NeoMedia Technologies has revealed that it is selling Sponge, the UK mobile agency it bought earlier this year, back to its founders, in order to concentrate its efforts on the development of its qode technology, as it rethinks its mobile strategy.
This agreement with Sponge is another significant step by company management to target corporate resources on the introduction of our patented qode suite of products in European markets and in North America and China says NeoMedia Prresident and CEO, Charles T. Jensen. We decided it is in the best interest of our shareholders to continue to fine-tune our focus, trim our cash burn rate, and reverse substantial dilution.”
Under the terms of the agreement, NeoMedia receives back from Sponge 33,097,135 shares of its own stock and $100,000 (53,000) in cash (net of legal fees), and is due an additional $150,000 by March 7, 2007. NeoMedia also retains a 7.5% interest in Sponge, which develops and implements mobile marketing campaigns and applications, and delivers content for UK and international customers.
All other agreements of NeoMedia relating to the acquisition are terminated, including the purchase price guarantee clause, which called for NeoMedia to make up, in cash, any decrease in the value of shares issued as consideration for the acquisition of Sponge. Based on NeoMedias current share price, this obligation would have been in excess of $10 million.
This, in fact, is at the crux of the deal. The fall in Neomedias share price since the deal was announced, left it with a huge additional commitment, which it appears made the purchase no longer viable. As a result, Sponge has exercised its right to pull out of the deal, meaning that in effect, it has received $6m from Neomedia for a 7.5% stake in the company.
Sponge CEO Alex Meisl told Mobile Marketing:
We recognised that NeoMedia were being pulled in lots of different directions, and felt this was a good opportunity for us to focus on our core business, which is doing exceptionally well. Business is very strong, we have doubled in size this year, and we now have a $6 million war-chest which we can use to grow the business in a number of different ways.”
European Debut for qode with ONE Water Campaign. Read. 
