U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
AMENDMENT NO. 1 TO
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 17, 2006
NEOMEDIA TECHNOLOGIES, INC.
---------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-21743 36-3680347
-------- ------- ----------
(State or Other Jurisdiction (Commission File Number) (IRS Employer
Incorporation) Identification No.)
2201 Second Street, Suite 600, Fort
Myers, Florida 33901
------------------------------- ----------
(Address of Principal Executive (Zip Code)
Offices)
(239) - 337-3434
----------------------------
(Registrant's Telephone
Number, including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
Completion of Acquisition of Mobot, Inc.
On February 9, 2006, NeoMedia Technologies, Inc. ("NeoMedia) and Mobot,
Inc. (www.mobot.com) ("Mobot") signed a definitive merger agreement (the
"Agreement"), subject to closing conditions, under which NeoMedia acquired all
of the outstanding shares of Mobot in exchange for $3,500,000 cash and
$6,500,000 in shares of NeoMedia common stock. The $6,500,000 stock portion of
the purchase price is represented by 16,931,493 shares of NeoMedia common stock,
calculated by dividing $6,500,000 by the volume-weighted average closing price
of NeoMedia common stock for the ten day up to and including February 8, 2006.
On February 17, 2006, NeoMedia and Mobot completed the closing
requirements and the acquisition became effective.
Mobot is a pioneer in visual search and recognition technology designed to
make marketing effective and innovative using mobile devices. Launched in 2004
to help companies cultivate rewarding relationships with the world's 1.5 billion
mobile phone users, Mobot gives marketers, content providers and carriers the
tools to make it easy for any consumer with a camera phone to interact with
their offerings.
This Form 8-K/A is being filed as Amendment No. 1 to NeoMedia's Form 8-K
filed with the SEC on February 21, 2006, in order to provide the financial
statements required by Items 7(a) and (b) of Form 8-K.
ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS
(a) Financial Statements of Acquired Business - Mobot, Inc.
Report of Independent Registered Public Accounting Firm
Balance sheet as of December 31, 2005
Statements of operations for the years ended December 31, 2005 and 2004
Statements of stockholders' deficit for the years ended December 31,
2005 and 2004
Statements of cash flows for the years ended December 31, 2005 and 2004
Notes to financial statements for the years ended December 31, 2005 and
2004
(b) Pro Forma Financial Information
Pro forma combined balance sheet as of December 31, 2005 (unaudited)
Pro forma combined statement of operations for the twelve months ended
December 31, 2005 (unaudited)
(c) Exhibits
23.1 Consent of Stonefield Josephson, Inc., Independent Registered
Public Accounting Firm
2
(a) Financial Statements of Acquired Business - Mobot, Inc.
Report of Independent Registered Public Accounting Firm
To the Board of Directors of Mobot, Inc.
Lexington, Massachusetts
We have audited the accompanying balance sheet of Mobot, Inc. as of December 31,
2005, and the related statements of operations, stockholders' deficit and cash
flows for the years in the period 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 audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). 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 audits provide 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 Mobot, Inc. as of December 31,
2005 and the results of its operations and its cash flows for the years ended
December 31, 2005 and 2004, in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's significant operating losses and cash used
for operations, working capital and stockholders' deficit raise substantial
doubt about its ability to continue as a going concern. Management's plans
regarding those matters are also described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ STONEFIELD JOSEPHSON, INC.
CERTIFIED PUBLIC ACCOUNTANTS
Los Angeles, California
April 3, 2006
3
Mobot, Inc.
Balance Sheet
December 31, 2005
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Assets
Current assets:
Cash and equivalents $ 908,897
Accounts receivable, net of allowance for doubtful accounts of $33,750 78,350
Other current assets 8,333
-----------
Total current assets 995,580
-----------
Property and equipment, net of accumulated depreciation 21,615
Intangible assets, net of accumulated amortization 12,970
Other assets 7,303
-----------
Total Assets $ 1,037,468
===========
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued expenses $ 344,555
Deferred revenue 235,956
Notes payable to NeoMedia Technologies, Inc. 1,500,000
Accrued payroll 100,000
Accrued interest, including $22,455 to NeoMedia Technologies, Inc. 48,400
-----------
Total current liabilities 2,228,911
-----------
Convertible debentures 500,000
-----------
Commitments and Contingencies --
Stockholders' deficit:
Common stock, $0.01 par value, 10,000 shares
authorized, 1,834 shares issued and outstanding 19
Additional paid-in capital 825
Accumulated deficit (1,692,287)
-----------
Total stockholders' deficit (1,691,443)
-----------
Total Liabilities and Stockholders' Deficit $ 1,037,468
===========
The accompanying notes form an integral part of these financial statements.
4
Mobot, Inc.
Statements of Operations
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Year Ended Year Ended
December 31, December 31,
2005 2004
------------ ------------
Net revenue $ 300,127 $ --
----------- -----------
Operating expenses:
Research and development expenses 552,121 --
Selling and marketing expenses 665,243 22,448
General and administrative expenses 514,432 190,245
----------- -----------
Total operating expenses 1,731,796 212,693
----------- -----------
Operating loss (1,431,669) (212,693)
Other income (expense):
Interest income 844 303
Interest expense - including $22,455 to
NeoMedia Technologies, Inc. (43,127) (5,945)
----------- -----------
Loss before provision for income taxes (1,473,952) (218,335)
Provision for income taxes -- --
----------- -----------
Net loss $(1,473,952) $ (218,335)
=========== ===========
The accompanying notes form an integral part of these financial statements.
5
Mobot, Inc.
Statements of Stockholders' Deficit
--------------------------------------------------------------------------------
Common Stock
---------------------------- Additional
Stockholders' Paid-In Accumulated
Shares Amount Capital Deficit Deficit
----------- ----------- ----------- ----------- -----------
Balance, January 1, 2004 1,000 $ 10 $ -- $ -- $ 10
Restricted stock issued for cash
at $1.00 per share 70 1 69 -- 70
Restricted stock issued for cash
at $1.00 per share with a
forfeiture clause 560 6 554 -- 560
Restricted stock issued for cash
at $1.00 per share 29 -- 29 -- 29
Net loss -- -- -- (218,335) (218,335)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2004 1,659 17 652 (218,335) (217,666)
Restricted stock issued for cash
at $1.00 per share with a forfeiture
clause 250 3 247 -- 250
Shares repurchased (75) (1) (74) -- (75)
Net loss -- -- -- (1,473,952) (1,473,952)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2005 1,834 $ 19 $ 825 $(1,692,287) $(1,691,443)
=========== =========== =========== =========== ===========
The accompanying notes form an integral part of these financial statements.
6
Mobot, Inc.
Statements of Cash Flows
--------------------------------------------------------------------------------
Year Ended Year Ended
December 31, December 31,
2005 2004
----------- -----------
Cash flows from operating activities:
Net loss $(1,473,952) $ (218,335)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Provision for doubtful accounts 33,750 --
Depreciation and amortization 4,591 555
Changes in operating assets and liabilities:
Accounts receivable (112,100) --
Other current assets (5,395) (2,937)
Other asset -- (7,303)
Accounts payable and accrued expenses 323,870 20,684
Deferred revenue 235,956 --
Accrued interest 42,455 5,945
Accrued payroll 100,000 --
----------- -----------
Net cash used for operating activities (850,825) (201,391)
----------- -----------
Cash flows used for investing activities:
Purchase of property and equipment (20,665) (4,278)
Purchase of intangible assets (9,788) (5,000)
----------- -----------
Net cash used for investing activities (30,453) (9,278)
----------- -----------
Cash flows provided by financing activities:
Proceeds from notes payable - NeoMedia
Technologies, Inc. 1,500,000 --
Convertible debenture -- 500,000
Issuance of common stock for cash 250 659
Repurchase of common stock (75) --
----------- -----------
Net cash provided by financing activities 1,500,175 500,659
----------- -----------
Net increase in cash and cash equivalents 618,897 289,990
Cash and cash equivalents, beginning of year 290,000 10
----------- -----------
Cash and cash equivalents, end of year $ 908,897 $ 290,000
=========== ===========
The accompanying notes form an integral part of these financial statements.
7
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(1) Basis of Presentation and Summary of Operations:
Basis of Presentation
Mobot, Inc., a Massachusetts corporation referred to as "Mobot" or
the "Company," was originally incorporated under the laws of
Delaware under the name Ilumena Corporation on September 8, 2003
(inception) and had no activity during the year ended December 31,
2003. On September 16, 2004, the Board of Directors approved to have
the Company's name officially changed to Mobot, Inc. Mobot is in the
business of connecting consumers using any camera phone on any
wireless carrier to brands, mobile content and commerce. Complex
codes, navigation or changes to cross-media campaigns are not
required.
Going Concern
The accompanying financial statements have been prepared in
conformity with accounting principles generally accepted in the
United States of America, which contemplate continuation of the
Company as a going concern. The Company has reported net losses of
approximately $1,474,000 and $218,000, for the years ended December
31, 2005 and 2004, and has an accumulated deficit of approximately
$1,692,000 as of December 31, 2005. In addition, the Company had a
cash balance of approximately $909,000, and a working capital
deficit of ($1,233,000) as of December 31, 2005. These factors raise
substantial doubts about the Company's ability to continue as a
going concern. These statements do not include any adjustments that
might result from the outcome of this uncertainty.
The Company was acquired by NeoMedia Technologies, Inc. ("NeoMedia")
on February 17, 2006. The management of Mobot expect NeoMedia to
fund its working capital. The report of independent registered
public accounting firm on NeoMedia's financial statements for the
year ended December 31, 2005 also expressed substantial doubts about
NeoMedia's ability to continue as a going concern. The Company and
Neomedia cannot be certain that anticipated revenues from operations
will be sufficient to satisfy its ongoing capital requirements.
Management's belief is based on the Company's operating plan, which
in turn is based on assumptions that may prove to be incorrect. If
the Company's financial resources are insufficient the Company or
Neomedia may require additional financing in order to execute its
operating plan and continue as a going concern. The Company or
NeoMedia cannot predict whether this additional financing will be in
the form of equity, debt, or another form. The Company may not be
able to obtain the necessary additional capital on a timely basis,
on acceptable terms, or at all. In any of these events, the Company
and NeoMedia may be unable to implement its current plans for
expansion, repay its obligations as they become due or respond to
competitive pressures, any of which circumstances would have a
material adverse effect on its business, prospects, financial
condition and results of operations.
8
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(2) Summary of Significant Accounting Policies:
Revenue Recognition Policy
The Company sells its products in the form of software license fees.
These license fees are classified as either exclusivity fees or
customer initiation fees. Exclusivity fees are initially deferred at
the time a customer is invoiced, and subsequently recognized ratably
over the term of the contract. Customer initiation fees are also
deferred and recognized over the period during which the Company
implements its products and supports its customers' marketing
campaigns, in no event does less than the license period, if
applicable.
The Company records revenue in accordance with SEC Staff Accounting
Bulletin No. 104 ("SAB 104") Revenue Recognition in Financial
Statements SAB No. 104 which requires that sales be recognized when
persuasive evidence of an arrangement exists, the price to the
customer is fixed and determinable, delivery of the service has
occurred and collectibility is reasonably assured.
Development Stage Company
The Company had not generated any revenues since inception through
the period ended December 31, 2004. In January 2005, the Company's
products became generally available and is no longer considered a
development stage company. During the year ended December 31, 2005,
the Company generated revenues of approximately $300,000 and is
fully operational.
Use of Estimates
The preparation of the financial statements in accordance with
accounting principles generally accepted in the United States of
America requires the Company's management to make a number of
estimates and assumptions relating to the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities
at the date of the consolidated financial statements, and the
reported amounts of revenue and expenses during the period.
Significant items subject to such estimates and assumptions include
the carrying amount of property and equipment, intangibles,
valuation of stock based compensation, valuation allowances for
deferred income tax assets, accounts receivable, accruals and other
factors. Actual results could differ from those estimates.
9
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(2) Summary of Significant Accounting Policies (Continued):
Cash and Equivalents
For the purposes of the balance sheet and statement of cash flows,
all highly liquid investments with original maturities of three
months or less are considered cash equivalents. The Company
maintains bank accounts with balances which, at times, that may
exceed federally insured limits. The Company has not experienced any
losses on such accounts. The Company believes it is not exposed to
any significant risk on bank deposit accounts. The Company had a
cash balance of approximately $909,000 and $290,000, respectively,
as of December 31, 2005, and December 31, 2004, of which both
amounts exceeded the federally insured limit.
Property and Equipment
Property and equipment consists primarily of computer equipment
having an estimated useful life of 3 years and are carried at cost,
net of accumulated depreciation. Depreciation is calculated using
the straight-line method over the estimated useful lives of the
related assets. Repairs and maintenance are charged to expense as
incurred.
Upon retirement or sale, cost and accumulated depreciation are
removed from the accounts and any gain or loss is reflected in the
statement of operations. Material expenditures, which increase the
life of an asset, are capitalized and depreciated over the estimated
remaining life of the asset.
Intangible Asset
Intangible asset consists of a domain name and is carried at cost,
net of accumulated amortization. Amortization is calculated using
the straight-line method over estimated useful life of 5 years. Upon
retirement or sale, cost and accumulated amortization are removed
from the accounts and any gain or loss is reflected in the statement
of operations.
Income Taxes
In accordance with SFAS No. 109, "Accounting for Income Taxes",
income taxes are accounted for using the assets and liabilities
approach. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities, and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences
are expected to be recovered or settled. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred
tax assets will not be recognized. The Company has recorded a 100%
valuation allowance as of December 31, 2005.
10
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(2) Summary of Significant Accounting Policies (Continued):
Advertising Costs
The Company expenses the cost of advertising and promoting its
services as incurred. For the years ended December 31, 2005, and
December 31, 2004, there were no advertising expenses incurred.
Fair Value of Financial Instruments
For certain of the Company's financial instruments, including cash,
short-term borrowings, accounts payable and other accrued
liabilities, the carrying amounts approximate fair value due to
their short-term maturities. The fair value of long-term obligations
approximates its carrying value as the existing contract interest
rates are comparable to market rates currently offered to the
Company for similar debt instruments with similar maturities.
Deferred Compensation
During 2005, the Company accrued compensation payable to Russell
Gocht, President and Chief Executive Officer in the amount of
$100,000, plus applicable withholding taxes of approximately $8,000.
This balance was paid in February 2006.
Research and Development Costs
The Company incurred research and development costs of approximately
$552,000 during 2005. These costs are expensed as incurred.
Customer Concentration and Other Risks
The Company sells it products worldwide. During 2005, three
customers accounted for approximately 84% of the Company's revenues.
As of December 31, 2005, two customers accounted for approximately
88% of the Company's accounts receivable balance.
Comprehensive loss
The Company did not present comprehensive loss on its statements of
operations because comprehensive loss consists of net loss only.
11
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(3) Recently Issued Accounting Pronouncements:
In March 2005, the SEC released Staff Accounting Bulletin No. 107,
"Share-Based Payment"("SAB 107"), which provides interpretive
guidance related to the interaction between SFAS 123(R) and certain
SEC rules and regulations. It also provides the SEC staff's views
regarding valuation of share-based payment arrangements. In April
2005, the SEC amended the compliance dates for SFAS 123(R), to allow
companies to implement the standard at the beginning of their next
fiscal year, instead of the next reporting period beginning after
June 15, 2005. Management has evaluated the impact of SAB 107 and
does not believe the adoption will have a material impact on its
financial position or results of operations or cash flows.
In March 2005, the FASB issued FASB Interpretation No. 47,
"Accounting for Conditional Asset Retirement Obligations" ("FIN
47"). FIN 47 provides guidance relating to the identification of and
financial reporting for legal obligations to perform an asset
retirement activity. The Interpretation requires recognition of a
liability for the fair value of a conditional asset retirement
obligation when incurred if the liability's fair value can be
reasonably estimated. FIN 47 also defines when an entity would have
sufficient information to reasonably estimate the fair value of an
asset retirement obligation. The provision is effective no later
than the end of fiscal years ending after December 15, 2005. The
Company will adopt FIN 47 beginning the first quarter of fiscal year
2006 and does not believe the adoption will have a material impact
on its financial position or results of operations or cash flows.
In May 2005, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 154,
Accounting Changes and Error Corrections -- a replacement of APB
Opinion No. 20 and FASB Statement No. 3. SFAS No. 154 requires
retrospective application to prior periods' financial statements of
changes in accounting principle, unless it is impracticable to
determine either the period-specific effects or the cumulative
effect of the change. SFAS No. 154 also requires that retrospective
application of a change in accounting principle be limited to the
direct effects of the change. Indirect effects of a change in
accounting principle, such as a change in nondiscretionary
profit-sharing payments resulting from an accounting change, should
be recognized in the period of the accounting change. SFAS No. 154
also requires that a change in depreciation, amortization or
depletion method for long-lived, non-financial assets be accounted
for as a change in accounting estimate effected by achange in
accounting principle. SFAS No. 154 is effective for accounting
changes and corrections of errors made in fiscal years beginning
after December 15, 2005. Early adoption is permitted for accounting
changes and corrections of errors made in fiscal years beginning
after the date this Statement is issued. Management does not expect
the implementation of this new standard to have a material impact on
their financial position, results of operations and cash flows.
12
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(3) Recently Issued Accounting Pronouncements (continued):
On June 15-16, 2005 the Emerging Issue Task Force meeting discussed
Effect of a Liquidated Damages Clause on a Free standing Financial
Instrument Subject to EITF 05-04 Issue No. 00-19, "Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled
in, a Company's Own Stock." The Task Force further discussed (a)
whether a registration rights penalty meets the definition of a
derivative and (b) whether the registration rights agreement and the
financial instrument to which it pertains should be considered as a
combined freestanding instrument or as separate freestanding
instruments. Additionally, some Task Force members expressed a
preference for evaluating a liquidated damages provision based on
the probable amount that the issuer would pay rather than the
maximum amount. The Task Force was not asked to reach a consensus on
this Issue. The Task Force asked the FASB staff to obtain additional
information about how entities currently evaluate and account for
registration rights agreements in practice. Additionally, the Task
Force asked the FASB staff to analyze registration rights penalties
in comparison with other penalties that do not meet the definition
of a derivative. Further discussion is expected at a future meeting.
In June 2005, the Emerging Issues Task Force, or EITF, reached a
consensus on Issue 05-6, Determining the Amortization Period for
Leasehold Improvements , which requires that leasehold improvements
acquired in a business combination or purchased subsequent to the
inception of a lease be amortized over the lesser of the useful life
of the assets or a term that includes renewals that are reasonably
assured at the date of the business combination or purchase. EITF
05-6 is effective for periods beginning after July 1, 2005. The
Company does not expect the provisions of this consensus to have a
material impact on the financial position, results of operations or
cash flows.
In December 2004 the FASB issued two Staff Positions -- FSP FAS
109-1, Application of FASB Statement 109 "Accounting for Income
Taxes" to the Tax Deduction on Qualified Production Activities
Provided by the American Jobs Creation Act of 2004, and FSP FAS
109-2 Accounting and Disclosure Guidance for the Foreign Earnings
Repatriation Provision within the American Jobs Creation Act of
2004. Neither of these affected the Company as it does not
participate in the related activities.
13
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(3) Recently Issued Accounting Pronouncements (continued):
In December 2004, the FASB issued SFAS No. 123 (revised 2004),
"Share-Based Payment." Statement 123(R) will provide investors and
other users of financial statements with more complete and neutral
financial information by requiring that the compensation cost
relating to share-based payment transactions be recognized in
financial statements. That cost will be measured based on the fair
value of the equity or liability instruments issued. Statement
123(R) covers a wide range of share-based compensation arrangements
including share options, restricted share plans, performance-based
awards, share appreciation rights, and employee share purchase
plans. Statement 123(R) replaces FASB Statement No. 123, Accounting
for Stock-Based Compensation, and supersedes APB Opinion No. 25,
Accounting for Stock Issued to Employees. Statement 123, as
originally issued in 1995, established as preferable a
fair-value-based method of accounting for share-based payment
transactions with employees. However, that Statement permitted
entities the option of continuing to apply the guidance in Opinion
25, as long as the footnotes to financial statements disclosed what
net income would have been had the preferable fair-value-based
method been used. Public entities filing as small business issuers
will be required to apply Statement 123(R) as of the first interim
or annual reporting period that begins after December 15, 2005. The
Company has evaluated the impact of the adoption of SFAS 123(R), and
believes the impact will not be significant to the Company's overall
results of operations or financial position.
The FASB has issued FASB Statement No. 155, Accounting for Certain
Hybrid Instruments. This standard amends the guidance in FASB
Statements No. 133, Accounting for Derivative Instruments and
Hedging Activities, and No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities.
Statement 155 allows financial instruments that have embedded
derivatives to be accounted for as a whole (eliminating the need to
bifurcate the derivative from its host) if the holder elects to
account for the whole instrument on a fair value basis. The FASB
believes the issuance of Statement 155 provides for the following:
- clarifies which interest-only strips and principal-only
strips are not subject to the requirements of Statement 133;
- establishes a requirement to evaluate interests in
securitized financial assets to identify interests that are
freestanding derivatives or that are hybrid financial
instruments that contain an embedded derivative requiring
bifurcation
- clarifies that concentrations of credit risk in the form of
subordination are not embedded derivatives; and
- amends Statement 140 to eliminate the prohibition on a
qualifying special-purpose entity from holding a derivative
financial instrument that pertains to a beneficial interest
other than another derivative financial instrument.
14
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(3) Recently Issued Accounting Pronouncements (continued):
The provisions of Statement 155 nullify Derivatives Implementation
Group (DIG) Issue C4, "Interest-Only and Principal-Only Strips," and
amends DIG Issues B39, "Application of Paragraph 13(b) to Call
Options That Are Exercisable Only by the Debtor," and D1,
"Application of Statement 133 to Beneficial Interests in Securitized
Financial Assets." A reference to Statement 155 will also be made in
several other DIG issues even though the guidance in those DIG
issues has not been nullified or partially nullified.
Statement 155 is effective for all financial instruments acquired or
issued after the beginning of an entity's first fiscal year that
begins after September 15, 2006.
The Company does not expect the adoption of this pronouncement to
have a material impact to the financial position, results of
operation and cash flows.
(4) Property and Equipment:
December 31,
2005
Computer equipment $ 23,217
Office equipment 1,726
--------------
24,943
Less: accumulated depreciation (3,328)
---------------
Property and equipment, net $ 21,615
==============
Depreciation expense was $3,105 and $223 for the years ended December 31,
2005 and 2004 respectively.
(5) Intangible Assets:
December 31,
2005
Domain name $ 5,000
Patents and trademarks 9,788
--------------
14,788
Less: accumulated amortization
Domain name (1,328)
Patents and trademarks (490)
--------------
Total accumulated amortization (1,818)
--------------
Intangible assets, net $ 12,970
==============
Amortization expense was $1,486 and $332 for the years ended December 31,
2005 and 2004, respectively.
15
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(6) Convertible Debentures:
In August and October of 2004, the Company entered into two
five-year $250,000 convertible debenture financing agreements. These
agreements accrue interest at 4% per annum and can be paid after
twelve months with no prepayment penalties. The Company accrued
interest on the debentures in the amount of $20,000 and $5,945, for
the years ended December 31, 2005 and December 31, 2004,
respectively. Neither agreement has a repayment schedule and are
payable in full, including accrued interest, at August and October
of 2009.
The debentures have conversion rights that allows for the debentures
to be converted into 333 shares of the Company's common stock only
as follows: (1) from and after the date that is twelve months
following the closing, if the Company has not completed a major
equity financing, resulting in proceeds to the Company of at least
$3 million prior to such date, (2) in the event of an initial public
offering, (3) in the event of a sale of the Company. In the event of
an initial public offering or sale of the Company, the Company will
notify the debenture holders they have the right to convert the
debentures within ten days of such notice at a conversion rate of
$1,500 per share. The debentures did not have a beneficial
conversion feature.
The debentures also have stock warrants that are issuable upon
conversion or exchange of the debentures at 50% of the number of
shares converted to common shares. The fair value of the warrants
has been determined to be nominal using the minimal value approach
under SFAS 123 and has not been recorded by the Company.
(7) Income Taxes:
The Company has net operating loss carryforwards of approximately
$1,054,000. The loss carryforwards begin to expire in 2023. The
Company believes it is more likely than not that it will not realize
the future tax benefits of its operating loss carry forwards and has
provided a full valuation allowance as of December 31, 2005.
The components of current and deferred income tax expense (benefit)
are as follows:
December 31, December 31,
2005 2004
------------- -----------
Current:
State $ - $ -
Federal - -
Deferred:
State - -
Federal - -
------------- -----------
Net income tax expense $ - $ -
============= ===========
16
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(7) Income Taxes, (continued):
A reconciliation of income taxes between the statutory and effective tax
rates on income before income taxes is as follows:
December 31, December 31,
2005 2004
---------------------- ------------------
Computed federal statutory income tax
expense (benefit) $ (501,000) $ (74,000)
State income tax, net of federal (47,000) (13,500)
Other (2,500) 200
Change in valuation allowance 550,500 87,300
---------------------- ------------------
$ - $ -
====================== ==================
The components of deferred income taxes are as follows:
December 31,
2005
Deferred tax (assets) liabilities:
Net operating loss carry forward $ (422,000)
Accrued expenses (152,800)
Deferred revenue (63,000)
-------------------
Net deferred tax assets (637,800)
Valuation allowance 637,800
------------------
$ -
==================
Under the Internal Revenue Code, substantial changes in the
Company's ownership may limit the amount of net operating loss carry
forwards that can be utilized in any one year to offset future
taxable income.
(8) Notes Payable - NeoMedia Technologies, Inc.:
On July 27, 2005, Mobot signed a non-binding Letter of Intent
("Letter of Intent") to be purchased by NeoMedia Technologies, Inc.
("NeoMedia"), of Fort Myers, Florida. NeoMedia has three distinct
business units, NeoMedia Internet Software Service that offers
technologies if linking the physical world to the internet, NeoMedia
Consulting and Integration Services that offers resale of computer
hardware and software and NeoMedia Micro Paint Repair that offers
technologies in the micro paint industry.
The Letter of Intent calls for NeoMedia to acquire all of the
outstanding shares of Mobot in exchange for $3,500,000 cash and
$6,500,000 in shares of NeoMedia common stock. The LOI is subject to
due diligence by both parties.
17
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(8) Notes Payable - NeoMedia Technologies, Inc., continued:
On July 28, 2005, Mobot borrowed from NeoMedia the principal amount
of $600,000 in the form of an unsecured promissory note. The Note
will be forgiven upon signing of a definitive purchase agreement for
the acquisition of all of the outstanding shares of Mobot by
NeoMedia, as contemplated by the Letter of Intent. In the event the
acquisition is not consummated, the Note will become due 90 days
after written notice of cancellation of the Letter of Intent. In the
event the Letter of Intent is terminated and the Note is not repaid
within 90 days of such cancellation, the note will convert into
shares of Mobot common stock with a value equal to the unpaid
principal and accrued interest on the Note. The Note accrues
interest at a rate of 6% per annum and at December 31, 2005, accrued
interest amounted to $22,455.
In the event a definitive purchase agreement is not executed by the
parties, or the Letter of Intent is not terminated by September 26,
2005, Mobot has the right to demand an additional $200,000 loan from
NeoMedia. On September 26, 2005, Mobot exercised its right and
received the additional $200,000 loan. Further, in the event a
definitive purchase agreement is not executed by the parties or the
Letter of Intent is not terminated by October 26, 2005, Mobot has
the right to demand an additional $200,000 loan from NeoMedia. On
October 26, 2005, Mobot exercised its right and received the
additional $200,000 loan. In addition, on December 15, 2005, the
Company received an additional $500,000 of cash proceeds. Both of
the additional loans are in the form of unsecured promissory notes
subject to the same terms as the original $600,000 note. At December
31, 2005, the total outstanding balance due to NeoMedia
Technologies, Inc. was $1,500,000. (See note 11)
The Company evaluated these transactions for beneficial conversion
features and embedded derivatives and concluded that there were
none. The conversion price would be at market rate.
(9) Stockholders' Deficit:
Common Stock
Each of the ten holders of our common stock are entitled to one vote
for each share held of record on each matter submitted to a vote of
stockholders. Holders of common stock have no preemptive rights and
have no rights to convert their common stock into any other
securities. The outstanding common stock is duly authorized and
validly issued, fully-paid, and non-assessable.
Forfeiture Clause
During 2005, the Company issued for cash 250 shares to key
employees. If employment with the Company terminates before four
years from the date of issuance, the employee will be required to
forfeit a certain number of shares, based upon a predetermined
schedule. The Company retains the right to purchase back any
forfeited shares at the original sale price of $1 per share.
18
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(9) Stockholders' Deficit, continued:
Equity Incentive Plan
On September 16, 2004, the Company adopted an incentive plan called
the "2004 Equity Incentive Plan" providing for the issuance of up to
900 shares of the Company's common stock pursuant to grants of
restricted stock or stock options under the plan.
The Company issued 659 and 175 net shares of restricted stock under
the plan from September 16, 2004 to December 31, 2004 and January 1,
2005 to June 13, 2005, respectively to employees, directors,
consultants, and advisors. The value of these shares were
established at $1 at the outset of the plan, based on the then
current business conditions. The fair value of the shares granted
during 2004 and 2005, as estimated by management, approximated $1
per share since the Company was undercapitalized, was in early stage
of development and bore significant economic risks. The net proceeds
amounted to $659 and $175 from the sale of these shares during 2004
and 2005, respectively.
The Company also granted 22 shares of performance based options to a
consultant on February 23, 2005, of which, 0 options vested. The
fair value of these options has been determined to be nominal using
the minimal value approach under SFAS 123 and has not been recorded
by the Company.
There were no restricted shares issued, or options granted, between
June 13, 2005 and December 31, 2005.
Issuance and Repurchase of Common Stock
During November 2004, the Company issued common stock to a
contractor. The agreement allowed for the contractor to acquire all
of the common stock upon acceptance of employment from the Company.
During January 2005, the contractor declined the offer of employment
by the Company. The Company repurchased the common stock.
(10) Commitments and Contingencies:
Operating Lease
The Company leases its office facility under an operating lease with
an expiration date of April 30, 2006. For the year ended December
31, 2005, and December 31, 2004, Mobot incurred rent expense of
approximately $48,000 and $6,000, respectively. The Company has
approximately $18,000 of future minimum payments under the
non-cancelable operating lease.
Litigation
In the normal course of business the Company is subject to various
claims and litigation. The Company does not currently have any
pending or threatening litigation.
19
Mobot, Inc.
Notes to Financial Statements
Years Ended December 31, 2005 and 2004
--------------------------------------------------------------------------------
(11) Subsequent Events:
On February 9, 2006, NeoMedia and Mobot, Inc. ("Mobot") signed a
definitive merger agreement under which NeoMedia acquired all of the
outstanding shares of Mobot in exchange for $3,500,000 cash and
$6,500,000 in shares of NeoMedia common stock. The $6,500,000 stock
portion of the purchase price is represented by 16,931,493 shares of
NeoMedia common stock, calculated by dividing $6,500,000 by the
volume-weighted average closing price of NeoMedia common stock for
the ten day up to and including February 8, 2006. On February 17,
2006, NeoMedia and Mobot completed the closing requirements and the
acquisition became effective. As of December 31, 2005, NeoMedia had
loaned Mobot $1,500,000, which was forgiven upon the effective
closing date.
Prior to closing, the convertible debentures (see note 6) were
converted into 333 shares of Mobot's common stock and was included
in the sale transaction. The related warrants were canceled and all
rights waived. There were no additional shares of Mobot common stock
issued in the period January 1, 2006 to February 17, 2006. All
options (see note 9) lapsed as of the closing. As provided by the
debentures, the accrued interest was forgiven at closing.
20
(b) Pro Forma Financial Information
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
1. Basis of Presentation
Acquisition of Mobot, Inc.
On February 17, 2006, NeoMedia Technologies, Inc. ("NeoMedia) acquired all of
the outstanding shares of Mobot, Inc. (www.mobot.com) ("Mobot") in exchange for
$3,500,000 cash and $6,500,000 in shares of NeoMedia common stock. The
$6,500,000 stock portion of the purchase price is represented by 16,931,493
shares of NeoMedia common stock. Pursuant to the terms of the merger agreement,
the number of shares of NeoMedia common stock to be issued as stock
consideration was calculated using a share price of $0.3839. In the event that
NeoMedia's stock price at the time the consideration shares are saleable is less
than $0.3839, NeoMedia is obligated to compensate Mobot shareholders in cash for
the difference between the price at the time the shares become saleable and
$0.3839. In addition to cash and stock, at closing NeoMedia forgave notes
payable totaling $1,500,000 due from Mobot. This amount is considered other
additional consideration in the purchase price allocation.
Mobot is a pioneer in visual search and recognition technology designed to make
marketing effective and innovative using mobile devices. Launched in 2004 to
help companies cultivate rewarding relationships with the world's 1.5 billion
mobile phone users, Mobot gives marketers, content providers and carriers the
tools to make it easy for any consumer with a camera phone to interact with
their offerings.
Presentation
The unaudited pro forma condensed combined historical statement of operations
for the year ended December 31, 2005 gives effect to the acquisition of Mobot as
if it had occurred as of January 1, 2005, combining the historical results of
NeoMedia for the year ended December 31, 2005 with the historical results of
Mobot for the year ended December 31, 2005. The unaudited pro forma condensed
combined balance sheet as of December 31, 2005 gives effect to the acquisition
of Mobot as if it had occurred as of December 31, 2005.
The unaudited pro forma combined financial statements included in this filing
have been prepared by the managements of NeoMedia and Mobot without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. However, the managements of NeoMedia and
Mobot believe that the disclosures are adequate to make the information not
misleading.
The pro forma adjustments are based on currently available information and upon
estimates and assumptions that we believe are reasonable under the
circumstances. The unaudited pro forma financial data do not purport to
represent what NeoMedia's financial position or results of operations would
actually have been if such transactions had occurred on those dates and are not
necessarily representative of NeoMedia's financial position or results of
operations for any future period. The unaudited pro forma financial statements
should be read in conjunction with the separate historical financial statements
and footnotes of NeoMedia included in Form 10-KSB for the year ended December
31, 2005, and with the separate historical financial statements and footnotes of
Mobot for the years ended December 31, 2005 and 2004 (included herein).
21
2. Preliminary Purchase Price Allocation
A final determination of the allocation of the purchase price to the assets
acquired and liabilities assumed has not been made for Mobot. The allocation
reflected in the unaudited pro forma combined financial statements is based on
management's best judgment and estimate of the fair values of intangible assets
being acquired, and should be considered preliminary and is subject to the
completion of a comprehensive independent valuation of the assets acquired and
liabilities assumed. The final allocation of purchase price could differ
materially from the pro forma allocation included herein.
Any additional consideration issued pursuant to the stock purchase price
protection clause would also change the purchase price allocation.
3. Pro forma Net Loss Per Share
The pro forma basis and dilutive net loss per share are based on the weighted
average number of shares of pro forma NeoMedia's common stock as if the shares
issued to acquire Mobot had been issued at the beginning of the period shown.
Dilutive shares are not included in the computation of pro forma dilutive net
loss per share as their effect would be anti-dilutive.
22
NeoMedia Technologies, Inc.
Unaudited Pro-forma Condensed Combined Balance Sheet
December 31, 2005
(In thousands of US Dollars)
(A) (A)
Pro-forma Pro-forma
ASSETS NeoMedia Mobot Adjustments Consolidated
-------------------------- ------------ ------------
Current assets: * * (unaudited) (unaudited)
Cash and cash equivalents $ 2,291 $ 909 $ (3,500) $ (300)
Trade accounts receivable, net 341 78 -- 419
Inventories, net 423 -- -- 423
Investment in marketable securities 104 -- -- 104
Prepaid expenses and other current assets 151 8 -- 159
--------- --------- --------- ---------
Total current assets 3,310 995 (3,500) 805
Property and equipment, net 236 22 -- 258
Capitalized patents, net 3,134 -- -- 3,134
Micro paint repair chemical formulations and
proprietary process 1,450 -- -- 1,450
Customer contracts and relationships 0 -- 400 (C) 400
Capitalized software platform 0 -- 5,000 (C) 5,000
Other intangible assets 246 20 200 (C) 466
Goodwill 1,099 -- 5,608 (C) 6,707
Advances to Mobot, Inc. 1,500 -- (1,500) --
Cash surrender value of life insurance policy 769 -- -- 769
Other long-term assets 667 -- (17) (D) 650
--------- --------- --------- ---------
Total assets $ 12,411 $ 1,037 $ 6,191 $ 19,639
========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 1,574 $ 344 -- $ 1,918
Accrued expenses 1,844 148 -- 1,992
Amounts payable under settlement agreements 97 -- -- 97
Taxes payable 80 -- -- 80
Deferred revenues and other 898 236 -- 1,134
Liabilities in excess of assets of discontinued
business unit 676 -- -- 676
Notes and loans payable 3,015 1,500 (1,500) (E) 3,015
--------- --------- --------- ---------
Total current liabilities 8,184 2,228 (1,500) 8,912
--------- --------- --------- ---------
Convertible debentures -- 500 (500) (F) --
Shareholders' deficit:
Preferred stock -- -- -- --
Common stock (B) 4,676 -- 224 (C) 4,900
Additional paid-in capital 106,456 1 6,275 (C) 112,732
Deferred equity financing costs (13,256) -- -- (13,256)
Deferred stock-based compensation (169) -- -- (169)
Accumulated other comprehensive loss (177) -- -- (177)
Retained earnings (accumulated deficit) (92,524) (1,692) 1,692 (C) (92,524)
Treasury stock (779) -- -- (779)
--------- --------- --------- ---------
Total shareholders' deficit 4,227 (1,691) 8,191 10,727
--------- --------- --------- ---------
Total liabilities and shareholders' deficit $ 12,411 $ 1,037 $ 6,191 $ 19,639
========= ========= ========= =========
* - Derived from audited financial statements
23
Pro-forma Adjustments
(A)- Balance sheets are presented as of December 31, 2005
(B)- As of December 31, 2005, NeoMedia's $0.01 par value common stock consists
of 1,000,000,000 authorized shares, 475,387,910 historical shares and
630,833,644 pro forma shares issued; and 467,601,717 historical shares and
623,047,451 pro forma shares outstanding.
(C)- Adjustment for stock and cash issued to acquire Mobot, assuming
acquisitions occurred as of December 31, 2005. Adjustment includes the
elimination of $1 paid-in capital of Mobot. The pro forma purchase price
was calculated as follows:
Pro forma number of shares of NeoMedia to be issued as purchase price
consideration 22,413,793
x NeoMedia closing stock price around December 31, 2005 (measurement date) $0.290
-----------
Total stock consideration $6,500,000
Plus cash consideration $3,500,000
-----------
Pro forma purchase price $10,000,000
===========
In accordance with SFAS 141 and EITF 99-12, for the purposes of this
unaudited pro forma balance sheet, the fair value of the stock to be issued
as purchase price consideration is assumed to be $0.29 per share, which was
the average closing price of NeoMedia common stock for the three days up to
and including December 31, 2005 (the measurement date). There are no
additional options, warrants, or other stock-based consideration expected
to be issued as part of the purchase price in connection with the
acquisition. The acquisition of Mobot was completed on February 17, 2006.
The actual number of shares issued as stock consideration in the
acquisition was 16,931,493.
Based on NeoMedia's stock price around the measurement date of December 31,
2005, and the balance sheets of NeoMedia and Mobot as of December 31, 2005,
the pro forma purchase price would be allocated as follows:
(in thousands
of US
dollars,
except
share
amounts)
-------------
Purchase Price Consideration
Cash $3,500
Pro forma number of shares of NeoMedia common stock issued 22,413,793
/ NeoMedia closing stock price around December 31, 2005 (measurement
date) $0.29
-------------
Pro forma fair value of shares issued as purchase price consideration $6,500
Purchase-related costs 17
Other purchase consideration 1,500
-------------
Total fair value expected to be treated as purchase price consideration $11,517
=============
Assets Purchased
Cash and cash equivalents $909
Trade accounts receivable, net 78
Prepaid expenses and other current assets 8
Property and equipment, net 22
Customer contracts and relationships (i)(ii) 400
Capitalized software platform (i)(iii) 5,000
Other intangible assets (i)(iv) 220
Goodwill (i)(v) 5,608
-------------
12,245
-------------
Liabilities Assumed
Accounts payable 344
Accrued expenses 148
Deferred revenues and other current liabilities 236
-------------
728
-------------
24
Pro-forma Adjustments (cont'd)
(i) - For purposes of these unaudited pro forma financial
statements, the excess of fair value of consideration paid
over net book value for Mobot is allocated to the following
intangible asset categories: customer contracts and
relationships, capitalized software platform, other intangible
assets, and goodwill. The allocation is made based on NeoMedia
management's judgment and best estimate of the value of each
category for each business. As of this filing, NeoMedia has
not completed an independent valuation of such intangible
assets. NeoMedia is in the process of performing an
independent valuation of Mobot's intangible assets, and a
final allocation of the purchase price of each entity will be
made based on the results of such valuation, to be completed
no more than one year from closing. It is important to note
that the final independent valuation could vary materially
from the pro forma allocation presented above. The Company
expects to obtain the final independent valuation, currently
in process, prior to the filing of the 2nd quarter form 10-Q
in August 2006.
(ii) - Customer contracts and relationships consist of the
customers of each business that are under contract, as well as
prospects identified for potential future business, the fair
value of which is calculated as the discounted after-tax
expected earnings from current and identified customers.
NeoMedia expects to assign an amortization period of 5 years
to this class of assets.
(iii) - Capitalized software platforms consist of proprietary
software systems acquired. NeoMedia expects to assign an
amortization period of 7 years to this class of assets.
(iv) - Other intangible assets consist of brand names and other
proprietary copyrighted materials. NeoMedia expects to assign
an amortization period of 7-10 years to this class of assets.
(v) - The remaining excess of purchase price paid over fair value
of assets and liabilities assumed is allocated to goodwill,
and as such, is not assigned a depreciable life. Goodwill will
be tested for impairment as defined by Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets."
(D)- Adjustment to eliminate acquisition-related costs paid by NeoMedia in
2005 that are included in the purchase price allocation
(E)- Adjustment to eliminate note payable from Mobot to NeoMedia that was
forgiven at closing.
(F)- Adjustment to eliminate Mobot convertible debentures that were converted
prior to closing. As a result, the above unaudited condensed consolidated
pro forma balance sheet is shown assuming the debentures are converted
prior to the pro forma closing date.
25
NeoMedia Technologies, Inc.
Unaudited Pro-forma Combined Condensed Statement of Operations
For the Year Ended December 31, 2005
(In thousands of US Dollars, except per share data)
Pro-forma
(A) (A) Adjust- Pro-forma
NeoMedia Mobot ments Consolidated
------------- ------------- ------------- -------------
NET SALES: * * (unaudited) (unaudited)
License fees $ 523 -- -- $ 523
Resale of software and
technology equipment and service fees 354 -- -- 354
Micro paint product and service revenue 1,279 -- -- 1,279
Mobot license and service revenue -- 300 -- 300
------------- ------------- ------------- -------------
Total net sales 2,156 300 -- 2,456
------------- ------------- ------------- -------------
COST OF SALES:
License fees 453 -- -- 453
Resale of software and
technology equipment and service fees 206 -- -- 206
Micro paint direct cost of revenue 913 -- -- 913
Mobot license and service revenue -- -- 714 (B) 714
------------- ------------- ------------- -------------
Total cost of sales 1,572 -- 714 2,286
------------- ------------- ------------- -------------
GROSS PROFIT 584 300 (714) 170
Selling, general and administrative
expenses 7,561 1,180 111 (B) 8,852
Impairment charge 335 -- -- 335
Research and development costs 934 552 -- 1,486
------------- ------------- ------------- -------------
Income (loss) from operations (8,246) (1,432) (826) (10,504)
Loss on extinguishment of debt, net 172 -- -- 172
Inpairment charge on investments (780) -- -- (780)
Interest income (expense), net (293) (42) -- (335)
------------- ------------- ------------- -------------
Income before provision for income taxes (9,147) (1,474) (826) (11,447)
Provision for income taxes -- -- -- --
------------- ------------- ------------- -------------
Net income (loss) (9,147) (1,474) (826) (11,447)
Other comprehensive income (loss):
Unrealized loss on marketable securities (146) -- -- (146)
Foreign currency translation adjustment 29 -- -- 29
------------- ------------- ------------- -------------
Comprehensive income (loss) $ (9,264) $ (1,474) $ (826) $ (11,564)
============= ============= ============= =============
NET INCOME (LOSS) PER
SHARE--BASIC AND DILUTED $ (0.02) $ (0.02)
============= =============
COMPREHENSIVE INCOME (LOSS)
PER SHARE--BASIC AND DILUTED $ (0.02) $ (0.02)
============= =============
Weighted average number
of common shares-basic and diluted 451,857,851 24,904,215 (C) 476,762,066
============= ============= =============
26
* - Derived from audited financial statements
Pro-forma Adjustments
(A)- All results shown are for the year ended December 31, 2005
(B)- Adjustment to reflect amortization of acquired intangible assets for the
year ended December 31, 2005, as if the acquisition of Mobot had occurred
on January 1, 2005. It is important to note that the actual allocation and
estimated useful lives of intangible assets acquired that will be adopted
based on an independent valuation could vary from the estimates presented
herein. Such a difference could cause a material difference between the
actual periodic amortization charges that NeoMedia will record in its
statement of operations, and the amortization amount shown above. Estimated
useful lives are based on management's best estimate of the purchase price
allocation, and have not been finalized based on the results of an
independent valuation.
(C)- Adjustment for shares that would have been issued in connection with
acquisitions if they had occurred on January 1, 2005, calculated as
follows:
NeoMedia stock price around January 1, 2005 (measurement date) $0.261
Total stock consideration $6,500,000
----------
Pro forma number of shares of NeoMedia to be issued as purchase
price consideration 24,904,215
==========
27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NeoMedia Technologies, Inc.
(Registrant)
Date: May 2, 2006 By: /s/ Charles T. Jensen
--------------------------------
Charles T. Jensen, President,
Chief Executive Officer and Director
28
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
23.1 Consent of Stonefield Josephson, Inc., independent auditors of
Mobot, Inc.
29