NeoMedia Technologies, Inc. (PINK:NEOM) Enters Downward Spiral

When reality is not enough, it’s a profitable business to turn it into virtual reality. This is the aim of NeoMedia Technologies, Inc. (PINK:NEOM), a penny stock company providing a 2-dimensional barcode service. Two-dimensional barcodes transform a print advertisement, allowing it to be connected to a smartphone for further consumer experience.

Barcodes are promising for many industries- consumer products, print advertising and general information services, yet it’s an industry of great competition. While NEOM announces it owns 74 awarded and pending patents, the world of 2D barcode technology is a labyrinth of standards and it’s still not clear which technology could take off. Besides, pending patents may not always be considered material news for a company.

In other respects, NEOM is financially healthy for a pink sheet stock, showing the following data: 

• $1.2 million cash

• $7.7 million total assets

• $819,000 net loss

Share dilution is one red flag for this company, as well as competition and the non-exclusive nature of its business. As a positive mark, NeoMedia has an agreement with consumer giant Craft Foods to provide 2D codes for products and advertising. A similar agreement was granted to Microsoft Inc., promising because of the potential for Windows Phone 8 mobile devices to provide entertainment hidden in the 2D codes. Marketing research is encouraging, stating more and more customers use their smartphones for reading barcodes, to discover the novelty hidden behind the jumbled square.

The company is currently not in active promotion and has been falling for the past week, more than 17% down on Monday. With convertible debentures and other methods of stock dilution, the ticker may easily fall on high-volume selling. We suppose the latest climb was due to recent financial data released at the end of last month, as well as some positive news on business development. The NEOM stock was briefly mentioned in an email by Microcap Millionaires, a no-pay message.

This promoter has little previous history of large-scale pumps and for the last time touted a stock in February, sending volume and price up for Herborium Group, Inc. (PINK:HBRM). The botanical products company has good ideas, though dismal finances, a mere $1000 cash. It’s a further example for a risky bid, showing it’s important to learn by yourself about the company before believing an email outright.