U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): March 7, 2003
NEOMEDIA TECHNOLOGIES, INC.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-21743 36-3680347
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(State or Other (Commission File Number) (IRS Employer
Jurisdiction Identification No.)
Incorporation)
2201 SECOND STREET, SUITE 402, FORT MYERS, FLORIDA 33901
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(Address of Principal Executive Offices) (Zip Code)
(239) - 337-3434
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(Registrant's Telephone Number, including Area Code)
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ITEM 5. OTHER EVENTS.
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On March 7, 2003, NeoMedia Technologies, Inc., a Delaware corporation ("the
Company") entered into a Memorandum of Terms to acquire and merge with Loch
Energy, Inc. ("Loch"), an oil and gas provider based in Humble, Texas. Loch
currently owns mineral and lease rights to five properties, totaling
approximately 130 acres, near Houston, Texas. Loch's portion of the proven
reserves on the five properties is estimated at 7,707,247 barrels. Loch's
portion of the probable reserves on the five properties is estimated at an
additional 5,963,748 barrels.
The merger would provide for one share of common stock of the Company to be
exchanged for every four shares of Loch common stock on an adjusted basis, and
additional "earn out" shares to be issued to Loch shareholders based on actual
oil production in the first year after closing. Total shares to be issued to
Loch shareholders will not exceed 50% of NeoMedia outstanding shares.
The merger is subject to negotiations of definitive contracts, corporate filing
requirements, completion of due diligence and any required approval by the
Boards of Directors and shareholders of each company. It is anticipated that
closing would occur approximately 30 days after such conditions are satisfied.
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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.
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(Registrant)
Date: MARCH 17, 2003 By:/s/ CHARLES T. JENSEN
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Charles T. Jensen, President,
Chief Operating Officer,
Acting Chief Executive
Officer and Director
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EXHIBIT INDEX
SEQUENTIAL EXHIBIT
PAGE NUMBER DOCUMENT
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5 03.1 Memorandum of Terms for proposed
transaction between NeoMedia
Technologies, Inc., and Loch Energy, Inc.
11 03.2 Press release dated March 13, 2003
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EXHIBIT 03.1
MEMORANDUM OF TERMS
PROPOSED TRANASACTION BETWEEN
NEOMEDIA TECHNOLOGIES, INC.
AND
LOCH ENERGY
THE TERMS SET FORTH ON THE MEMORANDUM OF TERMS ARE INTERDEPENDENT, AND NO SINGLE
ASPECT OF THE MEMORANDUM OF TERMS SHOULD BE CONSIDERED OR VALUED ON A
STAND-ALONE BASIS.
Loch Energy and NeoMedia intend to complete a transaction to substantially
enhance their respective shareholder values. Loch Energy and NeoMedia seek to:
1. Merge Loch Energy with NeoMedia Technologies in an exchange of
common stock.
2. Centralize administrative and management functions.
3. Enhance shareholder value through the increase of cash flow from
oilfield operations, patent licensing and value added reseller
operations as well as by decreasing expenditures through
centralization.
To effectuate these goals, NeoMedia and Loch Energy would:
ACTION STEPS NEOMEDIA WOULD LOCH ENERGY WOULD
1. EXCHANGE OF SHARES:
Obtain shareholder approvals as required. Obtain the necessary approval from
Additionally, NeoMedia would obtain from Loch shareholders in order to effectuate a merger
Energy shareholders a legal majority of its shares with NeoMedia Technologies. Additionally,
to be exchanged for shares of common stock in convert all outstanding debt, other than
NeoMedia Technologies, Inc. NeoMedia will trade payables, and all shares of preferred
initially exchange twenty-five of its shares for stocks into shares of common stock of Loch
every one hundred shares of Loch Energy with a Energy prior to the merger with NeoMedia
potential maximum exchange rate of one share of Technologies. In accomplishing this, Loch
NeoMedia technologies common stock for each share Energy will, in conjunction with NeoMedia,
of Loch Energy common stock. calculate a ratio of its outstanding shares
of common stock to that of NeoMedia so as to
form a 1:1 ratio of shares between the two
companies ("ratio adjustment"). For example,
if NeoMedia Technologies has 1000 shares of
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ACTION STEPS NEOMEDIA WOULD LOCH ENERGY WOULD
common stock outstanding and Loch Energy has
500 shares of common stock outstanding, the
ratio would be 0.5:1. That is to say that a
1:1 ratio would be two shares of NeoMedia
Technologies common stock for each share of
Loch Energy common stock. The reverse would
also be true. If Loch Energy has 1000 shares
of common stock outstanding and NeoMedia
Technologies has 500 shares of common stock
outstanding, the ratio would be 0.5:1. That
is to say that a 1:1 ratio would be two
shares of Loch Stock for each share of
NeoMedia Technologies.
The initial exchange rate will be one
hundred of Loch Energy shares for each
twenty-five shares of NeoMedia Technologies,
after application of the adjustment ratio.
However, this exchange rate may be increased
to a maximum of one share of Loch Energy for
each share of NeoMedia Technologies common
stock according to the following earn-out
schedule, after application of the
adjustment ratio. The final calculation of
the earn-out will be made 365 days from the
signing of this letter of intent.
EARN-OUT:
365 days following the signing of this LOI
or upon Loch achieving any of the milestones
listed below, whichever occurs sooner after
the closing the shareholders of Loch will
receive shares of NeoMedia Common Stock in
accordance with the following:
a) if the total first year oil
production by Loch Energy (Companies
share of total oil production) or
the Loch Energy subsidiary of
NeoMedia Technologies, is 358,075
barrels or greater, the shareholders
of Loch Energy will receive 1 share
of NeoMedia Technologies common
stock for each share of Loch Energy,
after application of the adjustment
ratio;
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ACTION STEPS NEOMEDIA WOULD LOCH ENERGY WOULD
b) if the total first year oil
production is between 286,460 and
358,074 barrels , the shareholders
of Loch Energy will receive .8
shares of NeoMedia Technologies
common stock for each share of Loch
Energy, after application of the
adjustment ratio;
c) if the total first year oil
production is between 214,845 and
286,459 barrels, the shareholders of
Loch Energy will receive .6 shares
of NeoMedia Technologies common
stock for each share of Loch Energy,
after application of the adjustment
ratio;
d) if the total first year oil
production is between 143,230 and
214,844 barrels , the shareholders
of Loch Energy will receive .4
shares of NeoMedia Technologies
common stock for each share of Loch
Energy, after application of the
adjustment ratio;
e) if the total first year oil
production is below 143,230 barrels
, the shareholders of Loch Energy
will receive .25 shares of NeoMedia
Technologies common stock for each
share of Loch Energy, after
application of the adjustment ratio.
In no event will the shareholders of
Loch Energy receive less than .25
shares of NeoMedia Technologies
common stock for each share of Loch
Energy common stock after
application of the adjustment ratio.
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ACTION STEPS NEOMEDIA WOULD LOCH ENERGY WOULD
2. MANAGEMENT AND ADMINISTRATION:
NeoMedia will consolidate all senior Loch Energy will turn over all
management and administrative functions. management and administrative
The accounting, legal, treasury, and Human responsibilities for the combined
Resources functions will be combined and entity to NeoMedia Technologies.
headquartered at its Ft. Myers, Florida Additionally, the Board of
home office. Directors of NeoMedia Technologies
will remain the Board of Directors
for the combined entity. The oil
Drilling and Exploration
operations will be managed by
Douglas Ashworth and be
headquartered in Humble, Texas.
3. LOCK-UP:
NeoMedia's officers and directors are Mr. Ashworth will report to C. T.
subject to Rule 144 in regards to the sale Jensen.
of their shares.
Loch Energy shareholders will be
subject to Rule 144 in reqards to
the sale of their sale of NeoMedia
common stock.
4. STOCK OPTION PLAN:
The post merger NeoMedia Technologies will Former Loch Energy employees who
require a new stock option plan, which become NeoMedia Technology
will have to be ratified by the Board of employees will be eligible to
Directors and by the shareholders. participate in the new employee
stock option plan.
5. DUE DILIGENCE:
NeoMedia will conduct its due diligence Loch Energy will conduct its due
utilizing both internal and outside diligence utilizing both internal
professionals, as it requires. It will and outside professionals, as it
bear the costs of its own due diligence, requires. It will bear the costs of
which will include, but not be limited to, its own due diligence, which will
legal and accounting costs. include, but not be limited to,
legal and accounting costs.
Additionally, Loch Energy will be
required to complete, prior to the
merger, audited financials for the
last two fiscal years.
6. MANAGEMENT CONTRACTS:
NeoMedia will have in place a management Loch Energy will terminate any open
contract with its CEO of the combined management contracts prior to the
entity. merger.
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ACTION STEPS NEOMEDIA WOULD LOCH ENERGY WOULD
7. ISSUANCE OF SHARES:
NeoMedia will issue additional shares of Loch Energy will issue additional
its stock as required in the normal course shares of its stock as required in
of business. the normal course of business. The
exchange rate for shares of Loch
Energy with NeoMedia Technologies
will be set by the date of
signature of this Memorandum of
Terms based on NeoMedia's
outstanding common stock of
30,746,968 and Lochs outstanding
common stock (estimated at
47,000,000-final numbers to be
provided by Loch). The final ratio
must be the same as the ratio at
the date of signature of the
Memorandum of Terms.
DEFINITIVE The final agreement will set forth the terms and conditions for
AGREEMENT: both NeoMedia and Loch Energy and contain representations and
warranties, covenants and indemnities consistent with
transactions of this type.
APPROVALS: This merger is subject to an affirmative vote from the board of
directors of each company and the satisfactory completion of due
diligence by both companies.
CLOSING: As soon as practicable, but no later than (TO BE MUTUALLY AGREED
UPON), subject to extension by written mutual consent or to
satisfy any regulatory requirements.
Upon completion of due diligence and definitive documentation,
each party will be required to close absent unusual
circumstances, such as the failure of NeoMedia to obtain any
required stockholder approval, failure to deliver required
documentation set forth under the definitive agreements,
shareholder litigation, regulatory requirements and fraudulent
disclosures.
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Dated: 3-7-03 Dated: 3-6-03
/s/ Charles T. Jensen /s/ Douglas Ashworth
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CHARLES T. JENSEN DOUGLAS ASHWORTH
CEO, NEOMEDIA TECHNOLOGIES CEO, LOCH ENERGY
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EXHIBIT 03.1
FOR IMMEDIATE RELEASE
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PRESS CONTACTS: Charles T. Jensen David A. Kaminer
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NeoMedia Technologies, Inc. The Kaminer Group
+(239) 337-3434 +(914) 684-1934
cjensen@neom.com
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dkaminer@kamgrp.com
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NEOMEDIA REACHES AGREEMENT IN PRINCIPAL TO ACQUIRE LOCH ENERGY, INC.,
HOUSTON-BASED COMPANY WITH $410 MILLION IN PROVEN AND PROBABLE OIL RESERVES
FT. MYERS, FL, and HOUSTON, TX, March 13, 2003 -- NeoMedia Technologies, Inc.
(OTCBB: NEOM), said today that it has reached an agreement in principal to
acquire and merge with Loch Energy, Inc., of Houston, an energy company with
$410 million in PROVEN and PROBABLE reserves.
The merger would provide for one share of common stock of NeoMedia to be
exchanged for every four shares of Loch Energy common stock on an adjusted
basis, and additional "earn out" shares to be issued to Loch shareholders based
on actual oil production in the first year after closing. Total shares to be
issued to Loch shareholders will not exceed 50% of NeoMedia outstanding shares.
Loch projects revenue of $800,000 per month in the near term, and forecasts
an increase to $3.0 million per month over the next three years.
The merger is subject to negotiations of definitive contracts, corporate
filing requirements, completion of due diligence and any required approval by
the Boards of Directors and shareholders of each company. It is anticipated that
closing would occur approximately 30 days after such conditions are satisfied.
Fort Myers-based NeoMedia has been an innovator and international leader in
print-to-Internet and other technologies which make information faster and
easier to access, with specific expertise in homeland security and
e-authentication applications. Loch, headquartered in the Houston suburb of
Humble, is a low-cost, environmentally-conscientious and safe producer of oil
and gas properties with PROVEN and PROBABLE reserves estimated to be worth $410
million at the current average oil price of $30 per barrel.
'STRONGER BALANCE SHEETS FOR BOTH COMPANIES'
According to Charles T. Jensen, president, COO and acting CEO of NeoMedia,
the planned merger "should result in overall stronger balance sheets for both
companies.
"The new, merged NeoMedia Technologies will enhance shareholder value
through the increase of cash flow from oilfield operations, and assist NeoMedia
in funding a strong, core patent licensing business" he said. "We also believe
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additional efficiencies should be achieved by centralized administrative and
management functions at NeoMedia's offices in Fort Myers.
"While in the past NeoMedia has been a technology-based firm," said Jensen,
"we saw this acquisition and merger as a unique opportunity which, we believe,
can provide immediate and longer-term benefits to shareholders of both
companies."
MERGER MAKES LOCH PART OF A PUBLICLY-HELD ENTITY
Loch CEO Douglas Ashworth said the acquisition/merger with NeoMedia "allows
our shareholders to be part of a growing, publicly-held entity with a rich
history in high-tech development and innovation, and which now is equally
excited about the marketplace for energy products." Loch recently received what
Ashworth called "a substantial private investment, which will help us develop
existing well bores and continue our plans for expansion (see "Loch Energy,
Inc., to Begin Workovers on 5 Existing Well Bores After Receipt of LOI for $485K
Investment from Gen-Oil LLC," Business Wire, March 7, 2003)."
Ashworth said that Loch currently owns mineral and lease rights to five
properties, totaling approximately 130 acres, near Houston.
"Oil specialists have evaluated and estimated Loch's position on these
reserves to be extremely promising," he said. "Their studies show our PROVEN
reserves to be some 7,707,247 barrels, or $231 million at the current average
oil price of $30 per barrel, and our PROBABLE reserves an additional 5,963,748
barrels, or $179 million at $30 per barrel. Quite clearly, everyone involved
with Loch is very excited," said Ashworth.
Expected GROSS barrels of oil to be produced from Lochs properties are
598,000 in Year 1, 1.4 million in Year 2, and 2.2 million per year thereafter
until reserves are depleted. Loch's position is expected to be 358,000 in Year
1, 853,000 in Year 2, and 1.3 million per year thereafter as reserves hold.
Ashworth said the expected GROSS revenue from the oil on Loch's properties is
$16.5 million in Year 1, $39.2 million in Year 2, and $59.4 million per year
thereafter until reserves are depleted. Loch's position is expected to be worth
$9.8 million in Year 1, $23.5 million in Year 2, and $35.6 million per year
thereafter as reserves hold.
Major shareholders in Loch include Dale Cohrs, Peter Wang, the Macha
Family, Triway Assets, Eagle Consulting, and Glen Loch, the company's founder.
ABOUT NEOMEDIA TECHNOLOGIES
NeoMedia Technologies, Inc. (www.neom.com), is an innovator and international
leader in print-to-Internet and other technologies which make information faster
and easier to access, with expertise in homeland security and e-authentication
applications. NeoMedia markets services which link physical information and
objects to the Internet under the PaperClick(TM) trademark, and its Systems
Integration Group specializes in Open and Storage System solutions and
automating print production operations.
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ABOUT LOCH ENERGY, INC.
Loch Energy, Inc., is a low-cost, environmentally-conscientious and safe
producer of oil and gas properties, and a strong advocate of creating an
environment in which the oil and gas industry, and related businesses, prosper
and grow through responsible development of Texas's natural resources. Loch
takes pride in its reputation for fostering an environment in which its
employees work together as a diverse team, dedicated to continuous improvement,
ensuring the future prosperity of the company and its investors.
THIS PRESS RELEASE CONTAINS 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. WITH THE EXCEPTION OF HISTORICAL INFORMATION CONTAINED
HEREIN, THE MATTERS DISCUSSED IN THIS PRESS RELEASE INVOLVE RISK AND
UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE EXPRESSED IN
ANY FORWARD-LOOKING STATEMENT
PAPERCLICK IS A TRADEMARK OF NEOMEDIA TECHNOLOGIES, INC.
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