NeoMedia Technologies, Inc (NEOM)

[ASTOCKCOLLAPSE N0W]

Issue number one..

For every $1.00 in gross sales, the company spends $2.60 in operating costs (not including impairment charges).

Put simply, that means to generate $1.00 in sales the company pays it's staff $2.60. That's not a workable model.

Sales & Marketing and General and Administrative costs were, respectively, about equal to and greater than gross revenues. Research and development accounted for only 18% of operating costs after discounting for "impairment charges". That is not what one might expect from a "high tech" company. In real high tech companies R&D is usually the greatest operating cost, followed by sales and admin.

Taking it a line further, to generate $1.00 in sales the company must spend $4.00 (again, after discounting for impairment charges but including the cost of goods sold). Not a workable model.

Conclusion: The company's Executives, Sales, Marketing and average staff member is greatly underperforming. They are a waste of space and simply feeding from the shareholder trough.

Solution: 66% paycuts across the board if cost reductions cannot be satisfied with attrition and overlap terminations.