Replies to post #98547 on NeoMedia Technologies, Inc (NEOM)

[Steelers_Fan]

Nice Summary, SS.

[bpesta22]

Great summary SS.

Hi all-- new here. I loaded up on neom after it pulled back under .10.

A couple of questions:

1) This quarter's report obviously sucked, but it seems like most here expected it to suck. Given that, how much worse was the actual than the expected? What kind of better-- but still crappy-- numbers were people expecting?

2) Given that most expected it to suck, could part of the suckiness be already factored into the share price? Wasn't this thing .20 or .30 not too long ago?

3) Obviously, we bought this for potential earnings (because we like the technology) in future quarters, versus because of its financials this year. *If* that's the case, then the action tomorrow shouldn't be based on the last quarter's report but on whether the market believes Neom has a viable product and can get it out there before running outta cash.

Is this a fair assessment or not?

Finally,

4) Anyone have an accurate sense of Neom's bookvalue? Yahoo has it around .09, which I think was based on last year's data (or last quarter's -- if anyone can clarify). If the book value still is around .09, could the stock still tank far below that long term (and wouldn't the book value be a rough indicator of what shareholders would get back after all other debts were paid if neom went under?)? Should Neom's book value set some type of floor for how low we may trade near term?

Thanks in advance for any input. I am not at all an expert in financial statement analysis, nor I am trying to pump. With regard to risk/reward, seems like there's high levels of both!

GLTA

[edster1]

SS, nice summary. After the conference call a couple weeks ago, I was expecting revenues to increase over Q2, not stay flat or slightly down. The call never said they had increased, just that they had revenue. I think I read into that a little too much and assumed things would be up a little. Disheartening.

[yellowjacket]

Nice synopsis, SS9173. My read of the last 2 quarters on a "cash basis" only (and excluding MicroPaint) indicates revenues are up slightly from 2Q ($6,205) to 3Q ($6,249) before recent revenue generating announcements/indications involving Mobot, Sponge, Gavitec, 12Snap, qode, and Triton going forward. The cash burn rate appears to be dropping also--approaching $1MM/month now IMO. I'm looking for a PR announcing top off settlement with the subs that does not involve cash. YJ.

[beam11]

ss9173 - Thanks for presenting a summary for those who do not read the statements.

I think NEOM will come out of this slump, and I hope the paint business will be sold soon to generate more operating cash.

I am encouraged to see cost reduction efforts in process. This was the good news I was looking for in this statement.

I have seen many companies bounce back once they start looking for ways to cut cost. It is amazing what a company can do, when forced to make cut backs.

I have stated that NEOM holds the power to push the pps up, and this must begin with cutting cost. I believe we may see more improvement by 12/31/2006. We aleady know more revenue will be generated by one of the subs.

[jonesieatl]

Thank you ss9173 that was very helpful.

Thanks for the work you put in to summarize those facts.

jonesie

[brewskih]

Those cost cutting programs in the 3rd quarter amounted to nothing right? And some here like to tout how the CEO said this or that and he is more believable then any poster on this board.

Well lets break it down a little.

1. Cost of revenue - The gross profit margin got worse not better, so there was apparently not much cost cutting in the up front COST OF REVENUE.

2. Operating costs - actually got worse as well over the 2nd quarter, so again how was there cost cutting programs instituted in the 3rd quarter when the two main financial line items of daily operational expenses got worse.

3. The paint business - that so many here called a great revenue producer and a cash cow, lost big time money for such a small operation. The COST of reven
ue was double the revenue, and therefore a negative gross profit margin. On the financials the paint business is listed as having asset value of 3.4 million and I believe the liabilities was 1.5. million or a net asset value of around 2 million. Any one here still think they are going to get upwards of 20 million in the sale? Some here who supposedly dont know a thing about pricing companies, said the sale waould be under 10 million and were attacked. Well we will see if a company losing money hand over fist can garner 10 times revenue in its sales price, since its revenue appears to be around 1.2 million a year based on the 300,000.00 it took in this quarter.

4. Revenue - revenue was flat quarter over quarter. If you add back in the 300,000.00 paint revenue there was zero growth quarter over quarter, with all these new news articles that came out about the subs etc?

5. NEOMS OWN REVENUE - Neoms revenue when you back out the subs they purchase was somewhere around 300,000.00 as well I believe, or about 1.2 million dollars a year. Pathetic for a company that supposedly has its product in the market and functioning, for 3 years now.

5. LIABILITIES = NEOMs short term liabilities at this time are around 35 million dollars just in releationship to acquiring the subs. With the pps at .10 the price guarantee liability is 32.5 million or something like that, and at the end of december the silent partners are owed another 2.5 million. That dont count operating liabilities either.

6. Cash flow - NEOM had 3.1 million dollars in cash at the end of September, over a month ago. During 3rd quarter they burnt 2.2 million a month in cash for a total of 6.6 million for quarter. If that burn rate hasnt changed much, as I stated weeks ago they are about broke at this time. When you factor in Octobers burn rate if its about the same, that leaves NEOM with less then 1 million cash left, which even with cost cutting wont get them through another month. They arent gonna cut costs in half or less in 1 month I am certain, so the burn rate for November will be well over 1 million in my opinion.

I guess you now know why they decided to sell of the paint business. I know it was spun here that it was something that was intended and a good thing for NEOM. It was also spun by the officers that the sale was so they could focus on their core business. The truth of the matter is NEOM is in such dire financial straights at this time, they had to sell something to provide some kind of funding going forward, and the paint business was the only thing available, and was losing money, contrary to many heres belief.

[jonesieatl]

ss9173 or anyone else ...

Is everyone generally in agreement with these numbers?

=========================================
1) Cash on hand as of Sept 30th was $3.1M.

2) Based on cash currently available, and in the absence of any additional funding, NeoMedia expects to be able to sustain operations through December 31, 2006.

3) In order to maintain operations for a 12-month period, and in the absence of a material increase in revenues, NeoMedia estimates that it would need to raise at least an additional $7-10 million to sustain operations.
=========================================

From the statements in 1) and 2), it would seem Neomedia has gotten its cash burn rate down to around $1MM per month.

Also, from 1) and 3), that makes sense as well, since they say to maintain for a 12 month period they would need to raise an ADDITIONAL $7-10MM, meaning they figure for 12 months they'll need from $7MM + $3.1MM to $$10MM + $3.1MM, or $10.1MM to $13.1MM, for an average per-month burn rate over the 12 months from 9/30/06 to 9/30/07 of $842K to $1.09MM.

Sounds to me like they've managed to, or see clearly how they will, get that cash burn rate down to around $1MM/month, +/-.

Just want to know if everyone thinks that's what they are saying, so I can take the $2MM/mo burn rate out of my revenues/breakeven/EPS/PPS model.

jonesie

p.s. Somebody here kindasorta twisted what Neomedia said in 1), 2) and 3) above when they said "NEOM states on page 67 they expect to have to raise 7- 10 million dollars to carry them through their financial obligations for the next 12 months. Hello at a burn rate of even 1 million a month they need a minimum of 12 million for operating costs alone."

The person who said that intentionally left out the word "ADDITIONAL" in front of the 7-10MM bucks in order to somehow take issue with Neomedia's math.

Wonder why?

[stock_raving_mad]

Thanks SS I put that one in my NEOM Favorites.