UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 – Q
(Mark One)
| x |
QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March
31, 2015
or
| ¨ |
TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to ____________
Commission File Number 000-21743
NeoMedia Technologies, Inc.
(Exact Name of Issuer 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,
Colorado 80302
(Address, including zip code, of principal
executive offices)
303-546-7946
(Registrants’ telephone number, including
area code)
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 for such shorter period that the registrant was required to submit and post such files). Yes x No
¨
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 number of outstanding shares of the registrant’s Common
Stock on May 7, 2015 was 4,846,748,489.
NeoMedia Technologies, Inc.
Form 10-Q
For the Quarterly Period Ended March
31, 2015
Index
PART I — FINANCIAL INFORMATION
ITEM 1. Financial Statements
NeoMedia Technologies, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands, except share and per
share data)
| | |
March 31,
2015 | | |
December
31,
2014 | |
| | |
(Unaudited) | | |
| |
| ASSETS | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 101 | | |
$ | 75 | |
| Accounts receivable | |
| 156 | | |
| 214 | |
| Prepaid expenses and other current assets | |
| 29 | | |
| 32 | |
| Total current assets | |
| 286 | | |
| 321 | |
| Patents and other intangible assets, net | |
| 886 | | |
| 947 | |
| Other long-term assets | |
| 15 | | |
| 16 | |
| Total assets | |
$ | 1,187 | | |
$ | 1,284 | |
| | |
| | | |
| | |
| LIABILITIES AND SHAREHOLDERS' DEFICIT | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable | |
$ | 480 | | |
$ | 463 | |
| Accrued expenses | |
| 273 | | |
| 303 | |
| Deferred revenues and customer prepayments | |
| 876 | | |
| 1,151 | |
| Notes payable | |
| 242 | | |
| 242 | |
| Derivative financial instruments – warrants | |
| 3 | | |
| 2 | |
| Derivative financial instruments - Series C and D preferred stock and debentures payable | |
| 1 | | |
| 6 | |
| Debentures payable - carried at fair value | |
| 38,851 | | |
| 37,384 | |
| Total current liabilities | |
| 40,726 | | |
| 39,551 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| | | |
| | |
| | |
| | | |
| | |
Series C convertible preferred stock, $0.01 par value, 27,000 shares
authorized, 4,317 and 4,332 shares issued and outstanding, respectively, and a
liquidation value of $4,317 and $4,332 at March 31, 2015 and December
31, 2014, respectively | |
| 4,317 | | |
| 4,332 | |
Series D convertible preferred stock, $0.01 par value, 25,000 shares
authorized, 3,481 and 3,481 shares issued and outstanding, respectively, and a
liquidation value of $348 and $348, respectively, at March 31, 2015 and
December 31, 2014 | |
| 348 | | |
| 348 | |
| | |
| | | |
| | |
| Shareholders' deficit: | |
| | | |
| | |
Common stock, no par value, 7,500,000,000 shares authorized,
4,846,748,489 and 4,166,142,620 shares issued and outstanding as of
March 31, 2015 and December 31, 2014, respectively | |
| 4,985 | | |
| 4,985 | |
| Additional paid in capital | |
| 192,287 | | |
| 192,224 | |
| Accumulated deficit | |
| (240,697 | ) | |
| (239,377 | ) |
| Treasury stock, at cost, 2,012 shares of common stock | |
| (779 | ) | |
| (779 | ) |
| Total shareholders' deficit | |
| (44,204 | ) | |
| (42,947 | ) |
| Total liabilities and shareholders' deficit | |
$ | 1,187 | | |
$ | 1,284 | |
See accompanying notes.
NeoMedia Technologies,
Inc. and Subsidiaries
Condensed Consolidated Statements of
Operations
(Unaudited)
(in thousands, except
share and per share data)
| | |
Three months ended March 31, | |
| | |
2015 | | |
2014 | |
| | |
| | |
| |
| Revenue | |
$ | 470 | | |
$ | 1,003 | |
| Cost of revenues | |
| 18 | | |
| 158 | |
| Gross profit | |
| 452 | | |
| 845 | |
| | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | |
| Sales and marketing expenses | |
| 6 | | |
| 15 | |
| General and administrative expenses | |
| 188 | | |
| 603 | |
| Research and development costs | |
| 48 | | |
| 177 | |
| | |
| | | |
| | |
| Operating income | |
| 210 | | |
| 50 | |
| | |
| | | |
| | |
| Gain (loss) from change in fair value of hybrid financial instruments | |
| (1,515 | ) | |
| (545 | ) |
| Gain (loss) from change in fair value of derivative liability – warrants | |
| (1 | ) | |
| 373 | |
| Gain (loss) from change in fair value of derivative liability - Series C and D preferred stock and debentures | |
| 5 | | |
| 137 | |
| Interest expense | |
| (19 | ) | |
| -- | |
| | |
| | | |
| | |
| Net income (loss) | |
$ | (1,320 | ) | |
$ | 15 | |
| | |
| | | |
| | |
| Net income (loss) per common share: | |
| | | |
| | |
| Basic | |
$ | (0.000 | ) | |
$ | 0.000 | |
| Fully diluted | |
| (0.000 | ) | |
| 0.000 | |
| | |
| | | |
| | |
| Weighted average number of common shares: | |
| | | |
| | |
| Basic | |
| 4,506,555,811 | | |
| 4,984,827,279 | |
| Fully diluted | |
| 4,506,555,811 | | |
| 266,001,250,808 | |
See accompanying notes.
NeoMedia Technologies, Inc. and Subsidiaries
Condensed Consolidated Statements of
Cash Flows
(Unaudited)
(in thousands)
| | |
Three months ended March 31, | |
| | |
2015 | | |
2014 | |
| Cash Flows from Operating Activities: | |
| | | |
| | |
| Net income (loss) | |
$ | (1,320 | ) | |
$ | 15 | |
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |
| | | |
| | |
| Depreciation and amortization | |
| 61 | | |
| 70 | |
| (Gain) loss from change in fair value of hybrid financial instruments | |
| 1,515 | | |
| 545 | |
| (Gain) loss from change in fair value of derivative liability – warrants | |
| 1 | | |
| (373 | ) |
(Gain) loss from change in fair value of derivative liability - Series C and D
preferred stock and debentures | |
| (5 | ) | |
| (137 | ) |
| Changes in operating assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| 58 | | |
| (91 | ) |
| Prepaid expenses and other assets | |
| 4 | | |
| (1 | ) |
| Accounts payable and accrued expenses | |
| (13 | ) | |
| 280 | |
| Deferred revenues and customer prepayments | |
| (275 | ) | |
| (281 | ) |
| Net cash provided by operating activities | |
| 26 | | |
| 27 | |
| | |
| | | |
| | |
| Cash Flows from Financing Activities: | |
| | | |
| | |
| Payments on short-term notes payable | |
| -- | | |
| (28 | ) |
| Net cash used by financing activities | |
| -- | | |
| (28 | ) |
| | |
| | | |
| | |
| Net change in cash and cash equivalents | |
| 26 | | |
| (1 | ) |
| | |
| | | |
| | |
| Cash and cash equivalents, beginning of period | |
| 75 | | |
| 267 | |
| Cash and cash equivalents, end of period | |
$ | 101 | | |
$ | 266 | |
| | |
| | | |
| | |
| Supplemental cash flow information: | |
| | | |
| | |
| Non-cash financing activities: | |
| | | |
| | |
| Series C preferred stock converted to common stock | |
$ | 48 | | |
$ | -- | |
| Convertible debentures converted to common stock | |
| 15 | | |
| -- | |
See accompanying notes.
NeoMedia Technologies,
Inc. and Subsidiaries
Notes to Condensed Consolidated Financial
Statements
March 31, 2015
(Unaudited)
Note 1 – General
NeoMedia Technologies, Inc. a Delaware
corporation (the “Company,” “NeoMedia,” “we,” “us,” “our,” and similar
terms), was founded in 1989 and is headquartered in Boulder, Colorado. We have positioned ourselves to lead the development of
2D mobile barcode technology and services 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 solutions. With this technology, mobile devices
with cameras become barcode scanners, enabling a range of practical applications including mobile marketing and mobile commerce.
In addition, we offer licensing of our extensive intellectual property portfolio.
Note 2 – Summary of Significant Accounting
Policies
The accompanying unaudited condensed consolidated
financial statements have been prepared without audit pursuant to the rules and regulations of the United States Securities
and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements
prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe
that the disclosures made are adequate to make the information not misleading. We believe these statements include all adjustments,
which are of a normal and recurring nature, considered necessary for a fair presentation of the financial statements. The unaudited
condensed consolidated financial statements included herein should be read in conjunction with the financial statements and notes
thereto included in our annual report on Form 10-K filed with the SEC on March 3, 2015. The results of operations for
the three months ended March 31, 2015 are not necessarily indicative of the results to be expected for the full year.
Basis of Presentation –
The condensed consolidated financial statements include the accounts of NeoMedia and its wholly owned subsidiaries. We operate
as one reportable segment. All intercompany accounts, transactions and profits have been eliminated in consolidation. Certain
prior period amounts in the condensed 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.
Going Concern –
We have historically incurred operating losses, and we may continue to generate negative cash flows as we implement our business
plan. There can be no assurance that our continuing efforts to execute our business plan will be successful and that we will be
able to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared in conformity
with US GAAP, which contemplates our continuation as a going concern. Our net loss for the three months ended March 31, 2015 was
$1,320,000 as compared to net income of $15,000 for the same period in 2014. The operating results for the three months ended
March 31, 2015 and 2014, included $1,511,000 and $35,000, respectively, of net expense related to financing instruments.
Net cash provided by operations during
the three months ended March 31, 2015 was $26,000 as compared to net cash provided by operations of $27,000 during the three months
ended March 31, 2014. As of March 31, 2015, we have an accumulated deficit of $240.7 million, and a working capital deficit of
$40.4 million, including $38.9 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. 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 shares of common stock outstanding. During the first three months
of 2015, there were 680,606 thousand shares of common stock issued for these conversions. We cannot predict if or when each holder
may or may not elect to convert into shares of common stock.
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.
Basic and Diluted Net Income (Loss) Per Common Share
– Basic net income (loss) per common share is computed by dividing net income (loss) available to common shareholders
by the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share
is includes all outstanding stock options, warrants and convertible instruments, except in the case where doing so would be anti-dilutive,
such as when we have a net loss. The components of basic and diluted income (loss) per share attributable to common stock shareholders
were as follows (in thousands, except share and per share data):
| | |
Three months ended March 31, | |
| | |
2015 | | |
2014 | |
| Basic income (loss) per common share: | |
| | | |
| | |
Numerator: Net income (loss) available
to common shareholders | |
$ | (1,320 | ) | |
$ | 15 | |
Denominator: Weighted average shares
outstanding | |
| 4,506,555,811 | | |
| 4,984,827,279 | |
| Basic income (loss) per common share | |
$ | (0.000 | ) | |
$ | 0.000 | |
| | |
| | | |
| | |
| Diluted income (loss) per common share: | |
| | | |
| | |
| Numerator: | |
| | | |
| | |
Net income (loss) available to
common shareholders | |
$ | (1,320 | ) | |
$ | 15 | |
| Effect of dilutive securities | |
| -- | | |
| (35 | ) |
Diluted net income (loss) available to
common shareholders | |
$ | (1,320 | ) | |
$ | (20 | ) |
| Denominator: | |
| | | |
| | |
| Weighted average shares outstanding | |
| 4,506,555,811 | | |
| 4,984,827,279 | |
| Effect of dilutive securities | |
| -- | | |
| 261,016,423,529 | |
Diluted weighted average shares
outstanding | |
| 4,506,555,811 | | |
| 266,001,250,808 | |
| Diluted income (loss) per common share | |
$ | (0.000 | ) | |
$ | 0.000 | |
Recent Accounting Pronouncements
– From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date.
We believe that the impact of recently issued standards that are not yet effective may have an impact on our results of operations
and financial position. ASU Update 2014-09 Revenue from Contracts with Customers (Topic 606) issued May 28, 2014 by FASB and IASB
converged guidance on recognizing revenue in contracts with customers with an effective date after December 15, 2016 will be evaluated
as to impact and implemented accordingly. In addition, ASU Update 2014-15 Presentation of Financial Statements-Going Concern (Sub
Topic 205-40) issued August 27, 2014 by FASB defines management’s responsibility to evaluate whether there is substantial
doubt about an organization’s ability to continue as a going concern. The additional disclosure requirement is effective
after December 15, 2016 and will be evaluated as to impact and implemented accordingly.
Note 3 – Accrued Liabilities
The following summarizes our accrued liabilities (in thousands):
| | |
March
31,
2015 | | |
December
31,
2014 | |
| Accrued operating expenses | |
$ | 172 | | |
$ | 176 | |
| Accrued payroll related expenses | |
| 43 | | |
| 82 | |
| Accrued legal fees | |
| 58 | | |
| 45 | |
| Total | |
$ | 273 | | |
$ | 303 | |
Note 4 – Financing
At March 31, 2015, 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.
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 March 31, 2015:
| | |
| | |
| | |
| | |
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 | | |
$ | 0.000095 | | |
| 90 | % | |
125 Days |
| 2007 | |
| 540 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.000095 | | |
| 90 | % | |
125 Days |
| 2007 | |
| 272 | | |
| - | | |
$ | 2.00 | | |
$ | 0.000090 | | |
| 95 | % | |
125 Days |
| 2008 | |
| 1,095 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.000095 | | |
| 90 | % | |
125 Days |
| 2008 | |
| 830 | | |
| - | | |
$ | 2.00 | | |
$ | 0.000090 | | |
| 95 | % | |
125 Days |
| 2009 | |
| -- | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.000095 | | |
| 90 | % | |
125 Days |
| 2011 | |
| 794 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.000095 | | |
| 90 | % | |
125 Days |
| 2012 | |
| 762 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.000095 | | |
| 90 | % | |
125 Days |
| 2012 | |
| 210 | | |
| - | | |
$ | 2.00 | | |
$ | 0.000090 | | |
| 95 | % | |
125 Days |
| 2013 | |
| 22,084 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.000095 | | |
| 90 | % | |
125 Days |
| 2013 | |
| 7,127 | | |
| - | | |
$ | 2.00 | | |
$ | 0.000095 | | |
| 95 | % | |
125 Days |
| 2014 | |
| 150 | | |
| 9.5 | % | |
$ | 2.00 | | |
$ | 0.000090 | | |
| 90 | % | |
125 Days |
| Total | |
$ | 35,826 | | |
| | | |
| | | |
| | | |
| | | |
|
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 through
March 31, 2015.
| | |
Preferred
shares | | |
Preferred
shares | | |
Preferred
shares | | |
Common
shares | |
| | |
issued | | |
converted | | |
remaining | | |
issued | |
| | |
(in thousands) | |
| | |
| | |
| | |
| | |
| |
| Series C Preferred Stock | |
| 22 | | |
| 18 | | |
| 4 | | |
| 1,264,419 | |
| Series D Preferred Stock | |
| 25 | | |
| 22 | | |
| 3 | | |
| 16,344 | |
The outstanding principal and accrued
interest for the debentures as of March 31, 2015 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 March 31, 2015 | | |
| Principal and
accrued interest
converted since
inception | | |
| Common
Shares
issued | |
| | |
| (in thousands) | |
| | |
| | | |
| | | |
| | |
| Debentures | |
$ | 40,248 | | |
$ | 12,577 | | |
| 2,754,770 | |
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.
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 March 31, 2015 included exercise estimates/behaviors
and the following other significant estimates for valuing the preferred stock embedded derivatives: remaining term of 0.33 years,
equivalent volatility of 939%, stated dividend of 8%, equivalent credit-risk adjusted rate of 13.0% and conversion price of $0.000097.
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 March 31, 2015, 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 March 31, 2015 and December 31, 2014:
| March 31, 2015 | |
| | |
| | |
| | |
| |
| | |
| | |
| | |
| | |
| |
| | |
Face | | |
Carrying | | |
Embedded
Conversion | | |
Common
Stock | |
| | |
Value | | |
Value | | |
Feature | | |
Shares | |
| | |
(in thousands) | |
| | |
| | |
| | |
| | |
| |
| Series C Preferred Stock | |
$ | 4,317 | | |
$ | 4,317 | | |
$ | 1 | | |
| 44,505,155 | |
| Series D Preferred Stock | |
| 348 | | |
| 348 | | |
| -- | | |
| 3,588,660 | |
| Total | |
$ | 4,665 | | |
$ | 4,665 | | |
$ | 1 | | |
| 48,093,815 | |
| December 31, 2014 | |
| | |
| | |
| | |
| |
| | |
| | |
| | |
| | |
| |
| | |
Face | | |
Carrying | | |
Embedded
Conversion | | |
Common
Stock | |
| | |
Value | | |
Value | | |
Feature | | |
Shares | |
| | |
(in thousands) | |
| | |
| | |
| | |
| | |
| |
| Series C Preferred Stock | |
$ | 4,332 | | |
$ | 4,332 | | |
$ | 5 | | |
| 44,659,794 | |
| Series D Preferred Stock | |
| 348 | | |
| 348 | | |
| -- | | |
| 3,588,660 | |
| Total | |
$ | 4,680 | | |
$ | 4,680 | | |
$ | 5 | | |
| 48,248,454 | |
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 March 31, 2015 and December 31, 2014 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
| | |
Three months ended March 31, | |
| | |
2015 | | |
2014 | |
| | |
(in thousands) | |
| Series C Preferred Stock | |
$ | 4 | | |
$ | 128 | |
| Series D Preferred Stock | |
| 1 | | |
| 9 | |
| | |
| | | |
| | |
| Gain/(loss) from change in fair value of derivative liability | |
$ | 5 | | |
$ | 137 | |
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 March 31, 2015 included: (i) present
value of future cash flows for the debentures using an effective market interest rate of 13.0%, (ii) remaining term of 0.33 years,
(iii) equivalent volatility of 939% and anti-dilution adjusted conversion prices ranging from $0.000090 - $0.000095.
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 March 31, 2015 and December 31, 2014.
| March 31, 2015 | |
| | |
| | |
Common | |
| | |
Face | | |
Fair | | |
Stock | |
| | |
Value | | |
Value | | |
Shares | |
| | |
(in thousands) | |
| Debentures: | |
| | | |
| | | |
| | |
| 2006 | |
$ | 1,962 | | |
$ | 2,102 | | |
| 24,204,635 | |
| 2007 | |
| 812 | | |
| 1,034 | | |
| 11,677,185 | |
| 2008 | |
| 1,925 | | |
| 2,028 | | |
| 22,883,750 | |
| 2009 | |
| -- | | |
| 30 | | |
| 331,733 | |
| 2011 | |
| 794 | | |
| 849 | | |
| 9,780,037 | |
| 2012 | |
| 972 | | |
| 1,155 | | |
| 13,124,733 | |
| 2013 | |
| 29,211 | | |
| 31,501 | | |
| 358,502,804 | |
| 2014 | |
| 150 | | |
| 152 | | |
| 1,752,311 | |
| Total | |
$ | 35,826 | | |
$ | 38,851 | | |
| 442,257,188 | |
| December 31, 2014 | |
| | |
| | |
Common | |
| | |
Face | | |
Fair | | |
Stock | |
| | |
Value | | |
Value | | |
Shares | |
| | |
(in thousands) | |
| Debentures: | |
| | | |
| | | |
| | |
| 2006 | |
$ | 1,961 | | |
$ | 2,019 | | |
| 23,871,436 | |
| 2007 | |
| 814 | | |
| 1,000 | | |
| 11,549,397 | |
| 2008 | |
| 1,925 | | |
| 1,949 | | |
| 22,598,665 | |
| 2009 | |
| 7 | | |
| 46 | | |
| 517,119 | |
| 2011 | |
| 785 | | |
| 800 | | |
| 9,469,332 | |
| 2012 | |
| 972 | | |
| 1,111 | | |
| 12,926,448 | |
| 2013 | |
| 29,211 | | |
| 30,297 | | |
| 354,041,487 | |
| 2014 | |
| 170 | | |
| 162 | | |
| 1,930,434 | |
| Total | |
$ | 35,845 | | |
$ | 37,384 | | |
| 436,904,318 | |
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 (loss) from change in fair value of hybrid financial
instruments
| | |
Three months ended
March 31, | |
| | |
2015 | | |
2014 | |
| | |
(in thousands) | |
| | |
| | |
| |
| 2006 | |
$ | (83 | ) | |
$ | (33 | ) |
| 2007 | |
| (34 | ) | |
| (417 | ) |
| 2008 | |
| (81 | ) | |
| 7 | |
| 2009 | |
| -- | | |
| (4 | ) |
| 2010 | |
| -- | | |
| -- | |
| 2011 | |
| (34 | ) | |
| (12 | ) |
| 2012 | |
| (41 | ) | |
| 379 | |
| 2013 | |
| (1,236 | ) | |
| (465 | ) |
| 2014 | |
| (6 | ) | |
| -- | |
| | |
| (1,515 | ) | |
| (545 | ) |
| Less: Day-one loss from debenture financings | |
| - | | |
| - | |
| Gain (loss) from changes in fair value of hybrid instruments | |
$ | (1,515 | ) | |
$ | (545 | ) |
Warrants – The following table summarizes
the warrants outstanding, their fair value and their exercise price after adjustment for anti-dilution provisions:
| | |
| | |
March 31, 2015 | | |
December 31, 2014 | |
| | |
| | |
Anti-
Dilution | | |
| | |
| | |
Anti-
Dilution | | |
| | |
| |
| | |
| | |
Adjusted | | |
| | |
| | |
Adjusted | | |
| | |
| |
| | |
Expiration | | |
Exercise | | |
| | |
Fair | | |
Exercise | | |
| | |
Fair | |
| | |
Year | | |
Price ($) | | |
Warrants | | |
Value | | |
Price ($) | | |
Warrants | | |
Value | |
| | |
| | |
(in thousands) | | |
(in thousands) | |
| Warrants issued with preferred stock: | | | |
| | | |
| | | |
| | |
Series D
Preferred
Stock | |
| 2017 | | |
| 0.001500 | | |
| 5,825 | | |
$ | 1 | | |
| .000100 | | |
| 5,825 | | |
$ | 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Warrants issued with
debentures: | | |
| | | |
| | | |
| | | |
| | | |
| | |
| 2008 | |
| 2015 | | |
| 0.001500 | | |
| 15,872 | | |
| 1 | | |
| 0.000100 | | |
| 15,872 | | |
| 1 | |
| 2010 | |
| 2015 | | |
| 0.001500 | | |
| 5,423 | | |
| 1 | | |
| 0.000100 | | |
| 5,423 | | |
| 1 | |
| 2011 | |
| 2016 | | |
| 0.001500 | | |
| 3,883 | | |
| 0 | | |
| 0.000100 | | |
| 3,884 | | |
| 0 | |
| 2012 | |
| 2017 | | |
| 0.001500 | | |
| 2,330 | | |
| 0 | | |
| 0.000100 | | |
| 2,330 | | |
| 0 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total | |
| | | |
| | | |
| 33,333 | | |
$ | 3 | | |
| | | |
| 33,333 | | |
$ | 2 | |
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 March 31, 2015 included an expected life
equal to the remaining term of the warrants, an expected dividend yield of zero, estimated volatility ranging from 657% to 2199%,
and risk-free rates of return ranging from 0.05% to 0.65%. 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 (loss) from change in fair value of derivative liability
– warrants
| | |
Three months ended
March 31, | |
| | |
2015 | | |
2014 | |
| | |
(in thousands) | |
| Warrants issued with preferred stock: | |
| | | |
| | |
| Series D Preferred Stock | |
$ | -- | | |
$ | 66 | |
| | |
| | | |
| | |
| Warrants issued with debentures: | |
| | | |
| | |
| 2007 | |
| -- | | |
| -- | |
| 2008 | |
| (1 | ) | |
| 177 | |
| 2010 | |
| -- | | |
| 61 | |
| 2011 | |
| -- | | |
| 43 | |
| 2012 | |
| -- | | |
| 26 | |
| Total | |
$ | (1 | ) | |
$ | 373 | |
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 three months ended March 31, 2015 (in thousands):
| | |
Compound | | |
| | |
| | |
| |
| | |
Embedded | | |
Warrant | | |
Hybrid | | |
| |
| | |
Derivatives | | |
Derivatives | | |
Instruments | | |
Total | |
| | |
| | | |
| | | |
| | | |
| | |
| Beginning balance, December 31, 2014: | |
$ | 6 | | |
$ | 2 | | |
$ | 37,384 | | |
$ | 37,392 | |
| | |
| | | |
| | | |
| | | |
| | |
| Fair value adjustments: | |
| | | |
| | | |
| | | |
| | |
| Compound embedded derivatives | |
| (5 | ) | |
| -- | | |
| -- | | |
| (5 | ) |
| Warrant derivatives | |
| -- | | |
| 1 | | |
| -- | | |
| 1 | |
| Hybrid instruments | |
| -- | | |
| -- | | |
| 1,515 | | |
| 1,515 | |
| | |
| | | |
| | | |
| | | |
| | |
| Conversions: | |
| | | |
| | | |
| | | |
| | |
| Series C Preferred Stock | |
| -- | | |
| -- | | |
| -- | | |
| -- | |
| August 24, 2006 financing | |
| -- | | |
| -- | | |
| (12 | ) | |
| (12 | ) |
| December 29, 2006 financing | |
| -- | | |
| -- | | |
| -- | | |
| -- | |
| March 27, 2007 financing | |
| -- | | |
| -- | | |
| -- | | |
| -- | |
| October 28, 2008 financing | |
| -- | | |
| -- | | |
| -- | | |
| -- | |
| August 14, 2009 financing | |
| -- | | |
| -- | | |
| (16 | ) | |
| (16 | ) |
| February 8, 2011 financing | |
| -- | | |
| -- | | |
| -- | | |
| -- | |
| March 11, 2011 financing | |
| -- | | |
| -- | | |
| -- | | |
| -- | |
| April 13, 2011 financing | |
| -- | | |
| -- | | |
| -- | | |
| -- | |
| May 31, 2011 financing | |
| -- | | |
| -- | | |
| -- | | |
| -- | |
| June 28, 2011 financing | |
| -- | | |
| -- | | |
| -- | | |
| -- | |
| December 8, 2011 financing | |
| -- | | |
| -- | | |
| -- | | |
| -- | |
| July 1, 2013 financing | |
| -- | | |
| -- | | |
| -- | | |
| -- | |
| Sep 15, 2014 financing | |
| -- | | |
| -- | | |
| (20 | ) | |
| (20 | ) |
| Ending balance, March 31, 2015 | |
$ | 1 | | |
$ | 3 | | |
$ | 38,851 | | |
$ | 38,855 | |
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 Payable – In
2014, we received financing of $242,000 from YA Global to meet short term cash needs related to legal expenses. The financing
was through secured debentures in the form of a line of credit with varying maturity dates in 2016. The interest rate is 12% payable
annually on the anniversary of the individual debenture.
Note 5 – 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 effect on our financial position or operating results.
Other – 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.
Note 6 - Subsequent Events
The Company evaluated subsequent events through the date of
issuance of the financial statements. There were no reportable subsequent events.
ITEM 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations
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, enabling 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 we are also active 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 services 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 globally. During the first quarter of 2015, we closed eight (8) new IP agreements bringing the total quantity of deals
closed to over one hundred (100).
On the product side of our business, our
barcode solutions include our barcode reader (NeoReader and NeoReader SDK) as well as our barcode creation and management services
(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.
We believe that NeoMedia remains strong
and consistent in its approach to market and that we will continue to differentiate ourselves on the basis of our high quality
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
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 has approximately 50+ million installations
world-wide. Our reader is offered to consumers free of charge, leveraging an ad supported model. 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
on iOS, Android and Windows Phone.
We continue to offer our NeoSphere and
QodeScan products for QR creation and campaign management. We have many Fortune 500 brands using our NeoSphere product in
their global barcode operations and QodeScan tends to be used by small an d medium sized businesses. We have over 15,000 users
of our QR creation services. Our QR creation services utilize an indirect methodology for our customers, which is also embodied
in our intellectual property.
Results of Operations
Income from Operations
The following table sets forth certain data derived from our
condensed consolidated statements of operations (in thousands):
| | |
Three months ended March 31, | |
| | |
2015 | | |
2014 | |
| Revenue | |
$ | 470 | | |
$ | 1,003 | |
| Cost of revenues | |
| 18 | | |
| 158 | |
| Gross profit | |
| 452 | | |
| 845 | |
| | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | |
| Sales and marketing expenses | |
| 6 | | |
| 15 | |
| General and administrative expenses | |
| 188 | | |
| 603 | |
| Research and development costs | |
| 48 | | |
| 177 | |
| | |
| | | |
| | |
| Operating income | |
$ | 210 | | |
$ | 50 | |
Revenue. Revenues for the
three months ended March 31, 2015 and 2014 were $470,000 and $1,003,000, respectively, a decrease of $533,000, or 53%. The decrease
in revenue is primarily attributed to our reduced focus on sales activities as the management team worked on refinancing the company
and securing new investment partners, and a decrease in IP licensing revenue, which has typically been lower in the first quarter.
Cost of Revenues. Cost of
revenues was $18,000 for the three months ended March 31, 2015 compared with $158,000 for the three months ended March 31, 2014,
a decrease of $140,000, or 89%. Cost of revenues relate to third-party professional fees incurred in connection with the sale
of our IP licenses. The decrease in costs are due to the corresponding decrease in IP licensing revenues for the quarter.
Sales and Marketing. Sales
and marketing expenses were $6,000 and $15,000 for the three months ended March 31, 2015 and 2014, respectively, a decrease of
$9,000, or 60%. The decrease in sales and marketing expenses related to the corresponding decrease in services revenue. We expect
sales and marketing expenses will stay at current 2015 levels.
General and Administrative.
General and administrative expenses were $188,000 and $603,000 for the three months ended March 31, 2015 and 2014, respectively,
a decrease of $415,000, or 69%. General and administrative expenses decreased during the quarter in 2015 due to reduced legal
fees associated with litigation activities and cost containment efforts.
Research and Development.
Research and development expenses were $48,000 and $177,000 for the three months ended March 31, 2015 and 2014, respectively,
a decrease of $129,000, or 73%. Research and development expenses decreased due to cost containment efforts and reduction in customized
software projects.
Other Income (Expenses)
The following table sets forth certain data derived from our
condensed consolidated statements of operations (in thousands):
| | |
Three months ended March 31, | |
| | |
2015 | | |
2014 | |
| Gain (loss) from change in fair value of hybrid financial instruments | |
$ | (1,515 | ) | |
$ | (545 | ) |
| Gain (loss) from change in fair value of derivative liability – warrants | |
| (1 | ) | |
| 373 | |
| Gain (loss) from change in fair value of derivative liability - Series C and D preferred stock and debentures | |
| 5 | | |
| 137 | |
| Interest expense | |
| (19 | ) | |
| -- | |
| Total other income (expense) | |
$ | (1,530 | ) | |
$ | (35 | ) |
Gain (Loss) from Change in Fair
Value of Hybrid Financial Instruments. We carry certain of 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 the three months ended March 31, 2015 and 2014, the liability related
to these hybrid instruments fluctuated, resulting in losses of $1,515,000 and $545,000, respectively.
Gain (Loss) from Change in Fair
Value of Derivative Liabilities – Warrants. We account for our outstanding common stock warrants that were issued
in connection with our preferred stock and our debentures, at fair value. For the three months ended March 31, 2015 and 2014,
the liability related to these instruments fluctuated, resulting in a loss of $1,000 and a gain of $373,000, respectively.
Gain (Loss) from Change in Fair
Value of Derivative Liabilities – 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 three months ended March 31, 2015 and 2014, the liability
related to these hybrid instruments fluctuated, resulting in losses of $5,000 and $137,000, respectively.
The changes in the fair values of our
hybrid financial instruments and our derivative liabilities 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 security agreements. Because our common stock price has
been volatile and because many of our derivative financial instruments include relatively low fixed conversion or exercise prices,
it is possible that further fluctuations in the market price of our common stock could cause the fair value of these instruments
to increase or decrease significantly in future periods. The fair values of these instruments are subject to volatility so long
as the preferred stock, debentures and warrants are outstanding. These instruments will no longer be volatile upon their conversion
or exercise into common stock.
While we expect our common stock price
to remain volatile as described above, we do not anticipate this volatility to impact our revenues or operating income. Further,
it should be noted that the Company does not have any off balance sheet arrangements that would have an effect on its financial
condition.
Liquidity
and Capital Resources
| | |
Three months ended March 31, | |
| | |
2015 | | |
2014 | |
| | |
(in thousands) | |
| | |
| | |
| |
| Cash and cash equivalents | |
$ | 101 | | |
$ | 75 | |
| | |
| | | |
| | |
| Net cash provided by operating activities | |
$ | 26 | | |
$ | 27 | |
| Net cash used in investing activities | |
| -- | | |
| -- | |
| Net cash used in financing activities | |
| -- | | |
| (28 | ) |
| Net change in cash and cash equivalents | |
$ | 26 | | |
$ | (1 | ) |
We funded our liquidity requirements during
the quarter ended March 31, 2015 with funds from operations.
Going Concern –
We have historically incurred operating losses, and we may continue to generate negative cash flows as we implement our business
plan. There can be no assurance that our continuing efforts to execute our business plan will be successful and that we will be
able to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared in conformity
with US GAAP, which contemplates our continuation as a going concern. Our net loss for the three months ended March 31, 2015 was
$1,320,000 as compared to net income of $15,000 for the same period in 2014. The operating results for the three months ended
March 31, 2015 and 2014, included $1,511,000 and $35,000, respectively, of net expense related to financing instruments.
Net cash provided by operations during
the three months ended March 31, 2015 was $26,000 as compared to net cash provided by operations of $27,000 during the three months
ended March 31, 2014. As of March 31, 2015, we have an accumulated deficit of $240.7 million, and a working capital deficit of
$40.4 million, including $38.9 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. 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 shares of common stock outstanding. During the first three months
of 2015, there were 680,606 thousand shares of common stock issued for these conversions. We cannot predict if or when each holder
may or may not elect to convert into shares of common stock.
Sources of Cash and Projected Cash
Requirements. As of March 31, 2015, our cash balance was $101,000. The Company’s past financing agreements with
YA Global have certain ramifications that could affect future liquidity and business operations. For example, pursuant to the
terms of the debenture agreements between us and YA Global, without YA Global’s consent we cannot (i) issue or sell
any shares of our common stock or our preferred stock without consideration or for consideration per share less than the closing
bid price immediately prior to its issuance, (ii) issue or sell any preferred stock, warrant, option, right, contract, call,
or other security or instrument granting the holder thereof the right to acquire our common stock for consideration per share
less than the closing bid price immediately prior to its issuance, (iii) enter into any security instrument granting the holder
a security interest in any of our assets or (iv) file any registration statements on Form S-8. In addition, pursuant to security
agreements between us and YA Global, YA Global has a security interest in all of our assets. Such covenants could severely harm
our ability to raise additional funds from sources other than YA Global, and would likely result in a higher cost of capital in
the event we secured funding. Additionally, pursuant to the terms of the Investment Agreement between us and YA Global in connection
with our Series C Preferred Stock, we cannot (i) enter into any debt arrangements in which we are the borrower, (ii) grant any
security interest in any of our assets or (iii) grant any security below market price.
Critical Accounting Policies and Estimates
The significant accounting policies set
forth in Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year
ended December 31, 2014, as updated by Note 2 to the Unaudited Condensed Consolidated Financial Statements included herein,
and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report
on Form 10-K for the year ended December 31, 2014, appropriately represent, in all material respects, the current status
of our critical accounting policies and estimates, the disclosure with respect to which is incorporated herein by reference.
ITEM 3. Quantitative and Qualitative Disclosures about
Market Risk
We are a “smaller reporting company”
as defined by Rule 12b-2 of the Exchange Act and are not required to provide information under this item.
ITEM 4. Controls and Procedures
Evaluation of Disclosure Controls and
Procedures - We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure
that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported
within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to
our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial
Officer), as appropriate, to allow for timely decisions regarding required disclosure.
Pursuant to Rule 13a-15(b) under the Exchange
Act, the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s
Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO” who is also the Company’s principal
financial and accounting officer), of the effectiveness of the Company’s disclosure controls and procedures (as defined
under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation,
and taking the matters described below into account, the Company’s CEO and CFO have concluded that our disclosure controls
and procedures over financial reporting were not effective during reporting period ended March 31, 2015, as discussed below.
Internal Control Over Financial Reporting
- Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the
Company as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting
is designed 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. Our internal control
over financial reporting includes those policies and procedures that:
| - | pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our
assets, |
| - | provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that our receipts and expenditures are being made in accordance with authorizations
of our management and directors, and |
| - | provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that
could have a material effect on our financial statements. |
A material weakness is a control deficiency,
or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual
or interim financial statements will not be prevented or detected on a timely basis.
Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
Management, including the Company’s
principal executive and principal financial officer, assessed the effectiveness of the Company’s internal control over financial
reporting as of March 31, 2015. In making this assessment, management used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (1992 version).
Management’s assessment of the effectiveness
of the small business issuer’s internal control over financial reporting as of the March 31, 2015, concluded that the Company
did maintain effective internal control over financial reporting but there has not been adequate time to verify that the control
deficiencies that constitute material weaknesses identified in our Annual Report on Form 10-K for the year ended December 31,
2014, have been remediated.
If the material weaknesses have not been
remediated, a reasonable possibility exists that a material misstatement in our consolidated financial statements will not be
prevented or detected on a timely basis. However, our Chief Executive Officer and Principal Accounting Officer believes
that the financial statements included in this Quarterly Report on Form 10-Q present, in all material respects, our financial
position, results of operations and cash flows for the periods presented, in conformity with U.S. GAAP.
Changes in Internal Control over Financial
Reporting -- During the quarter ended March 31, 2015, we strengthened and increased our controls over financial reporting
by engaging an outside review team with significant experience in (i) reviewing and recording complex debt and equity transactions,
(ii) assessing revenue recognition concepts inherent in our transactions, and (iii) writing disclosures contained in financial
statements filed in our interim and annual reports. This team is also assessing the completeness and effectiveness of our internal
control over financial reporting, and will suggest and implement corrective action before our year ending December 31, 2015.
Inherent Limitations on Effectiveness of Controls
Our management, including our CEO and
CFO, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all
error 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.
PART II - OTHER INFORMATION
ITEM 1. 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. In addition to the normal course of business we are
engaged in the litigation described below:
Scanbuy v. NeoMedia
On March 21, 2014, Scanbuy, Inc. (“Scanbuy”)
filed a complaint in the Delaware Court of Chancery alleging, among other claims, that NeoMedia violated the Delaware Deceptive
Trade Practices Act, 6 Del. C. § 2532(8), by sending letters to certain of Scanbuy’s customers, which state that the
use of NeoMedia’s technology by Scanbuy and its customers constitutes patent infringement. On April 14, 2014, NeoMedia
filed a motion to dismiss the complaint on the grounds that venue is improper in Delaware pursuant to a Settlement and License
Agreement entered into by NeoMedia and Scanbuy on October 16, 2009. On October 31, 2014, the Court of Chancery granted NeoMedia’s
motion to dismiss and Scanbuy’s complaint was dismissed by the court without prejudice. All claims in this case were
subsequently settled effective as of December 31, 2014.
NeoMedia v. Scanbuy
On May 7, 2014, the Company filed a lawsuit
against Scanbuy, Inc. in the U.S. District Court for the Northern District of Georgia, Atlanta Division, styled as NeoMedia Technologies,
Inc. v. Scanbuy, Inc., Civil Action No. 1:14-cv-01379-AT (the “Scanbuy Georgia Litigation”). NeoMedia’s
Complaint alleged infringement of NeoMedia’s U.S. Patents Numbers 6,199,048 (the “ ‘048 Patent”) and 8,131,597
(the “ ‘597 Patent”) and violations of the Section 43(a) of the Lanham Act. On June 19, 2014, the Company
filed an Amended Complaint against Scanbuy, which asserted the same causes of action as in the original Complaint. On June
3, 2014, Scanbuy responded to NeoMedia’s Amended Complaint by filing an Answer and Counterclaims against the Company and
a motion to dismiss the Company’s Lanham Act claims. Scanbuy’s Counterclaims against the Company allege, among
other claims, claims for breach of non-disclosure agreement and for declaratory judgments that NeoMedia’s ‘048 and
‘597 Patents are not infringed and are invalid. Scanbuy also filed motions requesting the court to transfer the Scanbuy
Georgia Litigation to the U.S. District Court for the Southern District of New York. All claims and counterclaims
in this case were subsequently settled, effective as of December 31, 2014. On January 30, 2015, the parties filed, and the
court entered, a Stipulation and Consent Order of Dismissal with prejudice.
ITEM 1A. Risk Factors
We are a smaller reporting company as
defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.
ITEM 2. Unregistered Sales of Equity Securities and Use
of Proceeds
None
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Mine Safety Disclosures
Not Applicable
ITEM 5. Other Information
None
ITEM 6. Exhibits
Exhibit
No. |
|
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 |
|
10.1 |
|
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 |
| 3.18 |
|
Certificate of Merger of Qode Services
Corporation into NeoMedia Technologies, Inc. |
|
|
|
10-Q |
|
3.18 |
|
8/14/2014 |
| 31.1 |
|
Certification by Principal Executive
Officer pursuant to Rule 13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
| 31.2 |
|
Certification by Principal Financial
and Principal Accounting Officer pursuant to Rule 13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 |
|
X |
|
|
|
|
|
|
| 32.1 |
|
Certification by Principal Executive
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
X |
|
|
|
|
|
|
| 32.2 |
|
Certification by Principal Financial
and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 |
|
X |
|
|
|
|
|
|
| 101 |
|
Interactive data. The following
materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 formatted in
Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of
Operations, (iii) the Consolidated Statements of Cash Flows and (iv) related notes. |
|
X |
|
|
|
|
|
|
SIGNATURES
In accordance with the requirements of the Securities Exchange
Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
NEOMEDIA
TECHNOLOGIES, INC. |
| |
(Registrant) |
| |
|
| Dated: May 15, 2015 |
/s/ Laura A. Marriott |
| |
Laura A. Marriott, Chief Executive Officer and Principal Executive
Officer |
| Dated: May 15, 2015 |
/s/ Colonel
Barry S. Baer |
| |
Colonel (Ret.) Barry S. Baer, Chief Financial Officer and Principal
Financial and Accounting Officer |
EXHIBIT 31.1
CERTIFICATION
I, Laura A. Marriott, certify that:
1. I have reviewed this Quarterly
Report on Form 10-Q for the quarter ended March 31, 2015 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: May 15, 2015 |
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 Quarterly
Report on Form 10-Q for the quarter ended March 31, 2015 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: May 15, 2015 |
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 Quarterly Report
of NeoMedia Technologies, Inc., a Delaware corporation (the “Company”) on Form 10-Q for the quarter ended March 31,
2015 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 |
|
| May 15, 2015 |
|
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 Quarterly Report
of NeoMedia Technologies, Inc., a Delaware corporation (the “Company”) on Form 10-Q for the quarter ended March 31,
2015 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, |
|
| May 15, 2015 |
|
NeoMedia Technologies (CE) (USOTC:NEOM)
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부터 11월(11) 2024 으로 12월(12) 2024
NeoMedia Technologies (CE) (USOTC:NEOM)
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부터 12월(12) 2023 으로 12월(12) 2024
