As filed with the Securities and Exchange Commission on November 6, 2003
SEC Registration No. _________
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DELAWARE NEOMEDIA TECHNOLOGIES, INC. 36-3680347
(State or other jurisdiction of (Name of issuer in its charter) (I.R.S. Employer
incorporation or organization) Identification No.)
2201 SECOND STREET, SUITE 402 7373 CHARLES T. JENSEN
FORT MYERS, FLORIDA 33901 (Primary Standard Industrial 2201 SECOND STREET, SUITE 402
(239) 337-3434 Classification Code Number) FORT MYERS, FLORIDA
33901-3083
(Address and telephone number of (239) 337-3434
Registrant's principal executive offices) TELECOPIER NO.: (239) 337-3668
(Name, address, and telephone number
of agent for service)
With copies to:
Clayton E. Parker, Esq. Ronald S. Haligman, Esq.
Kirkpatrick & Lockhart LLP Kirkpatrick & Lockhart LLP
201 S. Biscayne Blvd., Suite 2000 201 S. Biscayne Blvd., Suite 2000
Miami, FL 33131 Miami, FL 33131
Telephone No.: (305) 539-3305 Telephone No.: (305) 539-3305
Telecopier No.: (305) 358-7095 Telecopier No.: (305) 358-7095
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
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 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,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE PRICE PER OFFERING REGISTRATION
TO BE REGISTERED REGISTERED SHARE (1) PRICE (1) FEE
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Common Stock, par value $0.01 per 308,648,500 $0.121 $37,346,469 $3,021.33
share
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TOTAL 308,648,500 $0.121 $37,346,469 $3,021.33
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(1) In accordance with Rule 457(c), the price represents the average of the
high and low sale prices of the registrant's common stock on October
31, 2003, on the Over-the-Counter Bulletin Board.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
RISK FACTORS
We are subject to various risks which may materially harm our business,
financial condition and results of operations. Before purchasing our shares of
common stock, you should carefully consider the risks described below in
addition to the other information in this prospectus. If any of these risks or
uncertainties actually occur, our business, prospects, financial condition, and
results of operations could be materially and adversely affected. In that case,
the trading price of our common stock could decline and you could lose all or
part of your investment.
RISKS SPECIFIC TO NEOMEDIA
WE HAVE CURRENTLY PENDING LEGAL ACTIONS INVOLVING OUR CRITICAL INTELLECTUAL
PROPERTY
On September 6, 2001, AirClic, Inc. ("AirClic") filed suit against us
in the Court of Common Pleas, Montgomery County, Pennsylvania, seeking, among
other things, the accelerated repayment of a $500,000 loan it advanced to us
pursuant to the terms of a Secured Promissory Note made on July 11, 2003 and a
non-binding Letter of Intent dated July 3, 2001 between AirClic and us. The note
was secured by substantially all of our intellectual property, including the
core physical world-to-Internet technologies. In the suit, we acknowledged our
obligations under the note but filed a counterclaim against AirClic seeking
damages for fraud, negligent misrepresentation and promissory estoppel.
On October 3, 2003, we paid AirClic the principal plus interest in the
approximate amount of $610,000, and transferred an additional amount of money to
our Pennsylvania attorney to pay any costs including attorney fees that we may
be required to pay AirClic for its enforcement of the note. On November 3, 2003,
we reached a settlement agreement with AirClic which will end the suit. The
parties are currently drafting the release document and expect the suit to be
dismissed by the end of the month.
WE HAVE HISTORICALLY LOST MONEY AND LOSSES MAY CONTINUE
We have incurred substantial losses since our inception, and anticipate
incurring substantial losses for the foreseeable future. We incurred a loss of
$1,855,000 in the six months ended June 30, 2003, $7,421,000 in the year ended
December 31, 2002, $25,469,000 in the year ended December 31, 2001, and
$5,409,000 in the year ended December 31, 2000. Our accumulated losses were
approximately $72,620,000 as of June 30, 2003, $70,765,000 as of December 31,
2002, and $63,344,000 as of December 31, 2001. We had a working capital deficit
of approximately $8,872,000 as June 30, 2003, $8,985,000 as of December 31,
2002, and $5,163,000 as of December 31, 2001. We had shareholders' deficit of
$6,006,000, $6,026,000, and $263,000 at June 30, 2003, December 31, 2002 and
December 31, 2001, respectively. We generated revenues of $1,548,000 for the six
months ended June 30, 2003, $9,399,000 for the year ended December 31, 2002,
$8,142,000 for the year ended December 31, 2001, and $27,565,000 for the year
ended December 31, 2000. In addition, cash flows used in operating activities
totaled $939,000 during the six months ended June 30, 2003, $598,000 for the
year ended December 31, 2002, $5,202,000 for the year ended December 31, 2001,
and $6,775,000 for the year ended December 31, 2000. To succeed, we must develop
new client and customer relationships and substantially increase our revenue
derived from improved products and additional value-added services. To the
extent we have available financing, we intend to expend substantial resources to
develop and improve our products, increase our valued-added services and to
market our products and services. These development and marketing expenses must
be incurred well in advance of the recognition of revenue. As a result, we may
not be able to achieve or sustain profitability.
WE WILL NEED TO RAISE ADDITIONAL CAPITAL TO FINANCE OPERATIONS
On October 27, 2003, we entered into a $20 million Standby Equity
Distribution Agreement with Cornell Capital Partners L.P. Under the terms of the
agreement, Cornell Capital Partners has agreed to purchase up to $20 million of
our common stock over the next two years at our discretion. The maximum amount
of purchases in any 7-day period is $280,000, not to exceed $840,000 in any
30-day period. For each share of common stock purchased under the Standby Equity
Distribution Agreement, Cornell Capital Partners will pay 98% of the lowest
closing bid price on the Over-the-Counter Bulletin Board during the five-day
period following the delivery of a notice by NeoMedia. We will pay 5% of the
gross proceeds of each purchase to Cornell Capital Partners as a commission, and
$500 of escrow fees for each advance.
