NeoMedia Technologies Inc. (OTCBB: NEOM.OB)

NeoMedia Technologies Inc. (NEOM) utilizes the mobile phone by leveraging barcodes as a mechanism to link brands, advertisers, carriers, retailers and consumers using the mobile Internet. With the barcode ecosystem technology, NEOM transforms mobile phones with cameras into barcode scanners, which provide instant access to mobile Web content whenever a barcode is scanned.

The Company provides the infrastructure to facilitate mobile barcode scanning and its associated commerce globally. The mobile barcode ecosystem software reads and transmits data from one-dimensional (1D) and two-dimensional (2D) barcodes to its intended destination. The code management and clearinghouse platforms create, connect, record, and transmit the transactions embedded in the barcodes. In order to provide mobile marketing solutions, NEOM also offers barcode scanning hardware that reads barcodes displayed on mobile phone screens. To make this system a reality, NEOM offers the tools and infrastructure for wireless carriers, mobile phone manufacturers and advertisers to make mobile barcode commerce reliable and universal.

The Company’s open standards approach creates a foundation that makes it easy to integrate barcode scanning technology onto mobile phones and the Company’s carrier grade eco-system provides network support, advanced analytics and reporting capabilities for operators and campaign mangers alike.

Founded in 1989, and based in Atlanta, Georgia, NEOM currently has 30 active patents spanning 13 countries, with 29 additional patents pending.

Source: http://www.reuters.com/finance/stocks/incomeStatement?symbol=NEOM.OB, https://trading.scottrade.com/quotesresearch/ScottradeResearch.aspx?symbol=neom , http://neom.com/investorrelations.php

Financial Summary

NEOM utilizes the mobile phone by leveraging barcodes (printed symbols) as a seamless mechanism to link brands, advertisers, carriers, retailers and consumers using the power of the mobile Internet. With the Company’s barcode ecosystem technology, NEOM transforms mobile phones with cameras into barcode scanners, which provide instant access to mobile Web content whenever a barcode is scanned. A barcode makes any medium immediately interactive - the code links consumers to the multimedia capability of the mobile Web. Combining this technology with analytics and reporting capabilities improves the way advertisers market to mobile consumers.

The Company provides the infrastructure to facilitate mobile barcode scanning and its associated commerce worldwide. Its mobile barcode ecosystem software reads and transmits data from 1D and 2D barcodes to its intended destination. The code management and clearinghouse platforms create, connect, record and transmit the transactions embedded in the barcodes, like Web-URLs, text messages (SMS), and telephone calls, ubiquitously and reliably. In order to provide complete mobile marketing solutions, NEOM also offers barcode scanning hardware that reads barcodes displayed on mobile phone screens. The Company provides infrastructure solutions to enable mobile ticketing and couponing programs - including scanner hardware and system support software for seamless implementation. This technology is supported by Company patents. In addition, the Company has an open standards philosophy designed to make integration and use of the technology easy for handset manufacturers, mobile operators and advertisers; and the consumer’s experience safe, reliable and interoperable.

NEOM has historically incurred net losses and losses from operations and it expect that it will continue to have negative cash flows as the Company implements its business plan. There can be no assurance that continuing efforts to execute its business plan will be successful and that the Company will be able to continue as a going concern. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (”US GAAP”), which contemplate NEOM’s continuation as a going concern.

Net loss from continuing operations for the six months ended June 30, 2009, and 2008 was $28.6 million and $5.3 million, respectively. Net cash used for operations during the same periods was $2.7 million and $3.2 million, respectively. NEOM also has an accumulated deficit of $241.2 million and a working capital deficit of $91.3 million as of June 30, 2009, much of which is related to the derivative value of financing instruments including $67.7 million related to the fair value of hybrid and derivative financial instruments, and $11.6 million related to the carrying value of debentures carried at amortized cost. These losses and deficits raise substantial doubt about the Company’s ability to continue as a going concern.

As of August 14, 2009, the Company currently does not have sufficient cash to sustain itself for the next 12 months. It will require additional financing in order to execute its operating plan and continue as a going concern. The management’s plan is to attempt to secure adequate funding to bridge the commercialization of the Company’s barcode ecosystem business. It cannot be predicted whether this additional financing will be in the form of equity, debt, or another form and NEOM may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. The Company believes that it can obtain additional financing, but in the event that these financing sources do not materialize, or that it is unsuccessful in increasing its revenues and profits, NEOM may be unable to implement its current plans for expansion, repay its debt obligations as they become due or continue as a going concern, any of which circumstances would have a material adverse effect on its business, prospects, financial condition and results of operations.

Total revenues decreased $71,000, or 34%, to $136,000 for the three months ended June 30, 2009, from $207,000 for the three months ended June 30, 2008. Total revenues increased $155,000, or 33%, to $626,000 for the six months ended June 30, 2009, from $471,000 for the six months ended June 30, 2008. This increase was the result of increased sales of NEOM’s hardware products. Sales of hardware products decreased to $36,000 from $82,000 for the three months ended June 30, 2009, and 2008, respectively, and increased to $429,000 from $149,000 for the six months ended June 30, 2009, and 2008, respectively, as a result of the introduction of the Company’s newest model barcode scanners as well as the sale of remaining quantities of its older models. During the six months ended June 30, 2009, NEOM recorded $6,000 of sales revenue for its barcode ecosystem products. In succeeding quarters the Company said it expects these revenues and related licensing revenues to increase as they shift the focus to its new business strategy of developing products and services to support the emerging barcode ecosystem that is being defined by bodies such as the OMA, GSMA and CTIA. The Company believes this focus will deliver the most value in the future.

As of June 30, 2009, NEOM had $0.3 million in cash and cash equivalents; a decrease of $1.0 million, or 77%, compared with a total of $1.3 million as of December 31, 2008.

As of June 30, 2009, NEOM had a working capital deficiency of $91.3 million, of which $67.7 million relates to the fair value of hybrid and derivative financial instruments, and $11.6 million relates to the carrying value of debentures carried at amortized cost. These values are significantly greater than the face amount of the Company’s debt that would be otherwise due in cash if the conversion feature of these instruments and the warrants did not exist.

Source: http://www.sec.gov/ , http://neom.com/investorrelations.php

Analyst Consensus

No chart available.

Source: Financial Times.com

No consensus analysis data available.

Source: http://www.reuters.com/finance/stocks/estimates?symbol=NEOM.OB

Investment Highlights

NEOM announced Monday the successful completion of a youth-focused mobile barcode project across Austria. The campaign, delivered in partnership with the Alps and Southeast Europe mobile marketing specialist IQ mobile on behalf of Austrian operator Tele.ring, impressively yielded a click rate of 0.5%, which in turn led to a 51.3% download conversion rate. The campaign launched in May 2009 with a series of attention-grabbing posters and encouraged students at 263 schools where the posters appeared, to send a free SMS to download the NeoReader - which 250 students did in the first five days of the campaign. With NeoReader enabled, they were able to scan the barcode that appeared on the posters in order to connect directly to the campaign site where they could access free mobile content such as ringtones and wallpapers.

Neustar announced earlier this month a groundbreaking agreement with NEOM to have Neustar act as the exclusive patent licensing agent in the United States for NEOM’s intellectual property for two-dimensional (2D) barcodes. The agreement creates a “one stop shop” for consumer brands to simply and affordably use barcodes to deliver exciting new applications, services and compelling content to mobile consumers. The addition of Neustar’s central registry services to NEOM’s patented barcode technology also means that brands now will be able to offer barcode marketing to consumers regardless of which mobile service provider or barcode reading software a consumer’s mobile device uses. The Neustar/NeoMedia collaboration enables brands to offer more targeted and dynamic communication options to mobile consumers, beyond simply taking them to a general Web site.

Recently NEOM, and Mobile Tag Inc. announced a non-exclusive patent licensing agreement for machine readable mobile codes under NEOM’s patent portfolio. This is the first contract to be announced under the Company’s recently launched licensing program. NEOM’s objective is to create an open and interoperable 2D bar-coding ecosystem, which will create lucrative and compelling opportunities for all participants, including brands, advertising agencies and mobile operators. By licensing its technology, NEOM aims to foster innovation and competition to create exciting new applications and services that will appeal to consumers. This activity will unlock the potential of mobile bar-coding to become an integral part of consumers’ daily lives. This licensing deal enables Mobile Tag Inc. to engage consumer brands, advertising agencies, mobile operators and the OEMs that supply them with NEOM’s officially licensed U.S. patents. As a charter licensee, Mobile Tag Inc. recognizes NEOM’s contributions to the industry and efforts to establish real world interoperability in the mobile barcode market. Both companies participated in the Neustar sponsored interoperability pilot program at CTIA in March 2009, and this commercial licensing agreement shifts the marketplace from trial to practical reality.

Source: Scottrade.com, Reuters.com,

Technical Analysis

Source: www.stockcharts.com

Moving Average Price Compare

NEOM is trading above its 50-day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.

Bollinger Bands

NEOM’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, NEOM is trading near its upper Bollinger Band. This suggests that the stock price is high relative to its recent price action.

MACD

The MACD for NEOM currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.

Comparative Analysis

Source: Reuter.com

Insider Trading Activity

Net Share Purchase Activity

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