DEFR14A 1 v099271_defr14a.htm

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 1
TO
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

Filed by Registrant x
Filed by a Party other than the Registrant o

Check the appropriate box:

o Preliminary Proxy Statement
o Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12

Traffix, Inc.

(Name of Registrant as Specified in its Charter)

(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

x No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
  
(2) Aggregate number of securities to which transaction applies:
  
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is calculated and state how it was determined):
  
(4) Proposed maximum aggregate value of transaction:
  
(5) Total fee paid:
  
o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
  
(2) Form, Schedule or Registration Statement No.:
  
(3) Filing Party:
  
(4) Date Filed:
  
 

 


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Dear Traffix Stockholder:

Our board of directors has approved a strategic merger with New Motion, Inc., a Delaware corporation (“New Motion”), to combine the businesses of Traffix and New Motion. We believe this combination brings together the resources necessary to create a major mobile entertainment network by providing access to a wide range of digital content, exclusive premium billed mobile subscription services and broad online distribution, which will enable the combined company to compete more effectively in the rapidly evolving digital entertainment marketplace.

Under the terms of the merger agreement with New Motion, Traffix and New Motion will combine their businesses through the merger of Traffix with a wholly owned subsidiary of New Motion, as a result of which Traffix will become a wholly owned subsidiary of New Motion and each share of Traffix common stock will be converted into the right to receive shares of New Motion common stock.

In the proposed merger, our stockholders and other security holders will receive in aggregate 11,917,520 shares of New Motion common stock, including shares of New Motion common stock underlying options to purchase New Motion common stock, in exchange for their shares of Traffix common stock and options to purchase shares of Traffix common stock. Based on the currently anticipated capitalization of both companies on the closing date of the merger, our stockholders will receive approximately 0.681 shares of New Motion common stock for each share of Traffix common stock. It is the intention of the parties that the shares of New Motion common stock and other securities issued to Traffix stockholders and option holders in the proposed transaction will represent approximately 45% of the outstanding capital stock of the combined company on a fully diluted basis (calculated using the treasury stock method).

Traffix’s common stock is currently listed on the Nasdaq Global Market under the symbol “TRFX.” New Motion’s common stock is currently quoted on Nasdaq’s Over-the-Counter Bulletin Board under the symbol “NWMO”. As a condition to the obligation of the parties to consummate the merger, the common stock of the combined company must be approved for listing on The Nasdaq Stock Market. New Motion has applied to have its common stock listed on The Nasdaq Global Market. New Motion anticipates that its common stock will be approved for listing on The Nasdaq Global Market and that it will commence trading on The Nasdaq Global Market concurrently with the consummation of the merger, but there is no assurance that such approval will be granted and listing on the Nasdaq Global Market is not a condition to the parties’ obligation to consummate the merger.

After careful consideration, our board of directors has unanimously determined that the merger with New Motion and the related merger agreement is advisable, fair to and in the best interests of our stockholders and has recommended that you vote for this proposal. The financial advisor to the special committee of our board of directors, Stephens Inc., has delivered to the special committee an opinion to the effect that, as of the date of its opinion and based upon and subject to the various considerations and assumptions set forth therein, the merger consideration to be received by holders of Traffix common stock pursuant to the merger agreement was fair from a financial point of view, to those holders.

YOUR VOTE IS VERY IMPORTANT.  The merger cannot be completed unless Traffix stockholders adopt and approve the merger agreement. Traffix is holding a special meeting of stockholders to vote on the proposals necessary to complete the merger. The special meeting of stockholders will be held at 10:00 a.m., local time, on January 31, 2008 at the offices of Traffix, One Blue Hill Plaza, Pearl River, New York 10965. Information about the special meeting of Traffix stockholders, the merger and any other business to be considered by stockholders is contained in the accompanying proxy statement. We urge you to read the accompanying joint proxy statement/prospectus. You should also carefully consider the risk factors beginning on page 17.

Whether or not you plan to attend the Traffix special meeting of stockholders, please submit your proxy as soon as possible to make sure that your shares are represented at the meeting.

TO APPROVE THE MERGER AND ADOPT THE MERGER AGREEMENT, YOU MUST VOTE “FOR” THE PROPOSAL BY FOLLOWING THE INSTRUCTIONS STATED ON THE ENCLOSED PROXY CARD. IF YOU DO NOT VOTE AT ALL, IT WILL, IN EFFECT, COUNT AS A VOTE AGAINST THE PROPOSAL.

The Traffix board of directors recommends that Traffix stockholders vote FOR the proposal to adopt and approve the merger agreement.

Sincerely,

Jeffrey L. Schwartz
Chairman and Chief Executive Officer

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the New Motion securities to be issued in connection with the merger or passed upon the adequacy or accuracy of this joint proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated December 21, 2007, and was first mailed to Traffix stockholders on or about December 29, 2007.


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TRAFFIX, INC.
One Blue Hill Plaza
Pearl River, New York 10965
(845) 620-1212

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON JANUARY 31, 2008

To the Stockholders of Traffix, Inc.:

We will hold a special meeting of stockholders of Traffix, Inc. (“Traffix”) at 10:00 a.m., local time, on January 31, 2008 at our offices located at One Blue Hill Plaza, Pearl River, New York, for the following purposes:

(1) To consider and vote on a proposal to approve and adopt the Agreement and Plan of Merger by and among New Motion, Inc. (“New Motion”), NM Merger Sub, Inc., a wholly owned subsidiary of New Motion (“Merger Co.”), and Traffix, Inc. (“Traffix”), dated as of September 26, 2007, which is referred to as the merger agreement in the enclosed documents.
(2) To consider and vote upon a proposal to grant discretionary authority to management of Traffix to adjourn the special meeting, if necessary, to solicit additional proxies if there appear to be insufficient votes at the time of the special meeting to approve any of the foregoing proposals; and
(3) To transact such other business as may properly come before the special meeting.

We describe these items of business more fully in the joint proxy statement/prospectus attached to this notice. We encourage you to read the entire document carefully.

The board of directors of Traffix fixed December 21, 2007 as the record date for the determination of stockholders entitled to notice of, and to vote at, the special meeting and any adjournment or postponement thereof. Only holders of record of shares of Traffix common stock at the close of business on the record date are entitled to notice of, and to vote at, the special meeting. At the close of business on the record date, Traffix had outstanding and entitled to vote 15,232,431 shares of common stock.

Your vote is important. The affirmative vote of the holders of a majority of the voting power of the shares of Traffix common stock outstanding on the record date for the Traffix special meeting is required for approval of the first proposal regarding adoption of the merger agreement. The affirmative vote of a majority of the votes cast in person or by proxy at the Traffix special meeting is required to approve the second proposal regarding an adjournment of the special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the first proposal. Even if you plan to attend the special meeting in person, we request that you sign and return the enclosed proxy card or vote by telephone or by using the Internet as instructed on the enclosed proxy card, and thus ensure that your shares will be represented at the special meeting if you are unable to attend. If you sign, date and mail your proxy card without indicating how you wish to vote, your proxy will be counted as a vote in favor of the adoption of the merger agreement and an adjournment of the Traffix special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the first proposal. If you fail to return your proxy card or vote by telephone or by using the Internet, the effect will be a vote against the adoption of the merger agreement and your shares will not be counted for purposes of determining whether a quorum is present at the special meeting. You may revoke your proxy in the manner described in the accompanying joint proxy statement/prospectus at any time before it has been voted at the special meeting. If you do attend the Traffix special meeting and wish to vote in person, you may revoke your proxy and vote in person.

Please do not send any stock certificates representing Traffix common stock at this time. If the merger is consummated, you will be sent instructions regarding the surrender of your stock certificates.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the shares of New Motion common stock to be issued in the merger, or determined if this proxy statement/prospectus is accurate or adequate. Any representation to the contrary is unlawful.

BY ORDER OF THE BOARD OF DIRECTORS

Andrew Stollman
Secretary
Pearl River, New York
December 31, 2007


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TABLE OF CONTENTS

 
Table of Contents     i  
Questions and Answers About the Special Meetings     v  
Summary     1  
The Merger     1  
The Special Meetings     6  
Summary Selected Financial Information     7  
New Motion Selected Consolidated Financial Data     7  
Traffix Selected Consolidated Financial Data     9  
Summary Selected Unaudited Pro Forma Combined Condensed Financial Data     11  
Unaudited Comparative Historical and Pro Forma Per Share Data     12  
Comparative Per Share Market Price and Dividend Information     14  
Stock Prices     14  
Dividends     15  
Cautionary Statement Regarding Forward-Looking Statements     16  
Risk Factors     17  
Risks Relating to the Merger     17  
Risks Relating to New Motion     21  
Risk Factors Relating to Traffix     28  
The Special Meetings     32  
General     32  
Matters to Be Considered     33  
Recommendation of the Boards of Directors     33  
Record Date and Vote Required     34  
Voting of Proxies     35  
The Merger     39  
General Description of the Merger and Conversion of Traffix Common Stock     39  
Background of the Transaction     39  
Reasons for the Merger — New Motion and Traffix     47  
Reasons for the Merger Specific to New Motion     48  
Reasons for the Merger Specific to Traffix     49  
Recommendation of the New Motion Board of Directors     49  
Recommendation of the Traffix Board of Directors     51  
Opinion of New Motion’s Financial Advisor     53  
Opinion of Financial Advisor to the Traffix Special Committee     60  
Interests of New Motion’s and Traffix’s Officers and Directors in the Merger     67  
Accounting Treatment     68  
Material United States Federal Income Tax Consequences of the Merger     68  

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Completion and Effectiveness of the Merger     70  
Board of Directors and Executive Management of New Motion After the Merger     70  
Regulatory Approvals     71  
Approval of the Merger     71  
Appraisal Rights     71  
Restrictions on Resale of New Motion Common Stock By Affiliates     71  
Anti-Dilution Adjustments     71  
Exchange of Certificates     72  
Fees and Expenses     72  
Delisting and Deregistration of Traffix Common Stock After the Merger     73  
The Merger Agreement     74  
The Merger     74  
Effective Time     74  
Consideration to Be Received in the Merger     74  
Representations and Warranties     75  
Conduct of Business Pending Merger     76  
Commercially Reasonable Best Efforts; Other Agreements     77  
Conditions to Completion of the Merger     78  
No Solicitation     79  
Termination     81  
Effect of Termination     81  
Termination Fees and Expenses     81  
Expenses     82  
Governance Matters     82  
Employee Matters     83  
Indemnification and Insurance     83  
Amendment; Extension and Waiver     84  
Governing Law     84  
Related Agreements     84  
Voting Agreements     84  
Traffix Officers’ Employment Agreements     85  
Unaudited Pro Forma Condensed Combined Financial Data     86  
Basis of Pro Forma Presentation     90  
New Motion’s Management Discussion and Analysis of Financial Condition and Results of Operations     95  
Overview     95  
Key Business Factors     97  
Application of Critical Accounting Policies and Estimates     98  
Results of Operations     102  
Liquidity and Capital Resources     106  

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Traffix’s Management Discussion and Analysis of Financial Condition and Results of Operations     110  
Results of Operations     110  
Overview     110  
Basis of Presentation, Principles of Consolidation and Significant Accounting Policies     110  
Estimates     110  
Proposed Merger with New Motion     116  
Background     120  
Online Advertising and Media Services     120  
Online Advertising — Website Advertising     120  
Search Engine Marketing     122  
Transactions with Major Customers     122  
Segment Information     122  
Results of Operations     123  
Net Revenue     123  
Liquidity and Capital Resources     141  
The Companies     144  
New Motion, Inc.     144  
Overview     144  
Our Products and Services     144  
Background     145  
Exchange Transaction and Capitalization     146  
The Wireless Entertainment Market     147  
Wireless Entertainment Publisher Challenges     149  
New Motion’s Competitive Strengths     149  
New Motion’s Strategy     150  
Distribution Channels     151  
Sales and Marketing     152  
Technology     152  
Competition     152  
Intellectual Property     152  
Government Regulation     152  
Employees     153  
Description of Property     153  
Legal Proceedings     153  
Traffix, Inc.     154  
Overview     154  
Competition     158  
Seasonality and Cyclicality     158  
Management     164  

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Board Composition and Committees     164  
Executive Officers and Directors     164  
Compensation Committee Interlocks and Insider Participation     166  
Executive Compensation     166  
Narrative Disclosure to Summary Compensation Table     167  
Outstanding Equity Awards at Fiscal Year-End     167  
Employment Agreements of Named Executive Officers of the Combined Company     168  
Related Party Transactions     170  
Promoters and Control Persons     172  
Security Ownership of Certain Beneficial Owners and Management     173  
New Motion     173  
Traffix     175  
Description of New Motion Capital Stock     177  
Authorized Capital Stock of New Motion     177  
Common Stock     177  
Warrants and Purchase Rights     178  
Anti-Takeover Provisions     178  
Transfer Agent and Registrar     179  
Listing     179  
Description of Traffix Capital Stock     180  
General     180  
Common Stock     180  
Preferred Stock     180  
Transfer Agent     180  
Comparison of Certain Rights of Stockholders of New Motion and Stockholders of Traffix     181  
Summary of Material Differences Between the Current Rights of Traffix Stockholders and Rights Those Stockholders Will Have As New Motion Stockholders Following the Merger     181  
Legal Matters     191  
Experts     191  
Future Stockholder Proposals     191  
Where You Can Find More Information     192  

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QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETINGS

The following questions and answers briefly address some commonly asked questions about the New Motion and the Traffix special meetings. They may not include all the information that is important to stockholders of New Motion and Traffix. We urge stockholders to read carefully this entire Joint Proxy Statement/Prospectus, including the annexes and the other documents referred to herein.

Q: Why am I receiving these materials?

A: We are sending you these materials to help you decide how to vote your shares of New Motion or Traffix stock with respect to their proposed merger.

The merger cannot be completed unless Traffix stockholders adopt the merger agreement, and New Motion stockholders approve the issuance of New Motion’s common stock in the merger. Each of New Motion and Traffix is holding its special meeting of stockholders to vote on the proposals necessary to complete the merger. Information about these meetings, the merger and the other business to be considered by stockholders is contained in this Joint Proxy Statement/Prospectus.

We are delivering this document to you as both a joint proxy statement of Traffix and New Motion and a prospectus of New Motion. It is a joint proxy statement because each of our boards of directors is soliciting proxies from its stockholders. It is a prospectus because New Motion will issue shares of its common stock in exchange for shares of Traffix in the merger.

Q: What will stockholders receive in the merger?

A: In the proposed merger, Traffix stockholders will receive approximately 0.681 shares of New Motion common stock for each share of Traffix common stock, based on the currently anticipated capitalization of both companies as of the closing date of the merger. This exchange ratio will not be adjusted to reflect stock price changes prior to the closing. However, the exchange ratio is subject to adjustment if additional shares or other securities of Traffix or New Motion are issued before the closing of the transaction.

New Motion’s stockholders will continue to own their existing shares, which will not be affected by the merger.

Q: What will option holders receive in the merger?

A: In the merger, all outstanding Traffix employee stock options and other stock-based awards will be converted into options and stock-based awards of New Motion, and those options and awards will entitle the holder to receive New Motion common stock. The number of shares issuable under those options and awards, and, if applicable, the exercise prices for those options and awards, will be adjusted based on the exchange ratio, which currently is approximately 0.681 assuming no change in the capitalization of Traffix or New Motion.

New Motion stock options and other equity-based awards, including restricted stock units, will remain outstanding and will not be affected by the merger.

Q: How will the merger affect the distribution of the combined company’s capital stock among stockholders and other security holders?

A: It is the intention of the parties that the shares of New Motion common stock, together with shares of New Motion common stock underlying options to purchase New Motion common stock, to be issued to stockholders and other security holders of Traffix will represent approximately 45% of the total outstanding capital stock of the combined company on a fully diluted basis, calculated using the treasury stock method. In general, the treasury stock method assumes exercise of “in-the-money” options and warrants with an intrinsic value (created by a positive difference between the market value of the underlying securities and the exercise price of the options or warrants), and further assumes that proceeds the company receives from an “in-the-money” exercise of options and warrants are used to repurchase shares of common stock in the market. The treasury stock method of calculation is used when computing diluted earnings per share in accordance with accounting principles generally accepted in the United States of America (GAAP).

Q: When do Traffix and New Motion expect to complete the merger?

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A: Traffix and New Motion expect to complete the merger after all conditions to the merger in the merger agreement are satisfied or waived, including after stockholder approvals are received at the special meetings of Traffix and New Motion. New Motion and Traffix currently expect to complete the merger in the first quarter of 2008. However, it is possible that factors outside of either company’s control could require New Motion or Traffix to complete the merger at a later time or not to complete it at all.

Q: How do the boards of directors of New Motion and Traffix recommend that I vote?

A: The New Motion board of directors recommends that holders of New Motion common stock vote FOR the proposal to approve the issuance of New Motion’s common stock in the merger.

The Traffix board of directors recommends that Traffix stockholders vote FOR the proposal to adopt the merger agreement.

Q: What do I need to do now?

A: After carefully reading and considering the information contained in this Joint Proxy Statement/Prospectus, please vote your shares as soon as possible so that your shares will be represented at your respective company’s special meeting. Please follow the instructions set forth on the proxy card or on the voting instruction form provided by the record holder if your shares are held in the name of your broker or other nominee.

Q: Are there any risks I should consider in deciding whether to vote for the proposals described in this joint prospectus/proxy statement?

A: We have listed in the section entitled “Risk Factors” the risks, among others, that you should consider in deciding whether to vote for the proposals described in this joint proxy statement/prospectus.

Q: How do I vote?

A: You may vote before your company’s special meeting in one of the following ways:

use the toll-free number shown on your proxy card (this applies to Traffix Stockholders only);
visit the website shown on your proxy card to vote via the Internet; (this applies to Traffix Stockholders only) or
complete, sign, date and return the enclosed proxy card in the enclosed postage-paid envelope.

You may also cast your vote in person at your company’s special meeting.

If your shares are held in “street name”, through a broker, bank or other nominee, that institution will send you separate instructions describing the procedure for voting your shares. “Street name” stockholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares.

Q: When and where are the New Motion and Traffix special meetings of stockholders?

A: The special meeting of New Motion’s stockholders will be held at the Hyatt Hotel located at 17900 Jamboree Road, Irvine, California 92614 at 10:00 a.m., local time, on January 31, 2008. Subject to space availability, all stockholders as of the record date, or their duly appointed proxies, may attend the meeting. Since seating is limited, admission to the meeting will be on a first-come, first-served basis. Registration and seating will begin at 9:30 a.m., local time.

The special meeting of Traffix stockholders will be held at the executive offices of Traffix located at One Blue Hill Plaza, Pearl River, New York 10965 at 10:00 a.m., local time, on January 31, 2008. Subject to space availability, all stockholders as of the record date, or their duly appointed proxies, may attend the meeting. Since seating is limited, admission to the meeting will be on a first-come, first-served basis. Registration and seating will begin at 9:30 a.m., local time.

Q: What does it mean if I receive more than one proxy card or more than one email instructing me to vote?

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A: If you receive more than one proxy card or more than one email instructing you to vote, your shares are registered in more than one name or are registered in different accounts. Please complete, date, sign and return each proxy card, and respond to each email, to ensure that all of your shares are voted.

Q: What does it mean if multiple members of my household are stockholders of New Motion or stockholders of Traffix but we only received one set of proxy materials?

A: If you hold shares in “street name,” in accordance with a notice sent to certain brokers, banks or other nominees, we are sending only one joint proxy statement/prospectus to an address unless we received contrary instructions from any stockholder at that address. This practice, known as “householding,” is designed to reduce our printing and postage costs.

Q: If my shares are held in “street name” by a broker or other nominee, will my broker or nominee vote my shares for me?

A: Your broker or other nominee does not have authority to vote on the proposals described in this Joint Proxy Statement/Prospectus. Your broker or other nominee will vote your shares held by it in “street name” with respect to these matters ONLY if you provide instructions to it on how to vote. You should follow the directions your broker or other nominee provides.

Q: What constitutes a quorum?

A: Stockholders who hold a majority in voting power of the New Motion common stock issued and outstanding as of the close of business on the record date and who are entitled to vote must be present or represented by proxy in order to constitute a quorum to conduct business at the New Motion special meeting.

Stockholders who hold a majority in voting power of the Traffix common stock issued and outstanding as of the close of business on the record date and who are entitled to vote must be present or represented by proxy in order to constitute a quorum to conduct business at the Traffix special meeting.

Q: What vote is required to approve each proposal?

A: To issue New Motion’s common stock:  the affirmative vote of the holders of a majority of New Motion’s shares voting on the proposal is required to approve the issuance of New Motion’s common stock in the merger, which is referred to in this Joint Proxy Statement/Prospectus as the Share Issuance Proposal.

To approve the merger agreement:  the affirmative vote of a majority of the outstanding shares of Traffix common stock entitled to vote is required to approve the merger agreement, which is referred to in this Joint Proxy Statement/Prospectus as the Merger Proposal.

Q: Are any stockholders already committed to vote in favor of the merger?

A: Yes. Pursuant to a voting agreement with New Motion, Traffix’s Chairman, Jeffrey L. Schwartz, and its President, Andrew Stollman, have agreed to vote all of their shares of Traffix common stock held on the record date at the special meeting in favor of the merger proposal. These shares represented approximately 14.5% of the outstanding shares of Traffix common stock as of the record date.

Pursuant to a voting agreement with Traffix, certain stockholders of New Motion, including certain directors and executive officers of New Motion, have agreed to vote all of their shares of New Motion common stock held on the record date at the special meeting in favor of the merger proposal. These shares represented approximately 29.5% of the outstanding shares of New Motion common stock as of the record date. For a more complete description of the voting agreements, see “The Voting Agreement” beginning on page 84 of this joint proxy statement/prospectus. The forms of voting agreement are also attached to this joint proxy statement/prospectus as Annex D.

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Q: Other than the stockholder votes, what is required to consummate the merger?

A: In addition to the receipt of New Motion stockholder approval and Traffix stockholder approval, each of the other closing conditions set forth in the merger agreement must be satisfied or waived. For a more complete description of the closing conditions under the merger agreement, we urge you to read both the section entitled “The Merger Agreement – Conditions to the Completion of the Merger” on page 78 of this joint proxy statement/prospectus and the agreement and plan of merger attached as Annex A.

Q: What if I do not vote on the matters relating to the merger?

A: If you are a New Motion stockholder and you fail to vote or fail to instruct your broker or other nominee how to vote on the Share Issuance Proposal, it will have no effect on the outcome of the vote for this proposal. Similarly, if you respond with an “abstain” vote, your proxy will have no effect on the outcome of the vote for this proposal. If you respond but do not indicate how you want to vote on the Share Issuance Proposal, your proxy will be counted as a vote in favor of the Share Issuance Proposal.

If you are a Traffix stockholder and you fail to vote or fail to instruct your broker or other nominee how to vote on the Merger Proposal, it will have the same effect as a vote against the Merger Proposal. If you respond with an “abstain” vote on the Merger Proposal, your proxy will have the same effect as a vote against the Merger Proposal. If you respond but do not indicate how you want to vote on the Merger Proposal, your proxy will be counted as a vote in favor of the Merger Proposal.

Q: What if I hold shares in both Traffix and New Motion?

A. If you are a stockholder of both Traffix and New Motion, you will receive two separate packages of proxy materials. A vote as a Traffix stockholder for the Merger Proposal will not constitute a vote as a New Motion stockholder for the Share Issuance Proposal, or vice versa. Therefore, please sign, date and return all proxy cards that you receive, whether from Traffix or New Motion, or vote as both a Traffix and New Motion stockholder by internet, telephone and/or in person as the individual meetings would allow.

Q: May I revoke or change my vote after I have delivered my proxy or voting instruction card?

A: Yes. You may revoke or change your vote at any time before your proxy is voted at your special meeting. You may do this in one of four ways:

by sending a notice of revocation to the corporate secretary of New Motion or Traffix, as applicable;
by sending a completed proxy card bearing a later date than your original proxy card;
by logging onto the Internet website specified on your proxy card in the same manner you would to submit your proxy electronically or by calling the telephone number specified on your proxy card, in each case if you are eligible to do so and following the instructions on the proxy card; or
by attending your special meeting and voting in person. Your attendance alone will not revoke any proxy.

If you choose any of the first three methods, you must take the described action no later than the beginning of the applicable special meeting.

If your shares are held in an account at a broker or other nominee, you should contact your broker or other nominee to revoke or change your vote within a reasonable time prior to your special meeting.

Q: What are the material U.S. federal income tax consequences of the merger?

A: New Motion and Traffix expect the merger to qualify as a tax free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, which we refer to as the Code, for U.S. federal income tax purposes. Assuming the merger qualifies for such treatment, a holder of Traffix common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of the holder’s shares of Traffix common stock for shares of New Motion common stock pursuant to the merger.

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Q: New Motion’s common stock is currently quoted on the Over-The-Counter Bulletin Board (“OTCBB”). Will New Motion’s common stock continue to trade on the OTCBB following the Merger?

A: No. New Motion has applied to have its common stock listed on The Nasdaq Global Market. New Motion anticipates that its common stock will be approved for listing on The Nasdaq Global Market and that it will commence trading on The Nasdaq Global Market concurrently with the consummation of the Merger.

Q: Do I have appraisal rights?

A: Assuming New Motion’s common stock is approved for listing on the Nasdaq Stock Market, holders of Traffix common stock or New Motion common stock will not be entitled to exercise any appraisal rights in connection with the merger.

Q: Should I send in my stock certificates now?

A: No. Please do not send your stock certificates with your proxy card.

If you are a holder of Traffix common stock, you will receive written instructions from the exchange agent after the merger is completed on how to exchange your stock certificates for New Motion common stock. New Motion stockholders will not be required to exchange their stock certificates in connection with the merger. New Motion stockholders holding stock certificates should keep their stock certificates both now and after the merger is completed.

Q: Who should I contact if I have any questions about the proxy materials or voting power?

A: Regardless of whether you are a stockholder of New Motion or Traffix, if you have any questions regarding information contained in this document or if you need assistance in submitting your proxy or voting your shares or need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you may call our proxy solicitor, Morrow & Co., LLC toll-free at (877) 807-8895.

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SUMMARY

This summary highlights selected information contained in this joint proxy statement/prospectus, referred to as this “Proxy Statement”, and does not contain all the information that may be important to you. New Motion and Traffix urge you to read carefully this Proxy Statement in its entirety, as well as the Annexes. Unless stated otherwise, all references in this Proxy Statement to New Motion are to New Motion, Inc., all references to Traffix are to Traffix, Inc. and all references to the merger agreement are to the Agreement and Plan of Merger, dated as of September 26, 2007, by and among New Motion, NM Merger Sub, Inc. and Traffix, a copy of which is attached as Annex A to this Proxy Statement.

The Merger

Each of the boards of directors of Traffix and New Motion has approved a strategic merger, combining resources to create a vertically integrated mobile entertainment network that can provide access to a wide range of digital content, exclusive premium billed mobile subscription services and broad online distribution, which we believe will enable the combined company to compete more effectively in the rapidly evolving digital entertainment marketplace. New Motion and Traffix have entered into an agreement and plan of merger pursuant to which New Motion and Traffix will combine their businesses through the merger of Traffix with a newly formed, wholly owned subsidiary of New Motion, as a result of which Traffix will become a wholly owned subsidiary of New Motion. In the proposed merger, Traffix stockholders will receive approximately 0.681 shares of New Motion common stock for each share of Traffix common stock, based on the currently anticipated capitalization of both companies as of the closing date of the merger. This exchange ratio will not be adjusted to reflect stock price changes prior to the closing. However, the exchange ratio is subject to adjustment if additional shares or other securities of Traffix or New Motion are issued before the closing of the transaction. New Motion’s stockholders will continue to own their existing shares, which will not be affected by the merger, except for the reduction in such stockholders total percentage ownership of New Motion’s issued and outstanding shares resulting from the issuance of the shares of New Motion to Traffix stockholders in connection with the merger.

The Companies (see page 144)

New Motion, Inc.
42 Corporate Park
Irvine, California 92606
(949) 777-3700

New Motion is a digital entertainment company headquartered in Irvine, California. New Motion provides a wide range of digital entertainment products and services, using the power of the Internet, the latest in mobile technology, and traditional marketing/advertising methodologies.

New Motion’s strategy is to efficiently acquire large numbers of new customers and simultaneously engage and retain this subscriber base with an attractive portfolio of high quality, innovative mobile entertainment and Internet media services focused on three strategic service lines – digital music, casual games and interactive contests. Each service line represents unique growth opportunities for New Motion’s existing domestic business, through acquisition of both product and distribution assets, and through future international business development opportunities. New Motion’s growing portfolio of applications and services are based primarily on internally generated content, such as MobileSidewalk’s Music Trivia, Gator Arcade and Bid4Prizes. Internally generated content is responsible for the majority of our revenues. We also license some identifiable content, such as ringtones, wallpapers and images from third parties to whom we generally pay a licensing fee on a per-download basis.

Traffix, Inc.
One Blue Hill Plaza
Pearl River, New York 10965
(845) 620-1212

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Traffix is a leading interactive media and marketing company that provides complete end-to-end marketing solutions for its clients who seek to increase sales and customer contact deploying the numerous facets of online marketing Traffix offers. Traffix’s clients include advertisers, direct marketers, agencies and wireless service providers. Traffix’s online marketing offers include search engine marketing, search engine optimization, email marketing, affiliate marketing, lead generation, creative support, and development and hosting solutions. Traffix owns and operates customized websites, hosted and third-party web pages, and email marketing platforms to facilitate consumer interaction with, and transactions for, its clients. Traffix generates and records revenue primarily on a performance-based model, whereby revenue is recognized upon the successful delivery of a qualifying lead, customer, survey, completed application, ultimate sale or the delivery of some other measurable marketing benefit as defined in the underlying marketing agreement.

In addition to generating customers, sales and leads for its advertising clients, Traffix also uses this media platform for the promotion of its own services which include subscriptions to its online personals websites and its mobile services, under which Traffix bills consumers directly.

The Merger Agreement (see page 74)

The merger agreement contemplates that Traffix merge with NM Merger Sub, Inc., a wholly owned subsidiary of New Motion formed for the purpose of the merger (the “Merger Co.”), with Traffix surviving the merger. As a result, Traffix will become a wholly owned subsidiary of New Motion.

Attached to this joint proxy statement/prospectus as Annex A is a copy of the merger agreement, which is the legal document that governs the merger. We encourage you to read the merger agreement. We have also filed other related agreements as exhibits to New Motion’s registration statement on Form S-4 containing this joint proxy statement/prospectus.

What You Will Receive in the Merger (see page 74)

The stock to be issued to Traffix stockholders by New Motion is referred to as the merger consideration. New Motion will issue approximately 11.9 million shares of New Motion common stock which will result in Traffix stockholders receiving approximately 0.681 shares of New Motion common stock for each share of Traffix common stock they own, based on the currently anticipated capitalization of both companies as of the closing date of the merger.

Each outstanding option to purchase Traffix common stock will be assumed by New Motion and will be converted at the effective time of the merger into an option to acquire New Motion common stock. Each option so assumed will thereafter represent an option to purchase a number of shares of New Motion common stock equal to the number of shares of Traffix common stock subject to the option immediately prior to the merger (whether or not vested) multiplied by the exchange ratio. The exercise price per share for each assumed Traffix option will be equal to the exercise price per share of the original Traffix option divided by the exchange ratio.

Ownership of Securities After the Merger

Traffix stockholders and its option holders will own approximately 45% of the capital stock of New Motion immediately after consummation of the merger, on a fully diluted basis (calculated using the treasury stock method).

Board of Directors and Executive Management of New Motion After the Merger (see page 70)

The New Motion board of directors after the merger will initially consist of seven directors. Burton Katz, New Motion’s Chief Executive Officer, or CEO, and a member of the New Motion board of directors, will remain CEO of the combined company and a member of the board of directors. The board of directors will also include Robert Ellin and Jerome Chazen, who will each qualify as independent directors, and Raymond Musci, New Motion’s President. The remaining directors will consist of Andrew Stollman, Traffix’s President who will become President of the combined company, and Robert Machinist and Lawrence Burstein, who are both independent directors of Traffix and will qualify as independent directors of the combined company following the merger.

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Risks Relating to the Merger (see page 17)

See “Risk Factors” for a discussion of certain risks that should be considered by Traffix stockholders in evaluating whether to approve the merger and the merger agreement and thereby become holders of New Motion common stock. New Motion stockholders should also see the “Risk Factors” section for a discussion of certain risks that they should consider in evaluating whether to approve the issuance of shares of New Motion common stock in connection with the merger.

Recommendation of the New Motion Board of Directors (see page 49)

After careful consideration, the New Motion board of directors recommends that New Motion stockholders vote “FOR” the Share Issuance Proposal.

Recommendation of the Traffix Board of Directors (see page 51)

After careful consideration, the Traffix board of directors has unanimously approved the merger agreement, the merger and the transactions contemplated in the merger agreement and recommends that Traffix stockholders vote “FOR” approval of the merger agreement, the merger and the transactions contemplated by the merger agreement.

Opinion of Financial Advisor to New Motion (see page 53)

On September 25, 2007, Jefferies Broadview, a division of Jefferies & Company, Inc., rendered its written opinion to the New Motion board of directors that, as of such date and based upon and subject to the factors and assumptions set forth in such written opinion, the consideration to be paid to Traffix stockholders by New Motion in the merger was fair to New Motion from a financial point of view. The full text of the Jefferies Broadview opinion to the New Motion board of directors dated as of September 25, 2007 is attached to this joint proxy statement/prospectus as Annex C and incorporated herein by reference and should be read in its entirety in connection with this joint proxy statement/prospectus.

Opinion of Financial Advisor to Traffix (see page 60)

On September 26, 2007, Stephens Inc. (“Stephens”) rendered its written opinion to the special committee of the Traffix board of directors that, as of such date and based upon and subject to the factors and assumptions set forth in such written opinion, the consideration to be received by Traffix’s stockholders in the merger was fair to Traffix’s stockholders from a financial point of view. The full text of Stephens’ opinion to the Traffix board of directors dated as of September 26, 2007 is attached to this joint proxy statement/prospectus as Annex B and incorporated herein by reference and should be read in its entirety in connection with this joint proxy statement/prospectus.

Interests of New Motion and Traffix Officers and Directors in the Merger (see page 67)

When considering the merger agreement and the merger, Traffix’s board of directors was aware that certain of the officers and directors of Traffix may have interests and arrangements that are different from your interests as stockholders. These include rights under common stock options and severance arrangements. In particular, as a condition to the consummation of the merger, Mr. Schwartz will receive a cash payment of $1.5 million in connection with the termination of his employment agreement with Traffix and will enter into a two-year consulting agreement with New Motion under the terms of his severance package. Additionally, in connection with the merger, Mr. Stollman’s current employment agreement with Traffix will be terminated and he will enter into a new employment agreement with New Motion providing for a term of no less than two years, under which he will serve as President of New Motion and receive aggregate total compensation and perquisites substantially similar to that which will be paid to New Motion’s Chief Executive Officer, Burton Katz following the merger. New Motion intends to enter into a new employment agreement with Mr. Katz concurrent with the close of the merger which increases Mr. Katz’s total compensation. Traffix officers and directors also have customary rights to indemnification against certain liabilities.

Accounting Treatment (see page 68)

The merger will be accounted for as an acquisition of Traffix by New Motion under the purchase method of accounting of U.S. generally accepted accounting principles. Under the purchase method of accounting, the assets and liabilities of the acquired company are, as of completion of the merger, recorded at their respective

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fair values and added to those of the reporting public issuer, including an amount for goodwill representing the difference between the purchase price and the fair value of the identifiable assets. Applicable income tax effects arising from these fair value adjustments on the assets of the acquired company will be included as a component of the combined company’s deferred tax asset or liability.

No Appraisal Rights (see page 71)

The holders of New Motion common stock do not have appraisal rights in connection with the merger. Assuming New Motion’s common stock is approved for listing on the Nasdaq Stock Market, under Section 262 of the General Corporation Law of the State of Delaware, the holders of Traffix common stock do not have appraisal rights in connection with the merger.

Material United States Federal Income Tax Consequences of the Merger (see page 68)

New Motion and Traffix intend for the merger to qualify as a reorganization within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes. Accordingly, a holder of Traffix common stock generally will not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of the holder’s shares of Traffix common stock for shares of New Motion common stock pursuant to the merger. It is a condition to each of New Motion’s and Traffix’s respective obligations to complete the merger that it receives a separate legal opinion, at the effective time of the merger, that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes.

The tax consequences of the merger to you may depend on your own situation. In addition, you may be subject to state, local or foreign tax laws that are not addressed in this joint proxy statement/prospectus. You are urged to consult with your own tax advisor for a full understanding of the tax consequences of the merger to you.

Conditions to the Completion of the Merger (see page 78)

The completion of the merger depends on the satisfaction of a number of conditions, including, but not limited to, the following:

approval of the merger agreement by the stockholders of Traffix;
approval by the New Motion stockholders of the issuance of shares of New Motion common stock in connection with the merger;
New Motion’s shares are authorized for listing on The Nasdaq Stock Market; and
the filing with and declaration of effectiveness by the Securities and Exchange Commission of the registration statement on Form S-4, of which this proxy statement is a part, to register the shares New Motion will issue in the merger.

Other than as listed above, New Motion and Traffix do not believe that any federal or state regulatory requirements must be complied with or approvals obtained in connection with the merger.

No Solicitation of Other Offers (see page 79)

In the merger agreement, each of Traffix and New Motion has agreed that it will not directly or indirectly:

solicit, initiate, encourage or knowingly facilitate any acquisition proposal;
participate in any discussions or negotiations regarding, or furnish to any person any confidential information in connection with, or knowingly facilitate any effort or attempt to make or implement, an acquisition proposal; or
approve or recommend, or enter into, any letter of intent, merger agreement, option agreement or other similar agreement related to any acquisition proposal or propose or agree to do any of the foregoing.

The merger agreement does not, however, prohibit either party from considering a bona fide acquisition proposal from a third party if certain specified conditions are met.

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Termination (see page 81)

Generally, the merger agreement may be terminated and the merger may be abandoned at any time before the completion of the merger (including after stockholder approval):

by mutual written consent of New Motion and Traffix; or
by either party, if:
any governmental entity issues an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the merger, and such order, decree, ruling or other action has become final and non-appealable;
the merger is not consummated on or before February 28, 2008;
the other party breached any of the agreements or representations in the merger agreement, in a way that the related condition to closing would not be satisfied, and this breach is either incurable or not cured within 45 days;
the required approval by the stockholders of New Motion or Traffix has not been obtained at the respective stockholders meeting or any adjournment or postponement thereof; or
the board of directors of the other party changes its recommendation that its stockholders vote in favor of the merger.

In certain circumstances involving a termination after a change in the recommendation of the board of directors of New Motion or Traffix to their stockholders, either of New Motion or Traffix may be required to pay a termination fee to the other of up to $4 million. The termination fee could discourage other companies from seeking to acquire or merge with either New Motion or Traffix.

Fees and Expenses (see page 81)

Whether or not the transactions contemplated by the merger agreement are consummated, each party will bear its respective expenses incurred with respect to the merger agreement, the merger and the transactions contemplated thereby.

Effects of the Merger on the Rights of Traffix Stockholders (see page 181)

As a stockholder of Traffix, Traffix’s certificate of incorporation, as currently in effect, and Traffix’s amended bylaws, as currently in effect, govern your rights. After completion of the merger, you will become a stockholder of New Motion. As a New Motion stockholder, New Motion’s certificate of incorporation, as amended, and New Motion’s amended and restated bylaws will govern your rights. New Motion and Traffix are incorporated in Delaware. Please refer to “Comparison of Certain Rights of Common Stockholders of New Motion and Stockholders of Traffix,” beginning on page 181 for more information.

Registration of Offer and Sale of New Motion Common Stock (see page 78)

New Motion intends to seek a declaration of effectiveness of the registration statement on Form S-4 of which this proxy statement is a part, to register the offer and sale of the shares that New Motion will issue in the merger.

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The Special Meetings

The New Motion Special Meeting (see page 32)

The special meeting of the New Motion stockholders will be held on January 31, 2008 at 10:00 a.m., local time, at the Hyatt Hotel, 17900 Jamboree Road, Irvine, California, 92614. At the special meeting, New Motion stockholders will be asked:

to approve the issuance of shares of New Motion common stock in the merger contemplated by the merger agreement; and
to act on other matters that may be properly submitted to a vote at the New Motion special meeting.

The Traffix Special Meeting (see page 32)

The special meeting of the Traffix stockholders will be held on January 31, 2008, at 10:00 a.m., local time, at Traffix offices at One Blue Hill Plaza, Pearl River, New York 10965. At the special meeting, Traffix stockholders will be asked:

to adopt and approve the merger agreement and the transactions contemplated by the merger agreement; and
to act on other matters that may be properly submitted to a vote at the Traffix special meeting.

Record Date; Stockholders Entitled to Vote (see page 34)

You can vote at the Traffix special meeting if you owned Traffix shares at the close of business on December 21, 2007, the record date for Traffix stockholders. On the record date, there were 15,232,431 shares of Traffix common stock outstanding and entitled to vote at the special meeting. Traffix stockholders will have one vote at the special meeting for each share of Traffix common stock that they owned on the record date.

You can vote at the New Motion special meeting if you owned New Motion shares at the close of business on December 21, 2007, the record date for New Motion stockholders. On the record date, there were 12,096,284 shares of New Motion common stock outstanding and entitled to vote at the special meeting. New Motion stockholders will have one vote at the special meeting for each share of New Motion common stock that they owned on the record date

Vote Required (see page 34)

The affirmative vote of the holders of a majority of the voting power of the shares of Traffix common stock outstanding on the record date for the Traffix special meeting is required to approve the proposal to adopt the merger agreement. The affirmative vote of the holders of a majority of the votes cast in person or by proxy at the Traffix special meeting is required to approve the proposal to adjourn the Traffix special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposal to adopt the merger agreement. Certain directors and executive officers have executed voting agreements in which they have agreed to vote in favor of both of these proposals as described in “Voting Agreements” below.

The affirmative vote of the holders of a majority of the votes cast in person or by proxy at the New Motion special meeting is required for approval of each of the proposals to approve the issuance of shares of New Motion common stock in the merger and to adjourn the New Motion special meeting, if necessary, to solicit additional proxies if there are not sufficient votes in favor of the proposal to approval the issuance of shares in the merger. Certain stockholders of New Motion, including certain directors and executive officers, have executed voting agreements in which they have agreed to vote in favor of both of these proposals as described in “Voting Agreements” below.

Voting by New Motion and Traffix Directors and Executive Officers (see page 35)

On December 21, 2007, the record date set by the New Motion board of directors, directors and executive officers of New Motion and their affiliates owned and were entitled to vote 3,563,640 shares of New Motion common stock, or approximately 29.5% of the total voting power of the shares of New Motion common stock outstanding on that date. On December 21, 2007, the record date set by the Traffix board of directors, directors and executive officers of Traffix and their affiliates owned and were entitled to vote 2,292,267 shares of Traffix common stock, or approximately 15.1% of the shares of Traffix common stock outstanding on that date.

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SUMMARY SELECTED FINANCIAL INFORMATION

New Motion Selected Consolidated Financial Data

The following selected financial data of New Motion as of and for each of the fiscal years since inception, in the period ended December 31, 2006, have been derived from New Motion’s audited historical financial statements. New Motion was formed in March 2005 and subsequently acquired the business of RingtoneChannel Pty Limited (“RingtoneChannel”), an Australian aggregator of ringtones in June 2005. RingtoneChannel was originally incorporated on February 23, 2004. The following selected financial data of New Motion as of and for the nine months ended September 30, 2006 and 2007 have been derived from New Motion’s unaudited historical financial statements. The data below are only a summary and should be read in conjunction with New Motion’s financial statements and accompanying notes, as well as management’s discussion and analysis of financial condition and results of operations, all of which are included in this joint proxy statement/prospectus beginning on page 95.

         
  Year Ended
December 31,
  Nine Months Ended
September 30,
     2004(1)   2005   2006   2006   2007
     (In Thousands, Except Per Share Data)   (Unaudited)
          (In Thousands, Except
Per Share Data)
Statement of Operations Data:
                                            
Net sales   $ 65     $ 5,867     $ 18,721     $ 12,543     $ 23,031  
Cost of sales     43       267       597       341       3,626  
Gross profit     22       5,600       18,124       12,202       19,405  
Expenses:
 
Selling and marketing           3,618       11,971       6,899       15,325  
General and administrative     19       1,289       4,679       3,034       8,429  
       19       4,907       16,650       9,993       23,754  
Income (loss) from operations     3       693       1,474       2,269       (4,349 ) 
Other expense (income)           36       89       228       (321 ) 
Income (loss) before provision (benefit) for income taxes     3       657       1,385       2,041       (4,028 ) 
Provision (benefit) for
income taxes
    1       270       708       967       (1,111 ) 
Income (loss) before
minority interest
    2       387       677       1,074       (2,917 ) 
Minority interest                             291  
Net income (loss)   $ 2     $ 387     $ 677     $ 1,074     $ (3,208 ) 
Net income (loss) per share:
                                            
Basic   $     $ 0.05     $ 0.09     $ 0.15     $ (0.29 ) 
Diluted   $     $ 0.05     $ 0.09     $ 0.13     $ (0.29 ) 

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  December 31,   September 30,
     2004(1)   2005   2006   2006   2007
     (In thousands)   (Unaudited)
          (In thousands)
Balance Sheet Data:
                                            
Cash and cash equivalents   $ 3     $ 350     $ 544     $ 284     $ 12,991  
Working capital     2       263       694       1,367       15,084  
Total assets     27       1,896       5,494       4,337       24,790  
Total liabilities     25       1,497       4,271       2,751       7,462  
Stockholders' equity     2       399       1,223       1,586       17,328  

Note: On February 6, 2004, we filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code with the United States Bankruptcy Court for the District of Connecticut (the “Bankruptcy Court”). In December 2005, New Motion paid a one-time dividend of $0.46 (on a pre Reverse Split basis) per eligible share of common stock as directed by the Bankruptcy Court. Aside from the aforementioned dividend, no cash dividends were declared or paid by New Motion in any of the periods presented.

(1) Derived from the financial statements of RingtoneChannel Pty Limited, an Australian developer and aggregator of ringtones (“RingtoneChannel”). RingtoneChannel, was incorporated on February 23, 2004 and was acquired by BroadSpring, Inc., a Delaware corporation (“Broadspring”), in June 2004 as a wholly-owned subsidiary to explore mobile opportunities in the United States market. In March 2005, Broadspring stockholders formed New Motion, a Delaware corporation with common ownership with Broadspring, with the intent of exploring mobile opportunities in the USA and the eventual possibility of transferring the mobile business out of Broadspring. Beginning June 2005, RingtoneChannel continued operations as a legal subsidiary of New Motion. This transition was deemed a continuation of an existing business controlled by common ownership and the historical operating results of RingtoneChannel from its inception in February 2004 to the date of the recapitalization (as described in New Motion’s financial statement footnotes) are therefore included in the financial statements of New Motion. All expenditures by BroadSpring on behalf of RingtoneChannel during the period in which it was a subsidiary of BroadSpring were recorded in the historical operating results of RingtoneChannel and thus were included in the financial statements of the combined New Motion-Ringtone Channel entity. The assets and liabilities of RingtoneChannel were recorded at their historical cost basis at that time of the recapitalization and not marked to fair value by either BroadSpring or New Motion.

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Traffix Selected Consolidated Financial Data

The following selected financial data of Traffix as of and for each of the five fiscal years in the period ended November 30, 2006, have been derived from Traffix’s audited historical financial statements. The following selected financial data of Traffix as of and for the nine months ended August 31, 2006 and 2007 have been derived from Traffix’s unaudited historical financial statements. The data below is only a summary and should be read in conjunction with Traffix’s financial statements and accompanying notes, as well as management’s discussion and analysis of financial condition and results of operations, all of which are included in this joint proxy statement/prospectus beginning on page 110.

             
  Year Ended November 30,   Nine Months Ended August 31,
     2002(2)(3)   2003(2)(3)   2004(1)(2)   2005(1)(2)   2006(1)(2)   2006   2007
     (In Thousands, Except Share and Per Share Data)   (Unaudited)
(In Thousands, Except Share
and Per Share Data)
Statement of Operations Data:
                                                              
Net sales   $ 44,043     $ 32,389     $ 37,281     $ 62,857     $ 72,844     $ 55,686     $ 63,569  
Cost of sales     12,244       13,081       22,053       41,052       47,985       35,407       44,268  
Gross profit     31,799       19,308       15,228       21,805       24,859       20,279       19,301  
Expenses:
                                                              
Selling, general and
administrative expenses
    26,724       20,142       15,156       19,928       21,249       16,666       15,653  
Bad debt expense
(recapture)(2)
    648       576       407       (403 )      539       174       (90 ) 
       27,372       20,718       15,563       19,525       21,788       16,840       15,563  
Income (loss) from
operations
    4,427       (1,411 )      (334 )      2,280       3,071       3,439       3,738  
Interest expense     (101 )                                     
Other income, net     202       1,684       1,753       1,191       468       311       864  
Income before provision (benefit) for income taxes     4,528       273       1,419       3,471       3,539       3,750       4,602  
Provision (benefit) for income taxes     1,787       (148 )      405       1,043       1,636       1,848       2,311  
Net income   $ 2,741     $ 421     $ 1,014     $ 2,428     $ 1,903     $ 1,902     $ 2,291  
Net earnings per share:
                                                              
Basic   $ 0.21     $ 0.03     $ 0.08     $ 0.17     $ 0.13     $ 0.13     $ 0.15  
Diluted   $ 0.19     $ 0.03     $ 0.07     $ 0.17     $ 0.13     $ 0.13     $ 0.15  
Weighted average shares outstanding:
                                                              
Basic     13,350,794       12,776,295       13,257,869       13,973,899       14,332,598       14,286,215       14,798,507  
Diluted     14,247,450       13,085,297       13,928,375       14,344,584       14,514,323       14,483,124       15,057,786  
Cash dividends per common share   $     $ 0.16     $ 0.32     $ 0.32     $ 0.32     $ 0.24     $ 0.24  

           
  November 31,   August 31,
2007
     2002   2003   2004   2005   2006
     (In Thousands, Except Per Share Data)   (Unaudited)
(In Thousands)
Balance Sheet Data:
                                                     
Working capital   $ 39,344     $ 38,247     $ 34,558     $ 30,721     $ 31,707     $ 30,959  
Total assets   $ 51,191     $ 50,013     $ 51,959     $ 56,263     $ 52,726     $ 55,860  
Total liabilities   $ 7,405     $ 6,674     $ 8,436     $ 11,421     $ 9,084     $ 9,422  
Stockholders’ equity   $ 43,786     $ 43,339     $ 43,522     $ 44,476     $ 43,328     $ 46,439  

(1) On January 21, 2005, Traffix acquired the assets of Hot Rocket Marketing, Inc. and Clockwork Advertising, Inc. (collectively “Hot Rocket”), privately-held corporations in the business of buying and selling performance-based online advertising space for third parties. Hot Rocket’s net revenues for the nine-month periods ending August 31, 2006 and 2007, were $8.9 and $8.6 million, respectively, and net

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revenues for the year ended November 30, 2006 and for the period from January 22, 2005 to November 20, 2005 were approximately $10.9 million and $7 million, respectively, with all revenue being after intercompany eliminations.
(2) On June 30, 2004, Traffix acquired the assets of SendTraffic, Inc., a privately held search engine marketing company (“SendTraffic”). SendTraffic’s net revenues for the nine-month periods ending August 31, 2006 and 2007, were $12.3 and $21.4 million, respectively, and net revenues for the years ended November 30, 2006 and 2005, and for the five months ended November 30, 2004, were approximately $17.9 million, $9.6 million and $2.1 million, respectively, with all revenue being calculated after intercompany eliminations.
(3) Effective September 1, 2001, Traffix financial statements included Montvale Management, LLC, as a consolidated majority owned subsidiary, which subsidiary was disposed of in Fiscal 2003.

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SUMMARY SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA

The following selected unaudited pro forma combined condensed financial data should be read in conjunction with New Motion’s unaudited pro forma combined condensed financial statements and related notes thereto included in this joint proxy statement/prospectus. You should also refer to Traffix’s financial statements and notes thereto included in this joint proxy statement/prospectus, and to New Motion’s financial statements and notes thereto included in this joint proxy statement/prospectus.

The selected unaudited pro forma combined condensed statement of operations data give effect to New Motion’s planned acquisition of Traffix as if the merger had occurred on January 1, 2006. The selected unaudited pro forma combined condensed balance sheet data give effect to New Motion’s planned acquisition of Traffix as if the merger had occurred as of September 30, 2007.

You should read carefully the unaudited pro forma consolidated financial data included herein and the accompanying notes. New Motion and Traffix have different fiscal year end dates. However, as the difference is less than 93 days, Traffix results for the year ended November 30, 2006 have been used to prepare the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2006, as permitted under Rule 11-02 of Regulation S-X. In addition, Traffix's results for the nine months ended August 31, 2007 and balance sheet as of August 31, 2007, have been used to prepare the unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2007, and the unaudited pro forma condensed combined balance sheet, as of September 30, 2007.

   
Statement of Operations Data   Year Ended
December 31,
2006
  Nine Months
Ended September 30,
2007
     (In Thousands, Except
Share and Per Share Data)
Net sales   $ 91,565     $ 78,685  
Income (loss) from operations   $ 2,081     $ (2,362 ) 
Net income (loss)   $ 1,102     $ (1,969 ) 
Net income (loss) per common and common equivalent share:
                 
Basic   $ 0.06     $ (0.09 ) 
Diluted   $ 0.06     $ (0.09 ) 
Weighted average number of common shares outstanding:
                 
Basic     19,181,208       23,025,637  
Diluted     19,181,208       23,025,637  

 
Balance Sheet Data   As of
September 30, 2007
     (In Thousands)
Working Capital   $ 40,778  
Total Assets   $ 215,948  
Long-term Debt   $ 44  
Stockholders’ Equity   $ 186,259  

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UNAUDITED COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

The following table summarizes unaudited per share information for New Motion and Traffix on a historical basis, a pro forma combined basis for New Motion and an equivalent pro forma combined basis for Traffix. It has been assumed for purposes of the unaudited pro forma financial information provided below that the merger was completed on January 1, 2006. The following information should be read in conjunction with (i) the historical audited financial statements of New Motion as of and for the year ended December 31, 2006 included in the New Motion Annual Report on Form 10-KSB, (ii) the unaudited historical financial statements as of and for the nine months ended September 30, 2007 included in the New Motion Quarterly Report on Form 10-QSB, (iii) the audited historical financial statements of Traffix as of and for the year ended November 30, 2006 included in the Traffix Annual Report on Form 10-K, (iv) the unaudited historical financial statements as of and for the nine months ended August 31, 2007, included in the Traffix Quarterly Report on Form 10-Q, and (v) the unaudited pro forma condensed combined financial information beginning on page 86.

The pro forma information below is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that would have occurred if the merger had been completed as of the beginning of the period presented, nor is it necessarily indicative of the future operating results or financial position of the combined company. The historical book value per share is computed by dividing total stockholders’ equity by the number of shares of common stock outstanding at the end of the period. The pro forma income (loss) from continuing operations per share of common stock of the combined company is computed by dividing the pro forma income (loss) from continuing operations available to holders of shares of the combined company’s common stock by the pro forma weighted average number of shares outstanding over the period. The pro forma combined book value per share is computed by dividing total pro forma stockholders’ equity by the pro forma number of shares of common stock outstanding at the end of the period.

   
  As of/for the
Year Ended
December 31, 2006
  As of/for the
Nine Months Ended
September 30,
2007
     (Unaudited)   (Unaudited)
New Motion Historical:
                 
Basic income per share   $ 0.09     $ (0.29 ) 
Diluted income per share   $ 0.09     $ (0.29 ) 
Dividends declared per share   $     $  
Book value per share   $ 0.17     $ 1.43  
Unaudited Pro Forma Combined(a):
           
Basic income (loss) per share continuing operations   $ 0.06     $ (0.09 ) 
Diluted income (loss) per share from continuing operations   $ 0.06     $ (0.09 ) 
Dividends declared per share(b)   $     $  
Book value per share     N/A     $ 7.76  

   
  As of/for the
Year Ended
November 30, 2006
  As of/for the
Nine Months Ended
August 31,
2007
     (Unaudited)   (Unaudited)
Traffix Historical:
                 
Income from continuing operations per common share-basic   $ 0.13     $ 0.15  
Income from continuing operations per common share-diluted   $ 0.13     $ 0.15  
Dividends declared per share   $ 0.32     $ 0.24  
Book Value per share   $ 3.02     $ 3.07  
Unaudited Traffix Pro Forma Equivalent(c):
                 
Income from continuing operations per common share-basic   $ 0.04     $ (0.06 ) 
Income from continuing operations per common share-diluted   $ 0.04     $ (0.06 ) 
Dividends declared per share   $     $  
Book Value per share     N/A     $ 5.28  

(a) Traffix results for the year ended November 30, 2006 have been used to prepare the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2006, as permitted under

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Rule 11-02 of Regulation S-X. In addition, Traffix's results for the nine months ended August 31, 2007 and balance sheet as of August 31, 2007, have been used to prepare the unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2007, and the unaudited pro forma condensed combined balance sheet, as of September 30, 2007.
(b) New Motion is not currently paying dividends on its common stock and does not anticipate paying cash dividends on its common stock in the foreseeable future.
(c) Traffix equivalent per share data amounts are calculated by multiplying pro forma per share amounts by the currently anticipated exchange ratio of approximately 0.681.

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COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

Stock Prices

The tables below set forth, for the calendar quarters indicated, the high and low sales prices per share of New Motion common stock which trades on the Over-The-Counter Bulletin Board (OTCBB) under the symbol “NWMO” and Traffix common stock, which trades on the NASDAQ Global Market under the symbol “TRFX” and the respective average daily volume per quarter of each security. The common stock market price quotations for New Motion reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions, and have been adjusted to reflect a 1-for-300 reverse stock split of its common stock which took effect on May 2, 2007. The common stock market price quotations for Traffix reflect the closing prices for Traffix common stock as reported on the Nasdaq Global Market. On December 19, 2007, the latest practicable date before the date of this joint proxy statement/prospectus, the last sales price per share of New Motion common stock was $12.00 on the OTCBB and the last sales price per share of Traffix common stock was $6.04 on the NASDAQ Global Market.

             
New Motion
  High   Low   Average
Volume
  Traffix   High   Low   Average
Volume
*First Quarter ended
March 31, 2007
  $ 114.11     $ 15.02       59       First Quarter ended
February 28, 2007
    $ 6.12     $ 5.24       35,441  
Second Quarter ended June 30, 2007   $ 39.04     $ 4.00       3,718       Second Quarter ended
May 31, 2007
    $ 6.01     $ 5.13       27,659  
Third Quarter ended
September 30, 2007
  $ 18.00     $ 13.00       1,060       Third Quarter ended
August 31, 2007
    $ 6.49     $ 4.84       44,108  

             
Year Ended
December 31, 2006
       Year Ended
November 30, 2006
    
*First Quarter   $ 75.00     $ 12.00       **       First Quarter     $ 5.92     $ 5.01       41,170  
*Second Quarter   $ 15.00     $ 12.00       **       Second Quarter     $ 6.35     $ 5.20       35,873  
*Third Quarter   $ 30.00     $ 15.00       **       Third Quarter     $ 5.91     $ 5.09       23,380  
*Fourth Quarter   $ 120.12     $ 12.01       **       Fourth Quarter     $ 5.46     $ 5.09       27,683  

             
Year Ended
December 31, 2005
       Year Ended
November 30, 2005
    
*First Quarter   $ 66.00     $ 54.00       **       First Quarter     $ 7.00     $ 5.59       57,148  
*Second Quarter   $ 90.00     $ 54.00       **       Second Quarter     $ 5.73     $ 4.35       48,109  
*Third Quarter   $ 105.00     $ 90.00       **       Third Quarter     $ 6.47     $ 4.58       48,198  
*Fourth Quarter   $ 165.00     $ 6.00       **       Fourth Quarter     $ 6.20     $ 5.07       40,227  

* On February 12, 2007, pursuant to the closing of an Exchange Transaction, New Motion (then called MPLC, Inc) acquired all of the outstanding voting securities of New Motion Mobile, Inc. (then called New Motion), which became MPLC’s wholly owned subsidiary. The high and low prices presented for 2006 and 2005 reflect MPLC’s historical operations, and not the operations of New Motion. Therefore, care should be taken in the interpretation of the data presented.
** Data not available.

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The table below shows as of September 26, 2007, the last trading day before New Motion and Traffix announced the merger, and December 19, 2007, the last trading day before the filing date of this joint proxy statement/prospectus the market price quotations for New Motion and Traffix. The table also includes the market value of Traffix common stock on an equivalent price per share basis, as determined by reference to the value of merger consideration to be received in respect of each share of Traffix common stock in the merger. These equivalent prices per share reflect the fluctuating value of the New Motion common stock that Traffix stockholders would receive in exchange for each share of Traffix common stock if the merger was completed on either of these dates, applying the exchange ratio of 0.681 shares of New Motion common stock for each share of Traffix common stock.

     
  New Motion Common Stock   Traffix
Common Stock
  Equivalent Value of
Traffix
Common
Stock
September 26, 2007   $ 15.50     $ 4.76     $ 10.56  
December 19, 2007   $ 12.00     $ 6.04     $ 8.17  

The above table shows only historical comparisons. These comparisons may not provide meaningful information to Traffix stockholders in determining whether to approve and adopt the merger agreement. Traffix stockholders are urged to obtain current market quotations for New Motion and Traffix common stock and to review carefully the other information contained in this joint proxy statement/prospectus, including historical financial information for both companies as contained within Annexes to this joint proxy statement/prospectus when considering whether to approve and adopt the merger agreement. See “Where You Can Find More Information” beginning on page 192 of this proxy statement/prospectus. Because an active trading market for New Motion’s common stock currently does not exist, the quoted price of New Motion’s common stock may not be a reliable indicator of its fair market value, or the equivalent value of the shares of Traffix common stock to be exchanged for New Motion stock.

Dividends

In December 2005, New Motion paid a one-time dividend of $0.46 (on a pre Reverse Split basis) per eligible share of common stock as directed by the Court. Aside from the aforementioned dividend, New Motion has not paid any other cash dividends on its common stock and it does not anticipate paying any dividends on its common stock for the foreseeable future. New Motion intends to retain its future earnings to re-invest in its ongoing business. The declaration of cash dividends in the future will be determined by New Motion’s board of directors based upon its earnings, financial condition, capital requirements and other relevant factors.

Traffix has paid a dividend of $0.08 per share of its common stock in each of the last eighteen fiscal quarters. The declaration of each such dividend was approved by Traffix’s board of directors upon the conclusion of each quarter. If the merger with New Motion is consummated, the board of directors of New Motion will determine its dividend policy, but it is expected that New Motion will not declare any dividends in the foreseeable future.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

We make forward-looking statements in this joint proxy statement/prospectus. These forward-looking statements relate to outlooks or expectations for earnings, revenues, expenses, asset quality or other future financial or business performance, strategies or expectations, or the impact of legal, regulatory or supervisory matters on business, results of operations or financial condition. Specifically, forward looking statements may include:

statements relating to the benefits of the merger, including anticipated synergies and cost savings estimated to result from the merger;
statements relating to future business prospects, number of subscribers, revenue, income and financial condition; and
statements preceded by, followed by or that include the words “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target” or similar expressions.

These statements reflect management judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. With respect to these forward-looking statements, each of New Motion and Traffix management has made assumptions regarding, among other things, customer growth and retention, pricing, operating costs and the economic environment.

Future performance cannot be ensured. Actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include:

the risk that the proposed transaction may not be completed in a timely manner if at all;
the failure of the stockholders to approve the transaction;
the risk that the businesses will not be integrated successfully or their integration may take longer, be more difficult or more costly to accomplish than expected;
expected synergies and cost savings from the merger may not be fully realized within the expected time frames or at all;
revenues following the merger may be lower than expected;
the effect of operating costs and business disruptions following the merger, including relationships with third parties, general business and economic conditions, geopolitical events and regulatory changes;
the performance of financial markets and interest rates and other changes in general economics and market conditions; and
other risks referenced from time to time in filings with the SEC and those factors listed in this joint proxy statement/prospectus under “Risk Factors” beginning on page 17.

You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this joint proxy statement/prospectus. Except as required by law, neither New Motion nor Traffix undertake any obligation to publicly update or release any revisions to these forward-looking statements to reflect any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in reports filed with the SEC by New Motion and Traffix.

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RISK FACTORS

In addition to the other information included in this joint proxy statement/prospectus, including the matters addressed in “Cautionary Statement Concerning Forward-Looking Statements” beginning on page 16 of this joint proxy statement/prospectus, you should carefully consider the following risks before deciding whether to vote for approval and adoption of the merger agreement or the share issuance proposal. In addition, you should read and consider the risks associated with each of the businesses of New Motion and Traffix because these risks will also affect the combined company.

Risks Relating to the Merger

Because the market price of New Motion’s common stock will fluctuate, Traffix stockholders cannot be sure of the market value of the New Motion common stock that they will receive.

When we complete the merger, we currently expect that shares of Traffix common stock will be converted into the right to receive approximately 0.681 shares of New Motion common stock. The exchange ratio and the number of shares that New Motion will issue or assume in the merger will not be adjusted for changes in the market price of either New Motion common stock or Traffix common stock, and the merger agreement does not provide for any price-based termination right. Accordingly, the market value of the shares of New Motion common stock that New Motion grants and Traffix stockholders will be entitled to receive when we complete the merger will depend on the market value of shares of New Motion common stock at the time that we complete the merger and could vary significantly from the market value on the date of this joint proxy statement/prospec tus or the date of the Traffix special meeting. The market value of the shares of New Motion common stock will continue to fluctuate after the completion of the merger. For example, since the start of the third calendar quarter of 2007, the market price of New Motion common stock ranged from a low of $12.00 to a high of $18.00, all as reported on the Over-The-Counter Bulletin Board. See “Comparable Per Share Market Price and Dividend Information” on page 14.

These variations could result from changes in the business, operations or prospects of Traffix or New Motion prior to or following the merger, regulatory considerations, general market and economic conditions and other factors both within and beyond the control of New Motion or Traffix.

The issuance of shares of New Motion common stock to Traffix stockholders in the merger will substantially reduce the percentage interests of New Motion stockholders.

If the merger is completed, New Motion will issue up to approximately 11.9 million shares of New Motion common stock in the merger. Based on the number of shares of New Motion and Traffix common stock outstanding on the New Motion and Traffix record dates, Traffix stockholders before the merger will own, in the aggregate, approximately 45% of the fully diluted shares of common stock immediately after the merger. The issuance of shares of New Motion common stock to Traffix stockholders in the merger and to holders of assumed options to acquire shares of Traffix common stock will cause a significant reduction in the relative percentage interest of current New Motion stockholders in earnings, voting, liquidation value and book and market value.

Uncertainty about the merger and diversion of management could harm Traffix, New Motion or the combined company, whether or not the merger is completed.

In response to the announcement of the merger, existing customers and suppliers of Traffix or New Motion may delay or defer their purchasing or other decisions concerning Traffix or New Motion, or they may seek to change their existing business relationship. In addition, as a result of the merger, current and prospective employees could experience uncertainty about their future with Traffix or New Motion or the combined company. These uncertainties may impair each company’s ability to retain, recruit or motivate key personnel. Completion of the merger will also require a significant amount of time and attention from management. The diversion of management attention away from ongoing operations could adversely affect ongoing operations and business relationships.

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Failure to complete the merger could adversely affect New Motion and Traffix stock prices and their future business and financial results.

Completion of the merger is conditioned upon the approval of New Motion and Traffix’s stockholders. There is no assurance that we will receive the necessary approvals or satisfy the other conditions to the completion of the merger. Failure to complete the proposed merger would prevent New Motion and Traffix from realizing the anticipated benefits of the merger. Each company will also remain liable for significant transaction costs at any time, including legal, accounting and financial advisory fees. In addition, the market price of each company’s common stock may reflect various market assumptions as to whether the merger will occur. Consequently, the completion of, or failure to complete, the merger could result in a significant change in the market price of New Motion’s and Traffix’s common stock.

Any delay in completion of the merger may significantly reduce the benefits expected to be obtained from the merger.

In addition to stockholder approval, the merger is subject to a number of other conditions beyond the control of Traffix and New Motion that may prevent, delay or otherwise materially adversely affect its completion. See “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 78. Traffix and New Motion cannot predict whether and when these other conditions will be satisfied. Further, the requirements for obtaining the required approvals could delay the completion of the merger for a significant period of time or prevent it from occurring. Any delay in completing the merger may significantly reduce the synergies and other benefits that New Motion and Traffix expect to achieve if they successfully complete the merger within the expected timeframe and integrate their respective businesses.

Unlike Traffix’s historical practice of making quarterly dividend payments, New Motion is not expected to declare or pay dividends on its common stock following the merger, which could cause the respective market prices of Traffix common stock and New Motion common stock to fall.

Traffix has made quarterly dividend payments on its common stock for the last 18 fiscal quarters. Under the terms of the merger agreement, Traffix may continue to declare regular quarterly dividends until such time as the Registration Statement on Form S-4 relating to the merger is declared effective. In December 2005, New Motion paid a one-time dividend of $0.46 (on a pre Reverse Split basis) per eligible share of common stock as directed by the Court. Aside from the aforementioned dividend, New Motion has historically not made any dividend payments on its stock and New Motion is not expected to regularly declare or pay dividends on its common stock following the completion of the merger. Accordingly, the benefits associated with the receipt of dividends on the Traffix stock will terminate following the merger and Traffix stockholders, which could have a negative impact on the value or perceived value of the stock of the combined company to stockholders of Traffix who receive shares of the combined company in the merger. As a result, Traffix stockholders may seek to sell a large quantity of Traffix common stock before the closing of the merger as a result of the anticipated termination of dividend payments. Alternatively, Traffix stockholders who receive shares of New Motion in the merger may seek to sell a large quantity of the stock they receive in exchange for their Traffix shares following the merger. The sale by Traffix stockholders of a large quantity of Traffix shares before the merger, or the sale of a large quantity of New Motion shares before or after completion of the merger, could have the effect of depressing the market prices for shares of Traffix common stock and New Motion common stock.

The anticipated benefits of the merger may not be realized fully or at all or may take longer to realize than expected.

The merger involves the integration of two companies that have previously operated independently with principal offices in two distinct locations. Due to legal restrictions, New Motion and Traffix have conducted only limited planning regarding the integration of the two companies. The combined company will be required to devote significant management attention and resources to integrating the two companies. Delays in this process could adversely affect the combined company’s business, financial results, financial condition and stock price. Even if New Motion and Traffix were able to integrate their business operations successfully, there can be no assurance that this integration will result in the realization of the full benefits of synergies, cost savings, innovation and operational efficiencies that may be possible from this integration or that these benefits will be achieved within a reasonable period of time.

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Because certain directors and executive officers of Traffix and New Motion have interests in seeing the merger completed that are different than those of Traffix’s and New Motion’s other stockholders, these persons may have conflicts of interest in recommending that Traffix and New Motion stockholders vote to approve the merger agreement.

Certain directors of Traffix and New Motion have arrangements or other interests that provide them with interests in the merger that are different than those of Traffix’s or New Motion’s other stockholders. For example, Burton Katz, the CEO of New Motion, who is also a director of New Motion, will, pursuant to the merger agreement, keep that title following the consummation of the merger and will remain on the board of directors of the combined company and Andrew Stollman, the President and a director of Traffix, will become the President of New Motion and join New Motion’s Board of Directors. In addition, Mr. Schwartz will receive a severance package pursuant to which he will receive a payment of $1.5 million in connection with the termination of his employment agreement with Traffix and enter into a two-year consulting agreement providing for annual compensation of $200,000. Mr. Schwartz also will be entitled to sell a significant portion of his shares before the closing of the merger. Also, up to three current Traffix directors and up to four current New Motion directors may serve on New Motion’s board. While other New Motion and Traffix directors will not become directors of New Motion after the merger, in either case, New Motion will indemnify and maintain liability insurance for each of the directors’ services as directors before the merger. As a result of these interests, these directors and officers could be more likely to recommend a vote in favor of approval of the merger and adoption of the merger agreement than if they did not hold these interests, and may have reasons for doing so that are different than the interests of other stockholders of New Motion or Traffix. The material interests of the directors and executive officers of Traffix and New Motion in the merger that are different than those of the other Traffix and New Motion stockholders are described under “The Merger — Interests of New Motion’s and Traffix’s Officers and Directors” beginning on page 67.

The merger agreement contains provisions that could discourage a potential competing acquiror that might be willing to pay more to acquire Traffix or that may be willing to acquire New Motion.

The merger agreement contains “no shop” provisions that restrict New Motion’s and Traffix’s ability to solicit or facilitate proposals regarding a merger or similar transaction with another party. Further, there are only limited exceptions to New Motion’s or Traffix’s agreement that their respective board of directors will not withdraw or adversely qualify its recommendation regarding the merger agreement. Although each of the New Motion and Traffix boards are permitted to terminate the merger agreement in response to a superior proposal if they determine that a failure to do so would be inconsistent with their fiduciary duties, its doing so would entitle the other party to collect a termination fee of up to $4 million. We describe these provisions under “The Merger Agreement — Termination” beginning on page 81 and “ — Effect of Termination Fees and Expenses” beginning on page 81.

These provisions could discourage a potential competing acquiror from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher value than that proposed to be paid in the merger, or might result in a potential competing acquiror proposing to pay a lower per share price than it might otherwise have proposed to pay because of the added expense of the termination fee.

Resales of shares of New Motion’s common stock following the merger and additional obligations to issue shares of New Motion common stock may cause the market price of New Motion common stock to fall.

As of September 26, 2007, New Motion had approximately 12.0 million shares of common stock outstanding and approximately 1.9 million shares of common stock subject to outstanding options and other rights to purchase or acquire its shares. New Motion currently expects that it will issue approximately 11.9 million shares of New Motion common stock in connection with the merger. The issuance of these new shares of New Motion common stock and the sale of additional shares of New Motion common stock that may become eligible for sale in the public market from time to time upon exercise of options (including a substantial number of New Motion options that will replace existing Traffix options), as well as the sale of up to 6,362,820 of shares of common stock which will become available for resale upon the effectivness of New Motion’s registration statement on Form SB-2, could have the effect of depressing the market price for shares of New Motion common stock.

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The trading price of shares of New Motion common stock after the merger may be affected by factors different from those affecting the price of shares of Traffix common stock or shares of New Motion common stock before the merger.

When we complete the merger, holders of Traffix common stock will become holders of New Motion common stock. The results of operations of New Motion, as well as the trading price of New Motion common stock, after the merger may be affected by factors different from those currently affecting New Motion’s or Traffix’s results of operations and the trading price of Traffix common stock. For a discussion of the businesses of Traffix and New Motion and of certain factors to consider in connection with those businesses, see “ — Risk Related to New Motion” beginning below, “ — Risks Relating to Traffix” beginning on page 28 and “Companies” beginning on page 144.

New Motion expects to record a significant amount of goodwill and other intangible assets in connection with the merger, which may result in significant future charges against earnings if the goodwill and other intangible assets become impaired.

In connection with the accounting for the merger, New Motion expects to allocate a large portion of the purchase price paid in the merger to goodwill and other intangible assets, and so it expects to record a significant amount of goodwill and other intangible assets. Under SFAS No. 142, New Motion must assess, at least annually and potentially more frequently, whether the value of goodwill and other intangible assets has been impaired. Any reduction or impairment of the value of goodwill or other intangible assets will result in a charge against earnings, which could materially adversely affect New Motion’s results of operations in future periods.

The share prices of New Motion’s common stock during the period beginning two days before and ending two days after September 26, 2007, the day before the merger agreement was announced, were used to calculate the total purchase price and the amount of goodwill recorded in connection with the merger. Because an active trading market for New Motion’s common stock currently does not exist, the quoted prices of New Motion’s common stock on the OTC Bulletin Board may not be a reliable indicator of its fair market value. See “ — Risks Related to New Motion — The liquidity of New Motion’s common stock is affected by its limited trading market.” Following the merger, the price of New Motion’s common stock may decline significantly resulting in an impairment of goodwill and other intangible assets. This could cause New Motion to incur significant future charges against earnings, which could materially reduce New Motion’s earnings and harm its business. See the discussion concerning the calculation of the preliminary estimated purchase price allocation under “Unaudited Pro Forma Condensed Combined Financial Data — Basis of Pro Forma Presentation — Preliminary Estimated Purchase Price Allocation” beginning on page 90.

New Motion will become subject to more stringent reporting and disclosure requirements following the completion of the merger with Traffix, which could harm the combined company’s business.

Following completion of the merger, the combined company likely will qualify as an “accelerated filer” for reporting purposes under the Securities Exchange Act of 1934, which will require the company to file periodic reports and other documents on an accelerated timetable. Also, following the merger, New Motion will no longer qualify as a small business issuer in subsequent reporting periods, and will be subject to more expanded and burdensome disclosure requirements with respect to any future reports or other documents filed with the Securities and Exchange Commission. Additionally, the merger will significantly increase the complexity of the internal controls over financial reporting that the combined company will need, and significantly more resources will be required to ensure that these controls remain effective. Accordingly, following the merger, the combined company will be subject to substantially more stringent and burdensome reporting and disclosure requirements, and complying with these requirements could be expensive and time consuming and could require significant management attention, which could substantially increase the company’s expenses and harm its business.

The combined company will face uncertainties related to the effectiveness of internal controls.

Public companies in the United States are required to review their internal controls over financial reporting under Section 404 of the Sabanes-Oxley Act of 2002. Although Traffix’s management has determined that its internal controls were effective as of the end of its most recent fiscal year, New Motion has not made a

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determination with respect to the effectiveness of its internal controls. See “ — Risk Factors — The requirements of the Sarbanes-Oxley Act, including section 404, are burdensome, and New Motion’s failure to comply with them could have a material adverse affect on the company’s business and stock price.” We can provide no assurance that the integration of Traffix and New Motion will not result in or lead to a future material weakness in the combined company’s internal controls, or that the combined company or its independent registered public accounting firm will not identify a material weakness in the combined company’s internal controls in the future. A material weakness in internal controls over financial reporting would require management and the combined company’s independent public accounting firm to evaluate the combined company’s internal controls as ineffective. If the combined company’s internal controls over financial reporting are not considered adequate, the combined company may experience a loss of public confidence, which could have an adverse effect on its business and stock price.

Risks Relating to New Motion

New Motion has a limited operating history in an emerging market, which may make it difficult to evaluate the company’s business.

New Motion was incorporated in March 2005 and immediately began offering entertainment products and services directly to consumers through the transfer of the RingtoneChannel Pty Limited (“RingtoneChannel”) business to the company. These services and products are billed through wireless carriers to their subscribers. Accordingly, New Motion has a limited history of generating revenues, and its future revenue and income potential business is uncertain. As a result of New Motion’s short operating history in the emerging mobile entertainment industry, it has limited financial data that you can use to evaluate its business. Any evaluation of New Motion’s business and its prospects must be considered in light of its limited operating history and the risks and uncertainties often encountered by companies in New Motion’s stage of development. Some of these risks and uncertainties relate to the company’s ability to do the following:

maintain and develop new wireless carrier and billing aggregator relationships upon which the company’s business currently depends;
respond effectively to competitive pressures;
increase brand awareness and consumer recognition;
attract and retain qualified management and employees;
continue to upgrade its technology;
continue to upgrade its information processing systems;
continue to develop and source high-quality mobile content that achieves significant market acceptance;
maintain and grow its off-deck distribution, including through its web sites and third-party direct-to-consumer distributors; and
execute its business and marketing strategies successfully.

If New Motion is unable to address these risks, its operating results may not meet the expectations of investors, which would likely cause the price of its common stock to decline.

New Motion’s business currently relies on wireless carriers and aggregators to facilitate billing and collections in connection with its entertainment products sold and services rendered, and the loss of, or a material change in, any of these relationships could materially and adversely affect New Motion’s business, operating results and financial condition.

New Motion currently generates, and it expects to continue to generate, the majority of its revenues from the sale of its products and services directly to consumers which are billed through wireless aggregators and carriers. For the fiscal year ended December 31, 2006, New Motion billed approximately 60% of its revenue through aggregation services provided by Goldpocket Wireless, Inc. (“Goldpocket Wireless”) and 34% of its revenue through its aggregator Mobile Messenger Pty Ltd (“Mobile Messenger”). In 2005, New Motion

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billed approximately 78% of its revenue with Buongiorno USA, Inc. (“Buongiorno”) and approximately 22% of its revenue through its aggregator Mobile Messenger. Through the third quarter of 2007, New Motion billed approximately 87% of its revenue through Goldpocket Wireless and approximately 8% through Mobile Messenger. New Motion expects that it will continue to generate a significant portion of its revenues through a limited number of aggregators for the foreseeable future, although these aggregators may vary from period to period.

New Motion’s aggregator agreements are not exclusive and generally have a limited term of one or two years with evergreen or automatic renewal provisions upon expiration of the initial term. These agreements set out the terms of the company’s relationships with the carriers. In addition, any party can terminate these agreements early, and in some instances, without cause.

Many other factors outside New Motion’s control could impair its carrier relationships, including a carrier’s:

decision to deliver New Motion’s products and services to its customer base;
decision to offer its own competing entertainment applications, products and services;
decision to offer similar entertainment applications, products and services to its subscribers for free;
network encountering technical problems that disrupt the delivery of or billing for the company’s applications; or
decision to increase the fees it charges to market and distribute the company’s applications, thereby increasing its own revenue and decreasing New Motion’s share of revenue.

If one or more of these wireless carriers decides not to offer off-deck applications, New Motion may be unable to replace the revenue source with an acceptable alternative, causing it to lose access to the subscribers covered by that wireless carrier, which could materially harm its business, operating results and financial condition. The off-deck arena refers primarily to services delivered through the Internet, which is independent of the carriers.

The markets in which New Motion operates are highly competitive and many of its competitors have greater resources than New Motion does.

The development, distribution and sale of wireless entertainment applications is a highly competitive business. New Motion competes primarily on the basis of marketing acquisition cost, brand awareness, and carrier and distribution breadth. New Motion also competes for experienced and talented employees.

Currently, New Motion considers its primary competitors to be Jamster, Buongiorno, Flycell, Playphone, Fun Mobile, Thumbplay and Dada Mobile. In the future, likely competitors may include other major media companies, traditional video game publishers, content aggregators, wireless software providers and other pure-play wireless entertainment publishers. Wireless carriers may also decide to develop and distribute their own similar wireless entertainment applications, products and services and as such they might refuse to distribute some or all of New Motion’s applications or may deny New Motion access to all or part of their networks.

Some of New Motion’s competitors’ advantages include the following:

substantially greater revenues and financial resources;
stronger brand names and consumer recognition;
the capacity to leverage their marketing expenditures across a broader portfolio of wireless and non-wireless products;
pre-existing relationships with brand holders;
more resources to make acquisitions; and
broader geographic presence.

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If New Motion is not as successful as its competitors in its target markets, New Motion’s sales could decline, its margins could be negatively impacted and it could lose market share, any of which could materially harm its business.

New Motion’s success depends on its ability to develop new applications products and services that its customers will continue to buy.

New Motion’s success depends on providing applications, products and services that offer its customers a high-quality entertainment experience. New Motion must continue to invest significant resources in research and development to enhance its offering of wireless applications and introduce new applications that its customers will continue to buy. New Motion’s operating results would suffer if its applications are not responsive to the preferences of its customers or are not effectively brought to market.

The planned timing or introduction of new applications is subject to risks and uncertainties. Unexpected technical, operational, deployment, distribution, carrier approval, or other problems could delay or prevent the introduction of new applications, which could result in a loss of, or delay in, revenues or damage to New Motion’s reputation and brand. If any of New Motion’s applications are introduced with defects, errors or failures, it could experience decreased sales, loss of customers and damage to its reputation and brand. In addition, new applications may not achieve sufficient market acceptance to offset the costs of development. New Motion’s success depends, in part, on unpredictable and volatile factors beyond its control, including customer preferences, competing applications and the availability of other entertainment activities. A shift in mobile phone usage or the entertainment preferences of its customers could cause a decline in New Motion’s applications’ popularity that could materially reduce its revenues and harm its business.

New Motion continuously develops and introduces new applications for use on next-generation mobile phones. New Motion must make product development decisions and commit significant resources well in advance of the anticipated introduction of a new mobile phone model. New mobile phone models for which the company is developing applications may be delayed, may not be commercially successful, may have a shorter life cycle than anticipated or may not be adequately promoted by wireless carriers or the mobile phone manufacturer. If the mobile phone models for which New Motion is developing applications are not released when expected or do not achieve broad market penetration, New Motion’s potential revenues will be limited and its business will suffer.

New Motion depends on a limited number of applications, products and services for a significant portion of its revenue.

New Motion derives a significant portion of its revenue from a limited number of applications. In fiscal 2005 and 2006, the company generated approximately 67% and 26%, respectively, of its revenue from its Ringtone applications and approximately 33% and 70%, respectively of its revenues from its Trivia applications. As a percentage of New Motion’s net revenue for the three months ended September 30, 2007, Bid4Prizes generated approximately 61% of the company’s net revenue, Gator Arcade 15%, RingtoneChannel and Trivia services 13%, and White Label services 6%. The remaining 5% of New Motion’s revenue for the three months ended September 30, 2007 was generated from several smaller sources. New Motion expects to continue to derive a substantial portion of its revenues from Bid4Prizes, Gator Arcade and Ringtone and Trivia applications and a limited number of other applications in the foreseeable future. Due to this dependence on a limited number of applications, the failure to achieve anticipated results with any one of these key applications may harm the company’s business. Additionally, if New Motion cannot develop new applications that are as successful as its Bid4Prizes application, its future revenues could be limited and its business will suffer.

New Motion faces challenges in managing the rapid growth of its business.

New Motion has experienced, and continues to experience, rapid growth in its business. This growth has placed, and may continue to place, significant demands on its management and its operational and financial infrastructure. To manage New Motion’s growth effectively, it must continue to improve and enhance its operational, financial and management controls in order to maintain efficiency and innovation in its growing organization. New Motion must also enhance its reporting systems and procedures to ensure timely and accurate periodic public disclosure of its operations and it will need to hire additional personnel. These system

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enhancements and improvements will require significant expenditures and allocation of valuable management resources. If New Motion fails to maintain the efficiency of its organization as it grows, its profit margins will decline and its earnings could be materially diminished.

In order to meet competitive challenges or take advantage of market opportunities, New Motion may expand its technology, sales, administrative and marketing organizations. Any growth in or expansion of New Motion’s business is likely to continue to place a strain on its management and administrative resources, infrastructure and systems. As with other growing businesses, New Motion expects that it will need to further refine and expand its business development capabilities, its systems and processes and its access to financing sources. New Motion also will need to hire, train, supervise and manage new employees. These processes are time consuming and expensive, will increase management responsibilities and will divert management attention.

If New Motion fails to deliver its applications to correspond with the commercial introduction of new mobile phone models, its sales may suffer.

New Motion’s business is tied, in part, to the commercial introduction of new mobile phone models with enhanced features, including color screens and greater processing power. Many new mobile phone models are released in the final quarter of the year to coincide with the holiday shopping season. New Motion cannot control the timing of these mobile phone launches. Some of New Motion’s customers download its applications soon after they purchase their new mobile phones in order to experience the new features of those phones. If New Motion misses the opportunity to sell applications when its customers upgrade to a new mobile phone due to application launch delays, its sales may suffer. In addition, if New Motion misses the key holiday selling period, either because the introduction of a new mobile phone model is delayed or New Motion does not successfully deploy its applications in time for the holiday selling season, New Motion’s sales may suffer.

New Motion’s business and growth may suffer if it is unable to hire and retain key personnel who are in high demand.

New Motion depends on the continued contributions of its senior management and other key personnel, many of whom may be difficult to replace. In particular, New Motion is dependant on the continued service of Burton Katz, its Chief Executive Officer. The loss of the services of any of its executive officers or other key employees could harm its business. New Motion’s future success also depends on its ability to identify, attract and retain highly skilled technical, managerial, finance, marketing and creative personnel. Qualified individuals are in high demand, and New Motion may incur significant costs to attract them. If New Motion is unable to attract or retain the personnel it needs to succeed, its business may suffer.

Many of New Motion’s senior management personnel and other key employees have become, or will soon become, substantially vested in their initial stock option grants. Employees may be more likely to leave if their owned shares or the shares underlying their options have significantly appreciated in value relative to the original purchase price of the shares or the option exercise price.

New Motion’s financial results could vary significantly from quarter to quarter and are difficult to predict.

New Motion’s revenues and operating results could vary significantly from quarter to quarter because of a variety of factors, many of which are outside of its control. As a result, comparing New Motion’s operating results on a period-to-period basis may not be meaningful. In addition, New Motion may not be able to predict its future revenues or results of operations. New Motion bases its current and future expense levels on its internal operating plans and sales forecasts, and its operating costs are to a large extent fixed. As a result, New Motion may not be able to reduce its costs sufficiently to compensate for an unexpected shortfall in revenues, and even a small shortfall in revenues could disproportionately and adversely affect financial results for that quarter. Products and carrier relationships may represent meaningful portions of its revenues and net income in any quarter. In addition, any payments due to New Motion from carriers may be delayed because of changes or issues with those carriers’ processes.

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In addition to other risk factors discussed in this section, factors that may contribute to the variability of New Motion’s quarterly results include:

the timing of charges related to impairments of goodwill, intangible assets, prepaid royalties and guarantees;
changes in pricing policies by the company, its competitors or its carriers and other distributors;
changes in the mix of original and licensed content, which have varying gross margins;
the timing of successful mobile handset launches;
fluctuations in the size and rate of growth of overall consumer demand for mobile related content;
strategic decisions by the company or its competitors, such as acquisitions, divestitures, spin-offs, joint ventures, strategic investments or changes in business strategy;
charges related to the company’s acquisition of assets;
accounting rules governing recognition of revenue;
the timing of compensation expense associated with equity compensation grants; and
decisions by the company to incur additional expenses, such as increases in marketing or research and development.

As a result of these and other factors, New Motion’s operating results may not meet the expectations of investors or public market analysts who choose to follow the company. Failure to meet market expectations could result in decreases in the trading price of the company’s common stock.

Wireless communications technology is changing rapidly, and New Motion may not be successful in working with these new technologies.

Wireless network and mobile phone technologies are undergoing rapid innovation. New mobile phones with more advanced processors and supporting advanced programming languages continue to be introduced in the market. New Motion has no control over the demand for, or success of, these products. However, if New Motion fails to anticipate and adapt to these and other technological changes, the company’s market share and its operating results may suffer. New Motion’s future success will depend on its ability to adapt to rapidly changing technologies, develop applications to accommodate evolving industry standards and improve the performance and reliability of its applications. In addition, the widespread adoption of networking or telecommunications technologies or other technological changes could require substantial expenditures to modify or adapt New Motion’s entertainment applications.

The markets for New Motion’s applications, products and services are also characterized by frequent new mobile phone model introductions and shortening mobile phone model life cycles. The development of new, technologically advanced applications to match the advancements in mobile phone technology is a complex process requiring significant research and development expense, as well as the accurate anticipation of technological and market trends. As the life cycle of mobile phone models and other wireless devices shortens, New Motion will be required to develop and adapt its existing applications and create new applications more quickly. These efforts may not be successful. Any failure or delay in anticipating technological advances or developing and marketing new applications that respond to any significant change in technology or customer demand could limit the available channels for New Motion’s applications and limit or reduce the company’s sales.

New Motion’s success depends on the continuing adoption of entertainment applications by wireless subscribers.

New Motion operates in a developing industry. Currently, only a limited number of wireless subscribers download entertainment applications, products and services to their mobile phones. New Motion’s success depends on growth in the number of wireless subscribers who use their mobile phones to access data services and, in particular, entertainment applications, products and services. If this market does not continue to grow

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or New Motion is unable to acquire new customers, its business growth, operating results and financial condition could be materially and adversely affected.

Changes in government regulation of the media and wireless communications industries may adversely affect New Motion’s business.

It is possible that a number of laws and regulations may be adopted in the United States and elsewhere which could restrict the media and wireless communications industries, including laws and regulations relating to customer privacy, taxation, content suitability, copyright, distribution and antitrust. Furthermore, the growth and development of the market for electronic commerce may prompt calls for more stringent consumer protection laws that may impose additional burdens on companies such as New Motion’s which conduct business through wireless carriers. In particular, changes in marketing guidelines and other requirements and regulations imposed by regulatory agencies, the Federal Communications Commission and industry associations, which fundamentally change the manner in which New Motion currently markets and sells its products and services, could have a material adverse effect on New Motion’s ability to acquire and retain customers. Additionally, changes in current laws or regulations or the imposition of new laws and regulations in the United States or elsewhere regarding the media and wireless communications industries may lessen the growth of wireless communications services and may materially reduce New Motion’s ability to increase or maintain sales of its products and services.

A decline in, or limitation on, the use of mobile phones would negatively impact New Motion’s business.

A number of public and private entities have begun to restrict the use of mobile phones on their premises. For example, many places of worship, restaurants, hospitals, medical offices, libraries, museums, concert halls and other private and public businesses restrict the use of mobile phones due to privacy concerns, the inconvenience caused by mobile phone users to other patrons and the disruption mobile phones may cause to other electronic equipment at these locations.

Legislation has also been proposed in the U.S. Congress and by many states and municipalities to restrict or prohibit the use of mobile phones while driving motor vehicles. Some states and municipalities in the United States have already passed laws restricting the use of mobile phones while driving, and similar laws have been enacted in other countries. These laws and other potential laws prohibiting or restricting the use of mobile phones could reduce demand for mobile phones generally and, accordingly, the demand for New Motion’s applications, which could reduce the company’s ability to increase or maintain sales of its applications.

A number of studies have examined the health effects of mobile phone use and the results of some of the studies have been interpreted as evidence that mobile phone use causes adverse health effects. The establishment of a link between the use of mobile phone services and health problems, and any media reports suggesting such a link, could reduce demand for mobile phones and, accordingly, the demand for New Motion’s applications.

New Motion’s business depends on the growth and maintenance of wireless communications infrastructure.

New Motion’s success will depend on the continued growth and maintenance of wireless communications infrastructure in the United States and around the world. This includes deployment and maintenance of reliable next-generation digital networks with the necessary speed, data capacity and security for providing reliable wireless communications services. Wireless communications infrastructure may be unable to support the demands placed on it if the number of customers continues to increase, or if existing or future customers increase their bandwidth requirements. In addition, viruses, worms and similar break-ins and disruptions from illicit code or unauthorized tampering may harm the performance of wireless communications. If a well-publicized breach of security were to occur, general mobile phone usage could decline, which could reduce the demand for and use of New Motion’s applications. Wireless communications experience a variety of outages and other delays as a result of infrastructure and equipment failures, and could face outages and delays in the future. These outages and delays could reduce the level of wireless communications usage as well as New Motion’s ability to distribute its applications successfully.

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The liquidity of New Motion’s common stock is affected by its limited trading market.

Bid and ask prices for shares of New Motion’s common stock are currently quoted on the OTC Bulletin Board under the symbol NWMO. There is currently no broadly followed, established trading market for New Motion’s common stock. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. The absence of an active trading market reduces the liquidity of New Motion’s common stock. As a result of the lack of trading activity, the quoted price for New Motion’s common stock on the OTCBB is not necessarily a reliable indicator of its fair market value.

Substantial future sales of New Motion’s common stock in the public market could cause its stock price to fall.

Upon the effectiveness of the registration statement of which this proxy statement is a part and any others that New Motion may file with respect to the resale of shares held by certain stockholders, including New Motion’s pending Registration Statement on Form SB-2 pursuant to which up to 6,362,820 shares of New Motion common stock will become available for resale upon the effectiveness of such registration statement, a significant number of the company’s shares of common stock may become eligible for sale. Sales of a significant number of shares of the company’s common stock in the open market could harm the market price of the company’s common stock. A reduced market price for New Motion’s shares could make it more difficult to raise funds through future offering of common stock.

Moreover, as additional shares of New Motion’s common stock become available for resale in the open market (including shares issued upon the exercise of New Motion’s outstanding warrants and options), the supply of New Motion’s publicly traded shares will increase, which could decrease New Motion’s stock price.

Some of New Motion’s shares may also be offered from time to time in the open market pursuant to Rule 144, and these sales may have a depressive effect on the market for New Motion’s shares. In general, a person who has held restricted shares for a period of one year may, upon filing with the SEC a notification on Form 144, sell into the market shares up to an amount equal to 1% of the outstanding shares.

The requirements of the Sarbanes-Oxley act, including section 404, are burdensome, and New Motion’s failure to comply with them could have a material adverse affect on the company’s business and stock price.

Effective internal control over financial reporting is necessary for New Motion to provide reliable financial reports and effectively prevent fraud. Section 404 of the Sarbanes-Oxley Act of 2002 requires New Motion to evaluate and report on its internal control over financial reporting beginning with the company’s Annual Report on Form 10-KSB for the fiscal year ending December 31, 2007. New Motion’s independent registered public accounting firm will need to annually attest to the company’s evaluation, and issue their own opinion on the company’s internal control over financial reporting beginning with the company’s Annual Report on Form 10-KSB for the fiscal year ending December 31, 2008. New Motion plans to prepare for compliance with Section 404 by strengthening, assessing and testing its systems of internal control over financial reporting to provide the basis for its report. The process of strengthening New Motion’s internal control over financial reporting and complying with Section 404 is expensive and time consuming, and requires significant management attention, especially given that New Motion has not yet undertaken any substantial efforts to comply with the requirements of Section 404. New Motion cannot be certain that the measures it will undertake will ensure that the company will maintain adequate controls over its financial processes and reporting in the future. Furthermore, if New Motion is able to rapidly grow its business, the internal controls over financial reporting that the company will need will become more complex, and significantly more resources will be required to ensure that its internal controls over financial reporting remain effective. The internal control over financial reporting that New Motion will need will become more complex, and more resources will be required to ensure that these controls remain effective, after the completion of the proposed merger with Traffix. Failure to implement required controls, or difficulties encountered in their implementation, could harm New Motion’s operating results or cause the company to fail to meet its reporting obligations. If New Motion or its auditors discover a material weakness in the company’s internal control over financial reporting, the disclosure of that fact, even if the weakness is quickly remedied, could diminish investors’ confidence in New Motion’s financial statements and harm the company’s stock price. In addition,

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non-compliance with Section 404 could subject the company to a variety of administrative sanctions, including the suspension of trading, ineligibility for listing on one of the Nasdaq Stock Markets or national securities exchanges, and the inability of registered broker-dealers to make a market in the company’s common stock, which would further reduce the company’s stock price.

New Motion does not expect to pay dividends for the foreseeable future, and any return on investment may be limited to potential future appreciation on the value of New Motion’s common stock.

New Motion currently intends to retain any future earnings to support the development and expansion of its business and does not anticipate paying cash dividends in the foreseeable future. New Motion’s payment of any future dividends will be at the discretion of the company’s board of directors after taking into account various factors, including without limitation, our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that the company may be a party to at the time. To the extent the company does not pay dividends, its stock may be less valuable because a return on investment will only occur if and to the extent the company’s stock price appreciates, which may never occur. In addition, investors must rely on sales of their common stock after price appreciation as the only way to realize their investment, and if the price of the company’s stock does not appreciate, then there will be no return on investment. Investors seeking cash dividends should not purchase New Motion’s common stock.

New Motion’s officers, directors and principal stockholders can exert significant influence over the company and may make decisions that are not in the best interests of all stockholders.

Collectively, New Motion’s officers, directors and principal stockholders (greater than 5% stockholders) beneficially own approximately 88% of the company’s outstanding common stock. As a result, these stockholders will be able to affect the outcome of, or exert significant influence over, all matters requiring stockholder approval, including the election and removal of directors and any change in control. In particular, this concentration of ownership of New Motion’s common stock could have the effect of delaying or preventing a change of control of the company or otherwise discouraging or prevent a potential acquirer from attempting to obtain control of the company. This, in turn, could have a negative effect on the market price of the company’s common stock. It could also prevent New Motion’s stockholders from realizing a premium over the market prices for their shares of common stock. Moreover, the interests of this concentration of ownership may not always coincide with New Motion’s interests or the interests of other stockholders, and accordingly, they could cause the company to enter into transactions or agreements that it would not otherwise consider.

Anti-takeover provisions may limit the ability of another party to acquire New Motion, which could cause the company’s stock price to decline.

New Motion’s restated certificate of incorporation, as amended, its bylaws and Delaware law contain provisions that could discourage, delay or prevent a third party from acquiring New Motion, even if doing so may be beneficial to New Motion’s stockholders. In addition, these provisions could limit the price investors would be willing to pay in the future for shares of New Motion’s common stock.

Risk Factors Relating to Traffix

The following risk factors will be relevant to Traffix stockholders in the event the merger is not consummated and to both the New Motion and Traffix stockholders in the event the merger is consummated.

Traffix may not continue to pay dividends on its equity securities.

Traffix has paid a dividend of $0.08 per share of its common stock in the last 18 fiscal quarters. The declaration of each such dividend was approved by its board of directors upon the conclusion of each quarter. Traffix can give you no assurances that its board will declare any dividends in future fiscal periods. Any further declarations will depend upon Traffix’s performance, the level of its then current and retained earnings and other pertinent factors relating to Traffix’s financial position. You should not rely on any prior approvals of its board as an indicator of its intent to approve the declaration of any dividends in the future.

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Advertisers may be reluctant to devote a portion of their budgets to internet advertising and digital marketing solutions.

Companies doing business on the Internet must compete with traditional advertising media, including television, radio, cable and print, for a share of advertisers’ total marketing budgets. Potential customers may be reluctant to devote a significant portion of their marketing budget to Internet advertising or digital marketing if they perceive the Internet to be a limited or ineffective marketing medium. Any shift in marketing budgets away from Internet advertising spending or digital marketing solutions could materially and adversely affect Traffix’s business, results of operations and financial condition.

Traffix may not be able to comply with the adoption of newly created laws and governmental regulation of the internet industry and new restrictions for internet use may increase Traffix’s cost of doing business.

As a direct-to-consumer marketing company, Traffix is subject to a variety of federal, state and local laws and regulations designed to protect consumers that govern certain of its marketing practices, all as more fully set forth in the company’s periodic reports filed pursuant to the Securities Exchange Act of 1934 under the heading “Business — Government Regulation.”

Demand for Traffix’s services may decline due to the proliferation of “spam” and software designed to prevent its delivery.

Traffix’s business may be adversely affected by the proliferation of “spam” and other unwanted Internet solicitations. In response to such proliferation, Internet Service Providers (“ISP’s”) have been adopting technologies, and individual computer users are installing software on their computers that are designed to prevent the delivery of certain Internet advertising, including legitimate solicitations such as those delivered by Traffix. Traffix cannot assure you that the number of ISP’s and individual computer users who employ these or other similar technologies and software will not increase, thereby diminishing the efficacy of its services. In the case that one or more of these technologies are widely adopted or the software widely utilized, demand for Traffix’s services would decline. During the nine months ended August 31, 2007 Traffix recognized a decline in its email marketing revenue of approximately 58% when compared to the nine months ended August 31, 2006. Traffix believes that such decline is the result of the factors mentioned above, and may continue to decline at higher rates in future fiscal periods.

Traffix may be unable to keep up with the rapid technological changes that may occur in the internet and e-commerce arenas which would adversely affect its business operations.

To remain competitive, Traffix must enhance and continually improve the responsiveness, functionality and features of its services. The Internet and the online commerce industry are characterized by rapid technological change, changes in user and customer requirements and preferences, frequent new product and service introductions embodying new technologies, and the emergence of new industry standards and practices that could render existing technology and systems obsolete at any time. Traffix’s success will depend, in part, on its ability to license leading technologies that address the increasingly sophisticated and varied needs of prospective consumers, and respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis. The development of a website and other proprietary technology entails significant technical and business risks. There can be no assurance that Traffix will use new technologies effectively or adapt existing websites and operational systems to customer requirements or emerging industry standards. If Traffix is unable, for technical, legal, financial or other reasons, to adapt in a timely manner in response to changing market conditions or customer requirements, its business, prospects, financial condition and results of operations would be materially adversely affected.

Traffix depends on third-party internet and telecommunications providers, over whom it has no control, to operate its services. Interruptions in these services caused by one of the providers could have an adverse effect on revenue and securing alternate sources of these services could significantly increase expenses.

Traffix depends heavily on several third-party providers of Internet and related telecommunication services, including hosting and co-location facilities, in operating its services. These companies may not continue to provide services to Traffix without disruptions in service, at the current cost or at all. The costs associated

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with any transition to a new service provider would be substantial, requiring the reengineering of computer systems and telecommunications infrastructure to accommodate a new service provider. This process would be both expensive and time-consuming. In addition, failure of the Internet and related telecommunications providers to provide the data communications capacity in the time frame required by Traffix could cause interruptions in the services Traffix provides. Unanticipated problems affecting Traffix’s computer and telecommunications systems in the future could cause interruptions in the delivery of services, causing a loss of revenue and potential loss of customers, all of which could materially and adversely affect the company’s business, results of operations and financial condition.

Traffix faces intense competition in the marketing of its services and its clients’ products.

Traffix faces intense competition in the direct marketing of its services and of clients’ products and services. Many of Traffix’s competitors are well established, have reputations for success in the development and marketing of services and have significant financial, marketing, distribution, personnel and other resources. These financial and other capabilities permit such companies to implement extensive advertising and promotional campaigns, both generally and in response to efforts by additional competitors to enter into new markets and introduce new services.

Traffix’s success depends on its ability to continue forming relationships with other Internet and interactive media content, service and product providers.

The Internet includes an ever-increasing number of businesses that offer and market consumer products and services. These entities offer advertising space on their websites, as well as profit sharing arrangements for joint effort marketing programs. Traffix expects that with the increasing number of entrants into the Internet commerce arena, advertising costs and joint effort marketing programs will become extremely competitive. This competitive environment might prevent Traffix from executing profit generating advertising and joint effort marketing programs in the future. This competitive environment may also prevent Traffix from providing entertaining content and product and service providers from marketing their products and services through the company’s websites. If Traffix fails to continue establishing new, and maintain and expand existing, profitable advertising and joint marketing arrangements, Traffix may suffer substantial adverse consequences to its financial condition and results of operations.

The outcome of litigation in which Traffix has been named as a defendant is unpredictable and a materially adverse decision in any such matter could have a material adverse affect on Traffix’s financial position and results of operations.

Traffix is named as defendant in litigation matters, as described under “Legal Proceedings” in the company’s periodic reports filed pursuant to the Securities Exchange Act of 1934. The defense of these claims may divert financial and management resources that would otherwise be used to benefit the company’s operations. Although Traffix believes that it has meritorious defenses to the claims made in each and all of the litigation matters to which it has been a named party, and intend to contest each lawsuit vigorously, no assurances can be given that the results of these matters will be favorable to it. A materially adverse resolution of any of these lawsuits could have a material adverse affect on its financial position and results of operations.

Traffix is dependent on its key personnel for managing its business affairs. The loss of their services could materially and adversely affect the conduct of the company’s business.

Traffix is and will be highly dependent upon the efforts of the members of its management team, particularly those of its Chief Executive Officer, Jeffrey L. Schwartz, and its President, Andrew Stollman. The loss of the services of Messrs. Schwartz or Stollman may impede the execution of Traffix’s business strategy and the achievement of its business objectives. Traffix can give you no assurance that it will be able to attract and retain the qualified personnel necessary for the development of its business. Traffix’s failure to recruit key personnel or its failure to adequately train, motivate and supervise its existing or future personnel will adversely affect its operations.

Traffix’s business plan is subject to change and any expectations it and you may have for its successful implementation may be unrealized.

Traffix’s business plan and strategy may quickly change based upon facts or circumstances currently unforeseen. Due to the ever changing nature of the e-commerce industry and the Internet, Traffix, based upon

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these unforeseen facts or circumstances, may change its business plan at the discretion of its Management and board of directors with results, adverse or otherwise, that Traffix cannot now foresee.

The concentration of ownership of Traffix’s common stock will discourage purchases of its common stock by persons who might otherwise seek to gain control of Traffix.

Traffix’s executive officers and directors beneficially own 2,292,267 shares of the company’s outstanding common stock representing approximately 15.1% of the total its outstanding shares before the exercise of any outstanding options. Accordingly, such persons will be able to exercise substantial control in the election of its directors, increases in its authorized capital, its dissolution or merger, or sale of its assets, and otherwise influence the control of its affairs. As a result, potential purchasers may not seek to acquire control of Traffix through the purchase of common stock which may tend to reduce the market price of its common stock. In addition, Traffix is subject to provisions of the General Corporation Law of the State of Delaware respecting business combinations which could, under certain circumstances, also hinder or delay a change in control.

Historically High Levels of Volatility in Revenue and Cost Trends

Traffix’s revenues and profitability from operations have historically varied, both from period to period and between revenues components. Traffix’s revenues, cost of providing revenues, profit margins and overhead expenses have varied historically among its Online and Media Service components, as well as on a consolidated basis. The revenue derived from Traffix’s Online and Media Service components may likely be different in future fiscal periods due to several factors, including consumer tastes, business opportunities, and regulatory issues that may exist in future periods. Therefore, it is difficult to predict revenue and gross margin trends, and their corresponding impact on liquidity and capital resources. Actual trends may cause Traffix to adjust its operating emphasis, which could result in continued period-to-period fluctuations in its results of operations. Historically, Traffix has been able to rapidly react to changes in the business environment within which it operates. Management responds to these changes as deemed appropriate at the time of change, and as dictated by the nature of such changes. Management’s reaction to such changes could cover a broad range of business-related adjustments, ranging from product mix repositioning and staff reductions, to entire business model overhauls. Based on Traffix’s current operations and marketing methods, as well as the dynamic, ever changing status of the Internet marketing environment, it is conceivable that Traffix would institute changes to its business practices in future fiscal periods. There can be no assurance that any such potential change would be successful in its implementation, and there can be no assurance that any such implementation would benefit Traffix’s operating margins, profitability, cash flows or capital resources.

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THE SPECIAL MEETINGS

General

New Motion

The New Motion special meeting is being held so that stockholders of New Motion may consider and vote upon (i) a proposal to approve the issuance of New Motion common stock in connection with the merger contemplated by the agreement and plan of merger, dated as of September 26, 2007, by and among Traffix, NM Merger Sub, Inc., or Merger Co., a wholly owned subsidiary of New Motion, and New Motion, (ii) a proposal to grant discretionary authority to management of New Motion to adjourn the special meeting, if necessary, to solicit additional proxies if there appear to be insufficient votes at the time of the special meeting to approve any of the foregoing proposals, and (iii) such other business as may properly come before the meeting or any adjournment or adjournments thereof. Under the terms of the definitive merger agreement, Merger Co. will merge with and into Traffix, with Traffix surviving the merger as a wholly owned subsidiary of New Motion. In the merger, each share of Traffix common stock held by stockholders of Traffix will be converted into approximately 0.681 shares of New Motion common stock based on the currently anticipated capitalization of both companies on the closing date of the merger.

This joint proxy statement/prospectus, together with a notice of special meeting and a form of proxy, is being provided to New Motion stockholders in connection with the solicitation of proxies by the New Motion board of directors for use at the special meeting of New Motion stockholders. The special meeting of the New Motion stockholders will be held at 10:00 a.m. local time on January 31, 2008 at 10:00 a.m., at the Hyatt Hotel, 17900 Jamboree Road, Irvine, California 92614, or at any adjournment, postponement or rescheduling of that meeting.

This joint proxy statement/prospectus and the accompanying notice of special meeting and form of proxy are first being mailed to stockholders of New Motion on or about December 29, 2007.

Traffix

The Traffix special meeting is being held so that stockholders of Traffix may consider and vote to (i) adopt and approve the agreement and plan of merger, dated as of September 26, 2007, by and among Traffix, NM Merger Sub, Inc., or Merger Co., a wholly owned subsidiary of New Motion, and New Motion, (ii) consider a proposal to grant discretionary authority to management of Traffix to adjourn the special meeting, if necessary, to solicit additional proxies if there appear to be insufficient votes at the time of the special meeting to approve any of the foregoing proposals, and (iii) transact such other business as may properly come before the special meeting. Under the terms of the definitive merger agreement, Merger Co. will merge with and into Traffix, with Traffix surviving the merger as a wholly owned subsidiary of New Motion. In the merger, each share of Traffix common stock held by stockholders of Traffix will be converted into approximately 0.681 shares of New Motion common stock based on the currently anticipated capitalization of both companies on the closing date of the merger.

This joint proxy statement/prospectus, together with a notice of special meeting and a form of proxy, is being provided to Traffix stockholders in connection with the solicitation of proxies by the Traffix board of directors for use at the special meeting of Traffix stockholders. The special meeting of the Traffix stockholders will be held at 10:00 a.m. local time on January 31, 2008 at Traffix’s offices located at One Blue Hill Plaza, Pearl River, New York, or at any adjournment, postponement or rescheduling of that meeting.

This joint proxy statement/prospectus and the accompanying notice of special meeting and form of proxy are first being mailed to stockholders of Traffix on or about December 29, 2007.

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Matters to be Considered

New Motion

At the New Motion special meeting, New Motion stockholders will be asked to vote on the following proposals:

to approve the issuance of New Motion common stock in connection with the merger;
to grant discretionary authority to management of New Motion to adjourn the special meeting, if necessary, to solicit additional proxies if there appear to be insufficient votes at the time of the special meeting to approve any of the foregoing proposals; and
to transact such other business as may properly come before the meeting or any adjournment or adjournments thereof.

Traffix

At the Traffix special meeting, Traffix stockholders will be asked to vote on the following proposals:

to adopt and approve the merger agreement;
grant discretionary authority to management of Traffix to adjourn the special meeting, if necessary, to solicit additional proxies if there appear to be insufficient votes at the time of the special meeting to approve any of the foregoing proposals, and
to transact such other business as may properly come before the special meeting or any adjournment(s) thereof.

Recommendation of the Boards of Directors

New Motion

The New Motion board of directors unanimously approved the merger agreement, the merger, the issuance of New Motion common stock pursuant to the merger and the other transactions related to the merger and contemplated by the merger agreement. The New Motion board of directors believes that the merger is advisable to and in the best interest of New Motion.

THE NEW MOTION BOARD UNANIMOUSLY RECOMMENDS THAT NEW MOTION STOCKHOLDERS VOTE “FOR” THE PROPOSAL TO AUTHORIZE THE ISSUANCE OF NEW MOTION COMMON STOCK TO THE TRAFFIX STOCKHOLDERS PURSUANT TO THE TERMS OF THE MERGER AGREEMENT. THE NEW MOTION BOARD OF DIRECTORS ALSO UNANIMOUSLY RECOMMENDS THAT NEW MOTION STOCKHOLDERS VOTE “FOR” THE PROPOSAL TO VOTE TO AUTHORIZE MANAGEMENT TO ADJOURN THE MEETING TO SOLICIT ADDITIONAL PROXIES, IF NECESSARY, IF THERE APPEARS TO BE INSUFFICIENT VOTES TO APPROVE ONE OR MORE OF THE OTHER PROPOSALS.

Traffix

The Traffix board of directors unanimously approved the merger agreement, the merger and the other transactions related to the merger and contemplated by the merger agreement. The Traffix board of directors believes that the merger is advisable, fair to and in the best interest of Traffix and its stockholders.

THE TRAFFIX BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT TRAFFIX STOCKHOLDERS VOTE “FOR” THE PROPOSAL TO ADOPT AND APPROVE THE MERGER AGREEMENT AND “FOR” THE PROPOSAL TO GRANT DISCRETIONARY AUTHORITY TO TRAFFIX MANAGEMENT TO VOTE YOUR SHARES TO ADJOURN THE SPECIAL MEETING, IF NECESSARY, TO SOLICIT ADDITIONAL PROXIES IF THERE APPEARS TO BE INSUFFICIENT VOTES TO APPROVE THE MERGER PROPOSAL.

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In considering such recommendations, New Motion stockholders and Traffix stockholders should be aware that New Motion and Traffix have agreed to provide certain employment, severance and indemnification arrangements to certain directors and officers of Traffix. See “The Merger — Interests of New Motion’s and Traffix’s Officers and Directors in the Merger” beginning on page 67.

Record Date and Vote Required

New Motion

The New Motion board of directors has fixed December 21, 2007 as the record date for determining the New Motion stockholders who are entitled to notice of and to vote at the New Motion special meeting. Only New Motion stockholders of record at the close of business on the record date will receive notice of, and be entitled to vote at, the special meeting of New Motion stockholders.

At the close of business on the record date, there were 12,096,284 shares of New Motion common stock outstanding and entitled to a vote, held by approximately 105 record holders. A majority of these shares must be represented, in person or by proxy, at the New Motion special meeting in order to constitute a quorum. A quorum must be present before a vote can be taken on the issuance of New Motion common stock, or any other matter, except adjournment or postponement of the meeting due to the absence of a quorum. At the New Motion special meeting, abstentions but not shares held in New Motion’s treasury, will be counted as present for purposes of determining the presence of a quorum, but will be considered not present for purposes of approving the proposal.

Each share of New Motion common stock entitles its holder to cast one vote on each matter submitted to a vote at the New Motion special meeting. In the event that stockholders are asked to vote on a proposal to adjourn or postpone the New Motion special meeting to permit solicitation of additional proxies, approval of that proposal would require the affirmative vote of holders of at least a majority of the shares of New Motion common stock present in person or represented by proxy at the meeting.

As of December 21, 2007, the record date for the New Motion special meeting, directors and executive officers of New Motion beneficially owned 4,235,196 of the outstanding shares of New Motion common stock, which represented approximately 33.2% of the shares of New Motion common stock then outstanding.

Traffix

The Traffix board of directors has fixed December 21, 2007 as the record date for determining the Traffix stockholders who are entitled to notice of and to vote at the special meeting. Only Traffix stockholders of record at the close of business on the record date will receive notice of, and be entitled to vote at, the special meeting of Traffix.

At the close of business on the record date, there were 15,232,431 shares of Traffix common stock outstanding and entitled to a vote, held by approximately 87 record holders. A majority of these shares must be represented, in person or by proxy, at the Traffix special meeting in order to constitute a quorum. A quorum must be present before a vote can be taken on the adoption and approval of the merger agreement, or any other matter except adjournment or postponement of the meeting due to the absence of a quorum. Abstentions, but not shares held in Traffix’s treasury, will be counted for purposes of determining the presence of a quorum at the Traffix special meeting.

Each share of Traffix common stock entitles its holder to cast one vote on each matter submitted to a vote at the Traffix special meeting. For the merger to be approved under Delaware law and Traffix’s certificate of incorporation, at least a majority of the outstanding shares of Traffix common stock on the record date must be voted for the merger proposal. In the event that stockholders are asked to vote on a proposal to adjourn or postpone the Traffix special meeting to permit solicitation of additional proxies, approval of that proposal would require the affirmative vote of holders of at least a majority of the shares of Traffix common stock present and voting, either in person or represented by proxy at the meeting.

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Voting of Proxies

New Motion

This joint proxy statement/prospectus is being furnished to New Motion stockholders in connection with the solicitation of proxies by the New Motion board of directors for use at the special meeting of New Motion. It is accompanied by a form of proxy card.

Voting by proxy means that a New Motion stockholder authorizes the persons named in the enclosed proxy card to vote the stockholder’s shares at the New Motion special meeting in the manner it directs. A New Motion stockholder may vote by proxy or in person at the meeting. To vote by proxy, a New Motion stockholder may use one of the following methods if it is a registered holder (that is, it holds its stock in its own name):

Telephone voting, by dialing the toll-free number and following the instructions on the proxy card;
Via the Internet, by going to the web address shown on the proxy card and following the instructions on the proxy card; or
Mail, by completing and returning the proxy card in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.

New Motion stockholders should complete, sign and return the proxy card if they will not be able to attend the special meeting in person. A New Motion stockholder who submits a proxy and later changes his or her mind as to the vote, or decides to attend the meeting in person, may revoke the proxy at any time before the vote at the New Motion special meeting by (1) notifying the corporate secretary of New Motion in writing of the revocation, either by mail, by fax or by delivering such revocation in person, or (2) completing, signing and returning a replacement proxy with a later date, either by mail, fax or delivery of such later proxy in person. In addition, a New Motion stockholder may revoke a prior proxy by attending the New Motion special meeting and voting in person. However, mere attendance alone at the special meeting by a New Motion stockholder who has signed a proxy, but has not provided a notice of revocation or request to vote in person to New Motion’s secretary is not sufficient to revoke such stockholder’s proxy.

All shares of New Motion common stock represented by properly executed proxies that New Motion receives by mail, facsimile, electronic mail or in person before or at the New Motion special meeting will, unless the proxies are revoked, be voted in accordance with the instructions indicated thereon. If a properly executed proxy is returned but contains no voting instructions, the shares of New Motion common stock represented by the proxy will be voted “FOR” the issuance of securities pursuant to the merger agreement. If a properly executed proxy is returned to New Motion and the stockholder has abstained from voting on the issuance of securities pursuant to the merger agreement, New Motion common stock represented by the proxy will be considered present at the special meeting for purposes of determining a quorum, but will not be considered to have been voted in favor of the issuance of securities pursuant to the merger agreement.

If a New Motion stockholder holds their shares of New Motion common stock in a brokerage account, the brokers holding such shares in “street name” may vote the shares only if the stockholder provides the broker with appropriate instructions. If an executed proxy is returned to New Motion by a broker holding shares of New Motion common stock in “street name” which indicates that the broker does not have discretionary authority to vote on the issuance of securities pursuant to the merger agreement, the shares will be considered present at the meeting for purposes of determining the presence of a quorum, but will not be considered to have been voted in favor of or against the issuance of securities pursuant to the merger agreement. Your broker will vote your shares only if you provide instructions on how to vote by following the instructions provided to you by your broker. You are urged to mark the applicable box on the proxy to indicate how to vote your shares. In addition, please note that if the shares of a New Motion stockholder are held in “street name” by a broker, bank or other nominee, and such New Motion stockholder wishes to vote in person at the New Motion special meeting, such stockholder must bring to the special meeting a letter from their broker, bank or other nominee in order to vote their shares in person.

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New Motion stockholders should address written notices of revocation of proxies and other communications relating to proxies to:

New Motion, Inc.
42 Corporate Park
Irvine, CA 92660
Attention: Allan Legator

Approval of the issuance of New Motion common stock to the Traffix stockholders requires the affirmative vote of holders of at least a majority of the shares of New Motion common stock present in person or by proxy at the New Motion special meeting. In order to ensure there is a quorum at the special meeting, the New Motion board of directors urges all New Motion stockholders to complete, date and sign the accompanying proxy and return it promptly in the pre-addressed, postage-paid envelope provided for that purpose.

New Motion does not expect that any matter other than the approval of the issuance of common stock pursuant to the merger agreement, and possibly the adjournment or postponement of the meeting, will be brought before the special meeting. If, however, other matters are properly presented, the persons named as proxies will vote in accordance with their judgment with respect to those matters, unless authority to do so is withheld in the proxy.

Solicitation of New Motion Proxies

Expenses incurred in connection with the solicitation of proxies from New Motion stockholders are estimated to be approximately $15,000 and will be borne by New Motion. Following the original mailing of this joint proxy statement/prospectus, proxies and other soliciting materials, New Motion will request brokers, custodians, nominees and other record holders of New Motion common stock to forward copies of those materials to persons for whom they hold shares of New Motion common stock and to request authority for the exercise of proxies. In addition, documents filed with the SEC by New Motion are available free of charge by contacting New Motion, at 42 Corporate Park, Irvine, CA 92660 or via telephone at (949) 777-3700. Directors, executive officers and employees of New Motion may solicit proxies in person or by telephone, mail, facsimile, electronic mail or other means. These directors, executive officers and employees will not be separately compensated for soliciting proxies.

Traffix

This joint proxy statement/prospectus is being furnished to Traffix stockholders in connection with the solicitation of proxies by the Traffix board of directors for use at the special meeting of Traffix stockholders. It is accompanied by a form of proxy card.

Giving a proxy means that a Traffix stockholder authorizes the persons named in the enclosed proxy card to vote its shares at the Traffix special meeting in the manner the proxy card directs. A Traffix stockholder may vote by proxy or in person at the meeting. If it is a registered holder (that is, it holds its stock in its own name) a Traffix stockholder may vote by mail if their proxy card is completed and returned in the enclosed envelope. The envelope requires no additional postage if mailed in the United States.

Traffix stockholders should complete, sign and return the proxy card if they will not be able to attend the special meeting in person. A Traffix stockholder who submits a proxy and later changes his or her mind as to the vote, or decides to attend the meeting in person, may revoke the proxy at any time before the vote at the Traffix special meeting by (1) notifying the corporate secretary of Traffix in writing of the revocation, either by mail, by fax, electronic mail or by delivering such revocation in person, or (2) completing, signing and returning a replacement proxy with a later date again, either by mail, by fax, electronic mail or by delivering such later dated proxy in person. In addition, a Traffix stockholder may revoke a prior proxy by attending the Traffix special meeting and voting in person. However, mere attendance alone at the special meeting by a Traffix stockholder who has signed a proxy but was not provided a notice of revocation or request to vote in person is not sufficient to revoke such stockholder’s proxy.

All shares of Traffix common stock represented by properly executed proxies that Traffix receives by mail, facsimile, electronic mail or in person before or at the Traffix special meeting will, unless the proxies are revoked, be voted in accordance with the instructions indicated thereon. If a properly executed proxy is returned but contains no voting instructions, the shares of Traffix common stock represented by the proxy will

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be voted “FOR” approval of the merger proposal, unless such shares are held in a brokerage account. If a properly executed proxy is returned to Traffix and the stockholder has abstained from voting on approval of the merger proposal, Traffix common stock represented by the proxy will be considered present at the special meeting for purposes of determining a quorum, but will not be considered to have been voted in favor of approval of the merger proposal.

If a Traffix stockholder holds his or her shares of Traffix common stock in a brokerage account, the brokers holding such shares in “street name” may vote the shares only if the stockholder provides the broker with appropriate instructions. If an executed proxy is returned to Traffix by a broker holding shares of Traffix common stock in “street name” that indicates that the broker does not have discretionary authority to vote on approval of the merger proposal, the shares will be considered present at the meeting for purposes of determining the presence of a quorum, but will not be considered to have been voted in favor of approval of the merger proposal and will be the equivalent of a vote against approval of the merger proposal. Your broker will vote your shares only if you provide instructions on how to vote by following the instructions provided to you by your broker. You are urged to mark the applicable box on the proxy to indicate how to vote your shares. In addition, please note that if the shares of a Traffix stockholder are held in “street name” by a broker, bank or other nominee, and such Traffix stockholder wishes to vote in person at the Traffix special meeting, such stockholder must bring to the special meeting a letter from their broker, bank or other nominee in order to vote their shares in person.

Traffix stockholders should address written notices of revocation of proxies and other communications relating to proxies to:

Traffix, Inc.
One Blue Hill Plaza
Pearl River, New York 10965
Attention: Dan Harvey

Approval of the merger proposal requires the affirmative vote of holders of at least a majority of the shares of Traffix common stock outstanding on the record date. Accordingly, abstentions and failures to vote will have the same effect as votes against approval of the merger proposal. Therefore, the Traffix board of directors urges all Traffix stockholders to complete, date and sign the accompanying proxy and return it promptly in the pre-addressed, postage-paid envelope provided for that purpose.

BECAUSE APPROVAL OF THE MERGER AGREEMENT REQUIRES THE AFFIRMATIVE VOTE OF AT LEAST A MAJORITY OF THE TRAFFIX COMMON STOCK OUTSTANDING AS OF THE RECORD DATE, ABSTENTIONS, FAILURES TO VOTE AND BROKER NON-VOTES WILL HAVE THE SAME EFFECT AS A VOTE AGAINST APPROVAL OF THE MERGER PROPOSAL.

Traffix does not expect that any matter other than approval of the merger proposal or possibly the adjournment or postponement of the meeting will be brought before the special meeting. If, however, other matters are properly presented, the persons named as proxies will vote in accordance with their judgment with respect to those matters, unless authority to do so is withheld in the proxy.

Solicitation of Traffix Proxies

Traffix is soliciting proxies for the special meeting from Traffix stockholders. Expenses incurred in connection with the solicitation of proxies from Traffix stockholders are estimated to be approximately $15,000 and will be borne by Traffix. Following the original mailing of this joint proxy statement/prospectus, proxies and other soliciting materials, Traffix will request brokers, custodians, nominees and other record holders of Traffix common stock to forward copies of those materials to persons for whom they hold shares of Traffix common stock, and to request authority for the exercise of proxies. In these cases, if the record holders so request, Traffix will reimburse the record holders for their reasonable expenses. Directors, officers and employees of Traffix may solicit proxies in person or by telephone, mail, facsimile or other means. These directors, officers and employees will not be separately compensated for soliciting proxies. In addition, Traffix has retained the services of Morrow & Co., LLC, a proxy solicitation firm, to solicit proxies on Traffix’s behalf, and will pay $15,000 to Morrow & Co. as compensation for such proxy solicitation services and has also agreed to re-imburse Morrow & Co. for disbursements, if any, incurred by Morrow & Co. on behalf of Traffix.

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YOU SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXIES. A TRANSMITTAL FORM WITH INSTRUCTIONS FOR THE SURRENDER OF CERTIFICATES FOR TRAFFIX COMMON STOCK WILL BE MAILED TO YOU AS SOON AS PRACTICABLE FOLLOWING THE COMPLETION OF THE MERGER.

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THE MERGER

This section of the joint proxy statement/prospectus, as well as the next section titled “The Merger Agreement” beginning on page 74, describes certain aspects of the proposed merger. These sections highlight key information about the merger agreement and the merger, but they may not include all the information that a stockholder would like to or should know. The merger agreement is attached as Annex A to this joint proxy statement/prospectus. We urge stockholders to read the merger agreement in its entirety.

General Description of the Merger and Conversion of Traffix Common Stock

On September 26, 2007, New Motion, Traffix and Merger Co., a wholly owned subsidiary of New Motion, entered into an Agreement and Plan of Merger, referred to as the merger agreement. The merger agreement is attached to this joint proxy statement/prospectus as Annex A. Under the terms of the merger agreement and Delaware law, Merger Co. will be merged with and into Traffix and the separate existence of Merger Co will cease, leaving Traffix as the surviving entity which will be a wholly owned subsidiary of New Motion.

It is the intention of New Motion and Traffix that Traffix stockholders will own 45% of the capital stock of New Motion immediately after consummation of the merger, on a fully-diluted basis (calculated using the treasury stock method). Each issued and outstanding share of Traffix common stock will be converted into the right to receive approximately 0.681 (as adjusted from 0.683 effective at September 26, 2007) shares of New Motion common stock based on the currently anticipated capitalization of both companies on the closing date of the merger. The value, but not the number, of shares of New Motion common stock to be issued to the Traffix stockholders will vary depending upon the market price of New Motion common stock at the time of the consummation of the merger. The following table illustrates the merger consideration as of September 26, 2007, the last full trading day before the public announcement of the merger, and reflects 15,153,410 shares of Traffix common stock outstanding and 2,295,375 Traffix shares underlying common stock options:

     
  New Motion
Common Stock
  Traffix
Common Stock
  Equivalent Value Traffix
Common Stock
Exchange ratio                       0.683  
September 26, 2007   $ 15.50     $ 4.76     $ 10.59  

The above table shows only an historical price comparison as of September 26, 2007. This comparison may not provide meaningful information to Traffix stockholders in determining whether to approve and adopt the merger agreement. Traffix stockholders are urged to obtain current market quotations for New Motion and Traffix common stock and to review carefully the other information contained in this joint proxy statement/prospectus. Because an active trading market for New Motion’s common stock currently does not exist, the quoted price of New Motion’s common stock may not be a reliable indicator of its fair market value, or the equivalent value of the shares of Traffix common stock to be exchanged for New Motion stock.

New Motion will not issue any fractional shares of its common stock in the merger. Instead of a fraction of a share, Traffix’s stockholders will receive an amount of cash, without interest, equal to the product of (x) such fraction of a share, multiplied by (y) the ten day trailing average closing price for a share of New Motion common stock on its principal market or exchange.

Background of the Transaction

The terms, conditions and other provisions of the merger agreement are the result of arm’s length negotiations conducted among representatives of New Motion and Traffix. The following is a summary of the meetings, negotiations and discussions between the parties that preceded the execution of the merger agreement.

General

The following is a description of the existing and historical business relationship between New Motion and Traffix, and a description of the material aspects of the proposed merger and related transactions, including the merger agreement and certain other agreements entered into in connection therewith. This section of this joint proxy statement/prospectus also discusses additional contacts, meetings and negotiations that representatives of Traffix had with other interested parties. While New Motion and Traffix believe that the

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following description covers the material terms of the merger and the related transactions, the description may not contain all of the information that is important to you. You should carefully read this entire document and the other documents we refer to herein for a more complete understanding of the merger and the related transactions.

Historical Background

From time to time, New Motion has analyzed a variety of potential strategic transactions, including Traffix and other potential business combinations and acquisitions. Similarly, Traffix has regularly evaluated strategic opportunities, including New Motion and other potential acquisitions or mergers, and has a history of acquiring other companies.

New Motion and Traffix were initially introduced and formally commenced a commercial relationship in 2005. Their commercial relationship and business level has continued to expand and increase since that time, particularly during Traffix’s third fiscal quarter ended August 31, 2007 and New Motion’s most recent fiscal quarter ended September 30, 2007. For the Traffix fiscal quarter ended on August 31, 2007, New Motion accounted for approximately 21% of Traffix’s net revenue, representing a significant increase over prior fiscal periods and making New Motion the single largest customer of Traffix. Due to their extensive business relationship, the companies were very familiar with one another, from both a strategic and operational standpoint. In addition, New Motion’s CEO, Burton Katz, and Traffix’ CEO, Jeffrey Schwartz, have a pre-existing business and personal relationship dating back several years, which further added to the companies’ knowledge of one another and their respective management teams.

The parties first discussed the possibility of a business combination on March 28, 2007, when Mr. Katz met with Traffix’s President, Andrew Stollman at an industry trade show in Orlando, Florida, primarily to discuss marketing initiatives between the two companies and other matters related to the companies’ commercial business dealings. In that meeting, Mr. Katz broached the subject of a strategic transaction between the companies and the parties agreed to meet later that day to further discuss this possibility. Mr. Stollman reported the substance of his initial conversation to Mr. Jeffrey Schwartz, Traffix’s CEO, and Mr. Schwartz encouraged him to meet with Mr. Katz to obtain a better understanding of what Mr. Katz had in mind. Later that evening Mr. Stollman met with Messrs. Katz and Raymond Musci, New Motion’s President, and the parties continued with preliminary discussions concerning the possibility of a strategic transaction. The parties agreed to further reflect on the possibility of engaging in more detailed discussions regarding a potential strategic transaction, and to meet at a later point in time to further explore the opportunity.

On March 29, 2007, during a routine business call between Messrs. Schwartz, Katz and Musci, Mr. Schwartz advised Messrs. Katz and Musci that he was aware of their conversations with Mr. Stollman with respect to exploring a strategic transaction and he urged them to continue the dialogue to determine if there was a possibility of the two companies entering into a strategic transaction.

During the first weekend of April 2007, Messrs. Stollman and Katz communicated with each other, referring to their mutual desire to continue probing the possibility of a strategic transaction. During this period, Messrs. Schwartz and Stollman had informal one-on-one telephone conversations with each of the Traffix board members advising them of management’s interest in evaluating a potential strategic transaction with New Motion. New Motion’s management similarly consulted with members of New Motion’s board of directors about management’s interest in exploring a potential transaction with Traffix.

Based on the parties’ interest to evaluate a possible strategic transaction, the companies executed a mutual Non-Disclosure Agreement on April 6, 2007.

From April 4 through April 12, 2007, Messrs. Katz and Musci had a number of telephone conversations and met in Traffix’s offices with Messrs. Schwartz and Stollman to further discuss the two companies’ businesses, strategies and goals, as well as several alternatives for a potential transaction.

A series of telephone calls on April 11, 2007, between Messrs. Stollman and Katz led to a conference call later that day among Messrs. Katz, Stollman and Daniel Harvey, Traffix’s CFO. During this conference call each company’s representatives discussed the current financial situation of their respective companies since the date of their last publicly filed financial statements. Structural questions with respect to a possible

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transaction were discussed in broad terms such as whether the strategic transaction should be in the form of a cash purchase by New Motion of all the shares of stock of Traffix or an exchange of stock for stock.

On April 12, 2007, Mr. Schwartz had a telephone conversation with Mr. Katz in which he said that the Traffix board of directors was scheduled to meet the following day to discuss various proposals for strategic transactions. Mr. Schwartz encouraged Mr. Katz to submit a formal indication of interest no later than the following day if New Motion was still interested in pursuing a potential strategic transaction with Traffix.

On April 13, 2007, Mr. Katz sent a brief letter to Mr. Schwartz stating in general terms New Motion’s interest to acquire all of the outstanding shares of Traffix in the form of a cash tender offer in the range of $85 to $88 million dollars, subject to due diligence and board approval.

On the same day, the Traffix board held a meeting during which it discussed several possible strategic transactions, including the cash offer by New Motion. At that meeting, the Traffix board designated independent director Robert Machinist to take the lead in evaluating New Motion’s proposal on behalf of the board. At that meeting the Traffix board also discussed preliminary indications of interest that it had received from other parties but concluded that as of the date of the meeting the proposal of New Motion was the only one with any reasonable prospect of resulting in a serious offer that would be acceptable to Traffix’s board.

During the period from April 13 through April 20, 2007, members of New Motion’s management and its board of directors had various internal meetings and conversations to discuss the specifics of the proposed transaction with Traffix. The board instructed management to proceed in further evaluating a potential transaction and update the board regularly on its progress.

On April 16, 2007, Messrs. Katz, Stollman and Machinist participated in a conference call to discuss the terms of the proposed strategic transaction in greater detail. Among other things, they discussed possible structures for the proposed transaction, including a straight cash purchase or a combined cash and stock purchase consideration, which company would be the survivor in any proposed transaction structure and both companies’ need to engage investment bankers to assist them in the analysis.

Messrs. Stollman and Katz had a series of phone conversations between April 17 and April 19, 2007 to continue their discussion concerning issues relating to the proposed general form and structure of a possible transaction, as well more detailed matters such as the composition of the combined company’s management and board of directors and the location of the combined company’s corporate headquarters. During the course of these discussions, Mr. Katz informed Mr. Stollman of New Motion’s plan to hire a new chief operating officer.

On April 20, 2007 Messrs. Katz, Musci, Machinist and Stollman met in Mr. Machinist’s office in New York to discuss potential synergies between the companies, alternative structures including a stock for stock merger, the trading exchange or market for the combined company’s stock, the relative advantages of either company continuing as the surviving company as well as the relative stock valuations of the companies. In the course of their meeting and discussions that day and the following few days, the parties agreed to concentrate on pursuing a possible stock for stock merger rather than an all cash transaction.

Shortly after April 20, 2007, Messrs. Stollman and Machinist had a conversation with Mr. Schwartz and other members of Traffix’s board of directors with respect to the substance of their April 20th meeting with Messrs. Katz and Musci. Based on their discussion, the Traffix board members and management came to a general consensus to pursue a possible stock merger with New Motion.

During conversations between representatives of the two companies during which Traffix’s management expressed their serious concern about a cash deal inasmuch as New Motion did not have immediately available funds and such a transaction would have a financing condition. Thus, on April 26, 2007, Mr. Katz sent to Mr. Machinist a revised term sheet containing the proposed general terms of a potential stock merger transaction. In addition to the revised purchase consideration, the new term sheet also contained, among other standard terms, an exclusivity/no shop provision to which Traffix objected and continued to object. Issues also arose with respect to the amount and structure of the “break-up fee” included in the new term sheet.

Subsequently, on April 26, 2007, while Mr. Stollman was at New Motion’s offices, he joined Messrs. Katz and Musci in a telephone conversation with Messrs. Machinist, Schwartz and Mr. Lawrence Burstein,

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another Traffix independent board member, to discuss the Term Sheet and other issues related to the proposed transaction. Later that evening, Messrs. Katz and Musci met again with Mr. Stollman to continue their discussion about a proposed transaction and other ancillary matters.

Over the course of the next ten days, management of the two companies continued to have regular conversations with respect to their ongoing business arrangements, which invariably also included some mention of the status of the parties’ discussions concerning their proposed strategic transaction. During the course of these conversations, Mr. Schwartz stated that in connection with a possible strategic transaction he would like to resign as Chairman and CEO and arrange for the sale of a substantial portion of his shares of Traffix common stock.

On May 7, 2007, Messrs. Katz, Stollman and Schwartz met in New York to discuss the progress of negotiations and Traffix’s response to New Motion’s Term Sheet.

On May 10, 2007, New Motion’s board of directors held a meeting at which Messrs. Katz and Musci led a discussion concerning potential strategic transactions that management had been exploring, including a potential merger with Traffix. Messrs. Katz and Musci summarized the status of management’s discussions with Traffix and updated the board on terms of the proposed transaction. Messrs. Katz and Musci responded to various questions from board members and stated that they would continue to update the board with their progress.

During the period from May 11 through May 14, 2007, representatives of each company’s management and board of directors held numerous meetings and conference calls internally and with the other company’s board members and management team to discuss a variety of proposals and counter-proposals with respect to the structure and terms of a proposed transaction.

On May 15, 2007, Messrs. Schwartz and Machinist had a telephone conversation to discuss the status of a proposed transaction and Traffix’s response to New Motion’s April 26th Term Sheet. Later that day, Messrs. Schwartz, Machinist and Stollman had a conference call with Traffix’s outside counsel, Feder, Kaszovitz, Isaacson, Weber, Skala, Bass & Rhine LLP (“Feder Kaszovitz”), to review legal issues related to various aspects of the proposed transaction. Feder Kaszovitz advised the group that Mr. Schwartz’s proposal to step down as Chairman and CEO and sell a significant portion of his shares of Traffix common stock could present a conflict of interest in negotiating any transaction, and recommended that the board establish a special committee comprised solely of independent directors to negotiate the terms of the proposed transaction with New Motion. Feder Kaszovitz also advised the group that it would be customary for the special committee to retain its own counsel and engage an independent financial advisor.

On May 21, 2007, New Motion sent to Traffix a revised Term Sheet reflecting terms of a proposed merger transaction that would result in Traffix’s stockholders receiving approximately 43% of the combined company’s capital stock on a fully diluted basis. This version of the term sheet continued to contain no-shop and break-up fee provisions that remained contentious.

At a meeting held on May 25, 2007, the Traffix board of directors established a Special Committee of the board of directors (the “Special Committee”) consisting of Messrs. Machinist, as Chairman, Lawrence Burstein and Mark Gutterman and delegated to the Special Committee authority, among other things, to review, evaluate and negotiate the terms and determine the advisability of any potential transaction, determine whether a transaction is fair to Traffix and its stockholders, and recommend to the full board any further action to be taken in connection with any potential transaction. The Special Committee was further authorized to retain legal and financial advisors and other consultants as needed to advise the committee on the benefits and risks of any potential transaction. At the meeting, the board of directors also adopted resolutions providing that the board would not approve or recommend to the stockholders any potential transaction without a favorable recommendation from the Special Committee, and authorizing compensation to the members of the Special Committee for their service in the amount of $15,000 per month for the Chair of the Special Committee, up to a maximum of $90,000 in the aggregate, and $10,000 per month for each of the two other members, up to a maximum of $60,000 in the aggregate to each, plus reimbursement of reasonable expenses for all members.

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During the period from May 28 to May 31, 2007, Messrs. Schwartz and Harvey traveled to California to commence their business and financial due diligence review of New Motion. During the course of this visit with New Motion’s management, Mr. Schwartz met primarily with Messrs. Katz and Scott Walker, New Motion’s Chief Marketing Officer, and Mr. Harvey primarily met with Messrs. Musci and Allan Legator, New Motion’s Chief Financial Officer and Secretary.

On May 31, 2007, Messrs. Machinist, Schwartz, Musci and Katz met in Los Angeles to discuss their vision of the future of a combined company.

On June 5, 2007, the Traffix Special Committee interviewed in person or by telephone conference several investment banking firms for the purpose of selecting a financial advisor to assist in the proposed transaction with New Motion. After consideration and discussion of the proposals it received, the Special Committee tentatively selected Stephens Inc. (“Stephens”), subject to a final presentation and execution of a satisfactory engagement letter, including fee arrangement.

On June 8, 2007, New Motion’s outside counsel, Stubbs Alderton & Markiles LLP (“SAM”), forwarded to Wolf, Block, Schorr and Solis-Cohen LLP, counsel to the Traffix Special Committee (“Wolf Block”) and Feder Kaszovitz the first draft of a merger agreement based on the terms set forth in the May 21st Term Sheet.

On June 11, 2007, the Traffix Special Committee held a meeting at which Wolf Block and Feder Kaszovitz, reported on the status of the proposed merger. Wolf Block further reported on the status of due diligence efforts and pointed out that the initial draft merger agreement furnished by New Motion’s outside counsel contained terms providing that New Motion stockholders would own 57% of the combined company and Traffix stockholders would own 43%. The Special Committee determined to have Mr. Machinist advise New Motion that it was not prepared to proceed on the basis of a 57%/43% split and that the final determination of the exchange ratio would be fixed following the completion of due diligence by its legal team and investment bankers. The Special Committee then resumed discussion concerning the necessity of retaining an investment banking firm to assess the financial benefits and risks of the transaction and evaluate the fairness of the transaction to the stockholders of Traffix. The Special Committee authorized Mr. Machinist to notify representatives of Stephens that it had been tentatively selected to serve as financial advisor to the Special Committee and to request Stephens to perform a preliminary assessment of a possible Traffix and New Motion merger.

On June 13, 2007, the Traffix Special Committee met with Messrs. Schwartz, Stollman and Harvey, to discuss the business issues with respect to the proposed transaction.

On June 15, 2007, Messrs. Machinist and Stollman met with Messrs. Musci and Katz at the offices of New Motion’s financial advisor in Los Angeles to investigate the management, personnel, business and operations of New Motion and to determine whether Traffix and its stockholders would benefit from a proposed transaction.

Between June 15, 2007 and the early part of July, 2007, management of both companies held numerous conference calls with each other and continued to exchange information in connection with their respective due diligence efforts.

On June 18, 2007, the board of directors of New Motion held a meeting, at which Messrs. Musci and Katz and representatives of SAM updated the New Motion board on the status of the proposed transaction and the parties’ due diligence efforts. Messrs. Katz and Musci also responded to questions concerning the status of negotiations of specific terms in the merger agreement. Representatives from SAM reported on the progress of their legal due diligence efforts and discussions with legal advisors of Traffix and its Special Committee concerning the terms of the merger agreement and related matters. Following their discussion, the board authorized management to commence the process for identifying and selecting a qualified financial advisor to assist New Motion in connection with the proposed transaction with Traffix.

During the week following July 4, 2007, New Motion began interviewing investment bankers. On July 5, 2007, Mr. Musci spoke on the phone with representatives of Jefferies Broadview.

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On July 9, 2007, the Special Committee held a meeting with representatives from Wolf Block and Stephens to further discuss the proposed transaction. Mr. Machinist reported generally regarding the potential transaction with New Motion, including the fact that he and Mr. Stollman had met with representatives from New Motion in California and explained that the proposed exchange ratio was subject to negotiation. The Special Committee then discussed the terms of a draft engagement letter with the representatives of Stephens and, after careful consideration, the Special Committee unanimously agreed that it would retain Stephens to evaluate the proposed transaction with New Motion for the purpose of determining if it could render an opinion that the transaction was fair from a financial point of view to Traffix stockholders.

From and after that date, Traffix established an electronic data room to facilitate the due diligence process. The Special Committee’s and Traffix’s legal and financial advisors commenced their legal and financial due diligence in order to determine the appropriate valuation and contractual terms for a potential transaction with New Motion.

During the period from July 10 through August 2007, the parties continued their due diligence efforts. In connection with these efforts, Messrs. Katz and Musci met with members of Traffix’s senior management team in New York, as well as with representatives of Stephens to review issues relating to the transaction and the progress of each company and its respective business plan.

On July 25, 2007, New Motion’s board of directors held a meeting at which Messrs. Musci and Katz led a discussion relating to the proposed transaction with Traffix. They updated the board on New Motion’s potential transaction and reviewed the qualification of several firms as possible candidates to act as New Motion’s financial advisor. Among the firms the board considered were Jefferies Broadview and Europlay Capital Advisors (“ECA”). Following a discussion concerning the advisory services required by the company, the qualifications of the candidates and the proposed compensation terms of the financial advisors, Messrs. Katz and Musci and representatives of SAM who were also present at the meeting responded to numerous questions from the board members concerning these matters as well as the terms of the draft merger agreement. At the end of the meeting, the board instructed management to keep the board informed on these issues.

On July 30, 2007, Messrs. Musci and Katz met with Mr. Machinist in New York to review the status of negotiations as well as various terms and aspects of the proposed transaction.

On August 7, 2007, New Motion’s board of directors held a board meeting at which Messrs. Katz and Musci and representatives of SAM led a discussion regarding the potential merger with Traffix. Mr. Musci gave a detailed history of the negotiations and discussed with the board the proposed terms of the transaction. Mr. Musci added that in addition to a potential deal with Traffix, the company is reviewing other potential strategic transactions. Messrs. Musci and Katz and representatives of SAM responded to numerous questions from the board members.

On August 8, 2007, the Traffix Special Committee held a meeting at which Mr. Machinist reported that Mr. Musci would be traveling to New York the following week to work with Mr. Harvey on preparing the combined pro forma financial projections and forecasts. Mr. Machinist further reported on the status of Stephens’ evaluation. The Special Committee agreed that this would be very important in assessing a possible combination of Traffix and New Motion. Wolf Block summarized the status of negotiations with New Motion’s counsel and the main open items in the latest draft of the merger agreement, including calculation of the exchange ratio and the provisions regarding termination and payment of break-up fees. The Special Committee and Wolf Block discussed these matters as well as several issues relating to due diligence matters, including the companies’ differing fiscal year ends and the confidence of the Special Committee in the financial projections provided by New Motion.

From the middle through the latter part of August the parties exchanged information and continued their respective legal, financial and business due diligence efforts. During this time, the respective legal advisors held several conference calls to discuss and resolve open items and continued to exchange information in connection with their due diligence efforts.

On August 20, 2007, New Motion’s board held a meeting to discuss and consider a variety of matters, including the proposed transaction with Traffix. Messrs. Musci and Katz and representatives of SAM updated the board on the status of the companies’ negotiations and due diligence efforts, and responded to questions

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from the board members regarding open issues in the draft merger agreement. The board also considered and approved the engagement of Jefferies Broadview to act as New Motion’s financial advisor in connection with the proposed transaction with Traffix, on the terms presented to the board.

On August 22, 2007, New Motion signed an engagement letter in which it retained Jefferies Broadview to act as New Motion’s financial advisor and to issue a fairness opinion in connection with the proposed transaction.

On August 29, 2007, Messrs. Musci, Burstein, Machinist and Jerome Chazen, a New Motion director, met in New York to review open issues and discuss the results of their due diligence efforts, corporate governance issues and the composition of New Motion’s board of directors following the completion of the merger.

On September 6, 2007, Messrs. Musci, Katz and a representative of ECA, Europlay Capital Advisors, met with Messrs. Machinist and Burstein in New York to further discuss open issues in the merger agreement. At that meeting, the parties agreed to include a mechanism for adjusting the exchange ratio merger consideration in connection with certain matters that were raised in the course of due diligence.

On September 7, 2007, the Special Committee held a telephonic meeting. Messrs. Machinist and Burstein reported on their meeting with Mr. Musci, Mr. Katz and a representative of ECA on the previous day. Among the business issues they discussed were continuing negotiations regarding the exchange ratio, pending the receipt by the Special Committee of financial projections and a report from Stephens, and the combined companies’ management structure.

On September 12, 2007, the Special Committee held a telephonic meeting attended by representatives from Wolf Block and Stephens. The representatives from Stephens discussed the status of its review of the proposed transaction. Members of the Special Committee and Wolf Block attorneys asked questions and received responses from Stephens as to their analysis and review until that point. The representatives of Stephens advised that they believed they would be in a position to deliver a more formal report to the Special Committee on September 18, 2007.

On September 18, 2007, the Special Committee held a meeting at the offices of Wolf Block attended by representatives from Wolf Block and Stephens. At the meeting, representatives of Stephens discussed its preliminary analysis of the proposed transaction with New Motion, including an analysis of the proposed exchange ratio calculation, market valuation, implied transaction valuation, financial data, stock performance and other factors which they considered relevant in their study. The representatives of Stephens stated that, absent any material changes in the proposed transaction from that presented at the meeting, it was likely that Stephens would be able to opine that an exchange ratio resulting in the New Motion stockholders owning 55% and Traffix stockholders owning 45% of the combined company on a fully diluted basis would be fair from a financial point of view to Traffix stockholders. After the Stephens representatives left the meeting, the Special Committee and Wolf Block had further discussions regarding the report and determined that it reflected a considerable amount of study and analysis and was convincing in its preliminary determination.

At the same meeting, representatives of Wolf Block reviewed with the Special Committee the terms of the merger agreement and led a discussion regarding the principal provisions of the merger agreement and the remaining significant open issues, including the exchange ratio calculation and proposed merger consideration adjustment to take account of certain contingent matters identified by New Motion, the method for calculating the number of outstanding shares on a fully diluted basis, the required approval of the transaction by stockholders of Traffix and New Motion, the conditions for payment and amount of “break-up” fees in the event of termination, employment and consulting agreements for Messrs. Stollman and Schwartz, respectively, and other matters.

On September 18, 2007, New Motion’s board of directors held a telephonic meeting at which the members of the board and management and members of SAM, New Motion’s outside counsel, discussed the status of the transaction and negotiations on the merger agreement.

On September 19, 2007, representatives of SAM, Wolf Block and Feder Kaszovitz held a telephonic conference call to discuss and resolve the remaining open issues in the merger agreement. This led to a call

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with representatives of these firms and Messrs. Musci, Katz and Schwartz later that day to discuss proposed resolutions of the remaining open issues in the draft merger agreement.

In late September, Messrs. Schwartz and Stollman retained counsel to represent their interests as employees of Traffix. As previously stated, Mr. Schwartz had decided that he wanted to sever his full-time relationship with Traffix and, through counsel, sought a severance package which would reflect his 12 years of service to Traffix and his contributions to it as its Chief Executive Officer since 1995. Following a series of discussions over a period of several days, it was agreed that Traffix would extend Mr. Schwartz’s employment contract to end on the earlier of the consummation of the merger with New Motion and November 30, 2008, and also provide Mr. Schwartz with a severance package upon consummation of the transaction with New Motion. It was also agreed that Mr. Schwartz would enter into a two-year consulting agreement with the combined company following the completion of the proposed merger. Similarly, as a result of parallel discussions during this time, it was agreed that Mr. Stollman’s employment agreement be extended to expire on the earlier of the consummation of the merger and June 30, 2008, and the parties outlined the general terms for a new employment agreement with Mr. Stollman to be entered into upon consummation of the merger with New Motion, under which he would serve as President of the combined company and receive compensation substantially similar to Mr. Katz’s compensation package following the merger.

On September 21, 2007, the Special Committee held a telephonic meeting at which representatives from Wolf Block reported on the status of negotiations on unresolved legal and business points, including the method for calculating the number of outstanding shares on a fully diluted basis and the resolution of certain contingent business issues identified by New Motion. Following the presentation by Wolf Block, the Special Committee directed Wolf Block to continue to negotiate the open business issues based upon parameters established by the Special Committee.

On September 23, 2007, New Motion’s board of directors held a meeting to discuss the status of the proposed merger with Traffix and the remaining open items in the merger agreement. At the meeting, Messrs. Musci and Katz and representatives of SAM led a discussion to summarize the remaining open items and update the board of directors on the results of their continuing negotiations with representatives of Traffix on these matters.

On September 25, 2007, the Special Committee held a telephonic meeting attended by representatives from Wolf Block and Stephens. The purpose of the meeting was for Stephens to present its final report, for the Special Committee to consider the terms of the possible transaction with New Motion that had been negotiated and, if appropriate, for the Special Committee to vote on whether to recommend to the Traffix board of directors that it proceed with the proposed transaction with New Motion. The representatives from Stephens delivered to the Special Committee and Wolf Block a document that summarized the detailed analysis upon which its fairness opinion was based. The representatives from Stephens explained their analysis with questions being asked by the Special Committee and answered at various times during their presentation. At the conclusion of the presentation, the representatives from Stephens stated that Stephens was prepared to render a fairness opinion that the exchange ratio of 0.683, subject to minor variations, which would result in the New Motion stockholders owning 55% and Traffix stockholders owning 45% of the combined company on a fully diluted basis, was fair to the stockholders of Traffix from a financial point of view. Representatives of Wolf Block noted that the exchange ratio of 0.683 might change slightly in accordance with final calculations by representatives of New Motion and Traffix of the number of outstanding shares and options of each company. The Special Committee also discussed the terms of the merger agreement providing for an exchange ratio of 0.633 if certain contingent matters were not resolved before the closing. Based on discussions with management and management’s expectation that these contingent matters would be resolved in a manner that would not trigger the lower exchange ratio, the Special Committee approved these provisions. The Special Committee deliberated at length, and after extended discussions on the analysis of the proposed merger agreement and the report given by Stephens, the Special Committee unanimously voted to: (1) recommend to the Traffix board of directors that it approve the proposed transaction with New Motion as described in the last draft of the merger agreement (and its disclosure schedules); and (2) to recommend that the Traffix board of directors recommend that its stockholders approve the proposed merger with New Motion.

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Following the conclusion of the Special Committee meeting, a meeting of Traffix’s board of directors was held. Representatives from Wolf Block, Feder Kaszovitz and Stephens participated in the meeting. The Stephens representatives summarized the report it had presented to the Special Committee containing the analysis on which its fairness opinion was based, with questions being asked by the board members and answered at various times during the presentation. The board then discussed the analysis presented by Stephens, the strategic business reasons for proceeding with the proposed merger and the recommendation of the Special Committee to approve the merger. The board also reviewed with the Feder Kaszovitz and Wolf Block representatives the status of the negotiations regarding the terms of the merger agreement. The board then unanimously approved the merger and merger agreement and directed that the matter be submitted to the Traffix stockholders for their approval.

On September 25, 2007, New Motion’s board of Director held a telephonic meeting at which representatives from Jefferies Broadview made a presentation regarding their proposed fairness opinion to be delivered to the board of directors in connection with the merger. The representatives of Jefferies Broadview explained their analysis forming the basis for its fairness opinion. At the conclusion of the presentation, representatives from Jefferies Broadview stated that it was prepared to render a fairness opinion based on the terms reflected in the latest draft of the merger agreement. Following this presentation and discussion, representatives from SAM made a presentation and led a discussion regarding the latest draft of the merger agreement and the final resolution of the remaining open issues in the merger agreement. New Motion’s board deliberated at length, and after further discussions on the analysis of the proposed merger agreement and the presentations given by Jefferies Broadview and SAM, the board unanimously voted to approve the terms of the merger agreement as presented and gave management and counsel the authority to resolve any remaining open issues.

On September 25, 2007, Jefferies Broadview delivered its written opinion to the effect that, as of that date and based upon and subject to the various considerations and assumptions set forth in its opinion, the merger consideration to be paid by New Motion pursuant to the merger agreement was fair, from a financial point of view, to New Motion.

On September 26, 2007, Stephens delivered its written opinion that, as of September 26, 2007, and based upon and subject to the assumptions, qualifications and limitations set forth in its opinion, the merger consideration was fair to Traffix and its stockholders, from a financial point of view.

Following the approval of New Motion’s and Traffix’s respective boards of directors late in the day, on September 26, 2007, the parties signed the merger agreement. A mutual public announcement was released on the morning of September 27, 2007.

Reasons for the Merger — New Motion and Traffix

Both New Motion and Traffix believe there are substantial potential benefits to the proposed merger. This section summarizes the potential benefits that both parties are expected to share in the merger. For a discussion of various factors that could prohibit or limit the parties from realizing some or all of these benefits, see “Risk Factors” beginning on page 17.

Contribution to the New Entity of Valuable Content from Both Companies.  Both Traffix and New Motion maintain websites and other valuable digital content that provides a high quality online user experience for each company’s respective users and subscribers. New Motion’s current content includes casual games, interactive contents and digital music. Traffix’s current content includes lifestyle and consumer interest content, music downloads, games and sweepstake contests. Management of both companies believes that combining this content into a single combined company portfolio is expected to yield benefits to the combined company, including improving the overall quantity and quality of content accessed by users and subscribers, which should lead to longer subscription terms and a more attractive customer value proposition. These benefits are expected to inure to the stockholders of the combined company through improvements in the combined company’s competitive position vis-à-vis its competitors and a greater level of revenues and higher profitability than would each entity have as a standalone company.
The Expected Management Depth of the Combined Company.  The parties considered the benefit of creating a management team comprised of experienced public company managers from both

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New Motion and Traffix, thereby resulting in expanded depth and capabilities of the combined company’s management team. This combined management team is expected to be able to better react to a changing competitive landscape and to originate and implement strategic initiatives with more resources than would each company on a standalone basis. Management believes that this deeper “bench” of talent will positively impact stockholder value.
The Merger Agreement.  The boards of directors of New Motion and Traffix considered the terms of the merger agreement and determined that they were reasonable and in the best interests of their respective shareholders. These terms included such aspects as (i) the ability of either party to, under certain circumstances, terminate the merger if an alternative transaction is deemed superior, (ii) that the size of the termination fee was considered reasonable and was a product of negotiations between the two parties and (iii) the fact that the representations, warranties and covenants of New Motion and Traffix are generally reciprocal.
Enhanced Stockholder Value.  New Motion and Traffix believe that the combined company will provide significant, realizable revenue and cost synergies, strong future cash flows, financial strength and improved management resources, which are expected to enhance the combined company’s competitive position and provide enhanced value for stockholders.

The actual synergistic benefits from the merger and costs of integration could be different from the foregoing estimates and these differences could be material. Accordingly, there can be no assurance that any of the potential benefits described above or included in the factors considered by the New Motion board of directors described below under “— New Motion’s Reasons for the Merger” or by the Traffix’s board of directors or its special committee described below under “— Traffix’s Reasons for the Merger” will be realized. See “Cautionary Statement Regarding Forward-Looking Statements” and “Risk Factors” and beginning on pages 16 and 17, respectively.

Reasons for the Merger Specific to New Motion

Traffix Broad Distribution and Existing Marketing Network.  New Motion considered Traffix’s broad marketing and distribution network, and its correspondingly large number of transactions and visitors, as a significant reason for the merger. Management considered the synergistic cost savings and increased profitability that is expected to be realized by the combined company, in particular, through the reduction in business development expenses and marketing expenditures that would result from eliminating the marketing mark-up Traffix has historically charged New Motion. These cost savings are expected to offer strategic benefits by reducing the combined company’s overall cost structure in relation to the revenues that the combined company is expected to generate. The money saved could be redeployed to acquire additional new customers and subscribers, further expanding the combined company’s subscriber and revenue base. The synergies realized from combining the marketing and distribution capabilities of Traffix with New Motion’s subscription business is expected to facilitate the combined company’s ability to scale New Motion’s existing business at a faster rate than New Motion would be able to achieve on its own. This will also enable diversification of revenue streams and enable expansion of the combined company’s business in the existing sectors in which New Motion and Traffix operate as well as in international markets. These costs savings and the combined company’s expanding and increasingly diversified revenue base could have a net positive impact on future earnings. In addition, a greater portion of the combined company’s revenue could be realized as cash flow.
Expected Financial Strength of the Combined Company.  After the merger is consummated, it is anticipated that the combined entity will have more substantial financial and managerial resources than New Motion has as a stand-alone entity. The greater anticipated financial resources of the combined entity, including an expected stronger balance sheet and anticipated greater sales and operating cash flows, is expected to allow the combined entity to acquire other companies that either company on its own could not do, or to invest in new businesses or build or acquire content and mobile technology and know-how that New Motion or Traffix on a stand-alone basis would be unable to finance on favorable or economically viable terms.

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Opinion of Financial Advisor.  The New Motion board of directors considered Jefferies Broadview’s opinion, dated September 25, 2007, to New Motion’s board of directors as to the fairness to New Motion, from a financial point of view and as of the date of the opinion, of the merger consideration to be paid by New Motion pursuant to the merger agreement, as more fully described in “— Opinion of New Motion’s Financial Advisor” beginning on page 53.

Reasons for the Merger Specific to Traffix

New Motion’s Mobile Subscriber Business Model.  Traffix considered the advantages of New Motion’s mobile subscriber business model, and the effect that this business model could have on Traffix’s existing business and base of users. The expected combined business model is expected to take advantage of the combination of New Motion’s mobile Internet subscription model, which is recurring in nature and which takes advantage of both online and mobile media, with the transaction-based revenue model of Traffix. Thus, the sustainability of Traffix’s revenue base is expected to improve through the transformation of Traffix’s transaction-based users into recurring monthly subscribers, possibly leading to greater revenue and profitability than Traffix could likely achieve as a standalone entity. The combined company’s unique business model is expected to enable the combined entity to realize competitive advantages that Traffix might not be able to achieve on its own.
Complementary nature of businesses.  Traffix considered the complementary nature of the two businesses, including the fact that the two companies already have a pre-existing commercial relationship with each other, as well as New Motion’s substantial presence in the mobile entertainment marketplace, and the relative value that each party might contribute to the future business and prospects of the combined company. The parties also evaluated the compatibility of the businesses, services, technologies, management and the administrative, sales and marketing, technical and creative organizations of Traffix and New Motion, and determined that these attributes will significantly enhance the capabilities of the combined company and its competitive position in the mobile entertainment industry.
Expected Rate of Growth of the Combined Entity.  Traffix considered the recent financial performance of New Motion, including the rate of growth of its revenue, as well as the anticipated future growth of New Motion’s mobile entertainment business, as a factor to determine the benefit of the merger. After the merger is consummated, it is anticipated that the combined entity’s rate of revenue and earnings growth would be greater than Traffix would have as a stand-alone entity. This expected greater rate of growth in the combined company is anticipated to benefit the combined company’s stockholders.
Opinion of Financial Advisor.  The Traffix board of directors considered Stephens’ opinion, dated September 26, 2007, delivered to Traffix’s board of directors as to the fairness to Traffix and its stockholders, from a financial point of view and as of the date of the opinion, of the merger consideration to be received by Traffix stockholders pursuant to the merger agreement, as more fully described in “Opinions of Financial Advisors to the Traffix board of directors” beginning on page 60.

Recommendation of the New Motion Board of Directors

At a meeting on September 25, 2007, the New Motion board of directors (i) determined that the merger and entering into the merger agreement are advisable and in the best interest of New Motion and its stockholders, (ii) approved the merger and the merger agreement and the transactions contemplated thereby, including the issuance of shares contemplated under the merger agreement, and (iii) determined to recommend that the holders of New Motion common stock vote FOR the issuance of shares in the merger.

In connection with the foregoing actions, the New Motion board of directors consulted with New Motion’s management, as well as New Motion’s financial advisor and outside legal counsel and considered the following factors and risks in addition to the specific reasons described above under “— Reasons for the Merger”:

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The information concerning New Motion’s and Traffix’s respective historic businesses, financial results and prospects, including the result of New Motion’s due diligence review of Traffix.
New Motion’s assessment that the two companies can effectively and efficiently be integrated.
Information regarding comparable companies, including market prices of the companies’ stock, market capitalizations, revenues, ratios of revenues to market price and other results of operations, based on reported historical information and analysts’ reports, as well as information regarding reported acquisitions of other companies in the digital entertainment and Internet marketing arena and other comparable acquisitions.
The aggregate merger consideration of 11,917,520 shares to be issued and assumed by New Motion in the transaction, subject to certain adjustments as provided in the merger agreement.
The exchange ratio of 0.683 shares of New Motion common stock for each share of Traffix common stock, based on the capitalization of each company as of the date of the merger agreement, and the fact that the exchange ratio will not fluctuate based upon changes in the stock prices of New Motion and Traffix between signing and closing.
The expectation that Traffix stockholders and option holders, immediately after completion of the merger, would hold approximately 45.0% of the shares of common stock of the combined company on a fully diluted basis (calculated using the treasury stock method), and the expectation that this ownership percentage would be adjusted upon the occurrence of certain events as provided in the merger agreement.
The benefit that the merger is expected to qualify as a tax-free reorganization for United States federal income tax purposes.
The results of the due diligence investigations by New Motion’s management and legal and financial advisors.

The New Motion board of directors also considered the following risks and uncertainties in the connection with the above described actions:

The strong commitment of both parties to complete the merger pursuant to their respective obligations under the terms of the merger agreement, including the no-shop obligations and the termination fees payable under certain circumstances as provided in the merger agreement.
The possibility that the benefits anticipated from the acquisition, including without limitation, the opportunities identified in the mobile internet business or the potential synergies from the merger, might not be achieved or might not occur as rapidly or to the extent currently anticipated.
The risk that integration of the technologies, organizations or other operations of the two companies might not be accomplished smoothly and might require more time, expense and management attention than anticipated.
The risk that, despite the efforts of the combined company, key finance, management and sales and marketing personnel might not be retained by New Motion.
The risk that the acquisition is not completed and the disruption in the business if the merger is abandoned.
The potential impact of the restrictions under the merger agreement on New Motion’s ability to take certain actions during the period before the closing of the merger (which may delay or prevent New Motion from undertaking business opportunities, including opportunities to execute other strategic transactions, that may arise, pending completion of the merger).
The potential for diversion of management and employee attention and for increased employee attrition during the period before the closing of the merger agreement, and the potential effect of these on New Motion’s business and relations with customers and vendors.

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The fact that the merger agreement provides that the New Motion board of directors after the merger will initially consist of seven directors, and New Motion and Traffix will each designate three directors, two of whom will qualify as independent directors, with the remaining director being Burton Katz, New Motion’s CEO.
The fees and expenses associated with completing the merger.
The risk that anticipated cost savings will not be achieved.

In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the New Motion board of directors did not find it useful to and did not attempt to quantify, rank or otherwise assign relative weights to these factors.

In addition, the New Motion board of directors did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, but rather the New Motion board of directors conducted an overall analysis of the factors described above, including discussions with the management team and outside legal and financial advisors. In considering the factors described above, individual members of the New Motion board of directors may have given different weight to different factors. The list of factors described in this section as having been considered by the New Motion board of directors is not intended to be the complete list of all factors considered but is believed to include all of the factors considered by the New Motion board of directors to be material.

After careful consideration, New Motion’s board of directors has unanimously determined that the merger agreement is advisable and in the best interests of New Motion and its stockholders, has unanimously determined that the merger is fair to, and in the best interests of its stockholders, and unanimously recommends that New Motion stockholders vote “FOR” the approval of the issuance of New Motion common stock in connection with the merger. Some directors of New Motion may be deemed to have a conflict of interest in the New Motion board of directors’ approval of the merger and its recommendation that the New Motion stockholders approve the merger. See “The Merger  — Interests of New Motion Directors and Officers in the Merger” on page 67.

Recommendation of the Traffix Board of Directors

Based upon the recommendation of the Special Committee of the independent members of Traffix’s board of directors, Traffix’s board of directors concluded that the merger is advisable, fair, and in the best interests of the stockholders and unanimously approved the merger and all related and necessary transactions and recommended that Traffix’s stockholders adopt the Merger Agreement and that a meeting of the stockholders be called for such purpose.

In connection with the foregoing actions, the Special Committee and the Traffix board of directors consulted with Traffix’s management, as well as Traffix’s financial advisor. The Special Committee also consulted with its legal counsel and the Traffix board of directors consulted with Traffix’s outside legal counsel. In addition, the Special Committee and the Traffix board of directors considered the following factors in addition to the specific reasons described above under “— Reasons for the Merger”:

An internal analysis of each company’s strengths and weaknesses, which allowed Traffix’s Special Committee and board of directors to identify several potential benefits to Traffix and its stockholders that, if realized, could increase stockholder value.
The information concerning Traffix’s and New Motion’s respective historic businesses, financial results and prospects.
The fact that the implied value of the merger consideration, based on the closing price of New Motion’s common stock on September 26, 2007 represented a premium of 221% to the closing price of Traffix’s common stock on such date.
The expectation that Traffix stockholders and option holders, immediately after completion of the merger, would hold approximately 45% of the shares of common stock of the combined company on

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a fully diluted basis (calculated using the treasury stock method), assuming full exercise of all options and warrants of the combined company outstanding immediately following the merger, subject to adjustment under certain circumstances as provided in the merger agreement.
The strong commitment on the part of both parties to complete the merger pursuant to their respective obligations under the terms of the merger agreement.
Traffix’s assessments that the two companies can effectively and efficiently be integrated.
The terms and provisions of the merger agreement, including the representations and warranties, the covenants and the conditions of each party to closing the merger, the right of Traffix to continue to declare dividends and the termination fee, which, in the view of the Traffix board of directors, does not preclude a proposal for an alternative transaction involving Traffix.
The fact that the merger agreement allows the Traffix board of directors to change or withdraw its recommendation of the merger agreement if a superior proposal is received from a third party or if the Traffix board of directors determines that the failure to change its recommendation would be inconsistent with its fiduciary duties under applicable law, subject to the payment of a termination fee upon termination under certain circumstances.
The benefit to its stockholders that that the merger is expected be a tax-free reorganization for United States federal income tax purposes.

The Special Committee and the Traffix board of directors also considered the following risks and uncertainties in connection with the above described actions:

The results of the due diligence investigations by Traffix’s management and legal and financial advisors.
The risk that the combined company will not be able to fully realize on the opportunities identified in the mobile internet business or the potential synergies from the merger.
The potential impact of the restrictions under the merger agreement on Traffix’s ability to take certain actions during the period before the closing of the merger (which may delay or prevent Traffix from undertaking business opportunities that may arise pending completion of the merger).
The potential for diversion of management and employee attention and for increased employee attrition during the period before the closing of the merger agreement, and the potential effect of these on Traffix’s business and relations with customers and vendors.
The fact that certain provisions of the merger agreement, although reciprocal, may have the effect of discouraging proposals for alternative acquisition transactions involving Traffix, including: (i) the restriction on Traffix’s ability to solicit proposals for alternative transactions; (ii) the requirement that the Traffix board of directors submit the merger agreement to the Traffix stockholders for adoption in certain circumstances, even if it withdraws its recommendation for the merger; and (iii) the requirement that Traffix pay a termination fee of up to $4 million to New Motion in certain circumstances following the termination of the merger agreement.
The risk that certain of Traffix’s directors and officers may have interests in the merger as individuals that are in addition to, or that may be different from, the interests of the Traffix stockholders.
The fees and expenses associated with completing the merger.
The risk that anticipated cost savings will not be achieved.
The risks of the type and nature described above under “Risk Factors.”

In view of the wide variety of factors considered in connection with its evaluation of the merger and the complexity of these matters, the special committee and the Traffix board of directors did not find it useful to and did not attempt to quantify, rank or otherwise assign relative weights to these factors.

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In addition, the special committee and the Traffix board of directors did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to its ultimate determination, but rather the special committee and the Traffix board of directors conducted an overall analysis of the factors described above, including discussions with the management team and outside legal, financial and accounting advisors. In considering the factors described above, individual members of the special committee and the Traffix board of directors may have given different weight to different factors. The list of factors described in this section as having been considered by the Traffix special committee and board of directors is not intended to be the complete list of all factors considered but is believed to include all of the factors considered by the Traffix special committee and board of directors to be material.

After careful consideration, Traffix’s board of directors has unanimously determined that the merger agreement is advisable and in the best interests of Traffix and its stockholders, has unanimously determined that the merger is fair to, and in the best interests of its stockholders, and unanimously recommends that Traffix stockholders vote “FOR” the approval of the merger and the adoption of the merger agreement. Some directors of Traffix may be deemed to have a conflict of interest in the Traffix board of directors’ approval of the merger and its recommendation that the Traffix stockholders approve the merger. See “The Merger — Interests of Traffix Directors and Officers in the Merger” on page 67.

Opinion of New Motion’s Financial Advisor

Jefferies Broadview served as New Motion’s financial advisor in connection with the merger. On September 25, 2007, Jefferies Broadview delivered to the New Motion board of directors its opinion to the effect that, as of that date and based upon and subject to the various considerations and assumptions set forth in its opinion, the merger consideration to be paid by New Motion pursuant to the merger agreement was fair, from a financial point of view, to New Motion.

The full text of Jefferies Broadview’s opinion, which sets forth the assumptions made, matters considered and limitations on the scope of review undertaken by Jefferies Broadview in rendering its opinion, is attached to this joint proxy statement/prospectus as Annex C. New Motion encourages its stockholders to read the Jefferies Broadview opinion carefully and in its entirety. Jefferies Broadview’s opinion was provided to the New Motion board of directors in connection with its consideration of the merger and addresses only the fairness, from a financial point of view and as of the date of Jefferies Broadview’s opinion, of the merger consideration to be paid by New Motion pursuant to the merger agreement and does not address any other aspect of the merger. Jefferies Broadview’s opinion does not constitute a recommendation as to how any holder of shares of New Motion common stock should vote on the merger or any matter related thereto. The summary of Jefferies Broadview’s opinion set forth in this joint proxy statement/prospectus is qualified in its entirety by reference to the full text of the opinion.

In connection with its opinion, Jefferies Broadview, among other things:

reviewed a draft of the merger agreement, dated September 25, 2007;
reviewed certain publicly available financial and other information about New Motion and Traffix;
reviewed certain information furnished to Jefferies Broadview by New Motion’s management, including financial forecasts and analyses, relating to the business, operations and prospects of New Motion;
reviewed certain information furnished to Jefferies Broadview by New Motion’s management, including financial forecasts and analyses relating to the business, operations and prospects of Traffix, including, among other things, certain cost savings and operating synergies projected by New Motion’s management to result from the merger (the “Synergies”);
held discussions with members of senior management of New Motion concerning the matters described in the prior three bullet points, and the contingent matters as defined in the merger agreement;

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held discussions with members of senior management of Traffix concerning the matters described in the second and fourth bullet points above;
reviewed certain publicly available information, including share trading price history and valuation multiples, of certain publicly traded companies that Jefferies Broadview deemed comparable to Traffix;
compared the proposed financial terms of the merger with the financial terms of certain other transactions that Jefferies Broadview deemed relevant;
considered the potential pro forma impact of the merger; and
conducted such other financial studies, analyses and investigations as Jefferies Broadview deemed appropriate.

In Jefferies Broadview’s review and analysis and in rendering its opinion, Jefferies Broadview assumed and relied upon, but did not assume any responsibility to independently investigate or verify, the accuracy and completeness of all financial and other information that was supplied or otherwise made available by New Motion or Traffix or that was publicly available to Jefferies Broadview (including, without limitation, the information described above), or that was otherwise reviewed by it. In its review, Jefferies Broadview did not obtain any independent evaluation or appraisal of any of the assets or liabilities of, nor did Jefferies Broadview conduct a physical inspection of any of the properties or facilities of, New Motion or Traffix, nor was Jefferies Broadview furnished with any such evaluations or appraisals of such physical inspections, nor did Jefferies Broadview assume any responsibility to obtain any such evaluations or appraisals.

With respect to the financial forecasts provided to and examined by it, Jefferies Broadview’s opinion noted that projecting future results of any company is inherently subject to uncertainty. New Motion and Traffix informed Jefferies Broadview, however, and Jefferies Broadview assumed, that such financial forecasts, including the Synergies, were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of the management of New Motion as to the future financial performance of New Motion, and New Motion and Traffix as to the financial performance of Traffix. Jefferies Broadview expressed no opinion as to such financial forecasts or the assumptions on which they were made.

Jefferies Broadview’s opinion was based on economic, monetary, regulatory, market and other conditions existing and which could be evaluated as of the date of its opinion. Jefferies Broadview expressly disclaimed any undertaking or obligation to advise any person of any change in any fact or matter affecting Jefferies Broadview’s opinion of which Jefferies Broadview may become aware after the date of its opinion.

Jefferies Broadview made no independent investigation of any legal or accounting matters affecting New Motion or Traffix, and Jefferies Broadview assumed the correctness in all respects material to Jefferies Broadview’s analysis of all legal and accounting advice given to New Motion and the New Motion board of directors, including, without limitation, advice as to the legal, accounting and tax consequences of the terms of, and transactions contemplated by, the merger agreement to New Motion and its stockholders. Jefferies Broadview also assumed a reduction to the merger consideration of approximately two percent of New Motion’s capital stock immediately after the effective time would be adequate to compensate New Motion for the failure of the contingent matters to be resolved fully in accordance with the requirements and conditions specified on the contingent matters schedule. In addition, in preparing its opinion, Jefferies Broadview did not take into account any tax consequences of the transaction to New Motion. Jefferies Broadview assumed that the final form of the merger agreement would be substantially similar to the last draft reviewed by it. In addition, Jefferies Broadview assumed that in the course of obtaining the necessary regulatory or third party approvals, consents and releases for the merger, no delay, limitation, restriction or condition would be imposed that would have an adverse effect on New Motion, Traffix or the contemplated benefits of the merger.

Jefferies Broadview’s opinion was for the use and benefit of the New Motion board of directors in its consideration of the merger, and Jefferies Broadview’s opinion did not address the relative merits of the transactions contemplated by the merger agreement as compared to any alternative transaction or opportunity that might be available to New Motion, nor did it address the underlying business decision by New Motion to

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engage in the merger or the terms of the merger agreement or the documents referred to therein. In addition, Jefferies Broadview was not asked to address, and its opinion did not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of New Motion. Jefferies Broadview expressed no opinion as to the price at which shares of New Motion common stock will trade at any time.

In preparing its opinion, Jefferies Broadview performed a variety of financial and comparative analyses. The preparation of a fairness opinion is a complex process involving various determinations as to the most appropriate and relevant quantitative and qualitative methods of financial analysis and the applications of those methods to the particular circumstances and, therefore, is not necessarily susceptible to partial analysis or summary description. Jefferies Broadview believes that its analyses must be considered as a whole. Considering any portion of Jefferies Broadview’s analyses or the factors considered by Jefferies Broadview, without considering all analyses and factors, could create a misleading or incomplete view of the process underlying the conclusion expressed in Jefferies Broadview’s opinion. In addition, Jefferies Broadview may have given various analyses more or less weight than other analyses, and may have deemed various assumptions more or less probable than other assumptions, so that the range of valuation resulting from any particular analysis described below should not be taken to be Jefferies Broadview’s view of Traffix’s actual value. Accordingly, the conclusions reached by Jefferies Broadview are based on all analyses and factors taken as a whole and also on the application of Jefferies Broadview’s own experience and judgment.

In performing its analyses, Jefferies Broadview made numerous assumptions with respect to industry performance, general business, economic, monetary, regulatory, market and other conditions and other matters, many of which are beyond New Motion’s and Jefferies Broadview’s control. The analyses performed by Jefferies Broadview are not necessarily indicative of actual values or actual future results, which may be significantly more or less favorable than suggested by such analyses. In addition, analyses relating to the per share value of New Motion common stock do not purport to be appraisals or to reflect the prices at which New Motion common stock may actually be sold. The analyses performed were prepared solely as part of Jefferies Broadview’s analysis of the fairness, from a financial point of view, of the merger consideration to be paid by New Motion pursuant to the merger, and were provided to the New Motion board of directors in connection with the delivery of Jefferies Broadview’s opinion.

The following is a summary of the material financial and comparative analyses performed by Jefferies Broadview in connection with Jefferies Broadview’s delivery of its opinion. The financial analyses summarized below include information presented in tabular format. In order to fully understand Jefferies Broadview’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Jefferies Broadview’s financial analyses.

Transaction Overview

Based upon the approximately 15.2 million shares of Traffix common stock that were outstanding as of September 25, 2007, Jefferies Broadview noted that the consideration pursuant to the merger agreement of 10,997,836 shares to be issued, based on the treasury method, to purchase 16,102,249 diluted shares of Traffix, based on the treasury method, implied an exchange ratio of 0.6830 shares of New Motion common stock per share of Traffix common stock. Jefferies Broadview also noted that on an all-in basis, the consideration pursuant to the merger agreement of 11,917,520 shares to be issued, based on an all-in method, results in pro forma shares outstanding of 25,837,108 on an all-in basis. Based upon the closing price per share of New Motion common stock of $14.00 on September 25, 2007, the exchange ratio of 0.6830 shares of New Motion common stock per share of Traffix common stock, Jefferies Broadview observed that holders of New Motion common stock would own approximately 55% of the combined company, and noted that the implied value of the merger consideration pursuant to the merger agreement was approximately $9.56 per share of Traffix common stock, which is referred to as the “Implied Merger Consideration Value,” compared to the closing price per share of Traffix common stock of $4.81 on September 25, 2007. Jefferies Broadview also noted that the Implied Merger Consideration Value of $9.56 per share of Traffix common stock represented:

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a premium of 98.8% over the closing price per share of Traffix common stock on September 25, 2007;
a premium of 82.5% over the closing price per share of Traffix common stock on August 28, 2007;
a premium of 43.8% over the highest price per share of Traffix common stock for the 52-weeks ending September 25, 2007; and
a premium of 116.8% over the lowest price per share of Traffix common stock for the 52-weeks ending September 25, 2007.

Traffix Analysis

Comparable Public Company Analysis.  Using publicly available information and information provided by Traffix’s management, Jefferies Broadview analyzed the trading multiples of Traffix and the corresponding trading multiples of the following Internet marketing solutions providers:

Autobytel Inc.;
Bankrate, Inc.;
Housevalues Inc.;
The Knot, Inc.;
LookSmart Ltd.;
Marchex, Inc.;
MIVA Inc.;
TechTarget, Inc.;
Think Partnership Inc.; and
Travelzoo Inc.

In its analysis, Jefferies Broadview derived and compared multiples for Traffix and the selected companies, calculated as follows:

the enterprise value divided by trailing twelve month, or TTM, revenue, which is referred to as “Total Enterprise Value/TTM Revenue;”
the enterprise value divided by projected revenue for calendar year 2007, which is referred to as “Total Enterprise Value/CY2007E Revenue;”
the enterprise value divided by projected revenue for calendar year 2008, which is referred to as “Total Enterprise Value/CY2008E Revenue;”
the enterprise value divided by TTM adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA, which is referred to as “Total Enterprise Value/TTM EBITDA;”
the enterprise value divided by projected adjusted EBITDA for calendar year 2007, which is referred to as “Total Enterprise Value/CY2007E EBITDA;”
the enterprise value divided by projected adjusted EBITDA for calendar year 2008, which is referred to as “Total Enterprise Value/CY2008E EBITDA;”
the price per share divided by TTM adjusted earnings per share, or EPS, which is referred to as “TTM P/E;”
the price per share divided by projected adjusted EPS for calendar year 2007, which is referred to as “CY2007E P/E;” and
the price per share divided by projected adjusted EPS for calendar year 2008, which is referred to as “CY2008E P/E.”

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In calculating the EBITDA and EPS multiples described above, Jefferies Broadview excluded from the historical and projected EBITDA and EPS for Traffix and each of the other companies, as applicable, stock-based compensation expense and other non-recurring charges, in each case when such information was available.

This analysis indicated the following:

Comparable Public Company Multiples

     
Benchmark   High   Low   Median
Total Enterprise Value/TTM Revenue     9.6x       0.3x       2.2x  
Total Enterprise Value/CY2007E Revenue     8.4x       0.4x       2.2x  
Total Enterprise Value/CY2008E Revenue     6.5x       0.4x       1.8x  
Total Enterprise Value/TTM EBITDA     31.1x       9.2x       19.7x  
Total Enterprise Value/CY2007E EBITDA     42.0x       9.5x       15.4x  
Total Enterprise Value/CY2008E EBITDA     39.3x       5.3x       12.0x  
TTM P/E     61.1x       20.3x       37.2x  
CY2007E P/E     58.8x       11.5x       30.4x  
CY2008E P/E     47.7x       7.5x       24.8x  

Using a reference range of 1.5x to 2.5x Traffix’s TTM revenues, 1.25x to 2.25x Traffix’s CY2007E Revenue, and 1.0x to 2.0x Traffix’s CY2008E Revenue, Jefferies Broadview determined an implied enterprise value for Traffix, then subtracted total indebtedness and added cash and cash equivalents to determine an implied equity value. After accounting for the vesting of in-the-money stock options, this analysis indicated a range of implied values per share of Traffix common stock of approximately $8.71 to $12.82 using TTM revenues, $8.90 to $13.98 using CY2007E Revenue, and $8.27 to $13.99 using CY2008E Revenue, compared in each case to the closing price per share of Traffix common stock of $4.81 on Sept 25, 2007 and the Implied Merger Consideration Value of $9.56 per share of Traffix common stock.

Using a reference range of 10.0x to 25.0x Traffix’s TTM EBITDA, 10.0x to 20.0x Traffix’s CY2007E EBITDA, and 10.0x to 15.0x Traffix’s CY2008E EBITDA, Jefferies Broadview determined an implied enterprise value for Traffix, then subtracted total indebtedness and added cash and cash equivalents to determine an implied equity value. After accounting for the vesting of in-the-money stock options, this analysis indicated a range of implied values per share of Traffix common stock of approximately $5.58 to $10.32 using TTM EBITDA, $6.72 to $10.93 using CY2007E EBITDA, and $6.57 to $8.62 using CY2008E EBITDA, compared in each case to the closing price per share of Traffix common stock of $4.81 on September 25, 2007 and the Implied Merger Consideration Value of $9.56 per share of Traffix common stock.

Using a reference range of 20.0x to 50.0x Traffix’s TTM EPS, 20.0x to 45.0x Traffix’s CY2007E EPS, and 20.0x to 35.0x Traffix’s CY2008E EPS, Jefferies Broadview determined an implied equity value for Traffix. This analysis indicated a range of implied values per share of Traffix common stock of approximately $3.21 to $8.02 using TTM EPS, $5.80 to $13.05 using CY2007E EPS, and $6.00 to $10.50 using CY2008E EPS, compared in each case to the closing price per share of Traffix common stock of $4.81 on September 25, 2007 and the Implied Merger Consideration Value of $9.56 per share of Traffix common stock.

No company utilized in the comparable company analysis is identical to Traffix. In evaluating the selected companies, Jefferies Broadview made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions and other matters, many of which are beyond Traffix’s and Jefferies Broadview’s control. Mathematical analysis, such as determining the median, is not in itself a meaningful method of using comparable company data.

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Comparable Transaction Analysis

Using publicly available and other information, Jefferies Broadview examined the following ten transactions involving interactive marketing services companies with TTM revenue between $15 million and $500 million announced since January 1, 2005. The transactions considered and the month and year each transaction was announced were as follows:

   
Target   Acquiror   Month and Year Announced
Ask Jeeves, Inc.   IAC/Interactive Corp.   March 2005
Digital Impact   Acxiom Corp.   March 2005
PointRoll   Gannett   June 2005
Web Marketing Holdings, Inc.   ValueClick, Inc.   June 2005
Fastclick, Inc.   ValueClick, Inc.   August 2005
LinkShare Corporation   Rakuten, Inc.   September 2005
Automotive.com, Inc.   PRIMEDIA, Inc.   November 2005
Right Media, Inc. (Remaining 80%)   Yahoo! Inc.   April 2007
24/7 Real Media, Inc.   WPP Group plc   May 2007
Aptimus, Inc.   Apollo Group, Inc.   August 2007

Using publicly available estimates and other information for each of these transactions, Jefferies Broadview reviewed the transaction value as a multiple of the target company’s TTM Revenue immediately preceding announcement of the transaction, which is referred to below as “Total Enterprise Value/TTM Revenue,” and as a multiple of the target company’s TTM EBITDA immediately preceding announcement of the transaction, which is referred to below as “Total Enterprise Value/TTM EBITDA.” In each case, the price paid in the transaction was adjusted for the target’s cash and debt at the time of acquisition when such information was available. In calculating the EBITDA multiples described above, Jefferies Broadview excluded from the historical EBITDA for each of the companies, as applicable, stock-based compensation expense, when such information was available.

This analysis indicated the following:

Selected Comparable Transaction Multiples

     
Benchmark   High   Low   Median
Total Enterprise Value/TTM Revenue     14.2x       1.8x       2.9x  
Total Enterprise Value/TTM EBITDA     104.9x       9.0x       19.0x  

Using a reference range of 2.0x to 3.0x Traffix’s TTM Revenue and 15.0x to 25.0x Traffix’s TTM EBITDA, Jefferies Broadview determined an implied enterprise value for Traffix, then subtracted total indebtedness and added cash and cash equivalents to determine an implied equity value for Traffix. After accounting for the vesting of in-the-money stock options, this analysis indicated a range of implied values per share of Traffix common stock of approximately $10.77 to $14.87 using TTM Revenue and $7.21 to $10.32 using TTM EBITDA, compared in each case to the closing price per share of Traffix common stock of $4.81 on September 25, 2007 and the Implied Merger Consideration Value of $9.56 per share of Traffix common stock.

No transaction utilized as a comparison in the comparable transaction analysis is identical to the merger. In evaluating the merger, Jefferies Broadview made numerous judgments and assumptions with regard to industry performance, general business, economic, market, and financial conditions and other matters, many of which are beyond Traffix’s and Jefferies Broadview’s control. Mathematical analysis, such as determining the average or the median, is not in itself a meaningful method of using comparable transaction data.

Premiums Paid Analysis

Using publicly available information, Jefferies Broadview analyzed the premiums offered in selected North American digital media, interactive marketing services and software transactions with equity consideration between $50 million and $500 million announced since January 1, 2005. For each of these transactions, Jefferies Broadview calculated the premium represented by the offer price over the target company’s closing

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share price one trading day and twenty trading days prior to the transaction’s announcement. This analysis indicated the following premiums for those time periods prior to announcement:

         
Time Period Prior to Announcement   High
Premium
  75th
Premium
  Median Premium   25th
Premium
  Low
Premium
1-trading day     83.3 %      36.6 %      23.9 %      13.6 %      (5.2 )% 
20-trading days     134.5 %      46.7 %      32.4 %      18.3 %      (7.2 )% 

Using the low and high premiums set forth above and the closing price per share of Traffix common stock of $4.81 on September 25, 2007, this analysis indicated a range of implied values per share of Traffix common stock of approximately $4.56 to $8.82, respectively, using the premiums 1-trading day prior to announcement, and approximately $4.99 to $12.61, respectively, using the premiums 20-trading days prior to announcement, compared