As filed with the Securities and Exchange Commission on July 22,1999
SEC Registration No. 333-77659
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------------------
AMENDMENT NO. 1 TO
FORM S-3
Registration Statement
Under the Securities Act of 1933
---------------------------------
NEOMEDIA TECHNOLOGIES, INC.
-----------------------------------
(Name of Registrant in its charter)
DELAWARE 36-3680347
------------------------------ ------------------
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2201 SECOND STREET, SUITE 600
FORT MYERS, FLORIDA 33901
941-337-3434
------------------------------------------------------------------------
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
CHARLES W. FRITZ
2201 SECOND STREET, SUITE 600
FORT MYERS, FLORIDA 33901-3083
941-337-3434
941-337-3668 - FAX
--------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
WITH COPIES TO:
JOHN M. KLIMEK, ESQ. MARIANNE LEPERA, ESQ.
MERRICK & KLIMEK, P.C. NEOMEDIA TECHNOLOGIES, INC.
401 SOUTH LASALLE, SUITE 1302 2201 SECOND STREET
CHICAGO, ILLINOIS 60605 SUITE 600
(312) 294-6044 FORT MYERS, FLORIDA 33901
(312) 294-6045 FAX 941-337-3434
941-337-3668 FAX
APPROXIMATE DATE OF PROPOSED SALE TO PUBLIC: From time to time following the
effective date of this Registration Statement
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box: [ ]
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(FACE SHEET CONTINUED)
CALCULATION OF REGISTRATION FEE
- -------------------- ----------------- --------------------- ---------------------------- ----------------------
TITLE OF SHARES AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED PRICE PER UNIT(2)(3) OFFERING PRICE REGISTRATION FEE
- -------------------- ----------------- --------------------- ---------------------------- ----------------------
<S> <C> <C> <C> <C>
Common Stock 3,278,336(1) $4.71875 $15,469,648 $580.12(4)
- -------------------- ----------------- --------------------- ---------------------------- ----------------------
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(1) Represents shares of common stock previously issued by the Company in
non-public transactions, shares of common stock issuable upon exercise of
warrants issued in non-public transactions, and shares of common stock
issuable upon call of a pledge of common stock securing a promissory note
issued by the Company in a non-public transaction. Shares of common stock
are being registered for resale by the holders hereof.
(2) Estimated solely for purposes of computing the registration fee pursuant to
Rule 457.
(3) In accordance with Rule 457(c), the price represents the average of the
high and low prices of the Registrant's common stock on April 27, 1999.
(4) The Company registered 2,836,063 shares of common stock on May 4, 1999 and
paid the registration fee of $3,720.38 at that time. This amount represents
the registration fee for the additional shares being registered in this
amendment.
<PAGE>
[FRONT COVER OF PROSPECTUS]
NEOMEDIA TECHNOLOGIES, INC.
The stockholders of NeoMedia Technologies, Inc. identified on page 9
may offer and sell the shares covered by this Prospectus from time to time. The
shares covered by this Prospectus include shares to be received by the
stockholders upon the exercise of warrants-rights to purchase common stock. The
selling stockholders will receive all of the proceeds from the sales of the
shares and will pay all commissions and selling expenses, if any, on the sale of
the shares. We will pay the expense of registration of the sale of the shares.
We will receive the proceeds from the exercise of the warrants if and when such
warrants are exercised. The holders of the warrants are under no obligation to
exercise the warrants and the selling stockholders are under no obligation to
sell their shares.
Our common stock trades on the Nasdaq SmallCap Market under the symbol
"NEOM". On July 6,1999, the last reported sale price of our common stock on the
Nasdaq SmallCap Market was $7.00 per share.
BEGINNING ON PAGE ONE, WE HAVE LISTED SEVERAL "RISK FACTORS" WHICH YOU
SHOULD CONSIDER. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY BEFORE YOU MAKE
YOUR INVESTMENT DECISION.
The Securities and Exchange Commission and state regulatory authorities
have not approved or disapproved of these securities, or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The Date of this Prospectus is July 22, 1999.
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TABLE OF CONTENTS
PAGE NO.
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<S> <C>
ABOUT THIS PROSPECTUS..................................................................... 3
RISK FACTORS.............................................................................. 3
Risk Factors Relating to the Company
We Have Sustained Losses in the Past and We Expect to Sustain Losses
in the Future..................................................................... 3
We may not be Able to Obtain Additional Financing that We will need
in the Next Twelve Months......................................................... 3
We are Uncertain of the Success of Our Intelligent Documents Solutions
Products.......................................................................... 4
Our Quarterly Results may Fluctuate Due to Certain Marketing and
Competitive Factors Over which we have Little or No Control....................... 4
We Depend on the Resale of Software and Equipment Resales
for Revenue....................................................................... 4
We Depend on Sales to One Major Customer............................................ 5
We may not be Able to Retain Our Key Executives, Sales Personnel
and Research and Development Personnel............................................ 5
Some of Our Products Depend upon License Rights
from Third Parties and there can be No Assurance that We can Adequately
Protect those Rights............................................................ 5
We Face Intense Competition in the Computer Software and
Hardware Field.................................................................... 5
We Face the Risk that Changes in the Technology will make Our
Products and Services Obsolete.................................................... 5
Our Intellectual Property Rights do not Provide Complete
Protection from Competitors....................................................... 6
We are Exposed to Product Liability Claims for which Insurance
Coverage is Limited, Potentially Inadequate and in Some Cases
Unavailable....................................................................... 6
Risk Factors Relating To This Offering
Officers and Directors Control most Corporate Action................................ 7
The Book Value of Our Common Stock is Less Than the Current
Market Price...................................................................... 7
The Price of NeoMedia Common Stock has been Highly Volatile
Due to Several Factors which will Continue to Effect the
Price of Our Stock................................................................ 7
NeoMedia and the Price of NeoMedia Shares may be Adversely
Effected by the Public Sale of a Significant Number of the Shares
Eligible for Future Sale.......................................................... 7
An Investor's Ability to Trade Our Common Stock may be
Limited by Trading Volume......................................................... 7
We may be Removed from the Nasdaq SmallCap Market if We
Fail to Meet Certain Maintenance Criteria......................................... 8
FORWARD LOOKING STATEMENTS................................................................ 8
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PAGE NO.
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USE OF PROCEEDS........................................................................... 9
SELLING STOCKHOLDERS...................................................................... 9
WHERE YOU CAN FIND MORE INFORMATION....................................................... 12
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................................... 12
PLAN OF DISTRIBUTION...................................................................... 13
LEGAL MATTERS............................................................................. 13
EXPERTS................................................................................... 13
RECENT DEVELOPMENTS....................................................................... 13
COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES.......................................................................... 14
</TABLE>
You should rely only on the information to which we have referred you
or provided in this Prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this Prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of those documents.
2
<PAGE>
ABOUT THIS PROSPECTUS
NeoMedia Technologies, Inc. provides computer software and consulting
services. The Company's principal business address is 2201 Second Street, Suite
600, Fort Myers, Florida 33901, (941) 337-3434. You can find out more about the
Company by reading the Company's Form 10-KSB Annual Report which is incorporated
by reference in this Prospectus. (See "Incorporation of Certain Documents by
Reference"). This Prospectus is part of a Registration Statement that we filed
with the Securities and Exchange Commission. You should read both this
Prospectus and any prospectus supplement together with the information described
under the heading "Where You Can Find More Information." You should not assume
that the information in this Prospectus or any prospectus supplement is accurate
as of any date other than the date on the front of those documents.
RISK FACTORS
YOU SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS, ALONG WITH
THE OTHER INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS,
IN DECIDING WHETHER TO INVEST IN OUR SHARES. THESE FACTORS, AMONG OTHERS, MAY
CAUSE ACTUAL RESULTS, EVENTS OR PERFORMANCE TO DIFFER MATERIALLY FROM THOSE
EXPRESSED IN ANY FORWARD-LOOKING STATEMENTS MADE IN THIS PROSPECTUS.
Risk Factors Relating to the Company
1. WE HAVE SUSTAINED LOSSES IN THE PAST AND WE EXPECT TO SUSTAIN LOSSES
IN THE FUTURE. We incurred a loss of $11,495,000 in 1998, $5,973,000 in 1997,
$3,076,000 in 1996, and $1,131,000 in 1995. We also incurred a loss of
$1,766,000 in the first quarter of 1999. Our accumulated losses from operations
were approximately $22,000,000 on December 31, 1998 ($23,760,000 on March 31,
1999)and we had a working capital deficit of approximately $453,000 ($1,308,000
on March 31, 1999) and approximately $600,000 ($ 290,000 on March 31,1999) in
unrestricted cash balances as of that date. We expect operating losses to
continue as we continue to develop our software products and conduct additional
research and development.
The report of KPMG LLP covering the December 31, 1998, consolidated
financial statements contains an explanatory paragraph that states that our
recurring losses from operations and accumulated deficit raise substantial
doubts about our ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of that uncertainty.
2. WE MAY NOT BE ABLE TO OBTAIN ADDITIONAL FINANCING THAT WE WILL NEED
IN THE NEXT TWELVE MONTHS. We believe that we will need to raise more money in
the next twelve months to continue to finance our operations. We may not be able
to obtain additional financing on acceptable terms, or at all. Any failure to
raise additional financing will materially adversely affect us. We anticipated
that the proceeds from the Public Offering, together with projected cash flow
from operations, would be sufficient to fund operations during the twelve months
following the consummation of the Public Offering. However, the proceeds from
the Public Offering, together with the cash flow from operations, were
sufficient to fund our operations for approximately nine months. From September,
1997, through December 18, 1997, we received net
3
<PAGE>
proceeds of approximately $12.9 million from the partial exercise of the
warrants, both of which were used to fund operations. We have limited current
commitments or arrangements with respect to, or readily available sources of,
additional financing. If we are not successful in our operations, future
acquisitions or expansion, your investment in NeoMedia could become worthless.
The report of KPMG LLP covering the December 31, 1998, consolidated
financial statements contains an explanatory paragraph that states that our
recurring losses from operations and accumulated deficit raise substantial
doubts about our ability to continue as a going concern. The consolidated
financial statements do not include any adjustments that might result from the
outcome of that uncertainty.
3. WE ARE UNCERTAIN OF THE SUCCESS OF OUR INTELLIGENT DOCUMENTS
SOLUTIONS PRODUCTS. We provide computer software and consulting services
including assisting clients in organizing and managing printed documents and
assisting clients in converting their computer software and hardware systems. We
have developed new products known as Intelligent Document(TM) Solutions. There
is no assurance that:
the Intelligent Document Solutions will be successful;
our current product offerings will not be adversely affected by us
focusing our attentions and resources in Intelligent Document(TM)
Solutions ; or
the Intelligent Documents Solutions will obtain market acceptance or
that the unit will ever achieve profitability.
No significant sales of the Intelligent Document Solutions products and services
have occurred to date.
4. OUR QUARTERLY RESULTS MAY FLUCTUATE DUE TO CERTAIN MARKET CONDITIONS
AND COMPETITIVE FACTORS OVER WHICH WE HAVE LITTLE OR NO CONTROL. The factors
listed below, some of which we cannot control, may cause our revenues and
results of operations to fluctuate significantly:
the extent to which our products gain market acceptance;
the timing and size of customer purchases; and
introductions of products by competitors.
5. WE DEPEND ON THE RESALE OF SOFTWARE AND EQUIPMENT RESALES FOR
REVENUE. We derived 72% of our revenues in 1998 from the resale of computer
software and technology equipment, 78% in 1997, 83% in 1996 and 76% in 1995. A
loss or a reduction of this revenue would have a materially adverse affect on
us. There is no assurance that:
the market for the products and services we offer will continue;
we will be able to continue to be successful in marketing these
products due to competition and other factors;
4
<PAGE>
we will continue to be able to obtain short-term financing for the
purchase of the products that we resell; or
our relationship with companies whose products and services we sell
will continue including relationships with Sun Microsystems Computer
Company, IBM Corporation and Xerox Corporation.
6. WE DEPEND ON SALES TO ONE MAJOR CUSTOMER. We derived 25% of our
revenues in 1998 from sales to one customer, Ameritech, Inc., 39% in 1997, 38%
in 1996 and 49% in 1995. The loss of these sales to this one customer would have
a materially adverse affect on us. We purchased the equipment and software sold
to this one customer from one single supplier. The loss of this supplier would
also have a material adverse affect on us.
7. WE MAY NOT BE ABLE TO RETAIN OUR KEY EXECUTIVES, SALES PERSONNEL AND
RESEARCH AND DEVELOPMENT PERSONNEL. As a relatively new company, our success
depends on the services of key employees in administration, sales, and research
and development. The loss of the services of one or more of such employees could
have a material adverse affect on us. We compete with many other companies in
the computer software and hardware market for qualified professional, technical,
and managerial personnel.
8. SOME OF OUR PRODUCTS DEPEND UPON LICENSE RIGHTS FROM THIRD PARTIES
AND THERE CAN BE NO ASSURANCE THAT THE RIGHTS WE HAVE UNDER THESE LICENSING
AGREEMENTS ARE SUFFICIENT OR THAT WE CAN ADEQUATELY PROTECT THOSE RIGHTS. Loss
of , or interference with these rights could have a material adverse affect on
us.
9. WE FACE INTENSE COMPETITION IN THE COMPUTER SOFTWARE AND HARDWARE
FIELD. The markets in which we compete are highly competitive and rapidly
changing. A number of companies offer products and services similar to those
offered by us, and target the same customers as us. Many of these companies have
substantially greater financial, marketing and technical resources and have
greater channels of distribution for their products and services. We anticipate
that competition within these markets will increase.
10. WE FACE THE RISK THAT CHANGES IN TECHNOLOGY WILL MAKE OUR PRODUCTS
AND SERVICES OBSOLETE. The products and services we sell are subject to rapid
technological change, frequent new product and service introductions, evolving
industry standards and changes in customer demands. There can be no assurance
that:
we will be successful in developing and marketing new product
enhancements, and new products or services that respond to
technological change or evolving industry standards;
we will not experience difficulties that could delay or prevent the
success or development, introduction and marketing of these
products, enhancements and services; or
any new product, product enhancement and services we may introduce
will achieve market acceptance.
5
<PAGE>
Our failure to develop and introduce new products, product enhancements or
services, or to gain customer acceptance of such products, product enhancements
or services in a timely fashion could materially adversely affect us.
11. OUR INTELLECTUAL PROPERTY RIGHTS DO NOT PROVIDE COMPLETE PROTECTION
FROM COMPETITORS. We presently have intellectual property applications pending
with respect to certain proprietary technology. We have received some notices of
allowance of claims on a patent filing covering related to Intelligent
Documents(TM); however, no assurances can be given that any patent for such
technology will be granted. There is also no assurance that:
there are no patents or patents pending by competitors for
technology similar to ours;
competitors will not independently develop or patent technologies
that are substantially equivalent or superior to our technologies;
third parties will not assert infringement claims against us or
against products and technologies which we license, or have the
rights to use, from third parties.
Any such claims, if proved, could materially adversely affect us.
12. WE ARE EXPOSED TO PRODUCT LIABILITY CLAIMS FOR WHICH INSURANCE
COVERAGE IS LIMITED, POTENTIALLY INADEQUATE AND IN SOME CASES UNAVAILABLE. Many
of our engagements involve projects that are critical to the operations of our
clients' businesses. Any failure in a client's information system could result
in a claim for substantial damages against us, regardless of our responsibility
for such failure. We could, therefore, be subject to claims in connection with
the products and services that we sell. We currently maintain some product
liability and errors and omissions insurance. There can be no assurance that:
we have adequately, or at all, contractually limited our liability
for such claims;
we would have sufficient resources to satisfy any liability
resulting from any such claim;
our coverage, if available, will be adequate in term and scope to
protect us against material adverse effects in the event of a
successful claim; or
our insurer will not disclaim coverage as to any future claim.
The successful assertion of one or more large claims against us that exceed
available insurance coverage could adversely affect us.
6
<PAGE>
Risk Factors Relating to this Offering
1. OFFICERS AND DIRECTORS CONTROL MOST CORPORATE ACTION. NeoMedia's
principal stockholders, acting together, may be able to control or exercise
significant influence over all matters requiring stockholder approval, including
the election of directors and the approval of significant corporate actions.
Other shareholders have little or no control or influence over such matters.
2. THE BOOK VALUE OF OUR COMMON STOCK IS LESS THAN THE CURRENT MARKET
PRICE. Based on our Stockholders' Equity as of December 31, 1998, and the
trading price of our common stock as of the date of this Prospectus, an investor
will experience immediate and substantial dilution between the book value per
share of their common stock, and the purchase price of the shares.
3. THE PRICE OF NEOMEDIA COMMON STOCK HAS BEEN HIGHLY VOLATILE DUE TO
SEVERAL FACTORS WHICH WILL CONTINUE TO EFFECT THE PRICE OF OUR STOCK. Our common
stock has traded as low as $1.531 and as high as $7.00 between mid-October,
1998, and July 6, 1999.
Some of the factors leading to this volatility include:
price and volume fluctuating in the stock market at large which do
not relate to our operating performance;
fluctuations in our operating results;
announcement of purchases or licenses of new technology;
announcements of financing received by us;
developments with respect to patents or proprietary rights;
changes in stock market analysts' recommendations regarding NeoMedia
and other companies in the computer software and hardware industry
generally; and
fluctuations in market demand for and supply of our products.
4. NEOMEDIA AND THE PRICE OF NEOMEDIA SHARES MAY BE ADVERSELY EFFECTED
BY THE PUBLIC SALE OF A SIGNIFICANT NUMBER OF THE SHARES ELIGIBLE FOR FUTURE
SALE. We have granted a large number of warrants-rights to buy our common stock.
The majority of our common stock is freely tradable. Sales of common stock in
the public market including shares issued on exercise of warrants, could
materially adversely affect the market price of our shares. Such sales also may
inhibit our ability to obtain future equity or equity-related financing on
acceptable terms.
5. AN INVESTORS' ABILITY TO TRADE OUR COMMON STOCK MAY BE LIMITED BY
TRADING VOLUME. The trading volume in our common stock has been relatively
limited. A consistently active trading market for our shares may not develop.
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6. WE MAY BE REMOVED FROM THE NASDAQ SMALLCAP MARKET IF WE FAIL TO MEET
CERTAIN MAINTENANCE CRITERIA. The Nasdaq Stock Market has net capital surplus
and stock price maintenance criterion for trading on the Nasdaq SmallCap Market.
We currently meet the requirements but our ability to continue to do so will
depend on whether we are able to maintain net tangible assets of at least
$2,000,000 and maintain a minimum stock price of $1.00. The public trading
volume of our common stock and the ability of our stockholders to sell their
shares could be significantly impaired if we fail to meet the maintenance
criteria and are removed from the Nasdaq SmallCap Market. In that case, our
common stock would trade on either the OTC bulletin board, a regional exchange
or in the pink sheets, which would likely result in an even more limited trading
volume.
FOR ALL OF THE AFORESAID REASONS, AND OTHERS WHICH MAY NOT BE SET FORTH
HEREIN, THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. ANY PERSON CONSIDERING
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY SHOULD BE AWARE OF THESE AND
OTHER FACTORS SET FORTH IN THIS PROSPECTUS. THE SECURITIES SHOULD BE PURCHASED
ONLY BY PERSONS WHO CAN AFFORD A TOTAL LOSS OF THEIR ENTIRE INVESTMENT AND HAVE
NO IMMEDIATE NEED FOR A RETURN OF THEIR INVESTMENT.
FORWARD LOOKING STATEMENTS
Statements made in this Prospectus or in the documents incorporated by
reference herein that are not statements of historical fact are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, and
Section 21E of the Securities Exchange Act of 1934. A number of risks and
uncertainties, including those discussed under the caption "Risk Factors" above
and the documents incorporated by reference herein could affect such
forward-looking statements and could cause actual results to differ materially
from the statements made. These factors include our ability to:
obtain additional financing on terms acceptable to us, if at all, to
allow us to continue operations as currently proposed;
develop, market and sell products and services for the Intelligent
DocumentTM, Year 2000 and other markets;
successfully integrate acquired products, services and businesses;
adjust to changes in technology, customer preferences, enhanced
competition and new competitors in the Intelligent DocumentTM, Year
2000 and other software markets;
protect our proprietary software rights from infringement or
misappropriation;
maintain or enhance our relationships with business partners and
vendors; and
attract and retain key employees
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USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares by the
selling stockholders. We will receive the exercise price of warrants held by
selling stockholders if and when such warrants are exercised. The proceeds from
such warrant exercises will be used for general corporate purposes.
SELLING STOCKHOLDERS
The following tables sets forth the names of the selling stockholders,
the number of shares of common stock owned beneficially by the selling
stockholders as of June 25, 1999 (including shares which have been acquired by
such stockholders but for which certificates have not yet been issued) and the
number of shares that may be offered pursuant to this Prospectus. The shares are
being registered to permit public secondary trading of the shares, and the
selling stockholders may offer the shares for resale from time to time. The
percentages of ownership set forth in the table are based on 12,078,427 shares
of common stock outstanding as of July 6, 1999 (including shares acquired but
for which certificates have not yet been issued).
<TABLE>
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COMMON STOCK
BENEFICIALLY COMMON STOCK BENEFICIALLY
OWNED COMMON STOCK OWNED AFTER OFFERING(1)(2)
NAME OF SELLING PRIOR TO COVERED BY THIS ----------------------------
STOCKHOLDER OFFERING(1) PROSPECTUS NUMBER PERCENT OF CLASS
- ------------------------------ ------------- --------------- --------- -----------------
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William E. and Edna Fritz 1,824,961(3) 137,752 1,687,209 15.7
David Swain 31,200(4) 16,500 14,700 *
Dan Amerson 18,500(4) 16,500 2000 *
A.T. Cross Company 783,334(5) 783,334 0 *
Michael A. and Jean H. Regan 225,000(6) 225,000 0 *
Tranzact Services, Ltd. 187,500(7) 187,500 0 *
BT Alex Brown Incorporated 50,000(8) 50,000 0 *
Prime Asset Management 655,000(9) 655,000 0 *
National Securities 13,250(10) 13,250 0 *
Martin Lechner 10,000 10,000 0 *
Stefan Kallabis 10,000 10,000 0 *
Alexander Nill 35,000 10,000 0 *
Alexander Knapp Voith 350,000 350,000 0 *
Jurgen Hasse 350,000 350,000 0 *
Calder Capital 10,000 10,000 0 *
</TABLE>
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<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY COMMON STOCK BENEFICIALLY
OWNED COMMON STOCK OWNED AFTER OFFERING(1)(2)
NAME OF SELLING PRIOR TO COVERED BY THIS ----------------------------
STOCKHOLDER OFFERING(1) PROSPECTUS NUMBER PERCENT OF CLASS
- ------------------------------ ------------- --------------- --------- -----------------
<S> <C> <C> <C>
Global Opportunity Hedge Fund 20,000 20,000 0 *
Vontobel AG 20,000 20,000 0 *
Thornhill Capital 365,000(11) 230,000 135,000 1.2
Christian Rohl 10,000(12) 12,000 0 *
Gekko Investment Holdings S.A 60,000(13) 60,000 0 *
Andreas Perschk 20,000(14) 20,000 0 *
Floxus GmbH 20,000(15) 20,000 0 *
Kenneth Fell 16,500(16) 16,500 0 *
Dan Goldstein 55,000(17) 55,000 0 *
</TABLE>
- ------------------
* Less than one percent
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission, and includes generally voting power
and/or investment power with respect to securities. Options to purchase
shares of common stock currently exercisable or exercisable within sixty
(60) days of June 1, 1999 are deemed outstanding for computing the
beneficial ownership percentage of the person holding such options but are
not deemed outstanding for computing the beneficial ownership percentage of
any other person. Except as indicated by footnote, to the knowledge of
NeoMedia, the persons named in the table above have the sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them.
(2) Assumes all shares eligible for sale by selling stockholder under this
Prospectus are sold.
(3) William E. Fritz, Secretary of NeoMedia, and his wife, Edna Fritz, are the
owners of 137,752 shares of common stock which are being registered under
this Prospectus including 12,523 shares to be issued upon the exercise of
warrants held by Mr. and Mrs. Fritz. Mr. and Mrs. Fritz are also the
general partners of the Fritz Family Limited Partnership and therefore each
are deemed to be the beneficial owner of the 1,511,742 shares held in the
Fritz Family Partnership. As Trustee of each of the Chandler R. Fritz 1994
Trust, Charles W. Fritz 1994 Trust and Debra F. Schiafone 1994 Trust,
William E. Fritz is deemed to be the beneficial owner of the shares of
NeoMedia held in each trust. Accordingly, in addition to shares held by Mr.
Fritz and his wife, Mr. William E. Fritz is deemed to be the beneficial
owner of an aggregate of 1,687,209 shares
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(175,467 of which as a result of being trustee of the Chandler T. Fritz
1994 Trust, Charles W. Fritz 1994 Trust and Debra F. Schiafone 1994 Trust,
and 1,511,742 shares as a result of being co-general partner of the Fritz
Family Partnership). Mr. William E. Fritz may be deemed to be a parent and
promoter of NeoMedia, as those terms are defined in the Securities Act.
(4) Includes 1,500 shares of common stock to be issued upon exercise of
warrants.
(5) Includes (i) 200,000 shares of common stock to be issued upon exercise of
warrants held by A.T. Cross; (ii) 500,000 shares of common stock to be
issued upon conversion of convertible promissory notes issued to A.T.
Cross; and (iii) 83,334 shares of common stock subject to issuance to A.T.
Cross if certain stock price levels are not met by NeoMedia.
(6) Includes (i) 37,500 shares of common stock to be issued upon exercise of
warrants held by Michael and Jean Regan and (ii) 187,500 shares of common
stock securing a promissory note issued to the Regans.
(7) Represents 187,500 shares of common stock securing a promissory note issued
to Tranzact Services, Ltd.
(8) Represents 50,000 shares of common stock to be issued upon exercise of
warrants held by BT Alex Brown.
(9) Includes 345,000 shares of common stock to be issued upon exercise of
warrants held by Prime Asset Management.
(10) Includes 3,250 shares of common stock to be issued upon exercise of
warrants held by National Securities Corporation.
(11) Includes (i) 230,000 shares of common stock to be issued upon exercise of
warrants held by Thornhill Capital covered by this Prospectus, and (ii)
135,000 shares of common stock to be issued upon exercise of warrants.
(12) Includes 10,000 shares of common stock to be issued upon exercise of
warrants held by Mr. Rohl.
(13) Includes 60,000 shares of common stock to be issued upon exercise of
warrants held by Gekko Investments.
(14) Includes 20,000 shares of common stock to be issued upon exercise of
warrants held by Mr. Perschk.
(15) Includes 20,000 shares of common stock to be issued upon exercise of
warrants held by Floxus GmbH.
(16) Includes 1,500 shares of common stock to be issued upon exercise of
warrants held by Mr. Fell.
(17) Includes 5,000 shares of common stock to be issued upon exercise of
warrants held by Mr. Goldstein.
11
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly, and current reports, proxy statements, and
other documents with the Securities and Exchange Commission. You may read and
copy any document we file at the SEC's public reference room at Judiciary Plaza
Building, 450 Fifth Street, NW, Room 1024, Washington, D.C. 20549. You should
call 1-800-SEC-0330 for more information on the public reference room. The SEC
maintains an internet site at http://www.sec.gov where certain information
regarding issuers (including NeoMedia) may be found. Our web site is
http://www.neom.com.
This Prospectus is part of a registration statement that we filed with
the SEC (Registration No. 333-77659). The registration statement contains more
information than this Prospectus regarding NeoMedia and its common stock,
including certain exhibits and schedules. You can get a copy of the registration
statement from the SEC at the address listed above or from its internet site.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate" into this Prospectus information we
file with the SEC in other documents. This means that we can disclose important
information to you by referring to other documents that contain that
information. The information may include documents filed after the date of this
Prospectus which update and supersede the information you read in this
Prospectus. We incorporate by reference documents listed below, except to the
extent information in those documents is different from the information
contained in this Prospectus, and all future documents filed with the SEC like
Form 10-QSB Quarterly Reports and Form 10-KSB Annual Reports until we terminate
the offering of these shares.
SEC FILING
(FILE NO. 0-21743) PERIOD/FILING DATE
------------------ ------------------
Annual Report on Form 10-KSB ............... Year ended December 31, 1998
Quarterly Report on Form 10-QSB ............ Quarter ended March 31, 1999
Current Report on Form 8-KSB ............... June 7, 1999
Description of common stock contained
in Registration Statements on Form 8-A...... November 18, 1996
You may request a copy of these documents, at no cost, by writing to or
calling:
NeoMedia Technologies, Inc.
2201 Second Street, Suite 600
Fort Myers, Florida 33901-3083
(941) 337-3434
12
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PLAN OF DISTRIBUTION
The selling stockholders may offer their shares at various times in one
or more transactions on the Nasdaq SmallCap Market or any other exchange on
which the shares may be listed or in private transactions.
The shares of common stock are being registered in order to allow the
selling stockholders to sell these shares. No underwriter or broker/dealer has
been engaged by us to assist in the sale of the shares and there is no
obligation that the selling stockholders sell all or any part of the shares
covered by this Prospectus. The selling stockholders may sell their shares at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at negotiated prices or at fixed prices.
The selling stockholders will pay all commissions, transfer taxes, and
other expenses associated with the sale of securities by them. The shares are
being registered pursuant to contractual obligations of NeoMedia, and we have
paid the expenses of the preparation of this Prospectus.
LEGAL MATTERS
Merrick & Klimek, P.C. of Chicago, Illinois, our counsel in connection
with the offering, has issued an opinion about the validity of the securities
being offered.
EXPERTS
The consolidated financial statements of NeoMedia and subsidiaries as
of December 31, 1998 and 1997, and for the years then ended, have been
incorporated by reference herein and in the registration statement in reliance
upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The report of KPMG LLP covering the December 31, 1998, consolidated
financial statements contains an explanatory paragraph that states that the
Company's recurring losses from operations and accumulated deficit raise
substantial doubts about the entity's ability to continue as a going concern.
The consolidated financial statements do not include any adjustments that might
result from the outcome of that uncertainty.
RECENT DEVELOPMENTS
Since December 31, 1998, we have raised over $4,600,000, through the
sale of our common stock and warrants to purchase our shares and $2,000,000
through the issuance of convertible debt in private transactions.
On June 7, 1999, NeoMedia Technologies, Inc. (the "Company") announced
that KPMG LLP ("KPMG") will no longer act as independent auditors of the
Company. In a letter dated May 28, 1999, received by the Company on June 1,
1999, KPMG resigned. KPMG's audit reports on the Company's financial statements
for either of the past two years ended December 31, 1998 and 1997 did not
contain an adverse opinion or disclaimer of opinion, and no such report was
qualified or modified as to audit scope or accounting principles. However, their
opinion on the financial statements for 1998 contained a "going concern"
uncertainty clause that indicated that the Company's consolidated financial
statements
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were "prepared assuming we will continue as a going concern. As discussed in
Note 2 to the consolidated financial statements, the Company has suffered
recurring losses from operations, has a significant accumulated deficit, and a
working capital deficiency that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty."
During our the Company's two most recent fiscal years ended December
31, 1998 and 1997 and the subsequent interim period through May 28, 1999, there
were no disagreements between the Company and KPMG on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which disagreements if not resolved to their satisfaction would have
caused them to make reference in connection with their opinion to the subject
matter of disagreement.
The Company announced on July 15, 1999 that it has engaged Arthur
Andersen LLP as the new independent auditors of the Company.
COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
As permitted by the Delaware General Corporation Law ("DGCL"), we have
included in our Certificate of Incorporation a provision to eliminate the
personal liability of our directors for monetary damages for breach or alleged
breach of their fiduciary duties as directors, except for liability (i) for any
breach of the director's duty of loyalty to NeoMedia or its stockholders, (ii)
for acts or omissions not in good faith or which involved intentional misconduct
or a knowing violation of law, (iii) in respect of certain unlawful dividend
payments or stock redemptions or repurchases, as provided in Section 174 of the
DGCL, or (iv) for any transaction from which the director derived an improper
personal benefit. The effect of this provision is to eliminate the rights of
NeoMedia and its stockholders (through stockholders' derivative suits on behalf
of NeoMedia) to recover monetary damages against a director for breach of the
fiduciary duty of care as a director except in the situations described in (i)
through (iv) above. This provision does not limit nor eliminate the rights of
NeoMedia or any stockholder to seek non-monetary relief such as an injunction or
rescission in the event of a breach of a director's duty of care. These
provisions will not alter the liability of directors under federal securities
laws.
The Certificate of Incorporation and the by-laws of NeoMedia provide
that we are required and permitted to indemnify our officers and directors,
employees and agents under certain circumstances. In addition, if permitted by
law, we are required to advance expenses to our officers and directors as
incurred in connection with proceedings against them in their capacity as a
director or officer for which they may be indemnified upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to
indemnification. At present, we are not aware of any pending or threatened
litigation or proceeding involving a director, officer, employee or agent of
NeoMedia in which indemnification would be required or permitted.
Insofar as indemnification of liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
14
<PAGE>
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONS.
The following table sets forth the various expenses in connection with
the sale and distribution of the securities being registered. All of the amounts
shown are estimates except the Securities and Exchange Commission registration
fee.
Securities and Exchange Commission
Registration Fee.......................................... $ 4,300.50
Legal fees and expenses....................................... $10,000.00
Accounting fees and expenses.................................. $ 7,500.00
Miscellaneous ................................................ $ 5,000.00
----------
Total ........................................................ $26,800.50
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by the Delaware General Corporation Law ("DGCL"), we have
included in our Certificate of Incorporation a provision to eliminate the
personal liability of its directors for monetary damages for breach or alleged
breach of their fiduciary duties as directors, except for liability (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involved intentional
misconduct or a knowing violation of law, (iii) in respect of certain unlawful
dividend payments or stock redemptions or repurchases, as provided in Section
174 of the DGCL, or (iv) for any transaction from which the director derived an
improper personal benefit. The effect of this provision is to eliminate the
rights of NeoMedia and its stockholders (through stockholders' derivative suits
on behalf of NeoMedia) to recover monetary damages against a director for breach
of the fiduciary duty of care as a director except in the situations described
in (i) through (iv) above. This provision does not limit nor eliminate the
rights of NeoMedia or any stockholder to seek non-monetary relief such as an
injunction or rescission in the event of a breach of a director's duty of care.
These provisions will not alter the liability of directors under federal
securities laws.
The Certificate of Incorporation and the by-laws of NeoMedia provide
that we are required and permitted to indemnify our officers and directors,
employees and agents under certain circumstances. In addition, if permitted by
law, we are required to advance expenses to our officers and directors as
incurred in connection with proceedings against them in their capacity as a
director or officer for which they may be indemnified upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such person is not entitled to
indemnification. At present, we are not aware of any pending or threatened
litigation or proceeding involving a director, officer, employee or agent of
NeoMedia in which indemnification would be required or permitted.
15
<PAGE>
Insofar as indemnification of liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable.
ITEM 16. EXHIBITS.
EXHIBIT DESCRIPTION
5.1 Opinion of Merrick & Klimek, P.C. ( previously filed)
23.1 Consent of Merrick & Klimek, P.C. (contained in Exhibit 5.1)
23.2 Consent of KPMG LLP
ITEM 17. UNDERTAKINGS.
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statements (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (A)(1)(i) and (A)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
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B. The undersigned registrant hereby undertakes that, for purposes of
determining liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fort Myers, State of Florida on July 20, 1999.
NEOMEDIA TECHNOLOGIES, INC.
By: /s/ CHARLES W. FRITZ
---------------------
Charles W. Fritz
President, Chief Executive Officer and
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this Form
S-3 has been signed below by the following persons in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
<S> <C> <C>
/s/ CHARLES W. FRITZ President, Chief Executive Officer, 7/20/99
- ------------------------ Chairman of the Board and Director
Charles W. Fritz
/s/ WILLIAM E. FRITZ Secretary and Director 7/20/99
- ------------------------
William E. Fritz
/s/ CHARLES T. JENSEN Chief Financial Officer, 7/20/99
- ------------------------ Treasurer and Director
Charles T. Jensen
/s/ ROBERT T. DURST, JR. Director 7/20/99
- ------------------------
Robert T. Durst, Jr.
/s/ A. HAYES BARCLAY Director 7/20/99
- ------------------------
A. Hayes Barclay
/s/ JAMES J. KEIL Director 7/20/99
- ------------------------
James J. Keil
/s/ PAUL REECE Director 7/20/99
- ------------------------
Paul Reece
/s/ JOHN A. LOPIANO Director 7/20/99
- ------------------------
John A. Lopiano
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
NUMBER -----------
- ------
23.1 Consent of KPMG LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
NeoMedia Technologies, Inc:
We consent to the use of our report dated March 12,1999, which appears in the
Annual Report on Form 10-KSB of NeoMedia Technologies, Inc. (the "Company") for
the year ended December 31, 1998, which Annual Report is incorporated by
reference herein.
Our report contains an explanatory paragraph that states that the Company has
suffered recurring losses from operations, has a significant accumulated
deficit, and a working capital deficiency that raise substantial doubt about its
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
/s/ KPMG LLP
July 21, 1999
Miami, Florida
