
Warrant, No. NEOM-0412, dated April
26, 2012, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
5/1/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.221 |
|
Eighteenth Ratification Agreement,
dated April 26, 2012, by and among the Company, each of the Company’s subsidiaries and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
5/1/2012 |
| 10.222 |
|
Irrevocable Transfer Agent Instructions
dated April 26, 2012, by and between the Company, the Buyer, David Gonzalez, Esq. and Worldwide Stock Transfer LLC |
|
|
|
8-K |
|
10.7 |
|
5/1/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.223 |
|
Debenture Extension Agreement dated
May 25, 2012, by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
5/29/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.224 |
|
Agreement, dated June 1, 2012, by and
between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
6/7/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.225 |
|
Secured Convertible Debenture, No.
NEOM 12-5, dated June 1, 2012, issued by the Company to YA Global Investments, L.P. (as amended by the Debenture Extension
Agreement Filed February 8, 2013 with the Sec as Exhibit 10.1) |
|
|
|
8-K |
|
10.2 |
|
6/7/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.226 |
|
Warrant No. NEOM-0512 dated June 1,
2012, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
6/7/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.227 |
|
Nineteenth Ratification Agreement,
dated June 1, 2012, by and among the company, each of the Company’s subsidiaries and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
6/7/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.228 |
|
Irrevocable Transfer Agent
Instructions dated June 1, 2012, by and between the Company, the Buyer, David Gonzalez, Esq. and Worldwide Stock Transfer
LLC |
|
|
|
8-K |
|
10.7 |
|
6/7/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.229 |
|
Agreement dated July 20, 2012, by and
between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
7/27/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.230 |
|
Secured Convertible Debenture, No.
NEOM 12-6, dated July 20, 2012, issued by the Company to YA Global Investments, L.P. (as amended by the Debenture Extension
Agreement Filed February 8, 2013 with the Sec as Exhibit 10.1) |
|
|
|
8-K |
|
10.2 |
|
7/27/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.231 |
|
Warrant, No. NEOM-0612 dated July 20,
2012, issued by the Company to YA Global Investments, L.P. |
|
|
|
8-K |
|
10.3 |
|
7/27/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.232 |
|
Twentieth Ratification Agreement, dated
July 20, 2012, by and among the Company, each of the Company’s subsidiaries and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.6 |
|
7/27/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.233 |
|
Irrevocable Transfer Agent Instructions
dated July 20,2012, by and between the Company, the Buyer, David Gonzalez, Esq. and Worldwide Stock Transfer LLC |
|
|
|
8-K |
|
10.7 |
|
7/27/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.234 |
|
Confidential Patent License Agreement
dated August 20, 2012, by and between the Company and Microsoft Corporation |
|
|
|
8-K |
|
10.1 |
|
8/24/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.235 |
|
General Services Agreement dated August
27, 2012, by and between the Company and Jeff Huitt |
|
|
|
8-K |
|
10.1 |
|
8/28/2012 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.236 |
|
Debenture Extension Agreement dated
February 4, 2013, by and between the Company and YA Global Investments, L.P. |
|
|
|
8-K |
|
10.1 |
|
2/8/2013 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.237* |
|
Employment Agreement by and between
the Company and Laura Marriott dated August 30, 2013 |
|
|
|
8-K |
|
10.1 |
|
8/30/2013 |
| 10.238 |
|
Reaffirmation and Ratification Agreement
by and between the Company and YA Global Investments, L.P. dated September 16, 2013 |
|
|
|
10-Q |
|
10.1 |
|
10/28/2013 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.239 |
|
Amended, Restated and Consolidated
Secured Convertible Debenture, No. NEOM-42, by and between the Company and YA Global Investments, L.P. dated September 16,
2013 |
|
|
|
10-Q |
|
10.2 |
|
10/28/2013 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.240 |
|
Amended, Restated and Consolidated
Secured Convertible Debenture, No. NEOM-43, by and between the Company and YA Global Investments, L.P. dated September 16,
2013 |
|
|
|
10-Q |
|
10.3 |
|
10/28/2013 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.241 |
|
Amended, Restated and Consolidated
Secured Convertible Debenture, No. NEOM-44, by and between the Company and YA Global Investments, L.P. dated September 16,
2013 |
|
|
|
10-Q |
|
10.4 |
|
10/28/2013 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.242 |
|
Amended, Restated and Consolidated
Secured Convertible Debenture, No. NEOM-45, by and between the Company and YA Global Investments, L.P. dated September 16,
2013 |
|
|
|
10-Q |
|
10.5 |
|
10/28/2013 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.243 |
|
Amended, Restated and Consolidated
Secured Convertible Debenture, No. NEOM-46, by and between the Company and YA Global Investments, L.P. dated September 16,
2013 |
|
|
|
10-Q |
|
10.6 |
|
10/28/2013 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.244 |
|
Amended, Restated and Consolidated
Secured Convertible Debenture, No. NEOM-47, by and between the Company and YA Global Investments, L.P. dated September 16,
2013 |
|
|
|
10-Q |
|
10.7 |
|
10/28/2013 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.245 |
|
Debenture Redemption Agreement, by
and between the Company and YA Global Investments, L.P. dated October 11, 2013 |
|
|
|
10-Q |
|
10.8 |
|
10/28/2013 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.246 |
|
Amended and Restated Patent Security
Agreement, by and between the Company and YA Global Investments, L.P. dated October 25, 2013 |
|
|
|
10-Q |
|
10.9 |
|
10/28/2013 |
| |
|
|
|
|
|
|
|
|
|
|
| 10.247 |
|
Agreement on the Pledge of Shares as
Collateral of NeoMedia Europe GmbH by and between the Company and YA Global Investments, L.P. dated December 13,
2013 |
|
|
|
10-K |
|
10.247 |
|
3/17/2014 |
| |
|
|
|
|
|
|
|
|
|
|
| 14 |
|
Code of Professional Ethics |
|
|
|
10-K |
|
14.1 |
|
4/3/2007 |
| |
|
|
|
|
|
|
|
|
|
|
| 21 |
|
Subsidiaries of the Registrant |
|
|
|
10-K |
|
21 |
|
3/17/2014 |
| |
|
|
|
|
|
|
|
|
|
|
| 23.1 |
|
Consent of StarkSchenkein, LLP |
|
|
|
10-K |
|
23.1 |
|
3/17/2014 |
| |
|
|
|
|
|
|
|
|
|
|
| 23.2 |
|
Consent of Kingery & Crouse, P.A. |
|
|
|
10-K |
|
23.2 |
|
3/17/2014 |
| |
|
|
|
|
|
|
|
|
|
|
| 23.3 |
|
Consent of Kingery & Crouse, P.A. |
|
X |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| 31.1 |
|
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| 31.2 |
|
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| 32.1 |
|
Certification of Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| 32.2 |
|
Certification of Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| 101.INS |
|
XBRL Instance Document |
|
X |
|
|
|
|
|
|
| 101.SCH |
|
XBRL Taxonomy Extension Schema Document |
|
X |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| 101.CAL |
|
XBRL Taxonomy Extension Calculation
Linkbase Document |
|
X |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| 101.DEF |
|
XBRL Taxonomy Extension Definition
Linkbase Document |
|
X |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| 101.LAB |
|
XBRL Taxonomy Extension Label Linkbase
Document |
|
X |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| 101.PRE |
|
XBRL Taxonomy Extension Presentation
Linkbase Document |
|
X |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
* Denotes management contract or compensatory plan or arrangement.
SIGNATURES
In accordance with
Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
| |
NEOMEDIA TECHNOLOGIES, INC. |
| |
|
|
| Date: September 19, 2014 |
|
|
| |
|
|
| |
By: |
/s/ Laura A. Marriott |
| |
|
Laura A. Marriott |
| |
|
Chief Executive Officer, Principal Executive Officer |
| |
|
|
| |
|
/s/ Barry S Baer |
| |
|
Barry S Baer |
| |
|
Chief Financial Officer, Principal Financial Officer and Principal
Accounting Officer |
In accordance with the requirements of
the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and
in the capacities indicated on September 19, 2014.
Signatures |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
Laura A. Marriott |
|
Chief Executive Officer, Principal
Executive Officer and Board Chairperson |
|
September 19,
2014 |
| Laura A. Marriott |
|
|
|
|
| |
|
|
|
|
| /s/
Barry S Baer |
|
Chief Financial Officer, Principal
Financial and Accounting Officer |
|
September 19,
2014 |
| Barry S Baer |
|
|
|
|
| |
|
|
|
|
| /s/
George G. O’Leary |
|
Director |
|
September 19,
2014 |
| George G. O’Leary |
|
|
|
|
| |
|
|
|
|
| /s/
Sarah Fay |
|
Director |
|
September 19,
2014 |
| Sarah Fay |
|
|
|
|
| |
|
|
|
|
| /s/
Peter Mannetti |
|
Director |
|
September 19,
2014 |
| Peter Mannetti |
|
|
|
|
Exhibit 23.3
Consent of Independent Registered Public
Accounting Firm
Board of Directors
NeoMedia Technologies, Inc.
We hereby consent to the incorporation
by reference in the previously filed Registration Statements (File Nos. 333-110189, 333-109778 and 333-173673) of our report dated
April 1, 2013 relating to the consolidated financial statements of NeoMedia Technologies, Inc. as of and for the year ended December
31, 2012, which appears in this Annual Report on Form 10-K/A.
/s/ Kingery & Crouse, P.A.
Certified Public Accountants
Tampa, Florida
September 19, 2014
EXHIBIT 31.1
CERTIFICATION
I, Laura A. Marriott, certify that:
1. I have reviewed this Annual
Report on Form 10-K/A (1st Amendment) for the year ended December 31, 2013 of NeoMedia Technologies, Inc.
2. Based on my knowledge, this report
does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report.
3. Based on my knowledge, the financial
statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4. The registrant's other certifying
officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared; and
(b) Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles; and
(c) Evaluated the effectiveness
of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report
any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial reporting.
5. The registrant's other certifying
officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether
or not material, that involves management or other employees who have a significant role in the registrant's internal control over
financial reporting.
| Date: September 19, 2014 |
By: |
/s/ Laura A. Marriott |
| |
|
Laura A. Marriott |
| |
|
Chief Executive Officer |
EXHIBIT 31.2
CERTIFICATION
I, Barry S. Baer, certify that:
1. I have reviewed this Annual
Report on Form 10-K/A (1st Amendment) for the year ended December 31, 2013 of NeoMedia Technologies, Inc.
2. Based on my knowledge, this report
does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made,
in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this
report.
3. Based on my knowledge, the financial
statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report.
4. The registrant's other certifying
officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
(a) Designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared; and
(b) Designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles; and
(c) Evaluated the effectiveness
of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report
any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal
quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant's internal control over financial reporting.
5. The registrant's other certifying
officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's
auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether
or not material, that involves management or other employees who have a significant role in the registrant's internal control over
financial reporting.
| Date: September 19, 2014 |
By: |
/s/ Colonel Barry S. Baer |
| |
|
Colonel (Ret.) Barry S. Baer |
| |
|
Chief Financial Officer and Principal
Financial and Accounting Officer |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
(18 U.S.C. SECTION 1350)
In connection with the Annual Report of
NeoMedia Technologies, Inc., a Delaware corporation (the “Company”) on Form 10-K/A (1st Amendment) for the
year ended December 31, 2013 as filed with the Securities and Exchange Commission (the “Report”), Laura A. Marriott,
does hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to her knowledge:
1. The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operation
of the Company.
| /s/ Laura A. Marriott |
|
| Laura A. Marriott |
|
| Chief Executive Officer, |
|
| Principal Executive Officer |
|
| September 19, 2014 |
|
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
(18 U.S.C. SECTION 1350)
In connection with the Annual Report of
NeoMedia Technologies, Inc., a Delaware corporation (the “Company”) on Form 10-K/A (1st Amendment) for the
year ended December 31, 2013 as filed with the Securities and Exchange Commission (the “Report”), Barry S. Baer, does
hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to his knowledge:
1. The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The
information contained in the Report fairly presents, in all material respects, the financial condition and results of operation
of the Company.
| /s/ Colonel Barry S. Baer |
|
Colonel (Ret.) Barry S. Baer,
Chief Financial Officer and Principal Financial and Accounting Officer, |
|
| September 19, 2014 |
|
NeoMedia Technologies (CE) (USOTC:NEOM)
Gráfico Histórico do Ativo
De Nov 2024 até Dez 2024
NeoMedia Technologies (CE) (USOTC:NEOM)
Gráfico Histórico do Ativo
De Dez 2023 até Dez 2024
