Yesterday NeoMedia Technologies, Inc. (OTC:NEOM) stock delivered a three-digit gain as the share price started growing after it was announced that NEOM has received a favorable decision from the US Patent Trademark Office (PTO) concerning a patent of the company. It looks, however, questionable if the gains can last. 
NEOM closed the day at $0.055 and recorded thus a 266.67% increase in its share price, which happened on the unseen trading volume of 31.31 million shares. NEOM has now entered the overbought area with RSI above 88, which could attract more traders. Further on, around one third of yesterday’s volume belonged to shorters.
NEOM had just reached the bottom of its downtrend that started in early 2009, thus the jump from yesterday may look at first sight positive. Though, on the other hand the stock has already made comparable jumps in the past and kept going down shortly after that. In February, the share price had reached $0.08 on news that NeoMedia Technologies had issued a convertible debenture for $650,000.
Another two convertible debenture were issued this year only for a total of almost $1.5 million, yet it looks like that could not even cover the operational expenses. NeoMedia Technologies business looks extremely unprofitable and is burning cash at enviable rates. As of end-March 2011, the company’ cash position was $49,000, compared to $80,000 as of end-December 2010. Some further figures from the last 10-Q reveal desperate financial condition and incredible potential dilution for shareholders.
NEON had huge working capital deficit exceeding $70 million on paper and total accumulated deficit of $236 million. No significant improvement in the revenues is noticed, neither in the operating loss which totaled $1.38 million. Also, there is convertible proffered stock and convertible debentures outstanding that could result in a multiplied number of NEON outstanding common shares. The number has already more than doubled just in the first three months of this year and was 65.7 million as of May 9, 2011.
