UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 : For the Fiscal Year Ended December 31, ~~2013~~2014

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 000-21743

NeoMedia Technologies, Inc.

(Exact name of registrant as specified in its charter)

Delaware	36-3680347
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

1515 Walnut Street, Suite 100, Boulder, CO 80302

(Address, including zip code, of principal executive offices)

303-546-7946

(Registrants’ telephone number, including area code)

Securities Registered Under Section 12(b) of the Act:	None
Name of exchange on which registered:	None – Quoted on the OTC Markets (~~OTCQB~~OTCPINK)
Securities registered pursuant to Section 12(g) of the Act:	Common Stock, ~~$0.001~~no par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨

Smaller Reporting Company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The aggregate market value of the common stock held by non-affiliates of the registrant as of June 30, ~~2013~~2014 was $2281,~~945,890~~846 based on the closing sale price for the registrant’s common stock as quoted on the OTC Markets. The number of outstanding shares of the registrant’s common stock on ~~March~~February 1017, ~~2014~~2015 was 4,~~984~~624,~~827~~526,~~279~~267.

Documents Incorporated By Reference: None

NeoMedia Technologies, Inc.

FORM 10-K

For the Fiscal Year Ended December 31, ~~2013~~2014

INDEX

		Page	~~Page~~
PART I
Item 1.	Business.	3	3
Item 1A.	Risk Factors.	5	6
Item 1B.	Unresolved Staff Comments.	9	10
Item 2.	Properties.	9	10
Item 3.	Legal Proceedings.	9	10
Item 4.	Mine Safety Disclosures.	10	10
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	11	11
Item 6.	Selected Financial Data.	12	12
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	12	12
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk.	20	20
Item 8.	Financial Statements and Supplementary Data.	21	21
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	52	49
Item 9A.	Controls and Procedures.	55	49
Item 9B.	Other Information.	54	50
PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	54	50
Item 11.	Executive Compensation.	57	53
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	60	57
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	62	59
Item 14.	Principal Accounting Fees and Services.	62	59
Part IV
Item 15.	Exhibits, Financial Statement Schedules.	63	60
SIGNATURES		81	77

Page 2

NOTE ABOUT FORWARD -LOOKING STATEMENTS

The information in this Annual Report on Form 10-K (this “Report”) contains “forward -looking statements” and information within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which may be subject to the “safe harbor” created by those sections. These forward -looking statements include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward -looking statements, although not all forward -looking statements contain these identifying words. We may not actually achieve the plans, intentions or expectations disclosed in our forward -looking statements and you should not place undue reliance on our forward -looking statements. These forward -looking statements involve known and unknown risks and uncertainties that could cause our actual results, performance or achievements to differ materially from those expressed or implied by the forward -looking statements, including, without limitation, the risks set forth in Part I, Item 1A, Risk Factors in this Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission (“SEC”). Except as required by law, we assume no obligation to update these forward -looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward -looking statements, even if new information becomes available in the future.

As used herein, “NeoMedia,” , “Company,” “we,” “us,” “our,”, and similar terms include NeoMedia Technologies, Inc., a Delaware corporation, ~~and its subsidiaries~~ unless the context indicates otherwise.

PART I

ITEM 1. Business

Overview

NeoMedia Technologies, Inc. a Delaware corporation (the “Company,” “NeoMedia,” “we,” “us,” “our,” and similar terms), was founded in 1989 and is headquartered in Boulder, Colorado. We have positioned ourselves to lead the development of 2D mobile barcode technology and ~~infrastructure~~services solutions that enable the mobile barcode ecosystem world-wide. NeoMedia harnesses the power of the mobile phone in innovative ways with state-of-the-art mobile barcode ~~technology~~ solutions. With this technology, mobile devices with cameras become barcode scanners, ~~and~~enabling ~~this enables~~ a range of practical applications including mobile marketing and mobile commerce. In addition, we offer licensing of our extensive intellectual property portfolio.

Products and Services

We provide a complete suite of mobile barcode solutions to customers around the globe.

2D Core – Our 2D Core products include NeoReader®, our barcode scanning application which is installed on mobile devices, NeoSphere™®, our enterprise grade barcode ~~management~~services solution, and QodeScan™®, our self -service barcode ~~management~~services solution for small and medium businesses. We offer these services directly to clients as well as offer Application Programmer’s Interface (“API”) and Software Development Kit (“SDK”) versions of these solutions for inclusion in enterprise solutions.

· NeoReader – a barcode scanning application that transforms mobile devices into universal barcode readers, allowing users to scan all major barcode types, including QR, Datamatrix, Aztec, EAN, UPC, PDF417, Code 39, Code 128 and more. Users ~~simply~~ launch the NeoReader application on their mobile device, scan the barcode and are quickly linked either directly or indirectly through a resolution server to specific content. From there, the consumer can access real-time product or service information, download content, send a SMS, make a phone call, or complete a mobile commerce transaction. There is also a SDK available for NeoReader that allows the integration of NeoReader functionality into enterprise implementations.

·Page NeoSphere and QodeScan – web-based solutions that support barcode creation and management and allow users (typically agencies, retailers and brands) to quickly develop, launch and manage a mobile barcode campaign by delivering three critical components:3

~~Page~~· 3NeoSphere and QodeScan – cloud based Software As A Service (‘SAAS’) solutions that support barcode creation and management and allow users (typically agencies, retailers and brands) to quickly develop, launch and manage a mobile barcode campaign by providing barcode creation tools as well as reporting and analytics. We believe that NeoSphere and QodeScan afford marketers the ability to better monetize their marketing initiatives, providing the tools to effectively manage their barcode-based campaigns.

oIP ~~Barcode~~Licensing ~~creation~~– ~~tools~~We have a robust IP portfolio encompassing many barcode implementations and are willing to license our patents to all in the ecosystem.

oSALES ~~Campaign~~AND ~~management tools~~MARKETING RELATIONSHIPS

oWe ~~Reporting~~are focusing our sales activities primarily in the United States and ~~analytics~~Europe and are expanding our business development activities, through partnerships, to other markets.

WeProprietary ~~believe that NeoSphere and QodeScan afford marketers the ability to better monetize their marketing initiatives, providing the tools to effectively manage their barcode-based campaigns.~~Technology

Many of the products we sell to our customers ~~Solutions~~rely –on hardware and software technologies provided to us by third parties under license. Certain of our products and services combine these third party technologies with technologies that are proprietary to us. Our ~~value-added~~proprietary ~~solutions~~technology may be protected by patent law, copyright law, trade secret law and other forms of intellectual property protection. Our proprietary technology includes technologies that enable ~~full~~us ~~end-~~to automate a number of back-end ~~mobile~~functions ~~solutions~~and ~~allowing~~technologies ~~marketers~~that ~~and~~allow ~~advertisers~~customers to ~~deliver~~order, change aand ~~highly~~manage ~~targeted~~their accounts easily without technical expertise. Some of our proprietary technologies are unique and ~~personalized~~may ~~consumer~~not be ~~experience~~legally –utilized without a license from ~~start~~us. Although we believe that our suite of proprietary technologies offer customers significant benefits, we do not believe that our proprietary technologies are sufficient to ~~finish.~~deter ~~These~~competitors ~~include:~~from providing competing products and services.

· Consulting Services – clients are able to leverage our expertise and deep knowledge of the mobile barcode market to enhance the effectiveness of their mobile campaigns or even, have NeoMedia manage their QR campaigns from end-to-end.Competition

·We ~~Partner~~believe ~~Solutions~~that – we ~~maintain~~have ~~partnerships~~positioned ~~with~~ourselves to ~~other~~compete as one of the leaders in the mobile ~~marketing~~barcode ~~organizations~~ecosystem. Our research indicates that ~~allow~~the usmobile tobarcode ~~incorporate~~space ~~additional~~is highly fragmented and there are a large number of providers offering similar solutions ~~into~~globally. Moreover, we believe we are well positioned and differentiated in our ~~existing~~offering ~~portfolio~~due to our intellectual property, including: many patents, on which our products and services are based. We expect that our intellectual property will serve as a competitive advantage as this market continues to mature.

oNotwithstanding ~~Mobile~~the ~~websites~~foregoing, –our ~~creation~~market is highly competitive and characterized by an increasing number of ~~mobile-optimized~~entrants ~~web~~that ~~pages~~have introduced or developed products and services similar to ~~ensure~~those we offer. We believe that competition will continue to intensify and increase in the near future. Our target market is rapidly evolving and is subject to continuous technological change. As a ~~consistent~~result, ~~consumer~~our ~~experience~~competitors may be better positioned to address these developments or may react more favorably to these changes, ~~making~~which ~~brand~~could ~~engagement~~have ~~easy~~a material adverse effect on our business, prospects, financial condition, and ~~enjoyable~~results of operations.

oIntellectual ~~Applications – creation of applications for iPhone and Android environments.~~Property

IPWe ~~Licensing~~rely –on Wea ~~have~~combination aof ~~robust~~laws IP(including patent, ~~portfolio~~copyright, ~~crossing~~trademark, ~~many~~service ~~barcode~~mark ~~implementations~~and trade secret laws) and ~~are~~contractual ~~willing~~restrictions to ~~license~~establish and protect our proprietary rights. As of December 31, 2014, we owned a large number of patents to(both ~~all~~awarded and pending) across both NeoMedia Technologies and NeoMedia Europe GmbH. Our patents include IP in a number of different patent families and cover core concepts linking the physical world to the electronic world many of which form the foundation for the mobile barcode ecosystem.

During 2014, we established IP agreements ~~SALES~~with ~~AND~~over ~~MARKETING~~60 ~~RELATIONSHIPS~~companies including leading brands and retailers. We are in discussions with other companies with regard to the licensing of our patents and our services platforms. However, there can be no guarantee that any of these discussions will result in future revenues.

We have ~~worked~~an toongoing ~~establish~~relationship awith ~~network~~Global IP ofLaw ~~direct~~Group ~~salespeople~~(“Global asIP”) ~~well~~for asour anintellectual ~~indirect~~property ~~channel~~monetization ~~of resellers~~ and ~~business~~enforcement ~~development~~activities. Global ~~personnel~~IP assists tous ~~market~~in ~~our~~seeking ~~products~~out ~~and~~potential ~~services.~~licensees Weof ~~are focusing~~ our ~~sales~~intellectual ~~activities~~property ~~primarily~~portfolio ~~in the United States~~ and ~~Europe~~assists ~~and~~us ~~are~~in ~~expanding~~enforcing our ~~business~~patent ~~development activities~~rights, if ~~through partnerships, to other markets~~required.

~~Proprietary~~Page ~~Technology~~4

~~Many~~We ofhave ~~the~~entered ~~products~~into weconfidentiality ~~sell~~and other toagreements with our ~~customers~~employees ~~rely on hardware~~ and ~~software~~contractors, ~~technologies~~including ~~provided~~agreements toin uswhich bythe ~~third~~employees ~~parties under license. Certain of our products~~ and ~~services~~contractors ~~combine~~assign ~~these~~their rights ~~third~~in ~~party~~inventions ~~technologies with technologies that are proprietary~~ to us. We ~~Our~~have ~~proprietary~~also ~~technology~~entered ~~may~~into benondisclosure ~~protected~~agreements bywith ~~patent~~our ~~law~~suppliers, ~~copyright~~distributors ~~law, trade secret law~~ and ~~other~~some customers ~~forms~~in oforder ~~intellectual property protection. Our proprietary technology includes technologies that enable us~~ to ~~automate~~limit aaccess ~~number of back-end functions and technologies that allow customers~~ to ~~order, change~~ and ~~manage~~disclosure ~~their accounts easily without technical expertise. Some~~ of our proprietary ~~technologies~~information. Intellectual ~~are~~property ~~unique~~laws, contractual arrangements, and ~~may~~the ~~not~~other besteps ~~legally~~we ~~utilized~~have ~~without~~taken ato ~~license~~protect ~~from us. Although we believe that~~ our ~~suite~~intellectual ofproperty ~~proprietary~~will ~~technologies~~assist ~~offer~~in ~~customers~~preventing ~~significant~~others ~~benefits,~~from weinfringing on ~~do not believe that~~ our ~~proprietary~~ technologies ~~are~~or ~~sufficient~~developing tosimilar ~~deter competitors from providing competing products and services~~technologies.

We license, or lease from others, technologies ~~Competition~~which may be used in our services. We expect that we and our customers could be subject to third-party infringement claims as the number of competitors grows. Although we do not believe that our technologies or services infringe the proprietary rights of any third parties, we cannot ensure that third parties will not assert claims against us in the future or that these claims will not be successful.

We ~~believe~~may ~~that~~be wesubject ~~have~~to ~~positioned~~claims ~~ourselves~~that tothe ~~compete~~technology we ashave ~~one~~used ofin ~~the~~our ~~leaders~~operations inhave ~~the~~infringed ~~mobile~~upon ~~barcode~~intellectual ~~ecosystem.~~property ~~Our~~rights ~~research~~held ~~indicates~~by ~~that~~others. We ~~the~~will ~~mobile~~evaluate ~~barcode~~all ~~space~~such claims isand, ~~highly~~if ~~fragmented~~necessary and ~~there~~appropriate, ~~are~~seek ato ~~large~~obtain ~~number~~licenses offor ~~providers~~the ~~offering~~use ~~similar~~of ~~solutions~~such ~~globally~~technology. If ~~Moreover,~~ we ~~believe~~or weour suppliers are ~~well~~unable ~~positioned~~to ~~due~~obtain licenses necessary to ~~our~~use intellectual property in our operations, ~~including~~we ~~many~~may ~~patents~~be legally liable to the owner of such intellectual property. Moreover, oneven ~~which~~in ~~our~~those ~~products~~instances ~~and~~in ~~services~~which we are ~~based.~~justified Wein ~~expect~~denying claims that ~~our~~we have infringed upon the intellectual property ~~will~~rights ~~serve~~of asothers, awe ~~competitive~~may ~~advantage~~nonetheless asbe ~~this~~forced ~~market~~to ~~continues~~defend or settle legal actions taken against us relating to ~~mature~~allegedly protected technology, and such legal actions may require us to expend substantial funds. See Item 1A Risk Factors for additional discussion of these risks.

~~Page 4~~Government Regulation

~~Notwithstanding~~Existing ~~the~~or ~~foregoing,~~future ~~our~~legislation ~~market~~could islimit the ~~highly~~growth ~~competitive~~or ~~and~~use ~~characterized by an increasing number~~ of ~~entrants~~the ~~that~~internet, ~~have~~mobile ~~introduced~~telecommunications, ormobile ~~developed~~marketing ~~products~~ and/or ~~services~~mobile ~~similar~~advertising, towhich ~~those~~would wecurtail our ~~offer~~revenue growth. WeStatutes ~~believe~~and ~~that~~regulations ~~competition~~directly ~~will~~applicable ~~continue~~ to ~~intensify~~internet ~~and~~communications, ~~increase~~mobile incommerce ~~the~~and ~~near~~mobile ~~future.~~marketing are ~~Our~~becoming ~~target~~more ~~market~~prevalent ~~is rapidly evolving~~ and iswe ~~subject~~anticipate tothere ~~continuous~~will ~~technological change. As a result, our competitors may~~ be ~~better~~activity ~~positioned~~ to ~~address~~determine ~~these~~how ~~developments~~new orand ~~may~~existing ~~react~~laws ~~more~~governing ~~favorably~~intellectual property, ~~to these changes~~privacy, ~~which~~libel ~~could~~and ~~have~~taxation aapply ~~material~~to ~~adverse~~mobile ~~effect~~marketing ~~on our business, prospects, financial condition,~~ and ~~results of operations~~advertising.

Some of our proprietary technology allows ~~Intellectual~~the ~~Property~~storage of non-specific demographic data from users. NeoMedia maintains current privacy policies and End User License Agreements which can be accessed from our website at http://www.neom.com/privacy and http://www.neom.com/EULA which we believe are current with best practices and guidelines in the United States.

We rely on a combination of laws (including patent, copyright, trademark, service mark and trade secret laws) and contractual restrictions to establish and protect our proprietary rights. As of December 31, 2013, we owned a large number of patents (both awarded and pending) across both NeoMedia Technologies and NeoMedia Europe GmbH. Our patents include IP in a number of different patent families and cover core concepts linking the physical world to the electronic world many of which form the foundation for the mobile barcode ecosystem.Personnel

~~During~~As ~~2013,~~of weDecember ~~established licensing agreements with over 25 companies including Skechers USA~~31, ~~Inc.~~2014, ~~The~~we ~~Kroger~~had ~~Co.,~~11 ~~The Wendy’s Company and more~~personnel. We ~~are~~believe inthat ~~discussions~~our ~~with~~personnel ~~other~~relations ~~companies~~are ~~with~~good. ~~regard~~None ~~to the licensing~~ of our ~~patents~~personnel ~~and~~are ~~our~~represented ~~technology~~by ~~platforms. However,~~a ~~there~~labor ~~can~~union beor nobound ~~guarantee~~by ~~that~~a ~~any~~collective bargaining ~~of these discussions will result in future revenues~~agreement.

Management We have an ongoing relationship with Global IP Law Group (“Global IP”) for our intellectual property monetization and enforcement activities. Global IP assists us in seeking out potential licensees of our intellectual property portfolio and assists us in enforcing our patent rights, if required.Changes

~~We have entered into confidentiality and other agreements with our employees and contractors, including agreements in which the employees and contractors assign their rights in inventions to us~~None. We have also entered into nondisclosure agreements with our suppliers, distributors and some customers in order to limit access to and disclosure of our proprietary information. Intellectual property laws, contractual arrangements, and the other steps we have taken to protect our intellectual property will assist in preventing others from infringing on our technologies or developing similar technologies.

Research ~~We license, or lease from others, technologies which may be used in our services. We expect that we~~ and our customers could be subject to third-party infringement claims as the number of competitors grows. Although we do not believe that our technologies or services infringe the proprietary rights of any third parties, we cannot ensure that third parties will not assert claims against us in the future or that these claims will not be successful.Development

We ~~may be subject to claims that the technology we~~ have ~~used~~incurred inapproximately ~~our operations have infringed upon intellectual property rights held by others~~$0. We4 ~~will evaluate all such claims~~ million and, ~~if necessary and appropriate, seek to obtain licenses for the use of such technology~~$0. If7 wemillion ~~or our suppliers are unable to obtain licenses necessary to use intellectual property~~ in ~~our~~research ~~operations,~~and wedevelopment ~~may~~expenses beduring ~~legally liable to~~ the ~~owner~~years ofended ~~such~~December ~~intellectual property. Moreover~~31, ~~even~~2014 inand ~~those instances in which we are justified in denying claims that we have infringed upon the intellectual property rights of others~~2013, ~~we may nonetheless be forced to defend or settle legal actions taken against us relating to allegedly protected technology, and such legal actions may require us to expend substantial funds~~respectively. ~~See Item 1A Risk Factors for additional discussion of these risks.~~

~~Government~~ITEM ~~Regulation~~1A. Risk Factors

~~Existing~~You orshould ~~future~~carefully ~~legislation~~consider ~~could limit~~ the ~~growth~~following factors ~~or use of the internet, mobile telecommunications~~ and~~/or~~ ~~mobile~~all ~~advertising,~~other ~~which~~information ~~would~~contained ~~curtail~~in ~~our~~this ~~revenue~~Report ~~growth.~~before ~~Statutes~~you ~~and~~make ~~regulations~~any ~~directly~~investment ~~applicable~~decisions towith ~~internet~~respect ~~communications, mobile commerce and mobile advertising are becoming more prevalent and we anticipate there will be activity~~ to ~~determine~~our ~~how new and existing laws governing intellectual property, privacy, libel and taxation apply to mobile marketing and advertising~~securities.

~~Some~~Page of our proprietary technology allows the storage of non-specific demographic data from users. NeoMedia maintains current privacy policies and End User License Agreements which can be accessed from our website at http://www.neom.com/privacy and http://www.neom.com/EULA which we believe are current with all best practices and guidelines in the United States.5

~~Page~~Risks 5Related to Our Business

We may be unable to continue as a going ~~Personnel~~concern based on our historical performance, which has included losses, an accumulated deficit, and a working capital deficit. We may continue to generate losses and be unable to service our outstanding liabilities in the future.

We have historically incurred operating Aslosses, ofand we may continue to generate negative cash flows as we implement our business plan for 2015. There can be no assurance that our continuing efforts to execute our business plan will be successful and that we will be able to continue as a going concern. The accompanying consolidated financial statements have been prepared in conformity with US GAAP, which contemplates our continuation as a going concern. Our net loss for the year ended December 31, ~~2013,~~2014 wewas ~~had~~$2.4 18million ~~personnel,~~as ~~including~~compared to net income of $28.5 inmillion for ~~our~~the ~~office~~year inended ~~Würsulen~~December 31, ~~Germany~~2013. WeThe ~~believe~~operating ~~that~~results ~~our~~for ~~personnel~~the ~~relations~~year ~~are~~ended ~~good~~December 31, 2014 included $3.3 ~~None~~million of ~~our~~net losses ~~personnel~~related ~~are~~to ~~represented~~financing byinstruments, a ~~labor~~net ~~union~~gain orof ~~bound~~$4.2 bymillion afrom ~~collective~~extinguishment ~~bargaining~~of ~~agreement~~debt and the operating results for the year ended December 31, 2013 included $26.7 million of net gains related to financing instruments.

Net cash used in operations during the ~~Management~~years ~~Changes~~ended December 31, 2014 and 2013 was $0.4 million each period. As of December 31, 2014, we have an accumulated deficit of $239.4 million. We also have a working capital deficit of $39.2 million, including $37.4 million in current liabilities for our derivative and debenture financing instruments which are due August 1, 2015 and for which we do not have the necessary capital to re-pay.

We currently do not have sufficient cash Onor ~~January~~commitments 3,for ~~2012,~~financing to sustain our operations for the ~~Board~~next ~~appointed~~twelve ~~James~~months Aif we are unable to generate sufficient cash flows from operations. ~~Doran~~Our asplan ~~Chief~~continues ~~Financial~~to ~~Officer~~be to develop new client and ~~Corporate~~customer ~~Secretary~~relationships and substantially increase our revenue derived from our products/services and IP licensing. OnIf ~~February~~our 8revenues do not reach the level anticipated in our plan, ~~2012~~we may require additional financing in order to execute our operating plan. If additional financing is required, Mrwe cannot predict whether this additional financing will be in the form of equity, debt, or another form, and we may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. ~~Doran~~In ~~resigned~~the ~~from~~event ~~his~~that ~~position~~financing assources ~~Chief~~are ~~Financial~~not ~~Officer~~available, or that we are unsuccessful in increasing our revenues and ~~Corporate~~profits, ~~Secretary~~we may be unable to implement our current plans for expansion, repay our debt obligations or respond to competitive pressures, any of ~~the~~which ~~Company~~would have a material adverse effect on our business, prospects, financial condition and results of operations.

The convertible debentures and preferred Onstock ~~January~~used ~~31,~~to ~~2012,~~finance the Company, ~~finalized~~which may be converted into common stock at the ~~removal~~sole ~~process~~option ~~(that~~of ~~commenced~~the onholders, ~~January~~have 11a highly dilutive impact when they are converted, ~~2012)~~greatly increasing the number of Drshares of common stock outstanding. ~~Christian~~During ~~Steinborn~~2014, ~~from~~there ~~the~~were ~~position~~3,834 million shares of ~~Managing~~common ~~Director~~stock ofissued ~~NeoMedia~~for ~~Europe~~these ~~GmbH~~conversions. ~~Ms.~~We ~~Laura~~cannot ~~Marriott,~~predict ~~our~~if ~~Chief~~or ~~Executive~~when ~~Officer,~~each ~~was~~holder ~~appointed~~may asor ~~the~~may ~~Managing~~not ~~Director~~elect ofto convert ~~NeoMedia~~into ~~Europe~~shares ~~GmbH~~of common stock.

OnIn ~~February~~May 102014, ~~2012,~~we ~~Colonel~~completed ~~(Ret~~a merger to increase the quantity of authorized shares of common stock available for issuance to satisfy the conversion rights under certain outstanding convertible securities and avoid an event of default.) We ~~Barry~~can Sprovide no assurance that the additional quantity of authorized shares will be sufficient to satisfy all future conversions of the outstanding convertible securities. ~~Baer~~If ~~was~~we ~~appointed~~have insufficient byauthorized shares in the ~~Board~~future asdue ~~Chief~~to ~~Financial~~security ~~Officer~~conversions or otherwise and ~~Corporate~~are ~~Secretary~~unable to respond to requests for conversion, we may be subject to an event of default under the ~~Company~~terms of such instruments.

OnOur ~~August~~management ~~27,~~and ~~2012,~~Board ~~Jeff~~may ~~Huitt~~be ~~was~~unable to ~~appointed~~execute astheir ~~Chief~~plans ~~Financial~~to ~~Officer~~grow byour ~~the~~revenues ~~Board~~and achieve continued profitability and ~~Colonel~~positive ~~Baer~~cash ~~continued~~flows, aswhich ~~Corporate~~could ~~Secretary.~~cause Onus to ~~November~~discontinue 4,our ~~2012,~~operations. ~~Colonel~~The ~~Baer~~risk ~~was~~associated ~~appointed~~with asa ~~Treasurer~~possible discontinuance of the ~~Company~~business could prevent us from attracting or retaining key personnel, which would have a material adverse effect on our business.

If our management and Board are unable Onto ~~March~~maintain 26and execute our plans, ~~2013~~then we may fail to grow our revenues, ~~the~~manage ~~Board~~costs ~~appointed~~and ~~Colonel~~achieve ~~Baer~~continued asprofitability ~~Chief~~and positive ~~Financial~~cash ~~Officer~~flows, which may cause us to ~~replace~~discontinue Mrour operations. ~~Huitt~~The risks associated with the possible discontinuance of the business could further prevent us from attracting and retaining management and staff, which would have a material adverse effect on our business.

~~Research~~Page ~~and Development~~6

WeAll ~~have~~of ~~incurred~~our ~~approximately~~assets ~~$0.7~~are ~~million~~pledged ~~and~~to $1secure certain debt obligations.0 ~~million~~If inwe ~~research~~fail ~~and~~to ~~development~~repay ~~expenses~~and/or ~~during~~otherwise satisfy the ~~years~~debt ~~ended~~obligations, ~~December~~our ~~31,~~assets ~~2013~~could be seized and ~~2012,~~liquidated for ~~respectively~~the benefit of the debt holders.

The convertible debentures that were initially ~~ITEM~~issued 1Ato YA Global are secured by all of our assets. ~~Risk~~The ~~Factors~~secured convertible debentures mature on August 1, 2015. In the event we are unable to repay and/or otherwise satisfy the secured convertible debentures in accordance with the related agreements, our assets could be seized and liquidated for the benefit of the debt holders and result in the discontinuance of our business.

~~You~~Our ~~should~~future ~~carefully~~profitability ~~consider~~depends on the ~~following~~timely ~~factors~~introduction ~~and~~of ~~all~~new ~~other~~and ~~information~~updated ~~contained~~products inand ~~this~~the ~~Report~~acceptance ~~before~~of ~~you~~these ~~make~~new ~~any~~and ~~investment~~updated ~~decisions~~products ~~with~~in ~~respect~~the ~~to our securities~~marketplace.

Rapid technological change and market ~~Risks~~development ~~Related~~are totypical for the industries we serve. Our ~~Business~~future revenue and profitability will depend in large part on timely development and introduction of new and upgraded products that address evolving market requirements. If we fail to effectively launch new and innovative products or allow our current product offerings to become stale in our advancing industry, we may lose market share to our competitors. Any inability, for technological or other reasons, to successfully grow and upgrade our product portfolio could materially adversely affect our business.

WeExisting ~~may~~shareholders bewill ~~unable~~experience significant todilution ~~continue~~when ascertain ainvestors, ~~going~~such ~~concern~~as ~~based~~YA ~~on our historical performance~~Global, ~~which~~convert ~~has~~their ~~included~~preferred ~~losses,~~stock anto ~~accumulated~~common ~~deficit~~stock, ~~and~~convert aconvertible debentures ~~working capital deficit. We may continue~~ to ~~generate~~common ~~losses~~stock, ~~and~~or bewhen ~~unable~~the toinvestors ~~service~~exercise ~~our~~their ~~outstanding~~warrants ~~liabilities~~for incommon ~~the future~~stock.

WeThe ~~have~~issuance ~~historically~~of ~~incurred~~shares ~~operating~~of ~~losses~~common ~~and~~stock pursuant ~~may continue~~ to ~~do so in~~ the ~~future.~~conversion Weof ~~must~~our ~~develop~~Series ~~new~~C ~~customer relationships~~ and ~~substantially~~D ~~increase~~convertible ~~our~~preferred ~~revenue derived from products~~stock, ~~services~~the ~~and~~conversion IPof ~~licensing.~~convertible Wedebentures ~~have expended and intend~~ to ~~continue to expend resources to develop~~common stock, ~~improve~~or ~~and~~the toexercise ~~market our products and services. A number~~ of ~~factors~~warrants could ~~increase~~result ~~our~~in ~~operating~~a ~~expenses,~~significant ~~such~~increase ~~as:~~in ~~adapting~~the ~~infrastructure~~outstanding ~~and~~shares ~~administrative~~of ~~resources~~common tostock ~~accommodate additional customers~~ and ~~future~~will ~~growth;~~have a ~~developing~~material ~~products,~~dilutive ~~distribution,~~impact ~~marketing,~~on ~~and~~our ~~management~~shareholders. ~~for the broadest possible market; broadening customer technical support capabilities; developing additional indirect distribution partners; and~~Additionally, ~~incurring~~our ~~legal~~net ~~fees~~earnings ~~and~~per ~~settlements~~share ~~associated~~would ~~with~~decrease ~~litigation~~ and ~~contingencies. To~~ the ~~extent~~market ~~that~~price ~~operating~~of our ~~expenses~~common ~~are~~stock ~~not~~per ~~offset~~share bywould ~~increases in revenues, we could incur operating losses and negative free cash flow~~decline.

~~Page~~Our 6common stock is deemed to be “penny stock” which may make it more difficult for investors to sell their shares due to suitability requirements.

~~There~~Our ~~can~~common bestock nois ~~assurance~~deemed ~~that our efforts~~ to ~~execute our business plan will~~ be ~~successful.~~“penny stock” ~~The~~as ~~accompanying~~defined ~~consolidated financial statements have been prepared~~ in ~~conformity~~Rule 3a51-1 ~~with~~of ~~accounting principles generally accepted in~~ the ~~United~~Securities ~~States~~Exchange Act of ~~America (“US GAAP”)~~1934, ~~which contemplate our continuation~~ as aamended ~~going concern. Our net loss for~~ (the ~~year~~“Exchange ~~ended December 31, 2013 and 2012 was $214~~Act”).1 Certain ~~million~~requirements ~~and~~regarding ~~$19.4~~penny ~~million,~~stocks ~~respectively,~~may ~~including~~reduce ~~$215.8~~the ~~million~~potential ~~and~~market ~~$21.7~~for ~~million, respectively, of net losses related to~~ our ~~financing~~common ~~instruments.~~stock ~~Our~~by ~~operating~~reducing ~~income~~the ~~was~~number ~~$1.0 million for 2013 as compared to an operating loss in 2012~~ of $5potential investors.5 ~~million.~~The ~~Net~~penny ~~cash~~stock ~~used~~designation bycould ~~operations~~make ~~during~~it ~~2013~~more ~~and~~difficult ~~2012~~for ~~was~~investors ~~$0.4~~in ~~million~~our ~~and~~common ~~$1.5~~stock ~~million,~~to ~~respectively.~~sell Asshares ofto ~~December~~third parties ~~31,~~or ~~2013,~~to weotherwise ~~have~~dispose ~~an accumulated deficit~~ of ~~$479~~them.5 ~~million.~~This Wecould ~~also~~cause ~~have a working capital deficit of $283.9 million, including $281.7 million in current liabilities for~~ our ~~derivative~~stock ~~and~~price ~~debenture~~to ~~financing instruments~~decline.

WeBroker-dealers ~~currently~~dealing doin ~~not~~penny ~~have sufficient cash or commitments for financing to sustain our operations for the next 12 months if we~~ stocks are ~~unable~~required to ~~generate~~provide ~~sufficient~~potential ~~cash~~investors ~~flows~~with ~~from~~a ~~operations.~~document ~~Our~~disclosing ~~plan~~the isrisks toof ~~develop~~penny ~~new customer relationships and substantially increase our revenue derived from our products/services and IP licensing~~stocks. ~~If our revenues do not reach the level anticipated in our plan~~Moreover, webroker-dealers ~~may~~are required ~~require additional financing in order~~ to ~~execute~~determine ~~our operating plan; however, we believe that our revenues will reach such level and such additional financing will not be necessary. If additional financing is required, we cannot predict~~ whether ~~this~~an ~~additional~~investment ~~financing will be~~ in ~~the~~a ~~form~~penny ofstock ~~equity,~~is ~~debt,~~a orsuitable ~~another~~investment ~~form,~~for ~~and we may not be able to obtain the necessary additional capital on~~ a ~~timely~~prospective ~~basis, on acceptable terms, or at all~~investor. InThese requirements reduce the ~~event~~potential ~~that~~market ~~financing~~of ~~sources~~investors ~~are not available, or that we are unsuccessful~~ in ~~increasing~~ our ~~revenues~~stock and ~~profits,~~could wecause ~~may~~the bestock ~~unable~~price to ~~implement~~decline. ~~our~~The ~~current~~potential ~~plans~~market for ~~expansion,~~“penny stocks” ~~repay~~is ~~our~~further ~~debt~~reduced ~~obligations~~by ora ~~respond~~Deposit toTrust ~~competitive~~Company ~~pressures~~(“DTC”) “chill”, ~~any of~~ which ~~would~~prevents ~~have~~trading afrom occurring ~~material adverse effect~~ on ~~our~~the ~~business,~~electronic ~~prospects,~~trading ~~financial~~system ~~condition~~as ~~and~~further ~~results~~described ~~of operations~~below.

InDue ~~February 2014 as described in Note 11 – Subsequent Events, we initiated a merger with the intention~~ to ~~increase~~ the ~~quantity~~accounting oftreatment ~~authorized shares~~ of ~~common stock available for issuance to satisfy~~ the ~~conversion~~convertible ~~rights~~preferred ~~under~~stock, ~~certain~~warrants ~~outstanding convertible securities~~ and ~~avoid~~convertible andebenture ~~event~~instruments ofissued ~~default. We~~by ~~can~~us, ~~provide~~our nonet ~~assurance~~income ~~that~~or ~~the~~loss ~~additional~~may ~~quantity~~not ~~of authorized shares will~~ be reflective ~~sufficient to satisfy all future conversions~~ of ~~the~~our ~~outstanding~~operating ~~convertible~~performance ~~securities. If~~and wecould have ~~insufficient~~a ~~authorized~~material ~~shares~~adverse inimpact ~~the~~on ~~future~~our ~~due~~market ~~to security conversions or otherwise and are unable to respond to requests for conversion, we may be subject to an event of default under the terms of such instruments.~~

During the years ended December 31, 2014 ~~Our~~and ~~management~~2013, we reported a net loss of $2.4 million and ~~Board~~a ~~may~~net beincome ~~unable~~of to$28.5 ~~execute~~million ~~their~~respectively. ~~plans~~The net losses resulted primarily from non-cash losses arising from the adjustment to ~~grow~~value our ~~revenues~~derivative and ~~achieve~~debenture ~~continued~~liabilities ~~profitability~~at ~~and~~fair ~~positive~~value. ~~cash~~The ~~flows,~~loss ~~which~~adjustments are ~~could~~primarily ~~cause~~due usto modifications to ~~discontinue~~the terms of the convertible debentures including the extension of the maturity date to August 2015. We adjust the value of these liabilities to reflect the estimated fair value at each balance sheet date. As a result, we could experience significant fluctuations in our ~~operations~~reported net income or losses in future periods from financing related gains or losses incurred to record the liabilities at fair value. The ~~risk~~financing ~~associated~~related ~~with~~gains aand ~~possible~~losses ~~discontinuance~~incurred to record the liabilities at fair value have historically been significant and have resulted in net losses that are not reflective of the ~~business~~Company’s operating ~~could~~performance ~~prevent~~as usreporting ~~from~~in ~~attracting~~operating income or ~~retaining~~loss. ~~key~~The ~~personnel~~complexity associated the fair value calculations and sophistication required by investors to distinguish and understand our operating performance relative to the reported net income and losses may cause our financial statements to be difficult to comprehend, ~~which~~analyze, ~~would~~and ~~have~~assess. As a result, the potential investor market for our common stock could be reduced resulting in a material adverse ~~effect~~impact on our ~~business~~market value.

IfPage our management and Board are unable to maintain and execute our plans, then we may fail to grow our revenues, manage costs and achieve continued profitability and positive cash flows, which may cause us to discontinue our operations. The risks associated with the possible discontinuance of the business could further prevent us from attracting and retaining management and staff, which would have a material adverse effect on our business.7

~~All~~A majority of our assets are ~~pledged~~intangible assets, towhich ~~secure~~will ~~certain~~have ~~debt~~little ~~obligations. If we fail to repay and/~~or ~~otherwise~~no ~~satisfy~~value ~~the~~if ~~debt obligations,~~ our ~~assets~~operations ~~could~~do benot ~~seized~~generate ~~and~~current ~~liquidated~~or ~~for~~future ~~the~~cash ~~benefit of the debt holders~~flow.

~~The~~At ~~convertible~~December ~~debentures~~31, ~~that~~2014, ~~were~~a ~~initially~~majority ~~issued~~of toour total YAassets ~~Global~~were ~~are~~intangible ~~secured~~assets, byconsisting ~~all~~primarily of ~~our~~rights ~~assets.~~related ~~The~~to ~~secured~~our ~~convertible~~patents ~~debentures~~and ~~mature~~other onintellectual ~~August 1, 2015~~property. In ~~the~~If our ~~event~~results weof ~~are~~operations ~~unable~~do tonot ~~repay~~generate ~~and/or~~sufficient ~~otherwise~~cash ~~satisfy~~flows in the ~~secured~~future, ~~convertible~~the ~~debentures~~assets inwill ~~accordance~~have ~~with~~little ~~the~~or ~~related~~no ~~agreements~~value, ~~our~~which could ~~assets~~lead ~~could~~to beus ~~seized~~recognizing ~~and~~impairment ~~liquidated~~losses for such assets. This could materially adversely affect the ~~benefit~~value of our stock and the ~~debt~~ability ~~holders~~of ~~and~~our ~~result~~shareholders into ~~the~~recoup ~~discontinuance~~their ofinvestments in our ~~business~~stock.

At December 31, 2013, we carried goodwill ~~Our~~arising ~~future~~from ~~profitability~~the ~~depends~~excess onof the ~~timely~~purchase ~~introduction~~price over the fair value of ~~new~~tangible ~~and~~assets ~~updated~~acquired ~~products~~in ~~and~~our purchase of NeoMedia Europe GmbH. We test goodwill for impairment annually or when events or changes in circumstances may warrant. We may be required to record a significant charge to earnings in our financial statements during the ~~acceptance~~period in which any impairment of ~~these~~our ~~new~~goodwill ~~and~~or ~~updated~~amortizable intangible ~~products~~assets is determined, resulting in ~~the~~a ~~marketplace~~materially adverse impact on our results of operations. As a result of our testing goodwill for impairment at December 31, 2014, we determined that our goodwill was fully impaired.

~~Rapid~~We ~~technological~~may ~~change~~not ~~and~~be ~~market~~able development are typical for the industries we serve. Our future revenue and profitability will depend in large part on timely development and introduction of new and upgraded products that address evolving market requirements. If we fail to ~~effectively~~compete ~~launch new and innovative products or allow our current product offerings to become stale~~ effectively in ~~our~~markets ~~advancing~~where ~~industry, we may lose market share to~~ our competitors. ~~Any~~have ~~inability,~~more ~~for technological or other reasons~~resources, towhich ~~successfully~~could ~~grow~~have ~~and~~a ~~upgrade~~material ~~our~~adverse ~~product~~effect ~~portfolio~~on ~~could materially adversely affect~~ our business.

~~Page~~Our 7market is highly competitive and characterized by an increasing number of entrants that have introduced or developed products and services similar to those we offer. We believe that competition will continue to intensify and increase in the near future. Our target market is rapidly evolving and is subject to continuous technological change. As a result, our competitors may be better positioned to address these developments or may react more favorably to these changes, which could have a material adverse effect on our business, prospects, financial condition, and results of operations.

~~Existing~~We ~~shareholders~~may ~~will~~be ~~experience~~unable ~~significant~~to ~~dilution~~protect ~~when~~our ~~certain~~intellectual property ~~investors,~~rights ~~such~~and asmay YAbe ~~Global,~~liable ~~convert~~for ~~their~~infringing ~~preferred~~the ~~stock~~intellectual toproperty ~~common~~rights ~~stock,~~of ~~convert convertible debentures to common stock~~others, orwhich ~~when~~could ~~the~~have ~~investors~~a ~~exercise~~material ~~their~~adverse effect ~~warrants~~on ~~for~~our ~~common stock~~business.

Our success is dependent upon our proprietary ~~The~~technology, ~~issuance~~including ofpatents ~~shares~~and ofother ~~common~~intellectual ~~stock~~property, ~~pursuant~~and toon the ~~conversion~~ability ofto ~~our~~protect ~~Series~~proprietary Ctechnology and Dother intellectual ~~convertible~~property ~~preferred~~rights. ~~stock~~In addition, we must conduct our operations without infringing on the ~~conversion~~proprietary rights of ~~convertible~~third parties. ~~debentures~~We also intend to ~~common~~rely ~~stock,~~upon orunpatented trade secrets and the ~~exercise~~know-how and expertise of ~~warrants~~our ~~could~~employees, ~~result~~as inwell aas ~~significant~~our patents. ~~increase~~To inprotect ~~the~~our ~~outstanding~~proprietary ~~shares~~technology and other intellectual property, we rely primarily on a combination of ~~common~~the ~~stock~~protections provided by applicable patent, copyright, trademark, and ~~will~~trade ~~have~~secret alaws ~~material~~as ~~dilutive~~well ~~impact~~as on ~~our~~confidentiality ~~shareholders~~procedures and licensing arrangements. ~~Additionally,~~Although we believe that we have taken appropriate steps to protect our ~~net~~unpatented ~~earnings~~proprietary ~~per~~rights, ~~share~~including requiring ~~would~~that ~~decrease~~our employees and ~~the~~third ~~market~~parties ~~price~~who ofare granted access to our ~~common~~proprietary ~~stock~~technology ~~per~~enter ~~share~~into ~~would~~confidentiality agreements, ~~decline~~we can provide no assurance that these measures will be sufficient to protect our rights against third parties. Others may independently develop or otherwise acquire patented or unpatented technologies or products similar or superior to ours.

~~Our~~Some ~~common~~provisions ~~stock~~of isour ~~deemed~~Certificate of toIncorporation beand ~~“penny~~Bylaws ~~stock”~~may deter takeover attempts, which may ~~make~~limit itthe ~~more~~opportunity ~~difficult~~of ~~for~~our ~~investors~~shareholders to sell their shares at ~~due~~a premium to ~~suitability~~the ~~requirements~~then-current market price.

Some of the provisions of our Certificate ~~Our~~of ~~common~~Incorporation ~~stock~~and isBylaws ~~deemed~~could make it more difficult for a third party to acquire us, even if doing so might be ~~“penny~~beneficial to ~~stock”~~our asshareholders ~~defined~~by inproviding ~~Rule 3a51-1~~them ofwith the ~~Securities~~opportunity ~~Exchange~~to ~~Act~~sell oftheir ~~1934,~~shares asat ~~amended~~a (premium to the ~~“Exchange~~then-current ~~Act”)~~market price. On ~~Certain~~December ~~requirements~~10, ~~regarding~~1999, ~~penny~~our ~~stocks~~Board ~~may~~adopted ~~reduce~~a shareholders’ rights plan and declared a non-taxable dividend of the ~~potential~~right ~~market~~to acquire ~~for~~one-one hundredth of a share of our Series A Preferred Stock, par value $0.01 per share, on each outstanding share of our common stock byto ~~reducing~~shareholders ~~the~~of ~~number~~record on December 20, 1999 and each share of ~~potential~~common ~~investors~~stock issued thereafter until a pre-defined hostile takeover date. The ~~penny~~shareholders’ ~~stock~~rights ~~designation~~plan, ~~could~~or ~~make~~so-called it“poison ~~more~~pill”, ~~difficult~~was ~~for~~adopted ~~investors~~as an anti-takeover measure. The shareholders’ rights plan was designed to enable all shareholders not engaged in ~~our~~a ~~common~~hostile ~~stock~~takeover attempt to ~~sell~~receive ~~shares~~fair and equal treatment in any proposed takeover of us and to ~~third~~guard ~~parties~~against partial or two-tiered tender offers, open market accumulations, and other hostile tactics to ~~otherwise~~gain ~~dispose~~control of ~~them~~us. ~~This~~The ~~could~~shareholders’ ~~cause~~rights plan was not adopted in response to any effort to acquire control of us at the time of adoption, however it may have the effect of rendering more difficult, delaying, discouraging, preventing, or rendering more costly an acquisition of us or a change in control of us. Certain shareholders, who were our ~~stock~~founders, ~~price~~Charles W. Fritz, William E. Fritz and The Fritz Family Limited Partnership and their holdings, were exempted from the triggering provisions of our shareholders’ rights plan, as a result of the fact that, as of the plan’s adoption, their holdings might have otherwise triggered the plan. The Shareholder Rights Plan was due to ~~decline~~expire December 10, 2009; however, it was extended and remains in effect.

~~Broker-dealers~~Page dealing in penny stocks are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker-dealers are required to determine whether an investment in a penny stock is a suitable investment for a prospective investor. These requirements reduce the potential market of investors in our stock and could cause the stock price to decline. The potential market for “penny stocks” is further reduced by a Deposit Trust Company (“DTC”) “chill”, which prevents trading from occurring on the electronic trading system as further described below.8

In addition, our Certificate of Incorporation ~~The~~authorizes ~~DTC~~our ~~placed~~Board ato ~~“chill”~~designate onand ~~deposits~~issue preferred stock, in one or more series, the terms of which may be determined at the time ~~Company’s~~of ~~common~~issuance ~~stock~~by our Board, ~~which~~without further action by shareholders, and may ~~negatively~~include ~~impact~~voting anrights, ~~investor’s~~including ~~ability~~the right to ~~trade~~vote as ina ~~our~~series ~~common~~on ~~shares~~particular matters, preferences as to dividends and liquidation, conversion, redemption rights, and sinking fund provisions.

InPreferred ~~November~~stock ~~2011,~~may ~~the~~have ~~DTC placed~~ a ~~“chill”~~negative impact on ~~deposits~~other ofstockholders ~~our common stock and is not clearing~~ or settling trades in our common stock through its electronic trading system. The “chill” does not affect our normal business operations. However, shareholders with internet brokerage accounts may not be able to trade in our common shares because the ~~internet~~pursuit ~~brokers clear and settle trades through the DTC. We believe the “chill” may limit the ability~~ of ~~potential~~certain ~~investors~~corporate ~~from purchasing our shares~~actions.

The issuance of any preferred stock could ~~Due~~have toa material adverse effect on the ~~accounting~~rights ~~treatment~~of holders of our common stock, and, therefore, could reduce the ~~convertible~~value ~~preferred~~of shares of our common stock. In addition, ~~warrants~~specific ~~and~~rights ~~convertible~~granted ~~debenture~~to ~~instruments~~future ~~issued~~holders byof ~~us,~~preferred stock could be used to restrict our ~~net~~ability to ~~income~~merge with, or ~~loss~~sell ~~may~~our ~~not~~assets beto, ~~reflective~~a third party. The ability of our ~~operating~~Board ~~performance~~to ~~and~~issue preferred stock could have athe ~~material~~effect ~~adverse~~of rendering ~~impact~~more ondifficult, ~~our~~delaying, ~~market~~discouraging, ~~value~~preventing, or rendering more costly an acquisition of us or a change in our control.

~~During~~In the ~~years ended December 31~~future, ~~2013~~there and 2012, we reported net losses of $214.1 million and $19.4 million respectively. The net losses resulted primarily from non-cash losses arising from the adjustment to value our derivative and debenture liabilities at fair value. The loss adjustments are primarily due to modifications to the terms of the convertible debentures including the extension of the maturity date to August 2015. We adjust the value of these liabilities to reflect the estimated fair value at each balance sheet date. As a result, we could ~~experience~~be ~~significant~~government regulations ~~fluctuations in our reported net income or losses in future periods from financing related gains or losses incurred to record the liabilities at fair value. The financing related gains~~ and ~~losses~~legal ~~incurred~~uncertainties ~~to record the liabilities at fair value have historically been significant and have resulted in net losses~~ that are not reflective of the Company’s operating performance as reporting in operating income or loss. The complexity associated the fair value calculations and sophistication required by investors to distinguish and understand our operating performance relative to the reported net income and losses may cause our financial statements to be difficult to comprehend, analyze, and assess. As a result, the potential investor market for our common stock could beharm ~~reduced resulting in a material adverse impact on~~ our ~~market value~~business.

Any new legislation or regulation, the Aapplication ~~majority~~of laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the internet and other online services, could have a material adverse effect on our ~~assets~~business, prospects, ~~are~~financial ~~intangible~~condition, ~~assets~~and results of operations. The growth and development of the market for mobile commerce may prompt calls for more stringent consumer protection laws to impose additional burdens on companies conducting business online. The adoption of any additional laws or regulations may decrease the growth of the internet, mobile telecommunications or other mobile services, which ~~will~~could, ~~have~~in ~~little~~turn, ordecrease nothe ~~value~~demand iffor our ~~operations~~services doand ~~not~~increase ~~generate~~our ~~current~~cost of doing business, or ~~future~~otherwise ~~cash~~have ~~flow~~a material adverse effect on our business, prospects, financial condition, and results of operations.

~~Page~~ITEM 81B. Unresolved Staff Comments

AtWe ~~December~~are ~~31, 2013,~~ a ~~majority~~“smaller ofreporting ~~our~~company” ~~total~~as ~~assets~~defined by ~~were~~Rule ~~intangible~~12b-2 ~~assets, consisting primarily~~ of ~~rights~~the ~~related~~Exchange toAct ~~our patents~~and, ~~other~~as ~~intellectual property~~such, ~~and~~are ~~goodwill arising from the excess of the purchase price over the fair value of tangible assets acquired in our purchase of NeoMedia Europe GmbH. If our results of operations do~~ not ~~generate~~required ~~sufficient cash flows in the future, the assets will have little or no value, which could lead~~ to usprovide ~~recognizing~~this ~~impairment losses for such assets~~information. ~~This could materially adversely affect the value of our stock and the ability of our shareholders to recoup their investments in our stock.~~

WeITEM ~~review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable~~2. We test goodwill for impairment annually or when events or changes in circumstances may warrant. We may be required to record a significant charge to earnings in our financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, resulting in a materially adverse impact on our results of operations.Properties

WeAs ~~may~~of ~~not~~December be31, ~~able~~2014, towe ~~compete~~leased ~~effectively~~one office inspace ~~markets~~facility ~~where~~for our ~~competitors~~business ~~have~~purposes, ~~more~~our ~~resources~~headquarters in Boulder, ~~which~~Colorado. ~~could~~The ~~have~~Boulder, aColorado ~~material~~lease ~~adverse~~is ~~effect~~an annual lease, of 2,303 square feet, expiring on March 31, 2019, with average monthly payments of approximately $5,690. We sublease portions of the space in our ~~business~~Boulder headquarters to other companies to offset the rent paid directly by NeoMedia.

~~Our~~In ~~market~~February is2014, ~~highly~~we ~~competitive~~entered ~~and~~into ~~characterized by~~ an ~~increasing~~amended lease ~~number~~arrangement offor ~~entrants~~NeoMedia ~~that~~Europe ~~have~~GmbH’s ~~introduced~~office ~~or developed products and services similar to those we offer~~lease. WeUnder ~~believe~~the ~~that~~terms ~~competition~~of ~~will continue to intensify and increase in~~ the ~~near~~new ~~future.~~arrangement, ~~Our~~approximately ~~target~~125 ~~market~~square meters isare ~~rapidly~~leased ~~evolving~~for ~~and is subject to continuous technological change. As~~ a ~~result,~~term ~~our competitors may be better positioned~~ to ~~address~~expire ~~these developments or may react more favorably to these changes, which could have a material adverse effect~~ on ~~our~~March ~~business~~31, ~~prospects~~2015, ~~financial~~with ~~condition,~~a ~~and~~monthly ~~results~~rent of ~~operations~~approximately $2,400.

WeITEM ~~may~~3. beLegal ~~unable to protect our intellectual property rights and may be liable for infringing the intellectual property rights of others, which could have a material adverse effect on our business.~~Proceedings

~~Our~~From ~~success~~time ~~is dependent upon our proprietary technology, including patents and other intellectual property, and on the ability~~ to ~~protect proprietary technology and other intellectual property rights. In addition~~time, we ~~must~~are ~~conduct~~involved ~~our~~in various ~~operations~~legal ~~without~~actions ~~infringing~~arising onin the ~~proprietary~~normal ~~rights~~course of ~~third parties. We also intend to rely upon unpatented trade secrets and the know-how and expertise of our employees~~business, asboth ~~well~~ as ~~our~~claimant ~~patents. To protect our proprietary technology~~ and ~~other~~defendant. ~~intellectual~~Although ~~property,~~it weis ~~rely~~not ~~primarily~~possible onto determine awith ~~combination~~certainty of the ~~protections~~outcome ~~provided~~of bythese ~~applicable patent~~matters, ~~copyright, trademark, and trade secret laws as well as on confidentiality procedures and licensing arrangements. Although~~ we believe ~~that~~the weeventual ~~have~~resolution ~~taken~~of ~~appropriate~~any ~~steps~~ongoing tolegal ~~protect~~actions ~~our~~is ~~unpatented~~unlikely to ~~proprietary~~have ~~rights,~~a ~~including~~material ~~requiring~~impact ~~that~~on our ~~employees~~financial ~~and~~position ~~third~~or ~~parties~~operating ~~who~~results. ~~are~~In ~~granted~~addition ~~access~~ to ~~our~~the ~~proprietary~~normal ~~technology~~course ~~enter~~of ~~into~~business ~~confidentiality agreements,~~ we ~~can~~are engaged ~~provide~~in nothe ~~assurance~~litigation ~~that~~described these measures will be sufficient to protect our rights against third parties. Others may independently develop or otherwise acquire patented or unpatented technologies or products similar or superior to ours.below:

~~Some~~Page provisions of our Certificate of Incorporation and Bylaws may deter takeover attempts, which may limit the opportunity of our shareholders to sell their shares at a premium to the then-current market price.9

~~Some~~Scanbuy of the provisions of our Certificate of Incorporation and Bylaws could make it more difficult for a third party to acquire us, even if doing so might be beneficial to our shareholders by providing them with the opportunity to sell their shares at a premium to the then-current market pricev. On December 10, 1999, our Board adopted a shareholders’ rights plan and declared a non-taxable dividend of the right to acquire one-one hundredth of a share of our Series A Preferred Stock, par value $0.01 per share, on each outstanding share of our common stock to shareholders of record on December 20, 1999 and each share of common stock issued thereafter until a pre-defined hostile takeover date. The shareholders’ rights plan, or so-called “poison pill”, was adopted as an anti-takeover measure. The shareholders’ rights plan was designed to enable all shareholders not engaged in a hostile takeover attempt to receive fair and equal treatment in any proposed takeover of us and to guard against partial or two-tiered tender offers, open market accumulations, and other hostile tactics to gain control of us. The shareholders’ rights plan was not adopted in response to any effort to acquire control of us at the time of adoption, however it may have the effect of rendering more difficult, delaying, discouraging, preventing, or rendering more costly an acquisition of us or a change in control of us. Certain shareholders, who were our founders, Charles W. Fritz, William E. Fritz and The Fritz Family Limited Partnership and their holdings, were exempted from the triggering provisions of our shareholders’ rights plan, as a result of the fact that, as of the plan’s adoption, their holdings might have otherwise triggered the plan.NeoMedia

~~Page~~On 9March 21, 2014, Scanbuy, Inc. (“Scanbuy”) filed a complaint in the Delaware Court of Chancery alleging, among other claims, that NeoMedia violated the Delaware Deceptive Trade Practices Act, 6 Del. C. § 2532(8), by sending letters to certain of Scanbuy’s customers, which state that the use of NeoMedia’s technology by Scanbuy and its customers constitutes patent infringement. On April 14, 2014, NeoMedia filed a motion to dismiss the complaint on the grounds that venue is improper in Delaware pursuant to a Settlement and License Agreement entered into by NeoMedia and Scanbuy on October 16, 2009. On October 31, 2014, the Court of Chancery granted NeoMedia’s motion to dismiss and Scanbuy’s complaint was dismissed by the court without prejudice. All claims in this case were subsequently settled effective as of December 31, 2014.

InNeoMedia addition, our Certificate of Incorporation authorizes our Board to designate and issue preferred stock, in one or more series, the terms of which may be determined at the time of issuance by our Board, without further action by shareholders, and may include voting rights, including the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion, redemption rights, and sinking fund provisionsv. Scanbuy

On May 7, 2014, the Company filed a lawsuit ~~Preferred~~against ~~stock~~Scanbuy, ~~may~~Inc. ~~have~~in the U.S. District Court for the Northern District of Georgia, Atlanta Division, styled as NeoMedia Technologies, Inc. v. Scanbuy, Inc., Civil Action No. 1:14-cv-01379-AT (the “Scanbuy Georgia Litigation”). NeoMedia’s Complaint alleged infringement of NeoMedia’s U.S. Patents Numbers 6,199,048 (the “ ‘048 Patent”) and 8,131,597 (the “ ‘597 Patent”) and violations of the Section 43(a) ~~negative~~of ~~impact~~the onLanham Act. On June 19, 2014, the Company filed an Amended Complaint against Scanbuy, which asserted the same causes of action as in the original Complaint. On June 3, 2014, Scanbuy responded to NeoMedia’s Amended Complaint by filing an Answer and Counterclaims against the Company and a motion to dismiss the Company’s Lanham Act claims. Scanbuy’s Counterclaims against the Company allege, among other ~~stockholders~~claims, orclaims for breach of non-disclosure agreement and for declaratory judgments that NeoMedia’s ‘048 and ‘597 Patents are not infringed and are invalid. Scanbuy also filed motions requesting the ~~pursuit~~court to transfer the Scanbuy Georgia Litigation to the U.S. District Court for the Southern District of ~~certain~~New ~~corporate~~York. All ~~actions~~claims and counterclaims in this case were subsequently settled, effective as of December 31, 2014. On January 30, 2015, the parties filed, and the court entered, a Stipulation and Consent Order of Dismissal with prejudice.

~~The~~ITEM ~~issuance of any preferred stock could have a material adverse effect on the rights of holders of our common stock, and, therefore, could reduce the value of shares of our common stock~~4. InMine ~~addition,~~Safety specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party. The ability of our Board to issue preferred stock could have the effect of rendering more difficult, delaying, discouraging, preventing, or rendering more costly an acquisition of us or a change in our control.Disclosures

~~In the future, there could be government regulations and legal uncertainties that could harm our business.~~N/A

~~Any~~Page new legislation or regulation, the application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of existing laws and regulations to the internet and other online services, could have a material adverse effect on our business, prospects, financial condition, and results of operations. The growth and development of the market for mobile commerce may prompt calls for more stringent consumer protection laws to impose additional burdens on companies conducting business online. The adoption of any additional laws or regulations may decrease the growth of the internet, mobile telecommunications or other mobile services, which could, in turn, decrease the demand for our services and increase our cost of doing business, or otherwise have a material adverse effect on our business, prospects, financial condition, and results of operations.10

~~ITEM~~PART ~~1B. Unresolved Staff Comments~~II

WeITEM ~~are~~5. aMarket ~~“smaller~~for ~~reporting~~Registrant’s ~~company”~~Common asEquity, ~~defined~~Related byStockholder ~~Rule~~Matters ~~12b-2 of the Exchange Act~~ and, asIssuer ~~such,~~Purchases ~~are~~of ~~not~~Equity ~~required to provide this information.~~Securities

Market ~~ITEM 2. Properties~~Information

AsOur ofcommon ~~December~~stock 31, 2013, we leased two office space facilities for our business purposes, our headquarters in Boulder, Colorado, and the property used for NeoMedia Europe GmbH’s office in Würselen, Germany. The Boulder, Colorado lease is anquoted ~~annual lease, of 1,354 square feet, expiring~~ on ~~March~~the ~~31,~~OTC Markets ~~2014,~~- ~~with~~OTCPINK ~~monthly~~under ~~payments~~the ofsymbol ~~approximately $2,700~~“NEOM. ~~NeoMedia Europe GmbH operates from a facility in Würselen, Germany, where approximately 209 square meters, expiring on March 31, 2015, with a monthly rent of approximately $3,800.~~”

InThe ~~February~~following ~~2014,~~table wesummarizes ~~entered~~the ~~into~~high and anlow ~~amended~~bid ~~lease~~information ~~arrangement~~of ~~for~~the ~~NeoMedia Europe GmbH~~Company’s ~~office~~common ~~lease. Under~~stock ~~the~~for ~~terms of~~ the ~~new~~periods ~~arrangement, approximately 125 square meters are leased for a term to expire on March 31, 2015, with a monthly rent of approximately $2,400~~indicated.

On February 19, 2014, we also entered into a new office lease agreement for our headquarters in Boulder, Colorado. The agreement provides for a five year lease of 2,303 square feet expiring on March 31, 2019 with average monthly rent payments over the term of $5,690. We intend to sublease certain areas of the property that will be unused by us.

	High		Low
2014:
Fourth quarter	$	0.001	$	0.0001
Third quarter	$	0.0014	$	0.0001
Second quarter	$	0.0211	$	0.0013
First quarter	$	0.0195	$	0.0075
2013:
Fourth quarter	$	0.0018	$	0.0002
Third quarter	$	0.0007	$	0.0001
Second quarter	$	0.0015	$	0.0003
First quarter	$	0.0038	$	0.0010

The following table presents certain information ~~ITEM~~with 3.respect ~~Legal~~to ~~Proceedings~~our equity compensation plans as of December 31, 2014:

~~From~~Plan ~~time~~Category Number of securities to ~~time,~~be weissued ~~are~~upon ~~involved~~exercise inof ~~various~~outstanding ~~legal~~options, ~~actions~~warrants ~~arising~~and inrights ~~the~~(a) ~~normal~~Weighted-average ~~course~~exercise price of ~~business~~outstanding options, ~~both~~warrants asand ~~claimant~~rights ~~and~~(b) ~~defendant.~~Number ~~Although~~of itsecurities isremaining ~~not~~available ~~possible~~for tofuture ~~determine~~issuance ~~with~~under ~~certainty~~equity ~~the~~compensation ~~outcome~~plans of(excluding ~~these~~securities ~~matters,~~reflected wein ~~believe~~column ~~the~~(a)) ~~eventual~~(c) ~~resolution~~Equity ofcompensation ~~any~~plans ~~ongoing~~approved ~~legal~~by ~~actions~~security isholders ~~unlikely~~- to$ ~~have~~- a- ~~material~~Equity ~~impact~~compensation onplans ~~our~~not ~~financial~~approved ~~position~~by orsecurity ~~operating~~holders ~~results.~~- - - Total - $ - -

We had five stock option plans – ~~ITEM~~the 42011 Stock Incentive Plan, the 2005 Stock Option Plan, the 2003 Stock Option Plan, the 2003 Stock Incentive Plan, and the 2002 Stock Option Plan. ~~Mine~~Options ~~Safety~~issued ~~Disclosures~~under these option plans had a term of up to 10 years. Options were granted with a vesting schedule as approved by the Stock Option Committee and/or the Board, but generally the vesting periods ranged from immediate vesting to 5 years. Common shares required to be issued on the exercise of stock options were to be issued from our authorized and unissued shares.

~~N/A~~Page 11

~~Page~~However, 10we no longer offer stock based compensation as part of our compensation packages for employees, contractors and/or Directors. On October 6, 2014, our Board of Directors elected to terminate all existing Stock Option and Incentive plans due to the significant cost to maintain and report on the plans as they do not achieve the goals intended. Thus, the 2002, 2005 Stock Option Plans and the 2003 Stock Incentive Plan were effectively terminated with no accounting requirements since no options or shares were issued. The 2003 Stock Option Plan with 397,613 options issued was effectively terminated with no accounting requirements as the term of the options have expired or the holders of the options no longer meet the requirements of holding the options due to termination of employment.

The 2011 Stock Plan was effectively terminated ~~PART~~subject IIto the holder’s rights to the options remaining open provided they meet the requirements of the options. Per discussion with eligible holders, each holder (current board members or officers and one previous officer of the corporation) waived their rights to exercise of the options.

Performance ~~ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities~~Graph

We are a “smaller reporting company” as defined ~~Market~~by ~~Information~~Rule 12b-2 of the Exchange Act and, as such, are not required to provide this information.

Recent ~~Our~~Sales ~~common~~of ~~stock~~Unregistered isSecurities; ~~quoted~~Use onof ~~the~~Proceeds ~~OTC~~from ~~Markets-OTCQB~~Registered ~~under the symbol “NEOM.”~~Securities

The ~~following~~Company ~~table~~has ~~summarizes~~had ~~the~~no ~~high~~sales ~~and~~of ~~low~~unregistered securities ~~bid~~during ~~information of~~ the ~~Company’s~~year ~~common~~ended ~~stock~~December ~~for~~31, ~~the periods indicated~~2014.

	High		Low
2013:
Fourth quarter	$	0.0018	$	0.0002
Third quarter	$	0.0007	$	0.0001
Second quarter	$	0.0015	$	0.0003
First quarter	$	0.0038	$	0.0010
2012:
Fourth quarter	$	0.0062	$	0.0021
Third quarter	$	0.0137	$	0.0054
Second quarter	$	0.0315	$	0.0072
First quarter	$	0.0560	$	0.0075

Holders

On February 17, 2015, the closing price of our common stock as quoted on the OTC Market was $0.0001 per share and there were 593 shareholders of record. The ~~following~~number ~~table~~of record ~~presents~~holders ~~certain~~does ~~information~~not ~~with~~include ~~respect~~beneficial toowners ~~our~~of ~~equity~~common ~~compensation~~stock ~~plans~~whose asshares are held in the names of ~~December~~banks, 31brokers, ~~2013:~~nominees or other fiduciaries.

				Number of
				securities
				remaining
				available for
	Number of			future
	securities			issuance under
	to be issued			equity
	upon exercise			compensation
	of			plans
	outstanding	Weighted-average		(excluding
	options,	exercise price of		securities
	warrants and	outstanding options,		reflected in
	rights	warrants and rights		column (a))
Plan Category	(a)	(b)		(c)
Equity compensation plans approved by security holders	1,173,000	$	0.017	3,352,492
Equity compensation plans not approved by security holders	-		-	-
Total	1,173,000	$	0.017	3,352,492

Dividends

We have ~~five~~not ~~stock~~declared ~~option~~or ~~plans~~paid –any ~~the~~cash dividends ~~2011 Stock Incentive Plan, the 2005 Stock Option Plan, the 2003 Stock Option Plan, the 2003 Stock Incentive Plan,~~ and ~~the~~do ~~2002~~not ~~Stock~~foresee ~~Option~~paying ~~Plan. Options issued under these option plans may have a term of up to 10 years. Options may be granted with~~ any ~~vesting~~cash ~~schedule~~dividends asin ~~approved by~~ the ~~Stock~~foreseeable ~~Option Committee and/or the Board, but generally the vesting periods range from immediate vesting to 5 years~~future. ~~Common shares required to be issued on the exercise of stock options would be issued from our authorized and unissued shares.~~

~~Page~~ITEM 116. Selected Financial Data

We are a “smaller reporting company” as defined ~~Performance~~by ~~Graph~~Rule 12b-2 of the Exchange Act and, as such, are not required to provide this information.

WeITEM ~~are~~7. aManagement‘s ~~“smaller~~Discussion ~~reporting~~and ~~company”~~Analysis ~~as defined by Rule 12b-2~~ of ~~the~~Financial ~~Exchange~~Condition ~~Act~~ and, asResults ~~such,~~of ~~are not required to provide this information.~~Operations

~~Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities~~Introduction

The ~~Company~~following ~~has~~discussion ~~had~~and noanalysis should ~~sales~~be read in conjunction with the Consolidated Financial Statements, and the Notes thereto included in this Report. The information contained below includes statements of ~~unregistered~~management’s ~~securities~~beliefs, ~~during~~expectations, hopes, goals and plans that, if not historical, are forward-looking statements subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the ~~quarter~~forward-looking ~~ended~~statements. ~~December~~For 31a discussion on forward-looking statements, ~~2013~~see the information set forth in the introductory note to this Report under the caption Note About Forward-Looking Statements, which information is incorporated herein by reference.

~~Holders~~Overview

OnNeoMedia ~~March~~has ~~10,~~positioned ~~2014,~~itself to lead the ~~closing~~world ~~price~~in ofmobile ~~our~~barcode ~~common~~technology ~~stock~~and assolutions ~~quoted~~that onenable the ~~OTC~~mobile ~~Market~~ecosystem. ~~was~~NeoMedia ~~$0.0006~~harnesses ~~per~~the ~~share~~power ~~and~~of ~~there~~the ~~were~~mobile device ~~544~~in ~~shareholders~~innovative ways with state-of-the-art ~~record~~mobile barcode technology. ~~The~~With ~~number~~this technology, mobile devices with cameras become barcode scanners, enabling a range of ~~record~~practical ~~holders~~applications ~~does~~including ~~not~~mobile ~~include~~marketing ~~beneficial~~and ~~owners~~mobile commerce. In addition, we offer licensing of ~~common~~our ~~stock~~extensive ~~whose~~intellectual ~~shares~~property portfolio. We are ~~held~~focusing our activities primarily in the ~~names~~United ofStates and ~~banks~~Europe, ~~brokers,~~although ~~nominees~~we orare also active in other ~~fiduciaries~~markets via partners or our self-service products.

~~Dividends~~Page 12

Our key focus areas are to: 1) maximize Weour ~~have~~patent ~~not~~portfolio ~~declared~~through orIP ~~paid~~licensing ~~any~~monetization ~~cash~~and ~~dividends~~enforcement; 2) provide services to enterprises, brands and doretailers to ~~not~~maximize ~~foresee~~the ~~paying~~reach ~~any~~of ~~cash~~our ~~dividends~~barcode increation and reader solutions; and, 3) partner with key mobile marketing entities to expand the ~~foreseeable~~depth ~~future~~of our offering to provide full end-to-end solutions for our customers, as necessary.

NeoMedia has been active in, and strives ~~ITEM~~to 6be an innovator in, the mobile barcode field since the mid-1990s, and during that time has spearheaded the development of a robust IP portfolio. ~~Selected~~ ~~Financial~~In ~~Data~~September 2011, we announced an agreement with Global IP Law Group to help further monetize our patent portfolio globally. During 2014, we closed over sixty (60) new IP agreements bringing the total quantity of deals closed to close to one hundred (100). In addition, dozens of companies have retained NeoMedia for its QR creation and management services, as a result of our licensing activities.

On the product side of our business, our Webarcode ~~are~~solutions ainclude ~~“smaller~~our ~~reporting~~barcode ~~company”~~reader as(NeoReader ~~defined~~and byNeoReader ~~Rule~~SDK) ~~12b-2~~as ofwell ~~the~~as ~~Exchange~~our ~~Act~~barcode creation services (NeoSphere and, asQodeScan). ~~such,~~Mobile ~~are~~barcodes ~~not~~continue ~~required~~to be an increasingly important activation element for brands and marketers and we continue to ~~provide~~see ~~this~~growth ~~information~~in terms of new customer additions and traffic across our network.

We believe that NeoMedia remains strong ~~ITEM~~and 7.consistent ~~Management‘s~~in ~~Discussion~~its approach to market and ~~Analysis~~that we will continue to differentiate ourselves on the basis of ~~Financial~~our ~~Condition~~high quality service offerings, our responsive customer service and ~~Results~~support oforganization, ~~Operations~~our customizable and full service solutions and our robust intellectual property portfolio.

NeoReader has experienced continued growth ~~Introduction~~particularly in enterprise implementations. NeoReader continues to be pre-installed on Sony Mobile devices and is available for download from the key “app stores” including Apple App Store™, Google Play™, Nokia Ovi Store, BlackBerry App World™, Windows® Marketplace, Facebook and Amazon. Our barcode reader has approximately 70+ million installations world-wide. Our reader is offered to consumers free of charge, leveraging an ad supported model. We anticipate the growth in consumer utilization will continue as barcodes continue to be utilized for a wide variety of vertical applications. We also offer NeoReader SDK for enterprise opportunities. Our research suggests that we are one of the few providers in the global ecosystem to offer Aztec code support, in addition to QR, Data Matrix, Code 39, PDF417 and a variety of 1D symbologies on iOS, Android and Windows Phone.

~~The~~In ~~following~~2013, ~~discussion~~we ~~and~~launched ~~analysis should be read in conjunction with the Consolidated Financial Statements~~QodeScan, ~~and~~our ~~the~~low cost ~~Notes~~self-service ~~thereto~~barcode ~~included~~creation ~~in this Report~~product. QodeScan ~~The~~is ~~information~~for ~~contained~~those ~~below~~users ~~includes~~who ~~statements of management~~don’st ~~beliefs,~~have ~~expectations,~~high ~~hopes,~~scan ~~goals~~volumes ~~and~~but ~~plans~~would like ~~that,~~the ifinsight ~~not~~into ~~historical,~~analytics ~~are~~that ~~forward~~a ~~looking~~managed ~~statements~~service ~~subject~~provides. In addition to ~~certain~~QodeScan, ~~risks~~we ~~and~~continue ~~uncertainties~~to ~~that~~offer ~~could~~our ~~cause~~NeoSphere product ~~actual~~intended ~~results~~for toenterprises, ~~differ~~agencies ~~materially~~and ~~from~~other ~~those~~large ~~anticipated~~volume ~~in the forward looking statements~~users. We ~~For~~have amany ~~discussion~~Fortune on500 ~~forward~~brands ~~looking~~using ~~statements,~~our ~~see~~NeoSphere product ~~the information set forth~~ in ~~the~~their ~~introductory~~global ~~note~~barcode tooperations. Our ~~this~~QR ~~Report~~creation ~~under~~services ~~the~~utilize ~~caption~~an ~~Note~~indirect ~~About~~methodology ~~Forward~~for ~~Looking~~our ~~Statements~~customers, which ~~information~~ is ~~incorporated~~also ~~herein~~embodied byin ~~reference~~our intellectual property.

Legal costs continue to be high for us. ~~Overview~~The costs to maintain our public company status, our IP licensing initiatives, satisfy our investor obligations as well as participate in an unexpected litigation have catapulted our legal fees to approximately 27% of total operating expenses for us in 2014. Unfortunately, this has meant that funds earmarked for sales and marketing investment were spent on legal fees.

Critical ~~NeoMedia~~Accounting ~~has~~Policies ~~positioned itself to lead the world in mobile barcode technology~~ and solutions that enable the mobile ecosystem. NeoMedia harnesses the power of the mobile device in innovative ways with state-of-the-art mobile barcode technology. With this technology, mobile devices with cameras become barcode scanners and this enables a range of practical applications including mobile marketing and mobile commerce. In addition, we offer licensing of our extensive intellectual property portfolio. We are focusing our activities primarily in the United States and Europe, although in other markets via partners or our self service products.Estimates

This discussion and analysis of financial ~~Our~~condition ~~key~~and ~~focus~~results ~~areas~~of ~~are~~operations ~~to:~~has 1)been ~~maximize~~prepared by our ~~patent~~management ~~portfolio~~based ~~through~~on IPour ~~licensing~~consolidated ~~monetization~~financial statements, which have been prepared in accordance with US GAAP. The preparation of these financial statements requires management to make estimates and ~~enforcement~~judgments that affect the reported amounts of assets, 2)liabilities, ~~provide~~revenues, ~~service~~and toexpenses, ~~enterprises~~and related disclosure of contingent assets and liabilities. On an ongoing basis, ~~brands~~our management evaluates our critical accounting policies and ~~retailers~~estimates, including those related to ~~maximize~~revenue ~~the~~recognition, ~~reach~~valuation of ~~our~~accounts ~~barcode~~receivable, ~~creation~~intangible assets, derivative liabilities and ~~reader~~contingencies. Estimates ~~solutions~~are based on historical experience and on various assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and 3)liabilities ~~partner~~that ~~with~~are ~~key~~not ~~mobile~~readily apparent ~~marketing~~from ~~entities~~other tosources. ~~expand~~These judgments and estimates affect the ~~depth~~reported amounts of ~~our~~assets ~~offering~~and toliabilities ~~provide~~and ~~full~~the ~~end-to-end~~reported amounts ~~solutions~~of ~~for~~revenue ~~our~~and ~~customers~~expenses during the reporting periods.

Page 1213

NeoMedia has been active in, and strives to be an innovator in, the mobile barcode field since the mid-1990s, and during that time has spearheaded the development of a robust IP portfolio. In September 2011, we announced an agreement with Global IP Law Group to help further monetize our patent portfolio, focusing on the US market. In 2013, we closed twenty five IP agreements and remain hopeful that our IP licensing activities will continue to generate new agreements in 2014 and beyond. We ~~intend~~consider ~~to continue to vigorously pursue or defend, as applicable, claims affecting~~ the ~~business~~following ~~interests~~accounting ~~and~~policies important ~~intellectual property of the Company and filed eight lawsuits,~~ in ~~this~~understanding ~~regard, in 2013. In 2013, we have successfully caused approximately 10 companies in the United States to cease and desist their mobile barcode operations that infringed upon~~ our IPoperating ~~rights~~results and ~~have~~financial ~~settled seven of the lawsuits we initiated.~~condition:

On· ~~the~~Intangible ~~product~~Asset ~~side~~Valuation – Assessing the valuation of ~~our~~intangible ~~business,~~assets ~~our~~is ~~barcode~~subjective ~~management~~in ~~solutions~~nature ~~include~~and ~~our~~involves ~~barcode~~significant ~~reader~~estimates ~~(NeoReader)~~and assumptions as well as management’s judgment. We periodically perform impairment tests on our ~~barcode~~long-lived ~~creation~~assets, ~~solutions~~including ~~(NeoSphere~~our ~~and~~intangible ~~QodeScan)~~assets, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. ~~Mobile~~Long-lived ~~barcodes~~assets ~~continue~~are testing for impairment by first comparing the estimated future undiscounted cash flows from a particular asset or asset group to bethe carrying value. If the expected undiscounted cash flows are greater than the carrying value, no impairment is recognized. If the expected undiscounted cash flows are less than the carrying value, then an ~~increasingly~~impairment ~~important~~charge ~~activation~~is ~~element~~recorded for ~~brands~~the difference between the carrying value and ~~marketers~~the expected discounted cash flows. The assumptions used in developing expected cash flow estimates are similar to those used in developing other information used by us for budgeting and other forecasting purposes. In instances where a range of potential future cash flows is possible, we ~~continue~~use a probability-weighted approach to ~~see~~weigh ~~growth~~the inlikelihood ~~terms~~of those possible outcomes. As of ~~new~~December ~~customer~~31, ~~additions~~2014, ~~and~~we ~~traffic~~do ~~across~~not believe any of our ~~network~~long-lived assets are impaired.

· Goodwill – Our goodwill represents the excess of the purchase price paid for NeoMedia ~~remains~~Europe ~~strong~~GmbH over the fair value of the identifiable net assets and ~~consistent~~liabilities inacquired, ~~its~~based ~~approach~~on toan ~~market~~independent appraisal of the assets and weliabilities ~~believe~~acquired. Goodwill is not amortized but is tested annually for impairment, and between annual tests if an event occurs or circumstances change that wewould ~~will~~more ~~continue~~likely than not reduce the fair value of a reporting unit below its carrying value. Goodwill is tested for impairment by comparing the carrying amount of the asset to ~~differentiate~~its ~~ourselves~~fair onvalue, which is estimated through the ~~basis~~use of ~~our~~a ~~high~~discounted ~~quality~~cash ~~product~~flows ~~and~~model. ~~service~~If ~~offerings~~the carrying amount exceeds fair value, ~~our~~an ~~responsive~~impairment ~~customer~~loss ~~service~~is ~~and~~recognized ~~support~~for ~~organization~~the difference. We performed the two step goodwill impairment test at December 31, 2014 and determined there was impairment of our ~~customizable~~goodwill ~~and~~as ~~full~~reflected ~~service~~on ~~solutions~~our balance sheet ($3,417,912). Our assessment conducted as of December 31, 2014 concluded that on a qualitative and ~~our~~quantitative ~~robust~~basis ~~intellectual~~there ~~property~~was ~~portfolio~~impairment of goodwill on our balance sheet.

~~NeoReader~~· ~~has~~Derivative ~~experienced~~Financial ~~continued~~Instruments ~~growth~~– inWe ~~2013~~do ~~particularly~~not inuse ~~enterprise~~derivative ~~implementations. NeoReader~~financial ~~continues~~instruments to behedge ~~pre~~exposures to cash-~~installed~~flow onrisks ~~Sony~~or ~~Mobile~~market-risks ~~devices~~that ~~and~~may isaffect ~~available~~the ~~for~~fair ~~download~~values ~~from~~of our financial instruments. However, certain financial instruments, such as warrants and the ~~key~~embedded ~~“app~~conversion ~~stores”~~features ~~including~~of ~~Apple~~our ~~App~~convertible ~~Store™,~~preferred ~~Google~~stock ~~Play™~~and convertible debentures, ~~Nokia~~which ~~Ovi~~are ~~Store,~~indexed ~~BlackBerry~~to ~~App~~our ~~World™~~common stock, ~~Windows®~~are ~~Marketplace,~~classified ~~Facebook~~as ~~and~~liabilities ~~Amazon. Our~~when ~~barcode~~either ~~reader~~(a) ~~now~~the ~~has~~holder ~~approximately~~possesses ~~50+~~rights ~~million~~to ~~installations~~net-cash ~~world~~settlement or (b) physical or net-~~wide~~share settlement is not within our control. ~~Our~~ ~~reader~~In such instances, net-cash settlement is ~~offered~~assumed tofor ~~consumers~~financial ~~free~~accounting ofand ~~charge~~reporting purposes, ~~leveraging~~even anwhen adthe ~~supported~~terms ~~model~~of the underlying contracts do not provide for net-cash settlement. Derivative financial instruments are initially recorded, and wecontinuously ~~anticipate~~carried, at fair value. Determining the ~~growth~~fair invalue ~~consumer~~of ~~utilization~~these ~~will~~complex ~~continue~~derivative asfinancial ~~barcodes~~instruments ~~continue~~involves judgment and the use of certain relevant assumptions including, but not limited to, beinterest ~~utilized~~rate ~~for~~risk, acredit ~~wide~~risk, ~~variety~~and ofequivalent ~~vertical~~volatility ~~applications~~and conversion/redemption privileges. We ~~also~~The ~~offer~~use ~~NeoReader~~of ~~SDK~~different ~~for~~assumptions ~~enterprise~~could ~~opportunities~~have a material effect on the estimated fair value amounts. ~~Our~~ ~~research~~For ~~suggests~~our ~~that~~convertible debentures, we ~~are~~have ~~one~~elected ofnot ~~the~~to ~~few~~separately ~~providers~~account infor the ~~global~~embedded ~~ecosystem~~conversion feature as a derivative instrument but to ~~offer~~account ~~Aztec~~for ~~code~~the ~~support,~~entire hybrid instrument at fair value in ~~addition~~accordance towith ~~QR,~~Financial ~~Data~~Accounting ~~Matrix~~Standards Board (“FASB”) Accounting Standards Codification (“FASB ASC”) 815, ~~Code~~Derivatives 39and Hedging. For our convertible preferred stock, ~~PDF417~~the underlying instruments are carried at amortized cost and athe ~~variety~~embedded ofconversion 1Dfeature ~~symbologies~~is accounted for separately at fair value in accordance with FASB ASC 815-40-05 and FASB ASC 815-40-15.

InPage 2013, we launched QodeScan, our low cost self-service barcode creation product. QodeScan is for those users who don’t have high scan volumes but would like the insight into analytics that a managed service provides. In addition to QodeScan, we continue to offer our NeoSphere product intended for enterprises, agencies and other large volume users. We have many Fortune 500 brands using our NeoSphere product in their global barcode operations. Our QR creation services utilize an indirect methodology for our customer, which is also embodied in our intellectual property.14

~~Legal~~· ~~costs~~Financial ~~continue~~Instruments toand beConcentration ~~high~~of ~~for~~Credit ~~us. The~~Risk ~~costs~~– toWe ~~maintain~~believe ~~our~~the ~~public~~carrying ~~company~~values ~~status,~~of our IPfinancial ~~licensing~~instruments ~~initiatives,~~consisting ~~satisfy~~of ~~our~~cash ~~investor~~and ~~obligations~~cash asequivalents, ~~well~~accounts asreceivable, ~~participate~~accounts inpayable, anaccrued ~~unexpected~~expenses, ~~arbitration~~derivative ~~have~~financial ~~catapulted~~instruments, ~~our~~other ~~legal~~current ~~fees~~liabilities, toconvertible ~~approximately~~preferred ~~30%~~stock, ofand ~~total~~convertible ~~operating~~debenture ~~expenses~~financings ~~for~~approximate ustheir infair ~~2013. Unfortunately,~~values ~~this~~due ~~has~~to ~~meant~~their ~~that~~short-term ~~funds~~nature, ~~earmarked~~or ~~for~~because ~~sales~~they ~~and~~are ~~marketing~~carried ~~investment~~at ~~were~~fair ~~spent on legal fees~~value.

~~NeoMedia~~· ~~continues~~Revenue Recognition – We derive revenues from the following primary sources: (1) license fees relating to ~~operate~~intellectual onproperty, aand ~~self-sufficient~~(2) ~~basis~~software and ~~has~~service ~~not~~revenues ~~taken~~related ~~funding~~to ~~since~~mobile ~~2012~~marketing barcode management, barcode readers and custom developed software. We ~~continue~~recognized torevenue ~~support~~when: ~~operations~~(a) ~~entirely~~persuasive ~~from~~evidence ~~cash~~of ~~generated~~the ~~from~~sales ~~our~~arrangement ~~business~~exists, (b) the arrangement fee is fixed or determinable, (c) service delivery or performance has occurred, (d) customer acceptance has been received, if contractually required, and ~~anticipate~~(e) ~~that~~collectability weof ~~will~~the ~~continue~~arrangement fee is probable. Revenue associated with licensing agreements primarily consists of non-refundable upfront license fees. Non-refundable upfront license fees received under license agreements, whereby continued performance or future obligations are considered inconsequential to dothe sorelevant license technology, are recognized as revenue upon delivery of the technology. ~~NeoMedia~~ ~~had~~We ~~record~~typically use signed contractual agreements as persuasive evidence of a sales arrangement. If at the inception of an arrangement the fee is not fixed or determinable, we defer revenue inuntil ~~2013~~the ~~and~~arrangement ~~record~~fee ~~operating~~becomes ~~profit/income~~due and payable. We ~~believe~~If ~~that~~we determine collectability is not probable, we ~~will~~defer ~~continue~~revenue tountil ~~see~~we ~~success~~receive ~~from~~payment ~~our~~or ~~business~~collection ~~based~~becomes onprobable, ~~both~~whichever is earlier. The determination of whether fees are collectible requires judgment of our management, and the ~~product~~amount and IPtiming ~~strategies~~of werevenue recognition may change if different assessments are ~~deploying~~made.

~~Critical~~· ~~Accounting~~Contingencies ~~Policies~~– From time to time, we are involved in various legal actions arising in the normal course of business, both as claimant and ~~Estimates~~defendant. Although it is not possible to determine with certainty the outcome of these matters, we believe the eventual resolution of any ongoing legal actions is unlikely to have a material impact on our financial position or operating results. If the resolution of ongoing legal actions is not in our favor, our financial position and operating results could be materially adversely impacted.

~~This~~· ~~discussion~~Income ~~and~~Tax ~~analysis~~Valuation ofAllowance ~~financial~~– ~~condition~~Deferred ~~and~~tax ~~results~~assets ofare ~~operations~~reduced ~~has been prepared~~ by ~~our~~a ~~management~~valuation ~~based~~allowance ~~on our consolidated financial statements~~when, ~~which have been prepared~~ in ~~accordance with US GAAP. The preparation of these financial statements requires management to make estimates and judgments that affect~~ the ~~reported~~opinion ~~amounts~~ of ~~assets, liabilities, revenues, and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis,~~ our management ~~evaluates our critical accounting policies and estimates~~, ~~including~~it ~~those~~is ~~related~~more tolikely ~~revenue~~than ~~recognition,~~not ~~valuation~~that ofsome ~~accounts~~portion ~~receivable,~~or ~~intangible~~all ~~assets, derivative liabilities and contingencies. Estimates are based on historical experience and on various assumptions believed to be reasonable under the circumstances, the results~~ of ~~which form~~ the ~~basis~~deferred ~~for~~tax ~~making judgments about the carrying values of~~ assets ~~and~~will ~~liabilities that are~~ not ~~readily~~be ~~apparent from other sources~~realized. ~~These~~We ~~judgments~~recorded ~~and~~a ~~estimates~~100% ~~affect~~valuation ~~the~~allowance ~~reported~~at ~~amounts~~December of31, ~~assets~~2014 and ~~liabilities and the reported amounts of revenue and expenses during the reporting periods~~2013.

Results ~~Page~~of 13 Operations

WeIncome ~~consider~~(Loss) ~~the~~from ~~following accounting policies important in understanding our operating results and financial condition:~~Operations

·The ~~Intangible~~following ~~Asset~~table ~~Valuation~~sets –forth ~~Assessing~~certain data ~~the~~derived ~~valuation~~from ~~of intangible assets is subjective in nature and involves significant estimates and assumptions as well as management’s judgment. We periodically perform impairment tests on~~ our ~~long-lived~~consolidated ~~assets,~~statements ~~including~~of ~~our~~operations ~~intangible assets, whenever events or changes~~ (in circumstances indicate that the carrying amount may not be recoverable. Long-lived assets are testing for impairment by first comparing the estimated future undiscounted cash flows from a particular asset or asset group to the carrying value. If the expected undiscounted cash flows are greater than the carrying value, no impairment is recognized. If the expected undiscounted cash flows are less than the carrying value, then an impairment charge is recorded for the difference between the carrying value and the expected discounted cash flows. The assumptions used in developing expected cash flow estimates are similar to those used in developing other information used by us for budgeting and other forecasting purposes. In instances where a range of potential future cash flows is possible, we use a probability-weighted approach to weigh the likelihood of those possible outcomes. As of December 31, 2013 and 2012, we do not believe any of our long-lived assets are impaired.thousands):

· Goodwill – Our goodwill represents the excess of the purchase price paid for NeoMedia Europe GmbH over the fair value of the identifiable net assets and liabilities acquired, based on an independent appraisal of the assets and liabilities acquired. Goodwill is not amortized but is tested annually for impairment, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Goodwill is tested for impairment by comparing the carrying amount of the asset to its fair value, which is estimated through the use of a discounted cash flows model. If the carrying amount exceeds fair value, an impairment loss is recognized for the difference. As of December 31, 2013 and 2012, we determined there were no impairments of our goodwill.

	Year Ended December 31,
	2014			2013 (Restated)

Revenues	$	3,512		$	5.024
Cost of revenues		(628	)		(731	)
Gross profit		2,884			4,293

Sales and marketing expenses		(101	)		(286	)
General and administrative expenses		(2,321	)		(2,549	)
Research and development costs		(390	)		(717	)
Impairment loss on goodwill		(3,418	)		-
Other operating income		-			229

Income (loss) from operations	$	(3,346	)	$	970

·Page Derivative Financial Instruments – We do not use derivative financial instruments to hedge exposures to cash-flow risks or market-risks that may affect the fair values of our financial instruments. However, certain financial instruments, such as warrants and the embedded conversion features of our convertible preferred stock and convertible debentures, which are indexed to our common stock, are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within our control. In such instances, net-cash settlement is assumed for financial accounting and reporting purposes, even when the terms of the underlying contracts do not provide for net-cash settlement. Derivative financial instruments are initially recorded, and continuously carried, at fair value. Determining the fair value of these complex derivative financial instruments involves judgment and the use of certain relevant assumptions including, but not limited to, interest rate risk, credit risk, and equivalent volatility and conversion/redemption privileges. The use of different assumptions could have a material effect on the estimated fair value amounts.15

~~For~~Revenues. ~~our~~Revenues ~~convertible debentures, we have elected not to separately account~~ for the years ~~embedded~~ended ~~conversion~~December ~~feature~~31, as2014 aand ~~derivative~~2013 ~~instrument~~were ~~but~~$3,512,000 toand ~~account~~$5,024,000, ~~for~~respectively, ~~the~~a ~~entire~~decrease ~~hybrid~~of ~~instrument at fair value in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“FASB ASC”) 815~~$1,512,000, ~~Derivatives~~or ~~and Hedging~~30%. ~~For~~The ~~our~~decrease in ~~convertible~~revenues ~~preferred stock, the underlying instruments~~ are ~~carried~~primarily atattributable ~~amortized~~to ~~cost~~a ~~and~~lower ~~the~~average ~~embedded~~price ~~conversion~~on ~~feature~~IP isagreements ~~accounted for separately at fair value in accordance with FASB ASC 815-40-05~~ and ~~FASB~~fewer ~~ASC~~NeoReader ~~815-40-15~~SDK deals.

·Cost ~~Financial~~of ~~Instruments~~Revenues. Cost of ~~and~~revenues ~~Concentration~~was of$628,000 ~~Credit~~for ~~Risk~~the –year Weended ~~believe~~December ~~the~~31, ~~carrying~~2014 ~~values~~compared ofwith ~~our~~$731,000 ~~financial~~in ~~instruments~~the ~~consisting~~prior ofyear, ~~cash~~a ~~and~~decrease ~~cash~~of ~~equivalents~~$103,000 or ~~accounts~~14%. ~~receivable,~~Cost ~~accounts~~of ~~payable,~~revenues ~~accrued~~primarily ~~expenses,~~relates ~~derivative~~to ~~financial~~third ~~instruments,~~party ~~other~~professional ~~current~~fees ~~liabilities,~~incurred ~~convertible~~in ~~preferred~~connection ~~stock,~~with ~~and~~the ~~convertible~~sale ~~debenture~~of ~~financings~~our ~~approximate~~IP ~~their~~licenses. Cost ~~fair~~of ~~values~~revenues ~~due~~typically tovaries ~~their~~in ~~short-term~~a ~~nature,~~manner orconsistent ~~because~~with ~~they~~changes ~~are~~in ~~carried~~our atIP ~~fair~~agreement ~~value~~revenues.

~~Page~~Sales 14and Marketing. Sales and marketing expenses were $101,000 and $286,000 for the years ended December 31, 2014 and 2013, respectively, a decrease of $185,000, or 65%. The decrease in sales and marketing expenses is due to cost containment efforts. We expect sales and marketing expenses will increase in future periods as we continue to develop and execute on our business goals.

·General ~~Revenue~~and ~~Recognition~~Administrative. General –and Weadministrative ~~derive~~expenses ~~revenues~~were ~~from~~$2,321,000 and $2,549,000 for the ~~following~~years ~~primary~~ended ~~sources:~~December ~~(1)~~31, ~~license~~2014 ~~fees~~and ~~relating~~2013, torespectively, a ~~intellectual~~decrease ~~property~~of $228,000, or 9%. Costs declined due to continued efforts to contain expenses and ~~(2)~~identify ~~software~~improved efficiencies in performing the general and ~~service~~administrative ~~revenues~~functions of the Company. The expense reductions are related to ~~mobile~~various ~~marketing~~items ~~barcode~~including lower ~~management~~personnel costs and lower service provider costs, ~~barcode~~such ~~readers~~as accounting and ~~custom~~legal ~~developed~~related ~~software~~fees.

WeResearch ~~recognized~~and ~~revenue~~Development. Research ~~when:~~and ~~(a)~~development ~~persuasive~~expenses ~~evidence~~were of$390,000 ~~the~~and ~~sales arrangement exists~~$717,000 ~~(b)~~for the ~~arrangement~~years ~~fee~~ended isDecember ~~fixed or determinable~~31, ~~(c)~~2014 ~~service~~and ~~delivery~~2013, ~~or performance has occurred~~respectively, ~~(d)~~a ~~customer~~decrease of ~~acceptance has been received~~$327,000, ifor ~~contractually~~46%. ~~required,~~Research and ~~(e)~~development ~~collectability~~expenses ofdecreased ~~the~~as ~~arrangement~~we ~~fee~~focused isour ~~probable.~~development ~~Revenue~~efforts ~~associated~~in ~~with~~our ~~licensing~~2D ~~agreements~~Core ~~primarily~~services and ~~consists~~subsequently oflaunched ~~non-refundable~~our ~~upfront~~QodeScan ~~license fees. Non~~self-~~refundable~~service ~~upfront~~barcode ~~license~~management ~~fees received under license agreements~~platform, ~~whereby~~resulting ~~continued~~in ~~performance~~a orreduced ~~future~~requirement ~~obligations~~for ~~are~~ongoing development ~~considered inconsequential to the relevant license technology, are recognized as revenue upon delivery of the technology~~services. ~~We typically use signed contractual agreements as persuasive evidence of a sales arrangement.~~

IfGoodwill. atWe ~~the~~performed ~~inception of an arrangement~~ the two ~~fee~~step isgoodwill ~~not~~impairment ~~fixed~~test orat ~~determinable~~December 31, we2014 ~~defer~~and ~~revenue~~determined ~~until~~there ~~the~~was ~~arrangement~~impairment ~~fee~~of ~~becomes~~our ~~due~~goodwill ~~and~~as ~~payable.~~reflected Ifon weour balance ~~determine~~sheet ~~collectability is not probable~~($3,418,000). weOur ~~defer~~assessment ~~revenue~~conducted ~~until~~as weof ~~receive~~December ~~payment or collection becomes probable~~31, ~~whichever~~2014 isconcluded ~~earlier.~~that ~~The~~on ~~determination~~a ofqualitative ~~whether~~and ~~fees~~quantitative basis ~~are~~there ~~collectible~~was ~~requires~~impairment ~~judgment~~ of ~~our~~goodwill ~~management,~~ and ~~the~~reflected ~~amount~~an ~~and~~impairment ~~timing~~loss of ~~revenue~~$3.418 ~~recognition may change if different assessments are made~~million.

·Other Operating ~~Multiple Element Transactions – From time to time, we enter into transactions involving multiple elements, such as customer agreements involving multiple patents~~Income. WeThe ~~account for multiple element transactions by first obtaining evidence of the estimated selling price of each element using vendor specific objective evidence (“VSOE”)~~$229,000 ~~third-party evidence (“TPE”), or management’s best estimate~~ of ~~selling~~other ~~price~~operating ifincome realized ~~neither~~during ~~VSOE nor TPE of selling price exists. Based on~~ the ~~determined~~year ~~selling~~ended ~~price~~December ~~of each element of the transaction~~31, ~~the~~2013 ~~value~~primarily ofrelated ~~the single agreement is allocated~~ to ~~each~~an ~~deliverable~~arbitration ~~based~~proceeding ~~on each element's proportional value~~ and ~~accounted~~settlement ~~for as a separate unit of accounting. Multiple element transactions require the exercise of judgment~~ in ~~determining~~our ~~the estimated selling price of the different elements~~favor. ~~The~~There was ~~judgments~~no ~~could~~Other ~~impact~~Operating ~~the~~Income ~~amount of revenues and expenses recognized over the term of the contract, as well as the period~~ in ~~which they are recognized~~2014.

·Other ~~Contingencies~~Income – From time to time, we are involved in various legal actions arising in the normal course of business, both as claimant and defendant. Although it is not possible to determine with certainty the outcome of these matters, we believe the eventual resolution of any ongoing legal actions is unlikely to have a material impact on our financial position or operating results. If the resolution of ongoing legal actions is not in our favor, our financial position and operating results could be materially adversely impacted.(Expense)

·The ~~Income~~following ~~Tax~~table ~~Valuation~~sets ~~Allowance~~forth –certain ~~Deferred~~data ~~tax~~derived ~~assets~~from ~~are reduced by a valuation allowance when, in the opinion of~~ our consolidated ~~management,~~statements ~~it is more likely than not that some portion or all~~ of ~~the~~operations ~~deferred~~(in ~~tax assets will not be realized. We recorded a 100% valuation allowance at December 31, 2013 and 2012.~~thousands):

Results of Operations

	Year Ended December 31,
	2014			2013
				(Restated)
Gain (loss) from change in fair value of hybrid financial instruments	$	(4,173	)	$	21,809
Gain from change in fair value of derivative liability – warrants		618			3,067
Gain from change in fair value of derivative liability - Series C and D preferred stock and debentures		289			1,841
Gain (loss) on extinguishment of debt		4,247			53
Interest income (expense), net					16
Gain (loss) on liquidation of investment in foreign subsidiary		(102	)

Total other expense	$	879		$	26,786

~~Income~~Page ~~(Loss) from Operations~~16

Gain (Loss) from Change in Fair Value of Hybrid Financial Instruments. We carry our debentures at fair value in accordance with the applicable accounting codification and do not separately account for the embedded conversion feature. The ~~following~~change ~~table~~in ~~sets~~the ~~forth~~fair ~~certain~~value ~~data~~of ~~derived~~these ~~from~~liabilities includes ~~our~~changes ~~consolidated~~in ~~statements~~the value of ~~operations~~the (accrued interest due under these instruments, as well as changes in ~~thousands):~~the fair value of the common stock underlying the instruments. For year ended December 31, 2014 and 2013, the liability related to these hybrid instruments fluctuated resulting in a loss of $4.2 million and a gain of $21.8 million, respectively. See Note 4 within the Notes to Consolidated Financial Statements for additional detailed discussion.

	Year Ended December 31,
	2013		2012
Revenues	$	5,024	$	2,344
Cost of revenues		(731)		(2,181)
Gross profit		4,293		163
Sales and marketing expenses		(286)		(1,100)
General and administrative expenses		(2,549)		(3,593)
Research and development costs		(717)		(951)
Other operating income		229		-
Income (loss) from operations	$	970	$	(5,481)

Gain from Change in Fair Value of Derivative Liability – Warrants. We account for our outstanding common stock warrants that were issued in connection with our preferred stock and debentures at fair value. For the years ended December 31, 2014 and 2013, the liability related to these instruments fluctuated, resulting in gains of $618,000 and $3.1 million, respectively. See Note 4 within the Notes to Consolidated Financial Statements for additional detailed discussion.

~~Page~~Loss 15from Change in Fair Value of Derivative Liability – Series C and D Preferred Stock and Debentures. For our Series C and D Preferred Stock, and certain of our debentures, we account for the embedded conversion feature separately as a derivative financial instrument. We carry these derivative financial instruments at fair value. For the year ended December 31, 2014 and 2013, the liability related to these hybrid instruments fluctuated, resulting in a gain of $289,000 and $1.8 million, respectively. See Note 4 within the Notes to Consolidated Financial Statements for additional detailed discussion.

~~Revenues.~~The ~~Revenues~~changes ~~for~~in the ~~years~~fair ~~ended~~values ~~December~~of ~~31,~~our hybrid ~~2013~~ and ~~2012~~derivative financial instruments were ~~$5,024,000~~primarily ~~and~~the ~~$2,344,000,~~result ~~respectively,~~of anfluctuations ~~increase~~in the value of ~~$2,680,000,~~our orcommon ~~114%.~~stock ~~The~~during the ~~increases~~period as well as changes in ~~revenues~~the ~~are~~terms ~~primarily~~of ~~attributable~~the torelated anfinancial ~~increase~~instruments. Because our common stock price has been volatile and our hybrid and derivative financial instruments include variable discount conversion prices, further fluctuations in the ~~quantity~~market price of ~~new~~our IPcommon ~~licensing~~stock ~~agreements~~could ascause ~~well~~the asfair anvalue of these instruments to be volatile and increase or decrease significantly in ~~revenue~~the future, resulting in future significant gains and losses from ~~our~~the ~~NeoReader~~change ~~SDK~~in the fair value of the instruments.

~~Cost~~Gain of(Loss) ~~Revenues. Cost~~on Extinguishment of Debt. ~~revenues~~During ~~was $731,000 for~~ the year ended December 31, ~~2013 compared with $2~~2014,~~181,000~~ inwe ~~the~~modified ~~prior~~and ~~year,~~consolidated ~~a decrease of $1,450,000 or 66%. Cost of revenues primarily relates to third party professional fees incurred in connection with the sale of~~ our IPoutstanding ~~licenses. Cost~~debentures ofresulting ~~revenues typically varies~~ in a ~~manner consistent with changes in our IP licenses revenues~~ $4. ~~Cost~~2 ofmillion ~~revenues~~gain inon ~~the prior year period relative to revenue was unusually high due to the expensing of additional legal fees associated with monetization of our patents~~extinguishment.

~~Sales~~Interest ~~and~~Income ~~Marketing~~(Expense), Net. ~~Sales~~ The ~~and marketing expenses were~~ $~~286~~16,000 ~~and~~of ~~$1,100,000~~net interest income reported for the ~~years~~year ended December 31, 2013 ~~and~~primarily ~~2012,~~relates ~~respectively,~~to ainterest ~~decrease~~accrued ofon ~~$814,000,~~payments received ~~or 74%. The decrease~~ in ~~sales~~connection ~~and~~with ~~marketing~~an ~~expenses~~arbitration isproceeding ~~due~~that tosettled ~~cost containment efforts. We expect sales and marketing expenses will increase~~ in ~~future~~our ~~periods~~favor asduring wethe ~~continue to develop and execute on our business goals~~year.

~~General~~Gain ~~and~~(loss) ~~Administrative. General~~on ~~and~~Liquidation ~~administrative~~of ~~expenses~~Investment in ~~were~~Foreign ~~$2,549,000~~Subsidiary. ~~and~~The $3102,~~593,~~000 ~~for~~loss ~~the~~is ~~years~~related ~~ended December 31, 2013 and 2012, respectively, a decrease of $1,044,000, or 29%. Costs declined due~~ to ~~continued efforts to contain expenses and identify improved efficiencies in performing~~ the ~~general~~initiation ~~and administrative functions~~ of the ~~Company. The~~liquidation ~~expense~~of ~~reductions~~our ~~are~~investment ~~related~~in toa ~~various items including lower personnel costs and lower service provider costs, such as accounting and legal related fees~~foreign subsidiary.

~~Research~~Other ~~and~~Comprehensive ~~Development. Research~~Income and development expenses were $717,000 and $951,000 for the years ended December 31, 2013 and 2012, respectively, a decrease of $234,000, or 25%. Research and development expenses decreased as we focused our development efforts in our 2D Core services and subsequently launched our QodeScan self-service barcode management platform, resulting in a reduced requirement for ongoing development services.(Loss)

For the year ended December 31, 2014, ~~Other~~there ~~Operating~~were ~~Income.~~no ~~The~~comprehensive gains or losses as compared to other comprehensive gains of $~~229~~133,000 offor 2013. The other ~~operating~~comprehensive gains ~~income~~in ~~realized~~2013 ~~during~~were due to the ~~year~~impact ~~ended~~of ~~December~~fluctuations 31in currency exchange rates associated with our translation of the NeoMedia Europe GmbH subsidiary financial statements from its local currency, the Euro, to U.S. dollars. We determined during the third quarter of 2013 ~~primarily~~that ~~related~~the functional currency of the foreign subsidiary changed to anthe ~~arbitration~~U.S. ~~proceeding~~dollar and ~~settlement~~as a result of the change in ~~our~~functional ~~favor~~currency, ~~which~~translation ~~concluded~~gains ~~during~~and losses associated with the ~~three~~conversion ~~months~~of ~~ended~~the ~~June~~NeoMedia 30Europe GmbH financial statements are recorded in our results from operations rather than through other comprehensive income (loss) effective July 1, 2013. ~~There~~As ~~was~~indicated above, nothe ~~similar~~liquidation ~~activity~~of an investment in ~~the~~a ~~prior~~foreign subsidiary eliminates any comprehensive gain or loss during the year in which liquidation becomes a material factor.

~~Other~~ Income ~~(Expense)~~Tax Benefit

During the year ended December 31, 2013, ~~The~~we ~~following~~determined ~~table~~that ~~sets~~a ~~forth~~deferred tax liability previously estimated to be realized by NeoMedia Europe GmbH should be reduced to zero based on certain ~~data~~economic ~~derived~~changes of the subsidiary during 2013. The economic changes included, but were not limited to, the termination of its hardware business and related sales activities that allowed it to generate revenue independently in the local market or otherwise, and the completion of a repositioning of the subsidiary from ~~our~~a ~~consolidated~~self-contained, ~~statements~~revenue generating operation to a cost center primarily focused on research and development. As a result of ~~operations~~the (change in ~~thousands):~~estimate, we recorded an income tax benefit of $706,000 to reduce the deferred tax liability to zero.

	Year Ended December 31,
	2013		2012
Gain (loss) from change in fair value of hybrid financial instruments	$	(197,392)	$	11,926
Gain from change in fair value of derivative liability - warrants		3,003		11,347
Loss from change in fair value of derivative liability - Series C and D preferred stock and debentures		(21,469)		(13,035)
Gain (loss) on extinguishment of debt		53		(27,479)
Impairment loss on cash surrender value of life insurance policy		-		(527)
Gain on de-recognition of accrued expenses and purchase price guarantee		-		8,300
Interest income (expense), net		16		(4,437)
Total other expense	$	(215,789)	$	(13,905)

Page 17

~~Page 16~~Liquidity

Gain (Loss) from Change in Fair Value of Hybrid Financial Instruments. We carry our debentures at fair value in accordance with the applicable accounting codification and do not separately account for the embedded conversion feature. The change in the fair value of these liabilities includes changes in the value of the accrued interest due under these instruments, as well as changes in the fair value of the common stock underlying the instruments. For year ended December 31, 2013 and 2012, the liability related to these hybrid instruments fluctuated resulting in a loss of $197.4 million and a gain of $11.9 million, respectively. See Note 4 within the Notes to Consolidated Financial Statements for additional detailed discussion.

	Year Ended December 31,
	2014			2013
	(in thousands)

Cash and cash equivalents	$	75		$	267

Net cash used in operating activities	$	(378	)	$	(399	)
Net cash provided by investing activities		-			-
Net cash provided by financing activities		186			56
Effect of exchange rate changes on cash		-			(1	)
Net change in cash and cash equivalents	$	(192	)	$	(344	)

~~Gain~~We ~~from~~funded ~~Change~~our inliquidity ~~Fair~~requirements ~~Value~~in 2014 ofwith ~~Derivative~~existing ~~Liability~~cash –resources ~~Warrants.~~as Wewell ~~account~~as ~~for~~financing ~~our~~($242,000) ~~outstanding~~from ~~common~~YA ~~stock~~Global ~~warrants~~to ~~that~~meet ~~were~~short ~~issued~~term incash ~~connection~~needs ~~with~~related ~~our~~to ~~preferred stock and debentures at fair value~~legal expenses. ~~For~~As ~~the~~of ~~years ended~~ December 31, ~~2013 and 2012~~2014, ~~the~~we ~~liability~~had ~~related to these instruments fluctuated~~$75,000 ~~resulting~~ in ~~gains~~cash ~~of $3.0 million~~ and ~~$11.3~~cash ~~million, respectively~~equivalents. ~~See Note 4 within the Notes to Consolidated Financial Statements for additional detailed discussion.~~

~~Loss~~Going from Change in Fair Value of Derivative Liability – Series C and D Preferred Stock and Debentures. For our Series C and D Preferred Stock, and certain of our debentures, we account for the embedded conversion feature separately as a derivative financial instrument. We carry these derivative financial instruments at fair value. For the year ended December 31, 2013 and 2012, the liability related to these hybrid instruments fluctuated, resulting in a loss of $21.5 million and $13.0 million, respectively. See Note 4 within the Notes to Consolidated Financial Statements for additional detailed discussion.Concern

We have historically incurred operating ~~The~~losses, ~~changes~~and inwe ~~the~~may ~~fair~~continue ~~values~~to ofgenerate ~~our~~negative ~~hybrid~~cash ~~and~~flows ~~derivative~~as ~~financial~~we ~~instruments~~implement ~~were~~our ~~primarily~~business ~~the~~plan ~~result~~for of2015. ~~fluctuations~~There incan ~~the~~be ~~value~~no ofassurance that our ~~common~~continuing ~~stock~~efforts ~~during~~to ~~the~~execute ~~period~~our asbusiness ~~well~~plan aswill ~~changes~~be insuccessful ~~the~~and ~~terms~~that ofwe ~~the~~will ~~related~~be ~~financial~~able ~~instruments.~~to ~~Because~~continue ~~our~~as ~~common~~a ~~stock~~going ~~price~~concern. The ~~has~~accompanying consolidated financial statements have been ~~volatile~~prepared ~~and~~in conformity with US GAAP, which contemplates our ~~hybrid~~continuation as ~~and~~a ~~derivative~~going ~~financial~~concern. ~~instruments~~Our ~~include~~net ~~variable~~loss ~~discount~~for ~~conversion~~the ~~prices~~year ended December 31, ~~further~~2014 ~~fluctuations~~was in$2.4 ~~the~~million ~~market~~as ~~price~~compared to net income of ~~our~~$28.5 ~~common~~million for ~~stock~~the ~~could~~year ~~cause~~ended December 31, 2013. The operating results for the ~~fair~~year ~~value~~ended December 31, 2014 included $3.3 million of ~~these~~net losses ~~instruments~~related to befinancing ~~volatile~~instruments ~~and~~including ~~increase~~a ornet ~~decrease~~gain ~~significantly~~of in$4.2 ~~the~~million ~~future,~~from ~~resulting~~a ingain ~~future~~on ~~significant~~extinguishment ~~gains~~of debt and ~~losses~~the ~~from~~operating results for the ~~change~~year inended ~~the~~December ~~fair~~31, ~~value~~2013 included $26.7 million of ~~the~~net gains related to financing instruments.

~~Impairment~~Net ~~Loss~~cash Onused ~~Cash~~in ~~Surrender~~operations ~~Value~~during ofthe year ~~Life~~ended ~~Insurance~~December ~~Policy.~~31, ~~During~~2014 ~~the~~and ~~third~~2013 ~~quarter~~was of$0.4 ~~2012,~~million wefor ~~determined~~each ~~that~~period. weAs ~~would~~of beDecember ~~unable~~31, to2014, ~~collect~~we ~~the~~have ~~cash~~an ~~surrender~~accumulated ~~value~~ deficit of a$239.3 ~~life~~million. ~~insurance~~We ~~policy~~also ~~due~~have to a ~~dispute~~working ~~with~~capital ~~the~~deficit ~~insurance~~of ~~company~~$39.2 ~~Accordingly~~million, weincluding ~~recorded a loss of~~ $~~527,000~~37.4 tomillion ~~impair~~in ~~the~~current ~~value~~liabilities offor our ~~the~~derivative ~~policy~~and asdebenture ~~reflected~~financing ininstruments ~~the~~which ~~results~~are ~~for~~due ~~the~~August ~~year~~1, ~~ended~~2015 ~~December~~and ~~31,~~for ~~2012.~~which ~~There~~we ~~was~~do nonot ~~similar~~have ~~activity~~the innecessary ~~2013~~capital to re-pay.

We currently do not have sufficient cash ~~Gain~~or oncommitments ~~De-recognition~~for offinancing ~~Accrued~~to ~~Expenses~~sustain ~~and~~our ~~Purchase~~operations ~~Price~~for ~~Guarantee~~the next twelve months if we are unable to generate sufficient cash flows from operations. WeOur ~~determined~~plan ~~during~~continues ~~the~~to ~~third~~be ~~quarter~~to ofdevelop ~~2012~~new ~~that~~client ~~certain~~and ~~accrued~~customer ~~purchase~~relationships ~~price~~and ~~obligations~~substantially increase our revenue derived from our products/services and ~~disputed~~IP ~~expenses~~licensing. ~~associated~~If ~~with~~our arevenues ~~2006~~do ~~acquisition~~not ~~were~~reach nothe ~~longer~~level ~~legally~~anticipated ~~enforceable~~in ~~due~~our plan, we may require additional financing in order to ~~the~~execute ~~expiration~~our ofoperating plan. If additional financing is required, we cannot predict whether this additional financing will be in the ~~statute~~form of ~~limitations.~~equity, Asdebt, aor ~~result~~another form, and we ~~de-recognized~~may not be able to obtain the ~~liabilities~~necessary additional capital on a timely basis, ~~which~~on ~~resulted~~acceptable interms, anor $8at all.3 ~~million~~In ~~gain~~the asevent ~~reflected~~that financing sources are not available, or that we are unsuccessful in ~~the~~increasing ~~results~~our revenues and profits, we may be unable to implement our current plans for ~~the~~expansion, repay ~~year~~our ~~ended~~debt ~~December~~obligations 31or respond to competitive pressures, ~~2012.~~any ~~There~~of ~~was~~which nowould ~~similar~~have ~~activity~~a inmaterial ~~2013~~adverse effect on our business, prospects, financial condition and results of operations.

~~Gain~~The ~~(Loss)~~convertible ondebentures ~~Extinguishment~~and ofpreferred stock ~~Debt.~~used ~~During~~to finance the ~~year~~Company, ~~ended~~which ~~December~~may ~~31,~~be ~~2013,~~converted weinto ~~modified~~common ~~and~~stock ~~consolidated~~at ~~our~~the ~~outstanding~~sole ~~debentures~~option ~~resulting~~of inthe holders, have a ~~$53,000~~highly ~~gain~~dilutive impact onwhen ~~extinguishment. During~~they ~~the~~are ~~year~~converted, ~~ended~~greatly ~~December~~increasing 31the ~~2012,~~number weof ~~modified~~shares ~~our~~of ~~debt~~common ~~causing~~stock ~~the~~outstanding. ~~existing~~During ~~debentures~~2014, tothere bewere ~~effectively~~3,834 million ~~retired~~shares ~~and~~of ~~new~~common ~~debentures~~stock issued. ~~The~~for ~~differences~~these inconversions. ~~the~~We ~~fair~~cannot ~~values~~predict ofif ~~the~~or ~~debt~~when ~~before~~each ~~and~~holder ~~after~~may ~~the~~or ~~modification~~may ~~resulted~~not inelect anto convert ~~extinguishment~~into ~~loss~~shares of ~~$27.5~~common ~~million~~stock.

~~Interest~~Page Income (Expense), Net. Following the May 25, 2012 modification of the debentures, which extended the due date, the debentures are no longer carried at amortized cost but are carried as hybrid financial instruments at fair value. As a result, the interest on these debentures subsequent to May 25, 2012 is reported as part of the Gain (Loss) from Change in Fair Value of Hybrid Financial Instruments and is no longer separately reported as interest expense. The $16,000 of net interest income reported for the year ended December 31, 2013 primarily relates to interest accrued on payments received in connection with an arbitration proceeding that settled in our favor during the year.18

~~Page~~Significant Liquidity 17Events

Financing Provided By YA Global. ~~Other~~In ~~Comprehensive~~2014, ~~Income~~we ~~(Loss)~~received funding from YA Global totaling $242,000.

~~For~~Since ~~the~~July ~~year ended December 31~~2012, ~~2013,~~we ~~other~~have ~~comprehensive~~not ~~gains~~received any ~~were~~new ~~$133,000~~convertible asdebenture ~~compared~~based tofinancing ~~other~~from ~~comprehensive~~YA ~~losses of $56,000 for 2012~~Global. ~~The~~ other comprehensive gains and losses were due to the impact of fluctuations in currency exchange rates associated with our translation of the NeoMedia Europe GmbH subsidiary financial statements from its local currencyHowever, ~~the Euro, to U.S. dollars. We determined during the third quarter of 2013 that the functional currency of the foreign subsidiary changed to the U.S. dollar and~~ as adescribed ~~result of the change in functional currency~~below, ~~translation gains and losses associated with~~ the ~~conversion~~outstanding ofconvertible ~~the~~debentures were ~~NeoMedia~~consolidated ~~Europe~~into ~~GmbH~~six ~~financial~~secured ~~statements~~convertible ~~are recorded in our results from operations rather than through other comprehensive income (loss) effective July 1, 2013~~debentures.

At December 31, 2014, financial instruments ~~Income~~arising ~~Tax~~from ~~Benefit~~our financing transactions with YA Global, included shares of our Series C preferred stock issued in February 2006, Series D preferred stock issued in January 2010, a series of six consolidated secured convertible debentures (the “Consolidated Debentures”) issued July 1, 2013 and various warrants to purchase shares of our common stock. All of our assets are pledged to secure our obligations under the debt securities. At various times, YA Global has assigned or distributed portions of its holdings of these securities to other holders, including persons who are officers of YA Global and its related entities, as well as to other holders who are investors in YA Global’s funds. The rights of the assignees of the YA Global holdings are bound by the terms of the financial instruments held by YA Global, and amendments to the terms of the financial instruments held by YA Global could also impact the terms of the financial securities held by the assignees.

~~During~~We ~~the~~had ~~year~~originally ~~ended~~entered ~~December~~into ~~31,~~financing transactions ~~2013,~~with weYA ~~determined~~Global, ~~that~~which included a ~~deferred~~series ~~tax~~of ~~liability~~twenty-seven ~~previously~~secured ~~estimated~~convertible todebentures beissued ~~realized~~between byAugust ~~NeoMedia~~2006 and ~~Europe~~July ~~GmbH~~2012. ~~should~~Effective beJuly ~~reduced~~1, to2013, ~~zero~~the ~~based~~terms ~~on certain economic changes~~ of the ~~subsidiary~~debentures ~~during~~held ~~2013. The~~by ~~economic~~YA ~~changes~~Global ~~included, but~~ were ~~not~~modified ~~limited~~ to, consolidate the ~~termination~~principal and ofinterest ~~its~~amounts ~~hardware~~outstanding ~~business~~under ~~and~~all ~~related~~of ~~sales~~the ~~activities~~outstanding ~~that~~secured ~~allowed~~convertible itdebentures topreviously ~~generate~~issued ~~revenue~~by ~~independently~~us into ~~the~~YA ~~local~~Global, such ~~market or otherwise~~that, ~~and~~upon the ~~completion~~issuance of athe ~~repositioning~~Consolidated Debentures and cancellation of the ~~subsidiary~~prior ~~from~~debentures, athe ~~self-contained,~~amount ~~revenue~~of ~~generating~~outstanding debentures ~~operation~~issued to aYA ~~cost~~Global ~~center~~decreased ~~primarily~~from ~~focused~~twenty-seven onto ~~research~~six ~~and development~~debentures. As aThe ~~result~~maturity dates of ~~the~~these ~~change~~secured inconvertible debentures ~~estimate,~~were wealso ~~recorded~~extended anfrom ~~income~~August ~~tax benefit of $706~~1,~~000~~ 2014 to ~~reduce~~August ~~the~~1, ~~deferred tax liability to zero~~2015.

The underlying agreements for each of ~~Liquidity~~the Consolidated Debentures are very similar in form. The Consolidated Debentures are convertible into our common stock, at the option of the holder, at the lower of a fixed conversion price per share or a percentage of the lowest volume-weighted average price (“VWAP”) for a specified number of days prior to the conversion (the “look-back period”). The conversion is limited such that the holder cannot exceed 9.99% ownership of the outstanding common stock, unless the holder waives their right to such limitation. All of the debentures are secured according to the terms of a Security Pledge Agreement dated August 23, 2006, which was entered into in connection with the first convertible debenture issued to YA Global and which provides YA Global with a security interest in substantially all of our assets. The debentures are also secured by a Patent Security Agreement dated July 29, 2008. On August 13, 2010, our wholly owned subsidiary, NeoMedia Europe GmbH, became a guarantor of all outstanding financing transactions between us and YA Global, through pledges of their intellectual property and other movable assets. As security for our obligations to YA Global, all of our Pledged Property, Patent Collateral and other collateral is affirmed through the several successive Ratification Agreements executed in connection with each of the 2010, 2011 and 2012 financings. The 2013 modification and consolidation of the outstanding secured convertible debentures as well as the execution of an Amended and Restated Patent Security Agreement in October 2013 reaffirmed the Pledged Property, Patent Collateral and other collateral pledged as security for our obligations to YA Global.

	Year Ended December 31,
	2013		2012
	(in thousands)
Cash and cash equivalents	$	267	$	611
Net cash used in operating activities	$	(399)	$	(1,536)
Net cash provided by investing activities		-		123
Net cash provided by financing activities		56		2,050
Effect of exchange rate changes on cash		(1)		(56)
Net change in cash and cash equivalents	$	(344)	$	581

YA Global holds warrants to purchase shares of our common stock that were issued in connection with the convertible debentures and the Series C and Series D preferred stock. The warrants are exercisable at a fixed exercise price which, from time to time, has been reduced due to anti-dilution provisions when we have entered into subsequent financing arrangements with a lower price. The exercise prices may be reset again in the future if we subsequently issue stock or enter into a financing arrangement with a lower price. In addition, upon each adjustment in the exercise price, the number of warrant shares issuable is adjusted to the number of shares determined by multiplying the warrant exercise price in effect prior to the adjustment by the number of warrant shares issuable prior to the adjustment divided by the warrant exercise price resulting from the adjustment.

WePage funded our liquidity requirements in 2013 with existing cash resources. During 2012, we funded our liquidity requirements through our existing cash resources and borrowings under our convertible debentures with YA Global. As of December 31, 2013, we had $267,000 in cash and cash equivalents.19

See Note 4 within the Notes to Consolidated ~~Going~~Financial ~~Concern~~Statements for additional detailed discussion on our financings.

Contractual While we have historically incurred operating losses, and we may continue to generate negative cash flows as we implement our business plan, the business has been operating on a self-sufficient basis. However, there can be no assurance that our success in executing our business plan will continue. The accompanying consolidated financial statements have been prepared in conformity with US GAAP, which contemplates our continuation as a going concern given fair value accounting related to our debentures. Our net loss for the year ended December 31, 2013 and 2012 was $214.1 million and $19.4 million, respectively, including $215.8 million and $21.7 million, respectively, of net losses related to our financing instruments. The impact of our successful implementation strategy shows our operating income was $1.0 million for 2013 as compared to an operating loss in 2012 of $5.5 million.Obligations

~~Net~~We ~~cash~~are ~~used~~a in“smaller ~~operations~~reporting ~~during~~company” ~~2013~~as ~~and~~defined by ~~2012~~Rule ~~was~~12b-2 ~~$0.4~~of ~~million~~the ~~and~~Exchange ~~$1.5~~Act ~~million~~and, ~~respectively.~~as ~~As of December 31~~such, ~~2013,~~are wenot ~~have~~required anto ~~accumulated~~provide ~~deficit~~this ~~of $479~~information.~~5 million. We also have a working capital deficit of $283.9 million, including $281.7 million in current liabilities for our derivative and debenture financing instruments.~~

~~Page~~Recently Issued 18Accounting Standards

WeSee ~~currently~~Recent doAccounting ~~not~~Pronouncements have sufficient cash or commitments for financing to sustain our operations for the next twelve months if we are unable to generate sufficient cash flows from operations. Our plan is to develop new client and customer relationships and substantially increase our revenue derived from our products/services and IP licensing. If our revenues do not reach the level anticipated in ~~our~~Note 2 ~~plan,~~- we may require additional financing in order to execute our operating plan; however, we believe that our revenues will reach such level and such additional financing will not be necessary. If additional financing is required, we cannot predict whether this additional financing will be in the form Summary of ~~equity,~~Significant ~~debt,~~Accounting orPolicies ~~another~~within ~~form, and we may not be able to obtain~~ the ~~necessary~~Notes additional capital on a timely basis, on acceptable terms, or at all. In the event that financing sources are not available, or that we are unsuccessful in increasing our revenues and profits, we may be unable to ~~implement~~Consolidated ~~our~~Financial current plans for expansion, repay our debt obligations or respond to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition and results of operationsStatements.

Off-Balance ~~The~~Sheet convertible debentures and preferred stock used to finance the Company, which may be converted into common stock at the sole option of the holders, have a highly dilutive impact when they are converted, greatly increasing the number of common shares outstanding. During 2013, there were 2,879 million shares of common stock issued for these conversions. We cannot predict if or when each holder may or may not elect to convert into common shares.Arrangements

~~Our~~We ~~financial~~are ~~statements~~not docurrently ~~not~~engaged ~~include~~in ~~any~~the ~~adjustments~~use of ~~relating~~off-balance tosheet ~~the~~derivative ~~recoverability~~financial ~~and~~instruments ~~reclassification~~to ofhedge ~~recorded~~or ~~asset~~partially ~~amounts~~hedge orinterest ~~the~~rate ~~amounts~~exposure ~~and~~nor ~~classification~~do ofwe ~~liabilities~~maintain ~~that~~any other ~~might~~off-balance besheet ~~necessary~~arrangements ~~should~~for wethe bepurpose ~~unable~~of tocredit ~~continue~~enhancement, ashedging atransactions, ~~going~~or ~~concern~~other financial or investment purposes.

~~Significant~~ITEM ~~Liquidity~~7A. ~~Events~~Quantitative and Qualitative Disclosures about Market Risk

~~Financing~~We ~~Provided~~are Bya YA“smaller ~~Global.~~reporting Incompany” ~~2012,~~as ~~all of our external financing was provided~~ defined by YARules ~~Global. We received a gross total of $~~12b-2~~.65~~ ~~million from YA Global through the issuance~~ of ~~a series of six convertible debentures and common stock warrants. The debentures initially bore interest at 9.5% per annum and matured on August 1, 2014. We paid cash fees to YA Global from~~ the ~~proceeds~~Exchange ofAct ~~the secured convertible debentures~~ and ~~warrants of $150~~,~~000,~~ ~~resulting~~as ~~in net proceeds of $2.5 million. We also received two short-term loans~~such, ~~fully~~are ~~repaid~~not ~~within~~required ~~approximately~~to 30provide ~~days~~this ~~of receipt, from YA Global totaling $112,000~~information. ~~We also repaid in full the July 20, 2012 debenture of $450,000.~~

~~Since~~Page July 2012, we have not received any debenture based financing from YA Global. We do not anticipate receiving additional financing in 2014. We believe our business plan will provide adequate cash flow to meet our operational requirements for the next twelve months.20

AtITEM December 31, 2013, financial instruments arising from our financing transactions with YA Global, included shares of our Series C preferred stock issued in February 2006, Series D preferred stock issued in January 2010, a series of six consolidated secured convertible debentures (the “Consolidated Debentures”) issued July 1, 2013 and various warrants to purchase shares of our common stock8. ~~All~~Financial ofStatements our assets are pledged to secure our obligations under the debt securities. At various times, YA Global has assigned or distributed portions of its holdings of these securities to other holders, including persons who are officers of YA Global and ~~its~~Supplementary related entities, as well as to other holders who are investors in YA Global’s funds. The rights of the assignees of the YA Global holdings are bound by the terms of the financial instruments held by YA Global, and amendments to the terms of the financial instruments held by YA Global could also impact the terms of the financial securities held by the assignees.Data

WeIndex had originally entered into financing transactions with YA Global, which included a series of twenty-seven secured convertible debentures issued between August 2006 and July 2012. Effective July 1, 2013, the terms of the debentures held by YA Global were modified to ~~consolidate the principal and interest amounts outstanding under all of the outstanding secured convertible debentures previously issued by us to YA Global, such that, upon the issuance of the~~ Consolidated ~~Debentures~~Financial and cancellation of the prior debentures, the amount of outstanding debentures issued to YA Global decreased from twenty-seven to six debentures. The maturity dates of these secured convertible debentures were also extended from August 1, 2014 to August 1, 2015.Statements

Page 19

		Page

Reports of Independent Registered Public Accounting Firms		22

Consolidated Balance Sheets at December 31, 2014 and 2013		24

Consolidated Statements of Operations and Comprehensive (Loss)/Income for the years ended December 31, 2014 and 2013		25

Consolidated Statement of Shareholders’ Deficit for the years ended December 31, 2014 and 2013		26

Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013		27

Notes to Consolidated Financial Statements		28

~~The~~Page underlying agreements for each of the Consolidated Debentures are very similar in form. The Consolidated Debentures are convertible into our common stock, at the option of the holder, at the lower of a fixed conversion price per share or a percentage of the lowest volume-weighted average price (“VWAP”) for a specified number of days prior to the conversion (the “look-back period”). The conversion is limited such that the holder cannot exceed 9.99% ownership of the outstanding common stock, unless the holder waives their right to such limitation. All of the debentures are secured according to the terms of a Security Pledge Agreement dated August 23, 2006, which was entered into in connection with the first convertible debenture issued to YA Global and which provides YA Global with a security interest in substantially all of our assets. The debentures are also secured by a Patent Security Agreement dated July 29, 2008. On August 13, 2010, our wholly owned subsidiary, NeoMedia Europe GmbH, became a guarantor of all outstanding financing transactions between us and YA Global, through pledges of their intellectual property and other movable assets. As security for our obligations to YA Global, all of our Pledged Property, Patent Collateral and other collateral is affirmed through the several successive Ratification Agreements executed in connection with each of the 2010, 2011 and 2012 financings. The 2013 modification and consolidation of the outstanding secured convertible debentures as well as the execution of an Amended and Restated Patent Security Agreement in October 2013 reaffirmed the Pledged Property, Patent Collateral and other collateral pledged as security for our obligations to YA Global.21

YAREPORT ~~Global~~OF ~~holds~~INDEPENDENT ~~warrants~~REGISTERED PUBLIC toACCOUNTING purchase shares of our common stock that were issued in connection with the convertible debentures and the Series C and Series D preferred stock. The warrants are exercisable at a fixed exercise price which, from time to time, has been reduced due to anti-dilution provisions when we have entered into subsequent financing arrangements with a lower price. The exercise prices may be reset again in the future if we subsequently issue stock or enter into a financing arrangement with a lower price. In addition, upon each adjustment in the exercise price, the number of warrant shares issuable is adjusted to the number of shares determined by multiplying the warrant exercise price in effect prior to the adjustment by the number of warrant shares issuable prior to the adjustment divided by the warrant exercise price resulting from the adjustment.FIRM

~~See~~To ~~Note 4 within~~ the ~~Notes~~Board toof ~~Consolidated~~Directors ~~Financial~~and ~~Statements~~Shareholders of ~~for~~NeoMedia ~~additional~~Technologies, ~~detailed discussion on our financings~~Inc.

We have audited the accompanying consolidated ~~Contractual~~balance ~~Obligations~~sheet of NeoMedia Technologies, Inc. (the “Company”) as of December 31, 2014, and the related consolidated statements of operations and comprehensive income (loss), shareholders’ deficit, and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are afree ~~“smaller~~of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. ~~company”~~Our audit included consideration of internal control over financial reporting as ~~defined~~a bybasis ~~Rule~~for ~~12b-2~~designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the ~~Exchange~~effectiveness ~~Act~~of ~~and~~the company’s internal control over financial reporting. Accordingly, aswe express no such opinion. An audit also includes examining, ~~are~~on ~~not~~a ~~required~~test tobasis, ~~provide~~evidence supporting ~~this~~the ~~information~~amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements ~~Recently~~referred ~~Issued~~to ~~Accounting~~above ~~Standards~~present fairly, in all material respects, the financial position of NeoMedia Technologies, Inc. as of December 31, 2014, and the results of its operations and its cash flows for year ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

~~See~~As ~~Recent~~discussed ~~Accounting Pronouncements~~ in Note 2 -to ~~Summary~~the offinancial statements, ~~Significant~~the ~~Accounting~~Company ~~Policies~~restated ~~within~~their December 31, 2013 financial statements as a result of the ~~Notes~~correction of errors related to ~~Consolidated~~the ~~Financial~~application ~~Statements~~of certain assumptions used in the Company’s fair value measurement of the derivative financial instruments and debentures payable. Our opinion is not modified with respect to that matter.

The accompanying consolidated financial ~~Off-Balance~~statements ~~Sheet~~have ~~Arrangements~~been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, has significant working capital and shareholder deficits and may have ongoing requirements for additional capital investment. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We/s/ ~~are~~Eide ~~not~~Bailly ~~currently~~LLP ~~engaged~~Greenwood inVillage, ~~the~~Colorado ~~use~~March of off-balance sheet derivative financial instruments to hedge or partially hedge interest rate exposure nor do we maintain any other off-balance sheet arrangements for the purpose of credit enhancement2, ~~hedging transactions, or other financial or investment purposes.~~2015

~~ITEM~~Page ~~7A. Quantitative and Qualitative Disclosures about Market Risk~~22

WeREPORT ~~are~~OF aINDEPENDENT ~~“smaller~~REGISTERED PUBLIC ~~reporting~~ACCOUNTING ~~company” as defined by Rules 12b-2 of the Exchange Act and, as such, are not required to provide this information.~~FIRM

~~Page~~To 20the Board of Directors and Shareholders of NeoMedia Technologies, Inc.:

We have audited the accompanying consolidated ~~ITEM~~balance 8sheet of NeoMedia Technologies, Inc. ~~Financial~~ ~~Statements~~(the “Company”), as of December 31, 2014, and ~~Supplementary~~the ~~Data~~related consolidated statements of operations and comprehensive loss, shareholders’ deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance ~~Index~~with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to ~~Consolidated~~obtain ~~Financial~~reasonable ~~Statements~~assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

		Page
Reports of Independent Registered Public Accounting Firms		22
Consolidated Balance Sheets at December 31, 2013 and 2012		24
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2013 and 2012		25
Consolidated Statement of Shareholders’ Deficit for the years ended December 31, 2013 and 2012		26
Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012		27
Notes to Consolidated Financial Statements		28

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

~~Page~~The 21accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to such financial statements, the Company has suffered recurring losses from operations, has significant working capital and shareholder deficits and may have ongoing requirements for additional capital investment. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As discussed in Note 2 to the Financial ~~REPORT~~Statements, OFthe ~~INDEPENDENT~~entity’s ~~REGISTERED~~2013 ~~PUBLIC~~fair ~~ACCOUNTING~~value ~~FIRM~~accounting of derivative financial instruments and debentures payable previously reported as $284,576,000 should have been $42,001,000. This discovery was made subsequent to the issuance of the financial statements. The financial statements have been restated to reflect this correction.

To/s/ ~~the Board of Directors and Shareholders of NeoMedia Technologies~~StarkSchenkein, ~~Inc.:~~LLP

~~We have audited the accompanying consolidated balance sheet of NeoMedia Technologies~~Denver, Inc. (the “Company”), as of December 31, 2013, and the related consolidated statements of operations and comprehensive loss, shareholders’ deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.CO

WeMarch ~~conducted~~17, ~~our~~2014 ~~audit~~except infor ~~accordance~~Note ~~with~~2, ~~the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit~~ Restatement to ~~obtain~~2013 ~~reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining~~Reporting, onas ato ~~test~~which ~~basis,~~date ~~evidence~~is ~~supporting~~September ~~the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management~~19, ~~as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.~~2014

InPage our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.23

~~The~~NeoMedia ~~accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to such financial statements~~Technologies, ~~the Company has suffered recurring losses from operations, has significant working capital and shareholders’ deficits and may have ongoing requirements for additional capital investment~~Inc. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~/s/~~Consolidated ~~StarkSchenkein,~~Balance ~~LLP~~Sheets

~~Denver~~(in thousands, COexcept share data)

March 17, 2014

	December 31,			December 31,
	2014			2013 (Restated)
ASSETS
Current assets:
Cash and cash equivalents	$	75		$	267
Accounts receivable		214			295
Prepaid expenses and other current assets		32			107
Total current assets		321			669
Property and equipment, net		-			5
Goodwill		-			3,418
Patents and other intangible assets, net		947			1,213
Other long-term assets		16			-
Total assets	$	1,284		$	5,305

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	463		$	236
Accrued expenses		303			291
Deferred revenues and customer prepayments		1,151			2,252
Note payable		242			56
Derivative financial instruments – warrants		2			620
Derivative financial instruments - Series C and D preferred stock and debentures payable		6			296
Debentures payable - carried at fair value		37,384			38,250
Total current liabilities		39,551			42,001

Commitments and contingencies (Notes 2, 4, 8)

Series C convertible preferred stock, $0.01 par value, 27,000 shares authorized, 4,332 and 4,816 shares issued and outstanding, liquidation value of $4,332 and $4,816 as of December 31, 2014 and 2013, respectively		4,332			4,816
Series D convertible preferred stock, $0.01 par value, 25,000 shares authorized, 3,481 and 3,481 shares issued and outstanding, liquidation value of $348 and $348 as of December 31, 2014 and 2013, respectively		348			348

Shareholders’ deficit:
Common stock, no par value, 7,500,000,000 shares authorized, 4,166,142,620 and 332,321,818 shares issued and outstanding as of December 31, 2014 and 2013, respectively		4,985			4,985
Additional paid-in capital		192,224			190,946
Accumulated deficit		(239,377	)		(236,910	)
Accumulated other comprehensive loss		-			(102	)
Treasury stock, at cost, 2,012 shares of common stock		(779	)		(779	)
Total shareholders’ deficit		(42,947	)		(41,860	)
Total liabilities and shareholders’ deficit	$	1,284		$	5,305

~~Page~~See 22accompanying notes.

~~REPORT~~Page ~~OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM~~24

~~To the Board of Directors and Shareholders of~~ NeoMedia Technologies, Inc.:

WeConsolidated ~~have audited the accompanying consolidated balance sheet~~ Statements of ~~NeoMedia~~Operations ~~Technologies, Inc. (the “Company”), as of December 31, 2012,~~ and ~~the~~Comprehensive ~~related~~Income consolidated statements of operations and comprehensive loss, shareholders’ deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.(Loss)

~~We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board~~ (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in ~~the circumstances~~thousands, ~~but~~except share not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and ~~disclosures~~per inshare the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.data)

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

	Year Ended December 31,
	2014			2013 (Restated)

Revenues	$	3,512		$	5,024
Cost of revenues		(628	)		(731	)
Gross profit		2,884			4,293

Operating expenses:
Sales and marketing expenses		(101	)		(286	)
General and administrative expenses		(2,321	)		(2,549	)
Research and development costs		(390	)		(717	)
Charge for goodwill impairment		(3,418	)		-
Other operating income		-			229
Total operating expenses		(6,230	)		(3,323	)

Income (loss) from operations		(3,346	)		970

Other income (expense):
Gain (loss) from change in fair value of hybrid financial instruments		(4,173	)		21,809
Gain from change in fair value of derivative liability - warrants		618			3,067
Gain from change in fair value of derivative liability - Series C and D preferred stock and debentures		289			1,841
Gain on extinguishment of debt		4,247			53
Loss on liquidation of investment in foreign subsidiary		(102	)		-
Interest income, net		-			16
Total other expense		879			26,786

Net income (loss) before taxes		(2,467	)		27,756

Income tax benefit		-			706

Net income (loss)	$	(2,467	)	$	28,462

Deemed dividends on convertible preferred stock		-			(16	)

Deemed dividends on convertible debentures		-			(726	)

Net income/(loss) available to common shareholders	$	(2,467	)	$	27,720

Comprehensive income (loss):
Net income	$	(2,467	)	$	28,462
Foreign currency translation adjustment					133

Comprehensive income (loss)	$	(2,467	)	$	28,595

Net income per common share, basic and diluted:
Basic	$	(0.00	)	$	0.10
Fully diluted	$	(0.00	)	$	0.10

Weighted average number of common shares:
Basic		1,585,816,122			274,625,840
Fully diluted		1,585,816,122			274,625,840

~~The~~See accompanying ~~consolidated financial statements have been prepared assuming that the Company will continue as a going concern~~notes. As discussed in Note 2 to such financial statements, the Company has suffered recurring losses from operations, has significant working capital and shareholder deficits and may have ongoing requirements for additional capital investment. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

~~/s/~~Page ~~Kingery & Crouse, P.A.~~25

NeoMedia ~~Certified~~Technologies, ~~Public~~Inc. ~~Accountants~~

Consolidated Statements ~~Tampa,~~of FLShareholders’ Deficit

~~April~~(In 1thousands, ~~2013~~except share data)

Page 23

	Common Stock												Treasury Stock
	(Reflects 15 to 1 reverse split)
										Accumulated
					Additional Paid–in		Accumulated			Other Comprehensive								Total Shareholders'
	Shares		Amount		Capital		Deficit			Loss			Shares		Amount			Deficit
Balance, December 31, 2012		140,402,392	$	2,106	$	188,814	$	(264,630	)	$	(235	)		2,012	$	(779	)	$	(74,724	)

Shares issued upon conversions of Series C preferred stock		2,749,140		41		10		-			-			-		-			51

Shares issued upon conversions of convertible debentures		189,170,285		2,838		2,121		-			-			-		-			4,959
Deemed dividend on Series C preferred stock		-		-		-		(16	)		-			-		-			(16	)
Deemed dividend on convertible debentures				-		-		(726	)		-			-		-			(726	)
Stock-based compensation expense		-		-		1		-			-			-		-			1
Comprehensive income – foreign currency translation											133			-		-			133

Net income		-		-		-		28,462			-			-		-			(214,113	)

Balance, December 31, 2013 (Restated)		332,321,818		4,985		190,946		(236,910	)		(102	)		2,012		(779	)		(41,860	)

Shares issued upon conversions of Series C preferred stock		1,145,475,982		0		484		-			-			-		-			484

Shares issued upon conversions of convertible debentures		2,688,344,819		0		794		-			-			-		-			794


Stock-based compensation expense		-		-		-		-			-			-		-			-

Comprehensive income – foreign currency translation adjustment		-		-		-		-			102			-		-			102

Net loss		-		-		-		(2,467	)		-			-		-			(2,467	)

Balance, December 31, 2014		4,166,142,620	$	4,985	$	192,224	$	(239,377	)	$	-			2,012	$	(779	)	$	(42,947	)

~~NeoMedia~~See ~~Technologies,~~accompanying ~~Inc~~notes. ~~and Subsidiaries~~

~~Consolidated~~Page ~~Balance Sheets~~26

~~(in~~NeoMedia ~~thousands~~Technologies, ~~except~~Inc. ~~share data)~~

	December 31,		December 31,
	2013		2012
ASSETS
Current assets:
Cash and cash equivalents	$	267	$	611
Accounts receivable, less allowances of $0		295		217
Prepaid expenses and other current assets		107		120
Total current assets		669		948
Property and equipment, net		5		44
Goodwill		3,418		3,418
Proprietary software, net		-		99
Patents and other intangible assets, net		1,213		1,490
Other long-term assets		-		40
Total assets	$	5,305	$	6,039
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	236	$	506
Accrued expenses		291		399
Deferred revenues and customer prepayments		2,252		3,735
Note payable		56		50
Deferred tax liability		-		706
Derivative financial instruments - warrants		684		3,687
Derivative financial instruments - Series C and D preferred stock and debentures payable		23,606		2,147
Debentures payable - carried at amortized cost		-		53
Debentures payable - carried at fair value		257,451		64,292
Total current liabilities		284,576		75,575
Commitments and contingencies
Series C convertible preferred stock, $0.01 par value, 27,000 shares authorized, 4,816 and 4,840 shares issued and outstanding, liquidation value of $4,816 and $4,840 as of December 31, 2013 and 2012, respectively		4,816		4,840
Series D convertible preferred stock, $0.01 par value, 25,000 shares authorized, 3,481 and 3,481 shares issued and outstanding, liquidation value of $348 and $348 as of December 31, 2013 and 2012, respectively		348		348
Shareholders’ deficit:
Common stock, $0.001 par value, 5,000,000,000 shares authorized, 4,984,827,279 and 2,106,035,882 shares issued and outstanding as of December 31, 2013 and 2012, respectively		4,985		2,106
Additional paid-in capital		190,946		188,814
Accumulated deficit		(479,485)		(264,630)
Accumulated other comprehensive loss		(102)		(235)
Treasury stock, at cost, 2,012 shares of common stock		(779)		(779)
Total shareholders’ deficit		(284,435)		(74,724)
Total liabilities and shareholders’ deficit	$	5,305	$	6,039

Consolidated Statements of Cash Flows

~~See~~(In ~~accompanying notes.~~thousands)

Page 24

	Year Ended December 31,
	2014			2013 (Restated)
Cash Flows from Operating Activities:
Net income	$	(2,467	)	$	28,462
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		271			410
Gain on extinguishment of debt		(4,247	)		(53	)
Loss (gain) from change in fair value of hybrid financial instruments		4,173			(21,809	)
Gain from change in fair value of derivative liability – warrants		(618	)		(3,067	)
Gain from change in fair value of derivative liability - Series C and D preferred stock and debentures		(289	)		(1,841	)
Impairment loss on goodwill		3,418			-
Deferred taxes		-			(706	)
Stock-based compensation expense		-			1
Loss on liquidation of foreign investment		102			-
Changes in operating assets and liabilities:
Accounts receivable		81			(68	)
Prepaid expenses and other assets		58			84
Accounts payable and accrued liabilities		241			(331	)
Deferred revenue and other current liabilities		(1,101	)		(1,481	)
Net cash used in operating activities		(378	)		(399	)

Cash Flows from Investing Activities:
Net cash provided by investing activities		-			-

Cash Flows from Financing Activities:
Borrowings under short-term notes payable		242			110
Payments on short-term notes payable		(56	)		(54	)
Net cash provided by financing activities		186			56

Effect of exchange rate changes on cash		-			(1	)

Net change in cash and cash equivalents		(192	)		(344	)

Cash and cash equivalents, beginning of year		267			611
Cash and cash equivalents, end of year	$	75		$	267

Supplemental cash flow information:
Interest paid	$	-		$	5
Income taxes paid	$	-		$	-

Non-cash Investing and Financing Activities:
Series C preferred stock converted to common stock	$	484		$	51
Series D preferred stock converted to common stock	$	-		$	-
Convertible debentures converted to common stock	$	794		$	4,959
Deemed dividend on Series C preferred stock conversion	$	-		$	16
Deemed dividend on convertible debentures conversion	$	-		$	726

~~NeoMedia~~See ~~Technologies,~~accompanying ~~Inc~~notes. ~~and Subsidiaries~~

~~Consolidated~~Page ~~Statements of Operations and Comprehensive Loss~~27

~~(in~~NeoMedia ~~thousands~~Technologies, ~~except share and per share data)~~Inc.

	Year Ended December 31,
	2013		2012
Revenues	$	5,024	$	2,344
Cost of revenues		(731)		(2,181)
Gross profit		4,293		163
Operating expenses:
Sales and marketing expenses		(286)		(1,100)
General and administrative expenses		(2,549)		(3,593)
Research and development costs		(717)		(951)
Other operating income		229		-
Total operating expenses		(3,323)		(5,644)
Income (loss) from operations		970		(5,481)
Other income (expense):
Gain (loss) from change in fair value of hybrid financial instruments		(197,392)		11,926
Gain from change in fair value of derivative liability - warrants		3,003		11,347
Loss from change in fair value of derivative liability - Series C and D preferred stock and debentures		(21,469)		(13,035)
Gain (loss) on extinguishment of debt		53		(27,479)
Impairment loss on cash surrender value of life insurance policy		-		(527)
Gain on derecognition of accrued expenses and purchase price guarantee		-		8,300
Interest income (expense), net		16		(4,437)
Total other expense		(215,789)		(13,905)
Net loss before taxes		(214,819)		(19,386)
Income tax benefit		706		-
Net loss		(214,113)		(19,386)
Deemed dividends on convertible preferred stock		(16)		-
Deemed dividends on convertible debentures		(726)		-
Net loss available to common shareholders	$	(214,855)	$	(19,386)
Comprehensive loss:
Net loss	$	(214,113)	$	(19,386)
Foreign currency translation adjustment		133		(56)
Comprehensive loss	$	(213,980)	$	(19,442)
Net loss per common share, basic and diluted:
Basic	$	(0.05)	$	(0.02)
Fully diluted	$	(0.05)	$	(0.02)
Weighted average number of common shares:
Basic		4,119,387,609		1,276,601,569
Fully diluted		4,119,387,609		1,276,601,569

Notes to Consolidated Financial Statements

~~See~~Note ~~accompanying~~1 ~~notes.~~– General

~~Page~~Business 25– NeoMedia, a Delaware corporation, was founded in 1989 and is headquartered in Boulder, Colorado. We have positioned ourselves to lead the development of 2D mobile barcode technology and services solutions that enable the mobile barcode ecosystem world-wide. NeoMedia harnesses the power of the mobile phone in innovative ways with state-of-the-art mobile barcode technology solutions. With this technology, mobile devices with cameras become barcode scanners, and this enables a range of practical applications including mobile marketing and mobile commerce. In addition, we offer licensing of our extensive intellectual property portfolio.

~~NeoMedia~~Note ~~Technologies,~~2 ~~Inc.~~– ~~and~~Summary ~~Subsidiaries`~~of Significant Accounting Policies

The accompanying audited consolidated financial ~~Consolidated~~statements ~~Statements~~have ofbeen ~~Shareholders’~~prepared ~~Deficit~~in accordance with accounting principles generally accepted in the United States (“US GAAP”). All normal adjustments considered necessary for a fair presentation have been included.

Basis of Presentation – The consolidated financial statements include the accounts of NeoMedia Technologies, Inc. and our wholly-owned subsidiary (Incollectively herein ~~thousands~~referred to as “NeoMedia,” ~~except~~the ~~share~~“Company,” ~~data~~“we,” “us,” “our,” and similar terms). We operate as one reportable segment. All intercompany accounts, transactions and profits have been eliminated in consolidation.

	Common Stock									Treasury Stock
								Accumulated
				Additional Paid–in		Accumulated		Other Comprehensive					Total Shareholders'
	Shares	Amount		Capital		Deficit		Loss		Shares	Amount		Deficit
Balance, December 31, 2011	541,984,111	$	542	$	170,006	$	(245,244)	$	(179)	2,012	$	(779)	$	(75,654)
Shares issued upon conversions of Series C preferred stock	34,168,248		34		844		-		-	-		-		878
Shares issued upon conversions of Series D preferred stock	142,457,436		143		2,199		-		-	-		-		2,342
Shares issued upon conversions of convertible debentures	1,387,426,087		1,387		15,751		-		-	-		-		17,138
Stock-based compensation expense	-		-		14		-		-	-		-		14
Comprehensive (loss – foreign currency translation adjustment	-		-		-		-		(56)	-		-		(56)
Net loss	-		-		-		(19,386)		-	-		-		(19,386)
Balance, December 31, 2012	2,106,035,882		2,106		188,814		(264,630)		(235)	2,012		(779)		(74,724)
Shares issued upon conversions of Series C preferred stock	41,237,113		41		10		-		-	-		-		51
Shares issued upon conversions of convertible debentures	2,837,554,284		2,838		2,121		-		-	-		-		4,959
Deemed dividend on Series C preferred stock	-		-		-		(16)		-	-		-		(16)
Deemed dividend on convertible debentures	-		-		-		(726)		-	-		-		(726)
Stock-based compensation expense	-		-		1		-		-	-		-		1
Comprehensive income – foreign currency translation adjustment	-		-		-		-		133	-		-		133
Net loss	-		-		-		(214,113)		-	-		-		(214,113)
Balance, December 31, 2013	4,984,827,279	$	4,985	$	190,946	$	(479,485)	$	(102)	2,012	$	(779)	$	(284,435)

Use of Estimates – The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Changes in facts and circumstances may result in revised estimates, which are recorded in the period in which they become known.

Going Concern – We ~~See~~have historically incurred operating losses, and we may continue to generate negative cash flows as we implement our business plan for 2015. There can be no assurance that our continuing efforts to execute our business plan will be successful and that we will be able to continue as a going concern. The accompanying ~~notes~~consolidated financial statements have been prepared in conformity with US GAAP, which contemplates our continuation as a going concern. Our net loss for theyear ended December 31, 2014 was $2.4 million as compared to net income of $28.5 million for the year ended December 31, 2013. The operating results for the year ended December 31, 2014 included $3.3 million of net losses related to financing instruments and net gain of $4.2 million, from a gain on extinguishment of debt and the operating results for the year ended December 31, 2013 included $26.7 million of net gains related to financing instruments.

~~Page~~Net 26cash used in operations during the years ended December 31, 2014 and 2013 was $0.4 million in each period. As of December 31, 2014, we have an accumulated deficit of $239.4 million. We also have a working capital deficit of $39.2 million, including $37.4 million in current liabilities for our derivative and debenture financing instruments which are due August 1, 2015 and for which we do not have the necessary capital to re-pay.

We currently do not have sufficient cash ~~NeoMedia~~or ~~Technologies~~commitments for financing to sustain our operations for the next twelve months if we are unable to generate sufficient cash flows from operations. Our plan continues to be to develop new client and customer relationships and substantially increase our revenue derived from our products/services and IP licensing. If our revenues do not reach the level anticipated in our plan, ~~Inc~~we may require additional financing in order to execute our operating plan. If additional financing is required, we cannot predict whether this additional financing will be in the form of equity, debt, or another form, and ~~Subsidiaries~~ we may not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In the event that financing sources are not available, or that we are unsuccessful in increasing our revenues and profits, we may be unable to implement our current plans for expansion, repay our debt obligations or respond to competitive pressures, any of which would have a material adverse effect on our business, prospects, financial condition and results of operations.

~~Consolidated~~Page ~~Statements of Cash Flows~~ 28

The convertible debentures and preferred ~~(In~~stock ~~thousands)~~used to finance the Company, which may be converted into common stock at the sole option of the holders, have a highly dilutive impact when they are converted, greatly increasing the number of shares of common stock outstanding. During 2014, there were 3,834 million shares of common stock issued for these conversions. We cannot predict if or when each holder may or may not elect to convert into shares of common stock.

	Year Ended December 31,
	2013		2012
Cash Flows from Operating Activities:
Net loss	$	(214,113)	$	(19,386)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		410		972
(Gain) loss on extinguishment of debt		(53)		27,479
(Gain) loss from change in fair value of hybrid financial instruments		197,392		(11,926)
Gain from change in fair value of derivative liability - warrants		(3,003)		(11,347)
Loss from change in fair value of derivative liability - Series C and D preferred stock and debentures		21,469		13,035
Deferred taxes		(706)		-
Stock-based compensation expense		1		14
Bad debt expense		-		457
Interest expense added to liabilities		-		4,406
Gain on derecognition of accrued expenses and purchase price guarantee		-		(8,300)
Impairment loss on cash surrender value of life insurance policy		-		527
Changes in operating assets and liabilities:
Accounts receivable		(68)		-
Prepaid expenses and other assets		84		63
Accounts payable and accrued liabilities		(331)		555
Deferred revenue and other current liabilities		(1,481)		1,915
Net cash used in operating activities		(399)		(1,536)
Cash Flows from Investing Activities:
Acquisition of property and equipment		-		(3)
Proceeds received from life insurance policy		-		126
Net cash provided by investing activities		-		123
Cash Flows from Financing Activities:
Payments on convertible debt instruments		-		(450)
Borrowings under convertible debentures		-		2,500
Borrowings under short-term notes payable		110		-
Payments on short-term notes payable		(54)		-
Net cash provided by financing activities		56		2,050
Effect of exchange rate changes on cash		(1)		(56)
Net change in cash and cash equivalents		(344)		581
Cash and cash equivalents, beginning of year		611		30
Cash and cash equivalents, end of year	$	267	$	611
Supplemental cash flow information:
Interest paid during the period	$	5	$	31
Series C preferred stock converted to common stock	$	10	$	878
Series D preferred stock converted to common stock	$	-	$	2,342
Convertible debentures converted to common stock	$	4,233	$	17,138
Deemed dividend on Series C preferred stock conversion	$	16	$	-
Deemed dividend on convertible debentures conversion	$	726	$	-

Restatement to 2013 Reporting – As noted above and disclosed initially in our Periodic Report on Form 8-K on July 29, 2014, during the year ended December 31, 2013, for fair value accounting of the derivative financial instruments and debentures payable, we reassessed the valuation techniques used to estimate the liability fair values. Based on the assessment, including discussions with the third-party valuation firm assisting us with the calculation, we determined that the valuation technique should be modified to consider the potentially dilutive impact on the stock price resulting from the issuance of additional shares of common stock upon the conversion of the instruments as well as the resulting value in comparison to our market capitalization.

As filed on our From 10-K/A on September ~~See~~19, ~~accompanying~~2014, ~~notes.~~we restated our December 31, 2013 Balance Sheet as it pertains to the Fair Value of our Warrants, Preferred Series C & D and Convertible Debentures to amounts as stated below from how they were reported as of December 31, 2013 in our 10-K (in thousands):

Page 27

	December 31, 2013 (as previously reported)			Adjustments			December 31, 2013 (Restated)

Derivative Financial Instruments – warrants	$	684		$	(64	)	$	620
Derivative Financial Instruments – Series C and D	$	23,606		$	(23,310	)	$	296
Debentures payable – carried at fair value	$	257,451		$	(219,201	)	$	38,250
Total Liabilities	$	284,576		$	(242,575	)	$	42,001
Accumulated Deficit	$	(479,485	)	$	242,575		$	(236,910	)
Total shareholders’ deficit	$	(284,435	)	$	242,575		$	(41,860	)

The ~~NeoMedia~~table ~~Technologies~~below reflects the changes in restating the statement of operations for the year ended December 31, ~~Inc.~~2013 (in thousands):

Notes to Consolidated Financial Statements

	Year Ended December 31, 2013 (as previously reported)			Adjustments		Year Ended December 31, 2013 (Restated)

Gain (loss) from change in fair value of hybrid financial instruments	$	(197,392	)	$	219,201	$	21,809

Gain (loss) from change in fair value of derivative liability – warrants	$	3,003		$	64	$	3,067

Gain (loss) from change in fair value of derivative liability – Series C & D	$	(21,469	)	$	23,310	$	1,841

Net income (loss) before taxes	$	(214,819	)	$	242,575	$	27,756

Net income (loss)	$	(214,113	)	$	242,575	$	28,462

Net income (loss) available to common shareholders	$	(214,855	)	$	242,575	$	27,720

Comprehensive income (loss)	$	(213,980	)	$	242,575	$	28,595

~~December~~Page ~~31, 2013~~29

The table below reflects the changes in ~~Note~~restating 1the –Statement ~~General~~of Cash Flows for the year ended December 31, 2013 (in thousands):

Statement ~~Business – NeoMedia, a Delaware corporation, was founded in 1989 and is headquartered in Boulder, Colorado. We have positioned ourselves to lead the development~~ of 2DCash mobile barcode technology and infrastructure solutions that enable the mobile barcode ecosystem world-wide. NeoMedia harnesses the power of the mobile phone in innovative ways with state-of-the-art mobile barcode technology solutions. With this technology, mobile devices with cameras become barcode scanners, and this enables a range of practical applications including mobile marketing and mobile commerce. In addition, we offer licensing of our extensive intellectual property portfolio.Flow:

Note 2 – Summary of Significant Accounting Policies

	Year Ended December 31, 2013 (as previously reported)			Adjustments		Year Ended December 31, 2013 (Restated)

Net income (loss)	$	(214,113	)	$	242,575	$	28,462

Gain (loss) from change in fair value of hybrid financial instruments	$	(197,392	)	$	219,201	$	21,809

Gain (loss) from change in fair value of derivative liability – warrants	$	3,003		$	64	$	3,067

Gain (loss) from change in fair value of derivative liability – Series C & D	$	(21,469	)	$	23,310	$	1,841

Net cash used in operating activities	$	(399	)	$	-	$	(399	)

~~The~~Cash ~~accompanying~~and ~~audited~~Cash ~~consolidated~~Equivalents ~~financial~~– Cash ~~statements~~and ~~have~~cash ~~been~~equivalents ~~prepared~~include incash ~~accordance with accounting principles generally accepted~~ in ~~the~~financial ~~United~~institutions, ~~States~~which ~~(“US~~are ~~GAAP”).~~highly ~~All~~liquid ~~normal~~investment ~~adjustments~~instruments ~~considered~~with ~~necessary~~original maturities ~~for~~of aless ~~fair~~than ~~presentation have been included~~90 days.

Revenue ~~Basis~~Recognition ~~of Presentation~~ – ~~The~~We ~~consolidated~~derive ~~financial~~revenues ~~statements~~from ~~include~~ the ~~accounts~~following ofprimary ~~NeoMedia~~sources: ~~Technologies, Inc. and our wholly-owned subsidiaries~~ (~~collectively~~1) ~~herein~~license ~~referred~~fees relating to asintellectual ~~“NeoMedia~~property,~~” the “Company,” “we,” “us,” “our,”~~ and ~~similar terms~~(2). Wesoftware ~~operate~~and asservice ~~one~~revenues ~~reportable~~related ~~segment.~~to ~~All~~mobile ~~intercompany~~marketing ~~accounts,~~barcode ~~transactions~~services and ~~profits~~development, ~~have~~barcode ~~been~~readers ~~eliminated in consolidation. Certain prior year amounts in the consolidated financial statements~~ and ~~notes~~custom developed ~~thereto have been reclassified to conform to the current year's presentation~~software.

We ~~Use~~recognized ofrevenue ~~Estimates~~when: –(a) ~~The~~persuasive ~~preparation~~evidence of ~~consolidated~~the ~~financial~~sales ~~statements~~arrangement inexists, ~~conformity~~(b) ~~with~~the USarrangement ~~GAAP~~fee ~~requires~~is ~~management~~fixed toor ~~make~~determinable, (c) ~~estimates~~service ~~and~~delivery ~~assumptions~~or ~~that~~performance ~~affect~~has ~~the~~occurred, ~~reported~~(d) ~~amounts~~customer ofacceptance ~~assets~~has ~~and~~been ~~liabilities~~received, if contractually required, and ~~disclosure~~(e) collectability of ~~contingent~~the ~~assets~~arrangement ~~and~~fee ~~liabilities~~is atprobable. ~~the~~Revenue ~~date~~associated ofwith ~~the~~licensing ~~financial~~agreements ~~statements~~primarily ~~and~~consists ~~the~~of ~~reported~~non-refundable upfront ~~amounts~~license offees. ~~revenues~~Non-refundable ~~and~~upfront ~~expenses~~license ~~during~~fees ~~the~~received ~~reporting~~under ~~period.~~license ~~Changes~~agreements, inwhereby ~~facts~~continued ~~and~~performance ~~circumstances~~or ~~may~~future obligations ~~result~~are inconsidered ~~revised~~inconsequential ~~estimates,~~to ~~which~~the relevant license technology, are ~~recorded~~recognized inas revenue upon delivery of the ~~period~~technology. We intypically ~~which~~use ~~they~~signed ~~become~~contractual ~~known~~agreements as persuasive evidence of a sales arrangement.

If ~~Going~~at ~~Concern~~the –inception ~~While~~of wean ~~have~~arrangement ~~historically~~the ~~incurred~~fee ~~operating~~is ~~losses,~~not ~~and~~fixed weor ~~may~~determinable, ~~continue to generate negative cash flows as~~ we ~~implement~~defer ~~our~~revenue ~~business~~until ~~plan,~~ the ~~business~~arrangement ~~has~~fee ~~been~~becomes ~~operating~~due and ~~on a self-sufficient basis~~payable. ~~However,~~If ~~there~~we ~~can~~determine becollectability nois ~~assurance~~not ~~that~~probable, ~~our~~we ~~success~~defer inrevenue ~~executing~~until ~~our~~we ~~business~~receive ~~plan~~payment ~~will~~or ~~continue.~~collection ~~The~~becomes ~~accompanying consolidated financial statements have been prepared in conformity with US GAAP~~probable, whichever ~~which~~is ~~contemplates~~earlier. ~~our~~The ~~continuation~~determination asof awhether ~~going~~fees ~~concern~~are ~~given~~collectible ~~fair~~requires ~~value~~judgment ~~accounting~~of ~~related to~~ our ~~debentures. Our net loss for the year ended December 31~~management, ~~2013~~ and ~~2012~~the ~~was~~amount ~~$214.1 million~~ and timing ~~$19.4 million, respectively, including $215.8 million and $21.7 million, respectively,~~ of ~~net~~revenue ~~losses~~recognition ~~related~~may tochange ~~our~~if ~~financing~~different ~~instruments.~~assessments ~~The~~are ~~impact of our successful implementation strategy shows our operating income was $1~~made.~~0 million for 2013 as compared to an operating loss in 2012 of $5.5 million.~~

Deferred ~~Net~~revenues ~~cash used in operations during 2013~~ and ~~2012~~customer ~~was~~prepayments ~~$0.4~~on ~~million~~our ~~and~~consolidated ~~$1.5~~balance ~~million,~~sheets ~~respectively.~~primarily Asrepresents ofamounts ~~December~~invoiced ~~31,~~or ~~2013,~~cash wepayments ~~have~~received in anadvance ~~accumulated deficit~~ of ~~$479.5~~our ~~million.~~performance Werelated ~~also~~to ~~have~~the aunderlying ~~working capital deficit of $283~~agreement.~~9 million, including $281.7 million in current liabilities for our derivative and debenture financing instruments.~~

WeChange ~~currently~~in doAccounting ~~not~~Policy – ~~have~~In ~~sufficient~~early ~~cash~~2013, orwe ~~commitments~~expanded ~~for~~our ~~financing~~business tostrategy ~~sustain~~related ~~our~~to ~~operations~~the ~~for~~monetization ~~the~~of ~~next~~intellectual ~~twelve~~property ~~months~~rights ifand wehave ~~are~~been pursuing ~~unable~~brand tolicenses ~~generate~~with ~~sufficient~~major ~~cash~~corporations. ~~flows~~In ~~from~~connection ~~operations.~~with ~~Our~~the ~~plan~~strategy isexpansion, towe ~~develop~~reevaluated ~~new~~our ~~client~~revenue ~~and~~recognition accounting ~~customer~~principles ~~relationships~~during ~~and~~the ~~substantially~~second ~~increase~~quarter ~~our~~of ~~revenue~~2013 ~~derived~~and ~~from~~determined ~~our~~that ~~products/services~~the ~~and~~completed IPperformance ~~licensing.~~methodology Iffor ~~our~~recognizing intellectual ~~revenues~~properly dorevenue ~~not~~was ~~reach~~preferable to the ~~level~~historically ~~anticipated~~used inproportional ~~our~~performance ~~plan,~~methodology. weThe ~~may~~completed ~~require~~performance methodology ~~additional~~is ~~financing~~further indescribed ~~order~~above towithin ~~execute~~the ~~our~~revenue ~~operating~~recognition ~~plan;~~discussion. ~~however,~~As wepart ~~believe~~of ~~that~~this ~~our~~change ~~revenues~~in ~~will~~accounting ~~reach~~principle, we ~~such~~conducted ~~level~~a ~~and~~quantitative ~~such~~analysis ~~additional~~to ~~financing~~determine ~~will~~the ~~not~~impact bethe ~~necessary.~~accounting Ifpolicy ~~additional~~change ~~financing~~would ishave ~~required,~~had weon ~~cannot~~our ~~predict~~2012 ~~whether~~balance ~~this~~sheet and ~~additional~~statement ~~financing~~of ~~will~~operations. beThe inimpact ~~the~~to ~~form~~our ofbalance ~~equity,~~sheet ~~debt,~~as orof ~~another~~December ~~form~~31, ~~and~~2012 wewould ~~may~~have ~~not~~been bea ~~able~~decrease toin ~~obtain~~each of the deferred ~~necessary~~revenues ~~additional~~and ~~capital~~customer onprepayments, atotal ~~timely~~current ~~basis~~liabilities, onand ~~acceptable~~accumulated ~~terms,~~deficit orof ~~at all~~$208,000. InThe ~~the~~impact ~~event~~to ~~that~~our ~~financing~~2012 statement ~~sources~~of ~~are~~operations ~~not~~would ~~available,~~have orbeen ~~that~~an weincrease ~~are unsuccessful~~ in ~~increasing our~~ revenues and ~~profits,~~decrease wein ~~may~~the benet ~~unable~~loss available to ~~implement~~common ~~our~~shareholders ~~current plans for expansion~~of $208,000, ~~repay~~and ~~our~~there ~~debt~~would ~~obligations~~have orbeen ~~respond~~no toimpact ~~competitive~~on ~~pressures,~~basic ~~any~~and ofdiluted ~~which~~net ~~would~~loss ~~have~~per acommon ~~material~~share. ~~adverse~~Based ~~effect~~ on ~~our~~the ~~business~~analysis, ~~prospects,~~the ~~financial~~impact was ~~condition~~deemed ~~and~~immaterial ~~results~~to ofthe ~~operations~~overall financial statements.

Page 28 30

Multiple Element Transactions ~~The~~– ~~convertible~~From ~~debentures~~time ~~and~~to ~~preferred~~time, ~~stock~~we ~~used~~enter tointo ~~finance~~transactions ~~the~~involving ~~Company~~multiple elements, ~~which~~such ~~may~~as becustomer ~~converted~~agreements ~~into~~involving ~~common~~multiple IP ~~stock~~licenses. atWe ~~the~~account ~~sole~~for ~~option~~multiple element transactions by first obtaining evidence of the ~~holders,~~estimated ~~have~~selling aprice ~~highly~~of ~~dilutive~~each ~~impact~~element using ~~when~~vendor ~~they~~specific ~~are~~objective ~~converted~~evidence (“VSOE”), ~~greatly~~third-party ~~increasing~~evidence ~~the~~(“TPE”), ~~number~~or management’s best estimate of ~~common~~selling ~~shares~~price ~~outstanding~~if neither VSOE nor TPE of selling price exists. ~~During~~Based ~~2013,~~on ~~there~~the ~~were~~determined 2selling price of each element of the transaction,~~879~~ ~~million~~the ~~shares~~value of ~~common~~the ~~stock~~single ~~issued~~agreement is allocated to each deliverable based on each element's proportional value and accounted for ~~these~~as ~~conversions~~a separate unit of accounting. WeMultiple ~~cannot~~element ~~predict~~transactions ifrequire orthe ~~when~~exercise ~~each~~of ~~holder~~judgment ~~may~~in ordetermining the ~~may~~estimated ~~not~~selling ~~elect~~price toof ~~convert~~the ~~into~~different ~~common~~elements. ~~shares~~The judgments could impact the amount of revenues and expenses recognized over the term of the contract, as well as the period in which they are recognized.

Basic and Diluted (Loss) Gain Per ~~Our~~Common ~~financial~~Share ~~statements~~– doBasic ~~not~~net ~~include~~(loss) ~~any~~gain ~~adjustments~~per ~~relating~~common share is computed by dividing net loss/gain available to common shareholders by the ~~recoverability~~weighted ~~and~~average ~~reclassification~~number of ~~recorded~~shares ~~asset~~of ~~amounts~~common orstock outstanding during the ~~amounts~~period. During the year ended December 31, 2014, we reported a net loss available to common shareholders and ~~classification~~excluded all outstanding stock options, warrants and convertible instruments from the calculation of ~~liabilities~~diluted ~~that~~net ~~might~~loss beper ~~necessary~~common ~~should~~share webecause beinclusion ~~unable~~of tothese ~~continue~~securities aswould ahave ~~going~~been ~~concern~~anti-dilutive.

~~Cash~~The ~~and~~following ~~Cash~~is ~~Equivalents~~a –reconciliation ~~Cash~~of the numerator and ~~cash~~denominator ~~equivalents~~of ~~include~~the ~~cash~~basic inand ~~financial~~diluted ~~institutions,~~net ~~which~~loss ~~are~~or ~~highly~~gain ~~liquid~~per ~~investment~~share ~~instruments~~calculations ~~with~~for ~~original~~each ~~maturities~~period of(in ~~less~~thousands, ~~than~~except share ~~90 days.~~and per share data):

Revenue Recognition – We derive revenues from the following primary sources: (1) license fees relating to intellectual property, and (2) software and service revenues related to mobile marketing barcode infrastructure management and development, barcode readers and custom developed software.

	Year Ended December 31,
	2014			2013 (Restated)

Basic loss per common share:
Numerator: (Net loss) gain available to common shareholders	$	(2,467	)	$	27,720
Denominator: Weighted average shares outstanding		1,585,816,122			274,625,840
Basic loss per common share	$	(0.000	)	$	(0.100	)

Diluted loss per common share:
Numerator:
Net loss available to common shareholders	$	(2,467	)	$	27,720
Effect of dilutive securities		-			-
Diluted net loss available to common shareholders	$	(2,467	)	$	-
Denominator:
Weighted average shares outstanding		1,585,816,122			274,625,840
Effect of dilutive securities		-			-
Diluted weighted average shares outstanding		-			274,625,840
Diluted loss per common share	$	(0.000	)	$	0.10

WeThe ~~recognized~~following ~~revenue~~table ~~when:~~reflects ~~(a) persuasive evidence of~~ the ~~sales~~outstanding stock ~~arrangement exists~~options, ~~(b) the arrangement fee is fixed or determinable~~warrants, ~~(c)~~convertible ~~service~~debt ~~delivery~~and orconvertible ~~performance~~preferred ~~has~~securities ~~occurred,~~as ~~(d)~~of ~~customer~~December ~~acceptance has been received~~31, if2014 ~~contractually required,~~ and (e) collectability of the arrangement fee is probable. Revenue associated with licensing agreements primarily consists of non-refundable upfront license fees. Non-refundable upfront license fees received under license agreements2013, ~~whereby~~which ~~continued~~have ~~performance~~been excluded orfrom ~~future obligations are considered inconsequential to~~ the ~~relevant~~diluted ~~license~~loss ~~technology,~~per ~~are~~common ~~recognized~~share ascalculation ~~revenue~~because ~~upon~~inclusion ~~delivery~~ of the ~~technology.~~securities Wewould ~~typically~~be ~~use signed contractual agreements as persuasive evidence of a sales arrangement.~~anti-dilutive:

IfPage at the inception of an arrangement the fee is not fixed or determinable, we defer revenue until the arrangement fee becomes due and payable. If we determine collectability is not probable, we defer revenue until we receive payment or collection becomes probable, whichever is earlier. The determination of whether fees are collectible requires judgment of our management, and the amount and timing of revenue recognition may change if different assessments are made. 31

Deferred revenues and customer prepayments on our consolidated balance sheets primarily represents amounts invoiced or cash payments received in advance of our performance related to the underlying agreement.

	December 31,
	2014		2013
Stock options		-		1,173,020
Warrants		499,990,063		499,990,063
Convertible debt		234,287,861,850		234,287,861,850
Convertible preferred stock		26,617,345,361		26,617,345,361
		261,405,197,274		261,406,370,294

Foreign ~~Change~~Currency ~~in Accounting Policy~~ – ~~In early 2013~~Historically, wethe ~~expanded~~functional ~~our~~currency ~~business~~of ~~strategy~~NeoMedia ~~related~~Europe toGmbH was the ~~monetization~~Euro, ofits ~~intellectual~~local ~~property~~currency, ~~rights~~ and ~~have~~we recorded ~~been~~translation ~~pursuing~~gains ~~brand~~and ~~licenses~~losses associated with ~~major~~the ~~corporations. In~~conversion ~~connection~~of ~~with~~ the ~~strategy~~subsidiary ~~expansion,~~financial westatements ~~reevaluated~~to ~~our~~U.S. ~~revenue~~dollars ~~recognition~~in accumulated ~~accounting~~other ~~principles~~comprehensive ~~during~~loss ~~the~~as ~~second~~a ~~quarter~~component of ~~2013~~shareholders’ ~~and~~deficit. ~~determined~~During ~~that~~ the ~~completed~~third ~~performance~~quarter ~~methodology~~of ~~for~~2013, ~~recognizing~~we ~~intellectual~~determined that ~~properly~~changes ~~revenue~~in ~~was~~economic ~~preferable~~facts toand ~~the~~circumstances ~~historically~~indicated ~~used~~that ~~proportional~~the ~~performance~~functional ~~methodology. The~~currency ~~completed~~of ~~performance~~NeoMedia ~~methodology~~Europe isGmbH ~~further~~had ~~described~~changed ~~above~~from the ~~within~~Euro to the ~~revenue~~U.S. ~~recognition discussion~~dollar. The Aschanges ~~part~~included, ofamong ~~this~~other ~~change~~things, inthe ~~accounting~~termination ~~principle,~~of wethe ~~conducted~~hardware abusiness ~~quantitative~~and ~~analysis~~related sales toactivities ~~determine~~that ~~the~~would ~~impact~~allow the ~~accounting~~subsidiary ~~policy~~to ~~change~~generate ~~would~~revenue ~~have~~independently ~~had~~in onthe ~~our~~local ~~2012~~market ~~balance~~or ~~sheet~~otherwise, and ~~statement~~the completion of ~~operations. The~~a ~~impact~~repositioning toof ~~our~~the ~~balance~~subsidiary ~~sheet~~from asa ~~of December 31~~self-contained, ~~2012~~revenue ~~would~~generating ~~have~~operation ~~been~~to a ~~decrease~~cost incenter ~~each~~focused ofprimarily ~~the~~on research ~~deferred revenues~~ and ~~customer prepayments, total current liabilities, and accumulated deficit of $208,000~~development. As ~~The~~a ~~impact~~result ~~to our 2012 statement~~ of ~~operations~~the ~~would~~change ~~have~~in ~~been~~functional ancurrency, ~~increase~~translation ingains ~~revenues~~ and ~~decrease~~losses inassociated with the ~~net~~conversion ~~loss available to common shareholders~~ of ~~$208,000,~~the ~~and~~NeoMedia ~~there~~Europe ~~would~~GmbH ~~have~~financial ~~been~~statements nowill ~~impact~~be onprospectively ~~basic~~recorded ~~and~~in ~~diluted~~our ~~net~~results ~~loss~~from ~~per~~operations ~~common~~effective July ~~share. Based on the analysis~~1, ~~the impact was deemed immaterial to the overall financial statements~~2013.

~~Multiple~~Fair ~~Element~~Value ~~Transactions~~of –Assets ~~From~~and ~~time~~Liabilities Acquired to– ~~time,~~Fair wevalue ~~enter~~is ~~into~~the ~~transactions~~price ~~involving~~that ~~multiple~~would ~~elements,~~be ~~such~~received asfrom ~~customer agreements involving multiple patents. We account for multiple element transactions by first obtaining evidence of~~ the ~~estimated~~sale ~~selling price~~ of an ~~each~~asset ~~element~~or ~~using~~paid ~~vendor~~to ~~specific~~transfer ~~objective~~a ~~evidence~~liability (~~“VSOE”),~~i.e. ~~third-party~~an ~~evidence~~exit ~~(“TPE”~~price), orin ~~management’s~~the ~~best~~principal ~~estimate~~or ofmost ~~selling~~advantageous ~~price~~market ifin ~~neither~~an ~~VSOE~~orderly ~~nor~~transaction between ~~TPE~~market ~~of selling price exists~~participants. In ~~Based~~determining onfair value, the ~~determined~~accounting ~~selling~~standards ~~price~~established ofa ~~each~~three-level ~~element~~hierarchy that ofdistinguishes ~~the~~between ~~transaction,~~(i) ~~the~~market ~~value~~data ofobtained ~~the~~or ~~single~~developed ~~agreement~~from isindependent ~~allocated~~sources to(i.e., ~~each~~observable ~~deliverable~~data ~~based~~inputs) ~~on each element's proportional value~~ and ~~accounted for as~~ (ii) a ~~separate~~reporting ~~unit~~entity’s ofown ~~accounting.~~data ~~Multiple~~and ~~element~~assumptions ~~transactions~~that ~~require~~market ~~the~~participants ~~exercise~~would ofuse ~~judgment~~ in ~~determining~~pricing ~~the~~an ~~estimated~~asset ~~selling~~or ~~price~~liability of(i.e., unobservable ~~the~~data ~~different elements~~inputs). Financial ~~The~~assets ~~judgments~~and ~~could~~financial ~~impact~~liabilities ~~the~~measured ~~amount~~and ofreported ~~revenues~~at ~~and~~fair ~~expenses~~value ~~recognized~~are ~~over~~classified in ~~the~~one ~~term~~ of the ~~contract~~following categories, asin ~~well~~order asof ~~the~~priority ~~period~~of inobservability ~~which~~and ~~they~~objectivity ~~are~~of ~~recognized.~~ pricing inputs:

~~Page~~· 29Level 1 – Fair value based on quoted prices in active markets for identical assets or liabilities. · Level 2 – Fair value based on significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data. · Level 3 – Fair value based on prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be a reporting entity’s own data and judgments about assumptions that market participants would use in pricing the asset or liability.

~~Basic~~The ~~and~~fair ~~Diluted~~value ~~Loss~~measurement ~~Per~~level ~~Common~~for ~~Share~~an asset –or ~~Basic~~liability ~~net loss per common share~~ is ~~computed~~based byon ~~dividing net loss available to common shareholders by~~ the ~~weighted~~lowest ~~average~~level ~~number~~ of ~~shares~~any ofinput ~~common~~that ~~stock~~is ~~outstanding~~significant ~~during~~to the ~~period.~~fair ~~During~~value ~~the~~measurement. Valuation techniques ~~years~~should ~~ended~~maximize ~~December~~the ~~31,~~use ~~2013~~of ~~and~~observable ~~2012,~~inputs ~~we reported a net loss available to common shareholders~~ and ~~excluded~~minimize ~~all outstanding stock options, warrants and convertible instruments from~~ the ~~calculation~~use of ~~diluted~~unobservable ~~net loss per common share because inclusion of these securities would have been anti-dilutive~~inputs.

Recurring Fair Value Measurements - The ~~following~~carrying ~~table~~value ~~reflects~~of the ~~outstanding~~Company’s ~~stock~~financial ~~options,~~assets ~~warrants~~and financial liabilities is their cost, ~~convertible~~which ~~debt~~may ~~and~~differ ~~convertible~~from fair ~~preferred~~value. The ~~securities~~carrying asvalue of ~~December~~cash 31held as demand deposits, ~~2013~~money market and ~~2012~~certificates of deposit, ~~which~~marketable investments, ~~have~~accounts ~~been~~receivable, ~~excluded~~short-term ~~from~~borrowings, ~~the~~accounts ~~diluted~~payable ~~loss~~and ~~per~~accrued ~~common~~liabilities ~~share~~approximated ~~calculation~~their ~~because~~fair ~~inclusion~~value. Marketable investments are valued at Level 1 due to readily available market quotes. The fair value of the ~~securities~~Company’s ~~would~~long-term debt, including the current portion approximated its carrying value. The Company accounts for its derivative financial instruments, including warrants and the embedded conversion features of our convertible preferred stock and convertible debentures at fair value and these are considered to be ~~anti-dilutive:~~recurring fair value measurements.

	December 31,
	2013	2012
Stock options	1,173,020	1,340,000
Warrants	499,990,063	1,882,492,690
Convertible debt	234,287,861,850	22,696,138,542
Convertible preferred stock	26,617,345,361	990,409,508
	261,406,370,294	25,570,380,740

Page 32

Foreign Currency – Historically, the functional currency of NeoMedia Europe GmbH was the euro, its local currency, and we recorded translation gains and losses associated with the conversion of the subsidiary financial statements to U.S. dollars in accumulated other comprehensive loss as a component of shareholders’ deficit. During the third quarter of 2013, we determined that changes in economic facts and circumstances indicated that the functional currency of NeoMedia Europe GmbH had changed from the euro to the U.S. dollar. The ~~changes~~fair ~~included,~~value ~~among~~measurements ~~other~~for ~~things,~~ the ~~termination~~Company's ofliabilities ~~the~~measured ~~hardware~~at ~~business~~fair ~~and~~value related sales activities that would allow the subsidiary to generate revenue independently in the local market or otherwise, and the completion of a repositioning of the subsidiary from a self-contained, revenue generating operation to a cost center focused primarily on ~~research and development. As~~ a ~~result~~recurring basis as of ~~the~~December ~~change in functional currency~~31, ~~translation~~2014 ~~gains~~ and ~~losses~~2013 ~~associated~~as ~~with the conversion of the NeoMedia Europe GmbH financial statements will be prospectively recorded in our results from operations effective July 1, 2013.~~follows:

Fair-valued Financial Instruments – Fair value measurement within the financial statements is primarily reflected in the accounting for our Convertible Preferred Stock, Convertible Debentures and Warrants, where we determine the fair value of certain hybrid instruments carried at fair value, and certain derivative liabilities which are recorded at fair value. See additional details below and at Note 4 – Financing.

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gain (Losses)
December 31, 2014:
Derivative Financial Instruments - Warrants		2,000		-		-		2,000		618,000
Derivative Financial Instruments - Series D & C preferred stock		6,000		-		-		6,000		289,000
Debentures Payable Carried at fair value		37,384,000		-		-		37,384,000		(4,173,000	)
Total		37,392,000		-		-		37,392,000		(3,266,000	)

December 31, 2013:
Derivative Financial Instruments - Warrants		620,000		-		-		620,000		3,067,000
Derivative Financial Instruments - Series D & C preferred stock		296,000		-		-		296,000		1,841,000
Debentures Payable Carried at fair value		38,250,000		-		-		38,250,000		21,809,000
Total		39,166,000		-		-		39,166,000		26,717,000

Following is a reconciliation for Level 3 liabilities measured on a recurring basis:
December 31, 2014										37,392,000
Gain from change in fair value of derivative liability - warrants										618,000
Gain from change in fair value of derivative liability - Series C & D preferred stock and Debentures										289,000
Loss from change in fair value of hybrid financial instruments										(4,173,000	)
Gain on extinguishment of debt										4,247,000
Conversion of debentures to common stock										793,000
December 31, 2013										39,166,000

December 31, 2013										39,166,000
Gain from change in fair value of derivative liability - warrants										3,067,000
Gain from change in fair value of derivative liability - Series C & D preferred stock and Debentures										1,841,000
Gain from change in fair value of hybrid financial instruments										21,809,000
Conversion of debentures to common stock										4,243,000
December 31, 2012										70,126,000

~~Derivative~~The ~~Financial Instruments – We do not use derivative financial instruments to hedge exposures to cash flow risks or market risks that may affect the~~ fair ~~values~~value ofmeasurements our financial instruments. However, certain financial instruments, such as warrants and the embedded conversion features of our convertible preferred stock and convertible debentures, which are indexed to our common stock, are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within our control. In such instances, net-cash settlement is assumed for ~~financial accounting and reporting purposes, even when~~ the ~~terms~~Company’s assets ofmeasured ~~the underlying contracts do not provide for net-cash settlement. Derivative financial instruments are initially recorded, and continuously carried,~~ at fair value. ~~Determining~~on ~~the~~a ~~fair~~nonrecurring ~~value~~basis ofas ~~these complex derivative financial instruments involves judgment and the use~~ of ~~certain relevant assumptions including~~December 31, ~~but~~2014 ~~not limited to, interest rate risk, credit risk,~~ and ~~equivalent~~2013 ~~volatility and conversion/redemption privileges. The use of different assumptions could have a material effect on the estimated fair value amounts.~~follows:

For our convertible debentures, we have elected not to separately account for the embedded conversion feature as a derivative instrument but to account for the entire hybrid instrument at fair value in accordance with FASB ASC 815, Derivatives and Hedging. For our convertible preferred stock, the underlying instruments are carried at amortized cost and the embedded conversion feature is accounted for separately at fair value in accordance with FASB ASC 815-40-05 and FASB ASC 815-40-15.

	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
December 31, 2014:
Goodwill	$	—	$	—	$	—	$	—	$	(3,418,000	)

December 31, 2013:
Goodwill	$	3,418,000	$	—	$	—	$	3,418,000	$	—

Derivative Financial Instruments – We do not use derivative financial instruments to hedge exposures to cash flow risks or market risks that may affect the fair values of our financial instruments. However, certain financial instruments, such as warrants and the embedded conversion features of our convertible preferred stock and convertible debentures, which are indexed to our common stock, are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within ~~Page~~our 30control. In such instances, net-cash settlement is assumed for financial accounting and reporting purposes, even when the terms of the underlying contracts do not provide for net-cash settlement. Derivative financial instruments are initially recorded, and continuously carried, at fair value. Determining the fair value of these complex derivative financial instruments involves judgment and the use of certain relevant assumptions including, but not limited to, interest rate risk, credit risk, and equivalent volatility and conversion/redemption privileges. The use of different assumptions could have a material effect on the estimated fair value amounts.

~~Financial~~For ~~Instruments~~our ~~and~~convertible ~~Concentration~~debentures, ofwe ~~Credit~~have elected ~~Risk~~not –to Weseparately ~~believe~~account for the ~~carrying~~embedded ~~values~~conversion offeature ~~our~~as ~~financial~~a ~~instruments~~derivative ~~consisting~~instrument ofbut ~~cash~~to ~~and~~account ~~cash~~for ~~equivalents,~~the ~~accounts~~entire hybrid ~~receivable,~~instrument ~~accounts~~at ~~payable,~~fair ~~accrued~~value ~~expenses,~~in ~~derivative~~accordance ~~financial~~with ~~instruments~~FASB ASC 815, ~~other~~Derivatives ~~current~~and ~~liabilities,~~Hedging. For our convertible preferred stock, ~~and~~the ~~convertible~~underlying ~~debenture~~instruments ~~financings~~are ~~approximate~~carried ~~their~~at ~~fair~~amortized ~~values~~cost ~~due~~and tothe ~~their~~embedded ~~short-term~~conversion ~~nature,~~feature oris ~~because~~accounted ~~they~~for ~~are carried~~ separately at fair value in accordance with FASB ASC 815-40-05 and FASB ASC 815-40-15.

~~Our~~Page cash balances in the United States periodically exceed federally insured limits. We have not experienced any losses in such accounts. The cash balances maintained by our wholly owned subsidiary, NeoMedia Europe GmbH, are also maintained in financial institutions that provide deposit guarantees and are governed by local public law. Our policies limit the concentration of accounts receivable credit exposure by requiring the majority of customers to prepay their renewal licenses prior to initiating services.33

Financial Instruments and Concentration ~~Accounts~~of ~~Receivable~~Credit Risk – We ~~report~~believe ~~accounts~~the ~~receivable~~carrying atvalues ~~net~~of ~~realizable~~our ~~value.~~financial ~~Our~~instruments ~~terms~~consisting of ~~sale~~cash ~~provide~~and ~~the~~cash ~~basis for when~~ equivalents, accounts ~~become~~receivable, ~~delinquent or past due. We provide an allowance for doubtful~~ accounts ~~equal~~payable, toaccrued ~~the~~expenses, ~~estimated~~derivative ~~uncollectible~~financial ~~amounts~~instruments, ~~based~~other oncurrent ~~historical~~liabilities, ~~collection~~convertible preferred ~~experience~~stock, and aconvertible ~~review~~debenture offinancings ~~the~~approximate ~~current~~their ~~status~~fair ofvalues ~~accounts~~due ~~receivable. We do not require collateral and~~ to ~~the~~their ~~extent~~short-term ~~credit is granted to our customers~~nature, ~~all~~or ~~open~~because they ~~accounts receivable beyond 90 days~~ are ~~evaluated~~carried ~~for~~at ~~recovery.~~fair value.

~~Goodwill –~~ Our ~~goodwill~~cash ~~represents~~balances ~~the~~in ~~excess of~~ the ~~purchase~~United ~~price~~States periodically ~~paid~~exceed ~~for~~federally ~~NeoMedia~~insured ~~Europe~~limits. ~~GmbH~~We ~~over~~have ~~the~~not ~~fair~~experienced ~~value~~any oflosses ~~the~~in ~~identifiable~~such ~~net assets and liabilities acquired, based on an independent appraisal of the assets and liabilities acquired~~accounts. ~~Goodwill~~The iscash ~~not~~balances ~~amortized~~maintained by ~~but~~our iswholly ~~tested~~owned ~~annually for impairment~~subsidiary, ~~and~~NeoMedia ~~between~~Europe ~~annual~~GmbH, ~~tests~~are ifalso anmaintained ~~event~~in ~~occurs~~financial orinstitutions ~~circumstances change~~ that ~~would~~provide ~~more~~deposit ~~likely~~guarantees and ~~than~~are ~~not~~governed ~~reduce~~by ~~the~~local ~~fair~~public ~~value of a reporting unit below its carrying value~~law. ~~Goodwill~~ isOur ~~tested~~policies ~~for~~limit ~~impairment by comparing~~ the ~~carrying~~concentration ~~amount~~ of ~~the~~accounts ~~asset~~receivable tocredit ~~its~~exposure ~~fair~~by ~~value, which is estimated through~~ requiring the ~~use~~majority of acustomers ~~discounted~~to ~~cash~~prepay ~~flows~~their ~~model.~~renewal Iflicenses ~~the~~prior ~~carrying~~to ~~amount~~initiating ~~exceeds fair value, an impairment loss is recognized for the difference~~services. ~~As of December 31, 2013, we determined there were no impairments of our goodwill.~~

~~Intangible~~Accounts ~~Assets~~Receivable – We ~~Intangible~~report ~~assets~~accounts ~~consist~~receivable ofat ~~patents,~~net ~~customer~~realizable ~~contracts, copyrighted material, acquired software products, and brand names~~value. ~~Intangible~~Our ~~assets~~terms ~~acquired as part~~ of asale ~~business~~provide ~~combination are recognized apart from goodwill if~~ the ~~intangible~~basis ~~asset~~for ~~arises~~when ~~from~~accounts ~~contractual~~become delinquent or ~~other~~past ~~legal~~due. ~~rights~~We orprovide ~~the~~an ~~asset~~allowance isfor ~~capable~~doubtful ofaccounts ~~being~~equal ~~separated~~to ~~from~~ the ~~acquired~~estimated ~~enterprise.~~uncollectible ~~Intangible~~amounts, ~~assets~~based ~~are~~on ~~reviewed~~historical ~~for~~collection experience ~~impairment~~and bya ~~comparing~~review ~~the carrying amount~~ of the ~~intangible~~current ~~asset~~status toof ~~its~~accounts ~~fair value~~receivable. We Ifdo ~~the~~not ~~carrying~~require ~~amount~~collateral ~~exceeds~~and ~~fair~~to ~~value,~~the anextent ~~impairment loss~~ credit is ~~recognized~~granted ~~for~~to ~~the~~our ~~difference. Intangible assets are amortized~~customers, ~~using~~all ~~the~~open ~~straight-line~~accounts ~~method,~~receivable ~~over~~beyond ~~the~~90 ~~estimated~~days ~~period~~are ofevaluated ~~benefit~~for ~~as noted below:~~recovery.

	Capitalized patents	5 - 17 years
	Customer contracts	5 years
	Copyrighted materials	5 years
	Acquired software products	7 years
	Brand names	10 years

Goodwill – Our goodwill represents the excess of the purchase price paid for NeoMedia Europe GmbH over the fair value of the identifiable net assets and liabilities acquired, based on an independent appraisal of the assets and liabilities acquired. Goodwill is not amortized but is tested annually for impairment, and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Goodwill is tested for impairment by comparing the carrying amount of the asset to its fair value, which is estimated through the use of a discounted cash flows model. If the carrying amount exceeds fair value, an impairment loss is recognized for the difference. We performed the two step goodwill impairment test at December 31, 2014 and determined there was impairment of our goodwill as reflected on our balance sheet ($3,418,000). Our assessment conducted as of December 31, 2014 concluded that on a qualitative and quantitative basis there is impairment of goodwill on our balance sheet.

~~Evaluation~~Intangible ~~of Long-Lived~~ Assets – Intangible Weassets ~~periodically~~consist ~~perform impairment tests on each~~ of ~~our long-lived assets~~patents, ~~including capitalized patent costs,~~ customer contracts, copyrighted ~~materials~~material, ~~brand~~acquired ~~names~~software products, and ~~capitalized~~brand ~~and~~names. ~~purchased~~Intangible assets ~~software~~acquired ~~costs,~~as ~~whenever~~part ~~events~~of ora ~~changes~~business incombination ~~circumstances~~are ~~indicate~~recognized ~~that~~apart ~~the~~from ~~carrying~~goodwill ~~amount~~if ~~may~~the ~~not~~intangible beasset ~~recoverable.~~arises ~~Long-lived~~from ~~assets~~contractual or ~~are~~other ~~testing~~legal ~~for~~rights ~~impairment~~or ~~by first comparing~~ the ~~estimated~~asset ~~future~~is ~~undiscounted~~capable ~~cash~~of ~~flows~~being separated from athe ~~particular~~acquired ~~asset~~enterprise. orIntangible ~~asset~~assets ~~group~~are toreviewed ~~the~~for impairment ~~carrying~~by ~~value. If~~comparing the ~~expected~~carrying ~~undiscounted~~amount ~~cash~~of ~~flows are greater than~~ the ~~carrying~~intangible ~~value,~~asset noto ~~impairment~~its isfair ~~recognized~~value. If the ~~expected~~carrying ~~undiscounted~~amount ~~cash~~exceeds ~~flows~~fair ~~are less than the carrying~~ value, ~~then~~ an impairment ~~charge~~loss is ~~recorded~~recognized for the difference ~~between the carrying value and the expected discounted cash flows~~. ~~The~~Intangible ~~assumptions~~assets ~~used in developing expected cash flow estimates~~ are ~~similar to those used in developing other information used by us for budgeting and other forecasting purposes. In instances where a range of potential future cash flows is possible~~amortized, weusing ~~use~~the ~~a probability~~straight-~~weighted~~line ~~approach~~method, toover ~~weigh~~ the estimated ~~likelihood~~period of ~~those~~benefit ~~possible~~as ~~outcomes.~~noted below:

As of December 31, 2013 and 2012, we do not believe any of our long-lived assets are impaired.

Capitalized patents			5 - 17 years
Acquired software products			7 years

Evaluation of Long-Lived Assets – We periodically perform impairment tests on each of our long-lived assets, including capitalized patent costs, customer contracts, copyrighted materials, brand names, and capitalized and purchased software costs, whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Long-lived assets are testing for impairment by first comparing the estimated future undiscounted cash flows from a particular asset or asset group to the carrying value. If the expected undiscounted cash ~~Page~~flows 31are greater than the carrying value, no impairment is recognized. If the expected undiscounted cash flows are less than the carrying value, then an impairment charge is recorded for the difference between the carrying value and the expected discounted cash flows. The assumptions used in developing expected cash flow estimates are similar to those used in developing other information used by us for budgeting and other forecasting purposes. In instances where a range of potential future cash flows is possible, we use a probability-weighted approach to weigh the likelihood of those possible outcomes.

~~Property~~As ~~and~~of ~~Equipment~~December ~~– Property and equipment~~31, ~~including software~~2014, ~~are~~we ~~stated~~do atnot ~~cost~~believe any ~~less~~of ~~accumulated~~our ~~depreciation. Depreciation is recorded on a straight~~long-~~line~~lived ~~basis over the estimated useful lives of the~~ assets asare ~~noted below:~~impaired.

	Furniture and fixtures		3 - 7 years
	Equipment		2 - 5 years

Property and Equipment – Property and equipment, including software, are stated at cost less accumulated depreciation. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets as noted below:

~~Research~~Page and Development – Costs associated with the planning and design phase of software development, including coding and testing activities, and related overhead, necessary to establish technological feasibility of our internally-developed software products, are classified as research and development and are expensed as incurred.34

Stock-Based Compensation – We record the grant date fair value of stock-based compensation awards as an expense using a straight-line attribution method over the vesting period of the related stock options. In order to determine the fair value of the stock options on the date of grant, we use the Black-Scholes-Merton option-pricing model. Inherent in this model are assumptions related to expected stock-price volatility, forfeiture and option life, risk-free interest rate and dividend yield. Although the risk-free interest rates and dividend yield are less subjective assumptions based on factual data derived from public sources, the expected stock-price volatility, forfeiture rate and option life assumptions require a greater level of judgment. We use an expected stock-price volatility assumption that is based on historical volatilities of our common stock and estimate the forfeiture rate and option life based on historical data related to prior option grants.

Furniture and fixtures			3 - 7 years
Equipment			2 - 5 years

WeResearch ~~account~~and ~~for~~Development – ~~modifications~~Costs ofassociated ~~the~~with ~~terms of existing option grants as exchanges of~~ the ~~existing~~planning ~~equity~~and ~~instruments~~design ~~for~~phase ~~new instruments. The fair value~~ of ~~the~~software ~~modified~~development, ~~option~~including atcoding ~~the~~and ~~grant~~testing ~~date~~activities, isand related ~~compared~~overhead, ~~with~~necessary ~~the~~to ~~value~~establish attechnological ~~that~~feasibility ~~date~~ of ~~the~~our ~~original~~internally-developed ~~option~~software ~~immediately~~products, ~~before its terms~~ are ~~modified. Any~~classified as ~~excess~~research ~~fair~~and ~~value~~development ofand ~~the~~are ~~modified~~expensed ~~option over the original option is recognized~~ as ~~additional compensation expense~~incurred.

~~Income~~Stock-Based ~~Taxes~~Compensation – We ~~Deferred~~no ~~tax~~longer ~~liabilities~~offer ~~and~~stock ~~assets~~based ~~reflect~~compensation ~~the~~as ~~difference~~part ~~between~~of ~~the~~our ~~financial~~compensation ~~statement~~packages for employees, contractors and/or ~~tax~~Directors. ~~basis~~On October 6, 2014, the Board of ~~assets~~Directors elected to terminate all existing Stock Option plans due to the significant cost to maintain and ~~liabilities~~report ~~using~~on ~~enacted~~the ~~tax~~plans ~~rates~~does innot ~~effect~~achieve ~~for~~the goals intended. Thus, the ~~year~~2002, in2005 ~~which~~Stock Option Plans and the ~~difference~~2003 isStock ~~expected~~Incentive Plan towere ~~reverse~~effectively terminated with no accounting requirements since no options or shares were issued. ~~Deferred~~The ~~tax~~2003 ~~assets~~Stock ~~are~~Option Plan ~~reduced~~with by397,613 aoptions ~~valuation~~issued ~~allowance~~was ~~when~~effectively itterminated iswith ~~more~~no ~~likely~~accounting ~~than~~requirements ~~not~~as ~~that~~the ~~some~~term ~~portion~~of the options have expired or ~~all~~the holders of the ~~deferred~~options ~~tax~~no ~~assets~~longer ~~will~~meet ~~not~~the berequirements ~~realized~~of holding the options due to termination of employment etc. WeThe 2011 ~~have~~Stock ~~recorded~~Plan ~~full~~was ~~valuation~~effectively ~~allowance~~terminated assubject to the holder’s rights to the options remaining open provided they meet the requirements of ~~December~~the 31options. Per discussion with eligible holders, ~~2013~~each holder (current board members or officers and ~~2012~~one previous officer of the corporation) have waived their rights to exercise of the options.

Income Taxes – Deferred ~~Recent~~tax ~~Accounting~~liabilities ~~Pronouncements~~and assets reflect the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the difference is expected to reverse. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. We have recorded full valuation allowance as of December 31, 2014 and 2013.

InRecent ~~February 2013, the Financial~~ Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income. The update improves the reporting of reclassifications out of accumulated other comprehensive income for certain transactions and is applied prospectively for periods beginning January 1, 2013. We do not anticipate that the accounting pronouncement will have a material impact on our consolidated financial statements in future periods.Pronouncements

InGoing ~~March~~Concern- ~~2013~~On August 27, ~~the~~2014, The Financial Accounting Standards Board (FASB) issued ~~ASU~~Accounting Standards Update No. ~~2013~~2014-052015, ~~Liabilities~~Presentation of Financial Statements-Going Concern (~~Topic~~Subtopic ~~830~~205-40): ~~Parent~~Disclosure of Uncertainties about an Entity’s ~~Accounting~~Ability ~~for~~to ~~Cumulative~~Continue ~~Translation~~as ~~Adjustment~~a ~~upon~~Going Concern. ~~Derecognition~~The ofUpdate ~~Certain~~was ~~Subsidiaries~~intended orto ~~Groups~~define ofmanagement’s ~~Assets~~responsibility ~~within~~to evaluate whether there is substantial doubt about an organizations ability to continue as a ~~Foreign~~going ~~Entity~~concern orand to provide related footnote disclosures. The main provisions of the Update state that in connection with preparing financial statements for each annual and interim reporting period, an ~~Investment~~entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a ~~Foreign~~going ~~Entity~~concern within one year after the date that the financial statements are issued. Management’s ~~The~~evaluation ~~ASU~~should isbe ~~effective~~based ~~beginning~~on ~~after~~relevant ~~December~~conditions ~~15,~~and ~~2013~~events that are known and ~~requires~~reasonably knowable at the ~~release~~date that ofthe ~~any~~financial ~~cumulative~~statements ~~translation~~are ~~adjustment~~issued. ~~into~~Substantial ~~net~~doubt ~~income~~about ~~upon~~an ~~derecognition~~entity’s ofability ~~certain~~to ~~subsidiaries~~continue oras ~~groups~~a ofgoing ~~assets~~concern ~~within~~exists when arelevant ~~foreign~~conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. When management identifies conditions or ofevents anthat ~~investment~~raise insubstantial ~~foreign~~doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. This Update is effective for annual reporting periods ending after December 15, 2016. The Company will adopt this guidance for the year ended December 31, 2016. We do not ~~anticipate~~believe ~~that~~ the ~~accounting~~adoption ~~pronouncement~~of this standard will ~~have~~result ain material ~~impact~~change disclosures on our ~~consolidated~~ability ~~financial~~to ~~statements~~continue inas ~~future~~a ~~periods~~going concern.

Revenue Recognition - On InMay ~~July~~28, ~~2013~~2014, the ~~FASB~~Financial ~~issued~~Accounting ~~ASU~~Standards ~~No.~~Board ~~2013-11,~~(FASB) ~~Income~~issued ~~Taxes~~Accounting ~~(Topic~~Standards ~~740~~Update (ASU): ~~Presentation~~2014-09, ofRevenue anfrom ~~Unrecognized~~Contracts with ~~Tax~~Customers. ~~Benefit~~The ~~When~~standard awill ~~Net~~eliminate ~~Operating~~the ~~Loss~~transaction- ~~Carryforward,~~and aindustry-specific ~~Similar~~revenue ~~Tax~~recognition ~~Loss,~~guidance orunder acurrent ~~Tax~~U.S. GAAP ~~Credit~~and ~~Carryforward~~replace ~~Exists.~~it ~~The~~with ~~ASU~~a isprinciple-based ~~effective~~approach for ~~periods~~determining ~~beginning~~revenue ~~after~~recognition. ~~December~~This ~~15,~~standard ~~2013~~has ~~and standardizes~~ the ~~presentation~~potential ofto anaffect every ~~unrecognized~~entity’s ~~tax~~day-to-day ~~benefit~~accounting ~~when~~and, ~~a net operating loss carryforward~~possibly, athe ~~similar~~way ~~tax~~business ~~loss,~~is orexecuted athrough ~~tax~~contracts ~~credit~~with ~~carryforward exists~~customers. We do have not ~~anticipate~~yet ~~that~~evaluated the ~~accounting~~impact ~~pronouncement~~the adoption this standard will have ain ~~material~~our ~~impact~~results onof ~~our~~operations ~~consolidated~~when ~~financial~~we ~~statements~~adopt it in ~~future~~January ~~periods~~of 2017.

Page 32 35

~~From~~Note ~~time~~3 to– ~~time,~~Capital various other new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of any other recently issued standards that are not yet effective will not have a material impact on our results of operations and financial position.Stock

~~Note~~Common 3Stock – ~~Capital~~ ~~Stock~~Holders of common stock are entitled to one vote for each share held of record on each matter submitted to a vote of shareholders. Holders of our common stock do not have a cumulative voting right. Upon a liquidation, dissolution, or winding up event, holders of common stock would be entitled to share ratably in all assets remaining after payment of liabilities and payment of accrued dividends and liquidation preferences on the preferred stock, if any. Shares of common stock that have been repurchased are held as treasury shares and used for general corporate purposes including, but not limited to, satisfying obligations under our employee benefit plans. Treasury stock is recorded at cost.

~~Common~~Preferred Stock – ~~Holders of common stock~~ We are ~~entitled~~authorized to ~~one~~issue ~~vote~~25 ~~for~~million ~~each~~shares ~~share held~~ of ~~record~~preferred onstock ~~each~~with ~~matter submitted to~~ a ~~vote~~par ofvalue ~~shareholders~~$0.01 ~~Holders~~per ofshare. ~~our~~Preferred ~~common~~ stock domay ~~not~~be ~~have~~issued ain the ~~cumulative~~future ~~voting~~in ~~right. Upon~~connection ~~a liquidation~~with acquisitions, ~~dissolution~~financings, or ~~winding~~other ~~up event~~matters, ~~holders~~as our Board of ~~common~~Directors deems appropriate. The issuance of preferred stock ~~would~~could behave ~~entitled~~the toeffect ~~share~~of ~~ratably~~delaying, indeferring, ~~all~~or ~~assets~~preventing ~~remaining~~a ~~after~~change ~~payment~~in control of ~~liabilities~~our ~~and~~company ~~payment~~without offurther action ~~accrued~~by ~~dividends~~our shareholders, and ~~liquidation~~may ~~preferences~~adversely onaffect the ~~preferred~~voting ~~stock,~~and ifother ~~any.~~rights ~~Shares~~ of ~~common~~the ~~stock~~holders ~~that~~of ~~have~~our ~~been~~common ~~repurchased~~stock. ~~are~~The ~~held~~issuance of aspreferred ~~treasury~~stock ~~shares~~with voting and ~~used~~conversion ~~for~~rights ~~general~~may ~~corporate~~also ~~purposes~~adversely ~~including,~~affect ~~but~~the ~~not~~voting ~~limited~~power ~~to,~~of ~~satisfying~~the ~~obligations~~holders ~~under~~of our ~~employee~~common ~~benefit~~stock, including ~~plans.~~the ~~Treasury~~loss ~~stock~~of isvoting ~~recorded~~control atto ~~cost~~others.

Series A Preferred Stock – In WeDecember ~~are~~1999, ~~authorized~~200,000 ~~to issue 25 million~~ shares of ~~preferred~~Series ~~stock~~A Preferred Stock with a par value of $0.01 per share. ~~Preferred~~were ~~stock~~authorized ~~may~~for ~~be issued in the future in connection with acquisitions, financings, or other matters, as our Board of Directors deems appropriate. The~~ issuance of preferred stock could have the effect of delaying, deferring, or preventing a change in control of our company without further action by our shareholders, and may adversely affect the voting and other rights of the holders of our common stock. The ~~issuance~~Series ofA ~~preferred~~Preferred ~~stock~~Stock ~~with~~has ~~voting and conversion rights may also adversely affect~~ the ~~voting~~following ~~power of the holders of our common stock, including the loss of voting control to others.~~rights:

· The right to receive mandatory cash dividends equal to the greater of $0.001 per share or 100 times the amount of all dividends (cash or non-cash, other than dividends of shares of common stock) paid to holders of the common stock, which dividend is payable 30 days after the conclusion of each calendar quarter and immediately following the declaration of a dividend on common stock; · One hundred votes per share of Series A Preferred ~~Stock~~on –each Inmatter ~~December~~submitted ~~1999,~~to ~~200~~a vote of our shareholders; · The right to elect two directors at any meeting at which directors are to be elected,~~000~~ ~~shares~~and to fill any vacancy on our Board of Directors previously filled by a director appointed by the Series A Preferred ~~Stock~~holders; ~~with~~· aThe ~~par~~right ~~value~~to receive an amount, in preference to the holders of ~~$0.01~~common stock, equal to the amount per share ~~were~~payable ~~authorized~~to ~~for~~holders ~~issuance.~~of common stock, plus all accrued and unpaid dividends, and following payment of 1/100th of the liquidation preference to the holders of each share of common stock, an additional amount per share equal to 100 times the per share amount paid to the holders of common stock; · The right to exchange each share of Series A Preferred ~~Stock~~for ~~has~~100 times the ~~following~~consideration received per share of common stock in connection with any merger, consolidation, combination or other transaction in which shares of common stock are exchanged for or converted into cash, securities or other property; and · The right to be redeemed in accordance with our shareholder rights: plan.

If accrued mandatory dividends associated with Series A Preferred stock are unpaid, we may not declare or pay dividends or distributions on, or redeem, repurchase or reacquire, shares of any class or series of junior or parity stock.

IfThe ~~accrued mandatory dividends associated with~~ Series A Preferred ~~stock~~Stock ~~are~~was ~~unpaid,~~created in weconnection ~~may~~with ~~not~~our ~~declare~~shareholders orrights ~~pay~~plan ~~dividends~~and oras ~~distributions~~of ~~on,~~December ~~or redeem~~31, ~~repurchase~~2014 orand ~~reacquire~~2013, ~~shares~~there ofwere ~~any~~no ~~class~~issued or ~~series~~outstanding shares of ~~junior~~Series orA ~~parity~~Preferred ~~stock~~Stock.

~~The~~ Series A Convertible Preferred Stock – ~~was~~In ~~created~~June in2001, ~~connection~~47,511 ~~with~~shares ~~our~~of ~~shareholders~~Series ~~rights~~A ~~plan~~Convertible ~~and~~Preferred asStock ofwith ~~December~~a ~~31,~~$0.01 ~~2013~~par ~~and~~value ~~2012,~~per ~~there~~share were noauthorized for ~~issued~~issuance. orThe ~~outstanding shares of~~ Series A Convertible Preferred Stock. has the following rights:

· Series A Convertible Preferred Stock –is Inconvertible ~~June~~into ~~2001~~shares of common stock at a one-to-one ratio, 47which was proportionally adjusted to a one-to-one hundred ratio pursuant to a reverse stock split in 2011,~~511~~ ~~shares~~and which is subject to proportional adjustment in the event of ~~Series~~further Astock ~~Convertible~~splits ~~Preferred~~or ~~Stock~~combinations, ~~with~~and adividends $0or distributions of shares of common stock.01 ~~par~~At ~~value~~the ~~per~~option ~~share~~of ~~were~~the ~~authorized~~holder, ~~for~~shares ~~issuance.~~are ~~The~~subject ~~Series~~to Aautomatic ~~Convertible~~conversion ~~Preferred~~as ~~Stock~~determined ~~has~~in each agreement relating to the ~~following~~purchase ~~rights:~~of shares of Series A Convertible Preferred Stock;

Page 33 36

· Series A Convertible Preferred Stock is convertible into shares of common stock at a one-to-one ratio, which was proportionally adjusted to a one-to-one hundred ratio pursuant to a reverse stock split in 2011, and which is subject to proportional adjustment in the event of further stock splits or combinations, and dividends or distributions of shares of common stock. At the option of the holder, shares are subject to automatic conversion as determined in each agreement relating to the purchase of shares of Series A Convertible Preferred Stock; · Each share of Series A Convertible Preferred Stock is entitled to receive a liquidation preference equal to the original purchase price of such share in the event of liquidation, dissolution, or winding up; · Upon merger or consolidation, or the sale, lease or other conveyance of all or substantially all of our assets, shares of Series A Convertible Preferred are automatically convertible into the number of shares of stock or other securities or property (including cash) to which the common stock into which it is convertible would have been entitled; and · Shares of Series A Convertible Preferred Stock are entitled to one vote per share of such stock, and vote together with holders of common stock.

As of December 31, ~~2013~~2014 and ~~2012~~2013, there were no shares of Series A Convertible Preferred Stock issued or outstanding.

Series B Convertible Redeemable Preferred Stock – In January 2002, 100,000 shares of Series B 12% Convertible Redeemable Preferred Stock with a par value of $0.01 per share were authorized for issuance. The Series B Convertible Redeemable Preferred Stock has the following rights:

	·	Series B Preferred shares accrue dividends at a rate of 12% per annum, or $1.20 per share, between the date of issuance and the first anniversary of issuance;
	·	Series B Preferred is redeemable to the maximum extent permitted by law (based on funds legally available for redemption) at a price per share of $15.00, plus accrued dividends (a total of $16.20 per share) on the first anniversary of issuance;
	·	Series B Preferred receive proceeds of $12.00 per share upon our liquidation, dissolution or winding up;
	·	To the extent not redeemed on the first anniversary of issuance, Series B Preferred is automatically convertible into the then existing general class of common stock on the first anniversary of issuance at a price equal to $16.20 divided by the greater of $20.00 or the lowest publicly-sold share price during the 90 day period preceding the conversion date, but in no event more than 19.9% of our outstanding capital stock as of the date immediately prior to conversion;
	·	Upon merger or consolidation, or the sale, lease or other conveyance of all or substantially all of our assets, shares of Series B Preferred are automatically convertible into the number of shares of stock or other securities or property (including cash) to which the common stock into which it is convertible would have been entitled; and
	·	Shares of Series B Preferred are entitled to one vote per share and vote with common stock, except where the proposed action would adversely affect the Series B Preferred or where the non-waivable provisions of applicable law mandate that the Series B Preferred vote separately, in which case Series B Preferred vote separately as a class, with one vote per share.

As of December 31, ~~2013~~2014 and ~~2012~~2013, there were no shares of Series B Convertible Redeemable Preferred Stock issued or outstanding.

Series C Convertible Preferred Stock – In February 2006, 27,000 shares of Series C Convertible Preferred Stock with a par value of $0.01 per share were authorized for issuance. The Series C Convertible Preferred Stock has the following rights:

· Series C preferred shares are entitled to dividends at a rate of 8% per annum, if, as and when declared by the Board of Directors;. · Series C preferred shares receive proceeds of $1,000 per share upon our liquidation, dissolution or winding up; · Each share of Series C preferred stock is convertible, at the option of the holder, into shares of our common stock at the lesser of (i) $50.00 or (ii) 97% of the lowest closing bid price of our common stock for the 125 trading days immediately preceding the date of conversion; and · Series C preferred shares have voting rights on an as-converted basis with the common stock.

AsPage of December 31, 2013 and 2012, there were 4,816 shares and 4,840 shares of Series C Convertible Preferred Stock issued and outstanding, respectively. The holders of our outstanding shares are limited by the certificate of designation and by the contractual provisions of the related Securities Purchase Agreements under which the Series C Convertible Preferred Stock was issued and other related transaction documents from beneficial control of more than 9.99% of our voting securities. Therefore, unless the holder waives this limitation upon 61 days’ notice to us, the holders may not exercise all the voting rights otherwise described in the certificate of designation of these securities (see Note 4 – Financing).37

As of December 31, 2014 and 2013, there were 4,332 shares and 4,816 shares of Series DC Convertible Preferred Stock ~~– In~~issued ~~January~~and ~~2010~~outstanding, ~~25,000~~respectively. The holders of our outstanding shares are limited by the certificate of designation and by the contractual provisions of the related Securities Purchase Agreements under which the Series DC Convertible Preferred Stock ~~with~~was aissued ~~par~~and ~~value~~other related transaction documents from beneficial control of ~~$0.01~~more ~~per~~than ~~share~~9.99% ~~was~~of ~~authorized~~our ~~for~~voting ~~issuance~~securities. ~~The~~Therefore, ~~Series~~unless Dthe ~~Convertible~~holder ~~Preferred~~waives ~~Stock~~this ~~has~~limitation upon 61 days’ notice to us, the ~~following~~holders may not exercise all the voting rights: otherwise described in the certificate of designation of these securities (see Note 4 – Financing).

	·	Series D preferred shares are entitled to dividends at a rate of 8% per annum, if, as and when declared by the Board of Directors;
	·	Series D preferred shares receive proceeds of $100 per share upon our liquidation, dissolution or winding up;

Series D Convertible Preferred Stock – In January 2010, 25,000 shares of Series D Convertible Preferred Stock with a par value of $0.01 per share was authorized for issuance. The Series D Convertible Preferred Stock has the following rights:

~~Page~~· 34Series D preferred shares are entitled to dividends at a rate of 8% per annum, if, as and when declared by the Board of Directors.; · Series D preferred shares receive proceeds of $100 per share upon our liquidation, dissolution or winding up; · Each share of Series D preferred stock is convertible, at the option of the holder, into shares of our common stock at the lesser of (i) $2.00 or (ii) 97% of the lowest closing bid price of our common stock for the 125 trading days immediately preceding the date of conversion; and · Series D preferred shares have voting rights on an as-converted basis with the common stock.

	·	Each share of Series D preferred stock is convertible, at the option of the holder, into shares of our common stock at the lesser of (i) $2.00 or (ii) 97% of the lowest closing bid price of our common stock for the 125 trading days immediately preceding the date of conversion; and
	·	Series D preferred shares have voting rights on an as-converted basis with the common stock.

As of December 31, 2014 and 2013, 3,481 shares of Series D preferred stock were issued and outstanding.

Shareholder Rights Plan – AsOn December 10, 1999, our Board of Directors adopted a shareholder rights plan and declared a non-taxable dividend that provides shareholders with the right to acquire one-one hundredth of a share of our Series A Preferred Stock for each outstanding share of our common stock to shareholders of record on December 3120, ~~2013~~1999 and ~~2012~~each share of common stock issued thereafter until a pre-defined hostile takeover date. As further defined in detail within the shareholder rights plan, 3the rights generally will be exercisable only if (1) an Acquiring Person or Adverse Person acquires beneficial ownership equal to or greater than 25% or 15%,~~481~~ ~~shares~~respectively, or (2) commences a tender offer upon consummation of ~~Series~~which Dthe ~~preferred~~Acquiring ~~stock~~Person ~~were~~or ~~issued~~Adverse Person would have beneficial ownership equal to or greater than 25% or 15%, respectively. The shareholder rights plan was designed to enable all shareholders not engaged in a hostile takeover attempt to receive fair and ~~outstanding~~equal treatment in any proposed takeover and to guard against partial or two-tiered tender offers, open market accumulations, and other hostile tactics to gain control of us. This shareholder rights plan may have the effect of rendering more difficult, delaying, discouraging, preventing, or rendering more costly an acquisition or a change in control. The Shareholder Rights Plan was due to expire December 10, 2009; however, it was extended and remains in effect.

~~Shareholder~~In ~~Rights~~addition, ~~Plan~~our –Certificate Onof ~~December~~Incorporation authorizes ~~10, 1999,~~ our Board of Directors ~~adopted~~to adesignate ~~shareholder rights plan~~ and ~~declared~~issue ~~a non-taxable dividend that provides shareholders with the right to acquire one-one hundredth of a share of~~ our ~~Series~~preferred ~~A Preferred Stock for each outstanding share of our common~~ stock ~~to shareholders of record on December 20~~, ~~1999 and each share of common stock issued thereafter until a pre-defined hostile takeover date. As further defined~~ in ~~detail~~one ~~within~~or ~~the~~more ~~shareholder rights plan~~series, the ~~rights~~terms generally will be exercisable only if (1) an Acquiring Person or Adverse Person acquires beneficial ownership equal to or greater than 25% or 15%, respectively, or (2) commences a tender offer upon consummation of which ~~the~~may ~~Acquiring~~be determined ~~Person~~at orthe ~~Adverse~~time ~~Person~~of ~~would~~issuance ~~have~~by ~~beneficial~~our ~~ownership~~Board ~~equal~~of ~~to or greater than 25% or 15%~~Directors, ~~respectively.~~without ~~The~~further ~~shareholder~~action ~~rights~~by ~~plan was designed to enable all~~ shareholders, ~~not engaged in a hostile takeover attempt to receive fair~~ and ~~equal~~may ~~treatment~~include invoting ~~any~~rights, including ~~proposed~~the ~~takeover~~right ~~and~~ to ~~guard~~vote ~~against~~as ~~partial~~a orseries ~~two-tiered~~on ~~tender~~particular ~~offers~~matters, ~~open~~preferences ~~market~~as ~~accumulations, and other hostile tactics~~ to ~~gain~~dividends ~~control~~and ~~of us. This shareholder rights plan may have the effect of rendering more difficult~~liquidation, ~~delaying~~conversion, ~~discouraging~~redemption rights, ~~preventing,~~and orsinking ~~rendering~~fund ~~more costly an acquisition or a change in control~~provisions.

InNote ~~addition,~~4 ~~our~~– ~~Certificate~~Financing of Incorporation authorizes our Board of Directors to designate and issue our preferred stock, in one or more series, the terms of which may be determined at the time of issuance by our Board of Directors, without further action by shareholders, and may include voting rights, including the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion, redemption rights, and sinking fund provisions.

At December 31, 2014, financial instruments ~~Note~~arising 4from –our ~~Financing~~financing transactions with YA Global Investments, L.P. (“YA Global”), an accredited investor, included shares of our Series C preferred stock issued in February 2006, Series D preferred stock issued in January 2010, a series of six consolidated secured convertible debentures (the “Consolidated Debentures”) issued July 1, 2013 and various warrants to purchase shares of our common stock. All of our assets are pledged to secure our obligations under the debt securities. At various times, YA Global has assigned or distributed portions of its holdings of these securities to other holders, including persons who are officers of YA Global and its related entities, as well as to other holders who are investors in YA Global’s funds.

Secured AtDebentures ~~December~~– ~~31,~~We ~~2013,~~had ~~financial~~originally ~~instruments~~entered ~~arising~~into ~~from our~~ financing transactions with YA Global ~~Investments~~, ~~L.P.~~which ~~(“YA Global”), an accredited investor,~~ included ~~shares~~a series of ~~our~~twenty-seven secured ~~Series~~convertible Cdebentures ~~preferred stock~~ issued inbetween ~~February~~August 2006, ~~Series~~and DJuly ~~preferred~~2012. ~~stock~~Effective ~~issued~~July in1, ~~January 2010~~2013, athe ~~series~~terms of ~~six~~the ~~consolidated~~debentures ~~secured~~held by ~~convertible~~YA ~~debentures~~Global ~~(the~~were ~~“Consolidated~~modified ~~Debentures”)~~to ~~issued~~consolidate ~~July~~the 1,principal ~~2013~~ and ~~various~~interest ~~warrants~~amounts tooutstanding ~~purchase~~under ~~shares~~all of ~~our~~the ~~common~~outstanding ~~stock.~~secured ~~All~~convertible debentures ofpreviously ~~our~~issued ~~assets~~by ~~are~~us ~~pledged~~ to ~~secure~~YA ~~our~~Global, ~~obligations~~such ~~under~~that, upon the ~~debt~~issuance ~~securities.~~of Atthe ~~various~~Consolidated ~~times,~~Debentures YAand ~~Global~~cancellation ~~has~~of the ~~assigned~~prior ordebentures, ~~distributed~~the ~~portions~~amount of ~~its~~outstanding ~~holdings~~debentures ofissued ~~these securities~~ to ~~other~~YA ~~holders,~~Global ~~including~~decreased ~~persons~~from ~~who~~twenty-seven ~~are~~to ~~officers~~six ofdebentures. YAThe maturity ~~Global~~dates ~~and~~of ~~its~~these ~~related~~secured ~~entities,~~convertible asdebentures ~~well~~were asalso toextended ~~other~~from ~~holders~~August ~~who~~1, ~~are~~2014 ~~investors~~to inAugust YA1, ~~Global’s funds~~2015.

Page 35 38

The ~~Secured~~underlying agreements for each of the Consolidated Debentures ~~– We~~are ~~had~~very ~~originally~~similar ~~entered~~in form. The Consolidated Debentures are convertible into ~~financing~~our ~~transactions~~common ~~with~~stock, YAat ~~Global~~the option of the holder, ~~which~~at ~~included~~the lower of a ~~series~~fixed conversion price per share or a percentage of ~~twenty~~the lowest volume-~~seven~~weighted ~~secured~~average ~~convertible~~price ~~debentures~~(“VWAP”) ~~issued~~for ~~between~~a ~~August~~specified ~~2006~~number ~~and~~of ~~July~~days ~~2012~~prior to the conversion (the “look-back period”). ~~Effective~~The ~~July~~conversion 1,is ~~2013~~limited such that the holder cannot exceed 9.99% ownership of the outstanding common stock, unless the ~~terms~~holder waives their right to such limitation. All of the debentures ~~held~~are bysecured YAaccording ~~Global~~to ~~were~~the ~~modified~~terms toof ~~consolidate~~a Security Pledge Agreement dated August 23, 2006, which was entered into in connection with the ~~principal~~first convertible debenture issued to YA Global and ~~interest~~which ~~amounts~~provides ~~outstanding~~YA ~~under~~Global with a security interest in substantially all of ~~the~~our ~~outstanding~~assets. ~~secured~~The ~~convertible~~ debentures ~~previously~~are ~~issued~~also secured by usa Patent toSecurity YAAgreement ~~Global~~dated July 29, ~~such~~2008. ~~that~~On August 13, ~~upon~~2010, ~~the~~our ~~issuance~~wholly ofowned ~~the~~subsidiary, ~~Consolidated~~NeoMedia ~~Debentures~~Europe ~~and~~GmbH, ~~cancellation~~became a guarantor of ~~the~~all ~~prior~~outstanding ~~debentures~~financing transactions between us and YA Global, ~~the~~through ~~amount~~pledges of ~~outstanding~~their ~~debentures~~intellectual ~~issued~~property and other movable assets. As security for our obligations to YA Global, ~~decreased~~all ~~from~~of ~~twenty-seven~~our toPledged ~~six~~Property, ~~debentures~~Patent Collateral and other collateral is affirmed through the several successive Ratification Agreements executed in connection with each of the 2010, 2011 and 2012 financings. The ~~maturity~~2013 ~~dates~~modification and consolidation of ~~these~~the outstanding secured convertible debentures ~~were~~as ~~also~~well ~~extended~~as ~~from~~the ~~August~~execution of 1,an ~~2014~~Amended toand ~~August~~Restated 1Patent Security Agreement in 2013 reaffirmed the Pledged Property, ~~2015~~Patent Collateral and other collateral pledged as security for our obligations to YA Global.

We ~~The~~evaluated ~~underlying agreements for each of~~ the ~~Consolidated~~financing ~~Debentures~~transactions ~~are very similar~~ in ~~form.~~accordance ~~The~~with ~~Consolidated~~ASC ~~Debentures~~815, ~~are~~Derivatives ~~convertible~~and ~~into our common stock~~Hedging, atand ~~the~~determined ~~option~~that of the ~~holder, at the lower of a fixed~~ conversion features ~~price per share or a percentage~~ of the ~~lowest~~Series ~~volume-weighted~~C ~~average~~and ~~price~~Series ~~(“VWAP”)~~D ~~for~~preferred astock ~~specified~~and ~~number of days prior to~~ the ~~conversion~~Consolidated ~~(the~~Debentures ~~“look-back~~were ~~period”).~~not ~~The~~afforded ~~conversion is limited such that~~ the ~~holder~~exemption ~~cannot~~for ~~exceed~~conventional convertible ~~9.99%~~instruments ~~ownership~~due ofto ~~the outstanding common stock, unless the holder waives~~ their ~~right~~variable toconversion ~~such limitation~~rates. ~~All~~The ofcontracts ~~the~~have ~~debentures~~no ~~are~~explicit ~~secured~~limit ~~according~~on to the ~~terms~~number of ashares ~~Security Pledge Agreement dated August 23~~issuable, so ~~2006,~~they ~~which~~did ~~was~~not ~~entered~~meet ~~into in connection with~~ the ~~first~~conditions ~~convertible~~set ~~debenture~~forth ~~issued to YA Global and which provides YA Global with a security interest~~ in ~~substantially~~current ~~all~~accounting ofstandards ~~our~~for ~~assets.~~equity ~~The debentures are also secured by a Patent Security Agreement dated July 29, 2008~~classification. ~~On August 13~~Accordingly, ~~2010,~~either ~~our~~the embedded ~~wholly~~derivative ~~owned subsidiary~~instruments, ~~NeoMedia~~including ~~Europe~~the ~~GmbH,~~conversion ~~became a guarantor of all outstanding financing transactions between us and YA Global~~option, ~~through~~must ~~pledges~~be ofbifurcated ~~their intellectual property~~ and ~~other~~accounted ~~movable assets. As security~~ for ~~our~~as ~~obligations~~derivative toinstrument liabilities ~~YA Global~~or, ~~all~~as ofpermitted ~~our~~by ~~Pledged~~ASC ~~Property~~815-15-25-4, ~~Patent~~Recognition ~~Collateral and other collateral is affirmed through the several successive Ratification Agreements executed in connection with each~~ of ~~the~~Embedded ~~2010~~Derivatives, ~~2011 and 2012 financings. The 2013 modification and consolidation of~~ the ~~outstanding~~instruments ~~secured~~may ~~convertible~~be ~~debentures~~carried ~~as well as the execution of an Amended and Restated Patent Security Agreement~~ in their ~~2013~~entirety ~~reaffirmed~~at ~~the~~fair ~~Pledged Property, Patent Collateral and other collateral pledged as security for our obligations to YA Global~~value.

At ~~We evaluated the financing transactions in accordance with ASC 815~~inception, ~~Derivatives~~we ~~and~~elected ~~Hedging,~~to ~~and~~bifurcate ~~determined that~~ the ~~conversion~~embedded ~~features~~derivatives ofrelated to the Series C and Series D preferred stock, ~~and~~while electing the ~~Consolidated~~fair ~~Debentures~~value ~~were~~option ~~not~~for ~~afforded~~ the ~~exemption~~Consolidated ~~for conventional convertible instruments due to their variable conversion rates~~Debentures. ~~The~~ASC ~~contracts~~825, ~~have~~Financial ~~no explicit limit on the number of shares issuable~~Instruments, soallows ~~they~~us ~~did~~to ~~not~~elect ~~meet~~ the ~~conditions~~fair ~~set~~value option ~~forth in current accounting standards~~ for ~~equity~~recording ~~classification.~~financial ~~Accordingly, either the embedded derivative~~ instruments, ~~including~~when ~~the~~they ~~conversion~~are ~~option,~~initially ~~must~~recognized beor ~~bifurcated~~if ~~and~~there ~~accounted~~is ~~for~~an asevent ~~derivative~~that ~~instrument~~requires ~~liabilities or, as permitted by ASC 815~~re-~~15-25-4, Recognition~~ measurement of ~~Embedded Derivatives,~~ the instruments ~~may~~at befair ~~carried~~value, insuch ~~their~~as ~~entirety~~a atsignificant ~~fair~~modification ~~value~~of the debt.

On AtFebruary ~~inception~~4, 2013, we ~~elected~~entered into a Debenture Extension Agreement with YA Global to ~~bifurcate~~extend the ~~embedded~~maturity ~~derivatives~~dates ~~related~~of the secured convertible debentures to August 1, 2014. Because the ~~Series~~effect Cof the extension did not exceed a significance threshold relative to cash flows prescribed by ASC 470-50, Debt Modifications and ~~Series~~Extinguishments, Dextinguishment ~~preferred~~accounting ~~stock~~was not applicable. On July 1, ~~while~~2013, ~~electing~~in addition to consolidating the secured ~~fair~~debentures ~~value~~into ~~option~~six ~~for~~Consolidated Debentures, the maturity date was extended to August 1, 2015. Four of the Consolidated Debentures are non-interest bearing while the remaining two Consolidated Debentures accrue interest at 9.5% ~~ASC~~as ~~825,~~outlined ~~Financial~~in ~~Instruments~~further detail below. Debentures assigned to other investors by YA Global were also modified effective July 1, ~~allows~~2013 usto extend the maturity date to ~~elect~~August 1, 2015. We evaluated the ~~fair~~impact ~~value~~of ~~option~~the modification on the accounting for ~~recording~~the ~~financial~~Consolidated ~~instruments~~Debentures ~~when~~in ~~they~~accordance with ~~are~~ASC ~~initially~~470-50-40-6 ~~recognized~~through or12 ifto ~~there~~determine iswhether anextinguishment ~~event~~accounting ~~that~~was ~~requires~~appropriate. ~~re-measurement~~Because the effect of the ~~instruments~~extension did atnot ~~fair~~exceed ~~value~~a significance threshold relative to cash flows prescribed by ASC 470-50, ~~such~~Debt asModifications aand ~~significant~~Extinguishments, extinguishment ~~modification~~accounting ofwas ~~the~~not ~~debt~~applicable.

The ~~terms~~following oftable ~~the~~summarizes ~~debentures held by YA Global prior to~~ the ~~consolidation~~significant terms were modified on May 25, 2012 to extend the stated maturity dates to August 1, 2013 and reduce the interest rates to 9.5% per year, with interest being payable on the maturity date in cash or, provided certain equity conditions are satisfied, in shares of ~~our~~each ~~common stock at the applicable conversion price. Because the effect~~ of the ~~modifications~~debentures ~~exceeded a significance threshold relative to cash flows prescribed by ASC 470-50, Debt Modifications and Extinguishments, the modifications of the amounts due under these arrangements were accounted~~ for aswhich ~~extinguishments, whereby~~ the ~~existing~~entire ~~debentures~~hybrid ~~are~~instrument ~~considered~~is torecorded beat ~~retired and new debentures issued. The existing instruments were first adjusted to~~ fair value as of May 25, 2012 using the interest rate and maturity date prior to the amendment. The fair value of the new instruments was then calculated using the modified interest rate and maturity date to determine the fair value of the instrument subsequent to the amendment. The differences in the fair values before and after the amendment were recorded as an extinguishment loss of approximately $27.5 million in the accompanying statements of operations for the year ended December 31, ~~2012.~~2014:

Page 36 39

On February 4, 2013, we entered into a Debenture Extension Agreement with YA Global to extend the maturity dates of the secured convertible debentures to August 1, 2014. Because the effect of the extension did not exceed a significance threshold relative to cash flows prescribed by ASC 470-50, Debt Modifications and Extinguishments, extinguishment accounting was not applicable. On July 1, 2013, in addition to consolidating the secured debentures into six Consolidated Debentures, the maturity date was extended to August 1, 2015. Four of the Consolidated Debentures are non-interest bearing while the remaining two Consolidated Debentures accrue interest at 9.5% as outlined in further detail below. Debentures assigned to other investors by YA Global were also modified effective July 1, 2013 to extend the maturity date to August 1, 2015. We evaluated the impact of the modification on the accounting for the Consolidated Debentures in accordance with ASC 470-50-40-6 through 12 to determine whether extinguishment accounting was appropriate. Because the effect of the extension did not exceed a significance threshold relative to cash flows prescribed by ASC 470-50, Debt Modifications and Extinguishments, extinguishment accounting was not applicable.

								Conversion Price – Lower of Fixed Price or Percentage of VWAP for Look-back period
								Anti- Dilution
Debenture	Face		Interest			Fixed		Adjusted					Look-back
Issuance Year	Amount		Rate			Price		Price		%			Period
	(in thousands)
2006	$	1,962		9.5	%	$	2.00	$	0.000090		90	%	125 Days
2007		542		9.5	%	$	2.00	$	0.000090		90	%	125 Days
2007		272		-		$	2.00	$	0.000095		95	%	125 Days
2008		1,095		9.5	%	$	2.00	$	0.000090		90	%	125 Days
2008		830		-		$	2.00	$	0.000095		95	%	125 Days
2009		7		9.5	%	$	2.00	$	0.000090		90	%	125 Days
2011		785		9.5	%	$	2.00	$	0.000090		90	%	125 Days
2012		762		9.5	%	$	2.00	$	0.000090		90	%	125 Days
2012		210		-		$	2.00	$	0.000095		95	%	125 Days
2013		22,084		9.5	%	$	2.00	$	0.000090		90	%	125 Days
2013		7,127		-		$	2.00	$	0.000095		95	%	125 Days
2014		170		9.5	%	$	2.00	$	0.000090		90	%	125 Days
Total	$	35,845

We bifurcate the compound embedded derivatives ~~The~~related ~~following~~to ~~table~~the ~~summarizes~~Series C and Series D preferred stock and carry these financial instruments as liabilities in the ~~significant~~accompanying balance sheet. Election to carry the instruments at fair value in their entirety is not available since their terms ofhave ~~each~~not been modified. Significant components of the ~~debentures~~compound ~~for~~embedded ~~which~~derivative include (i) the ~~entire~~embedded ~~hybrid~~conversion feature, (ii) down-round anti-dilution protection features and (iii) default, non-delivery and buy-in puts, all of which were combined into one compound instrument that is ~~recorded~~carried at fair value as a derivative liability. Changes in the fair value of ~~December~~the ~~31,~~compound ~~2013:~~derivative liability are recorded within income each period.

							Conversion Price – Lower of Fixed Price or Percentage of VWAP for Look-back period
							Anti- Dilution
Debenture	Face		Interest			Fixed	Adjusted				Look-back
Issuance Year	Amount		Rate			Price	Price		%		Period
	(in thousands)
2006	$	1,962	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2007		567	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2007		272	-		$	2.00	$	0.00019	95	%	125 Days
2008		1,217	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2008		830	-		$	2.00	$	0.00019	95	%	125 Days
2009		134	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2011		852	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2012		762	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2012		210	-		$	2.00	$	0.00019	95	%	125 Days
2013		22,084	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2013		12,127	-		$	2.00	$	0.00019	95	%	125 Days
Total	$	41,017

Conversions and Repayments – Our preferred stock and convertible debentures are convertible into shares of our common stock. Upon conversion of any of the convertible financial instruments in which the compound embedded derivative is bifurcated, the carrying amount of the debt, including any unamortized premium or discount, and the related derivative instrument liability are credited to the capital accounts upon conversion to reflect the stock issued and no gain or loss is recognized. For instruments that are recorded in their entirety at the fair value of the hybrid instrument, the fair value of the hybrid instrument converted is credited to the capital accounts upon conversion to reflect the stock issued and no gain or loss is recognized. Beginning in April 2013, the trading market price of our common stock (and the conversion price) was less than its par value. We are limited to issuing shares of common stock at no less than the par value, and all shares of our common stock issued in those conversions were issued at par value. However, the methodology used to estimate the number of shares of convertible debentures and preferred stock converted during this time are based upon the value received for the shares issued, with the difference between that value and the par value recorded as a deemed dividend.

WeThe ~~bifurcate~~following ~~the~~table ~~compound~~provides ~~embedded~~a ~~derivatives~~summary of ~~related to~~ the ~~Series C and Series D~~ preferred stock ~~and~~conversions ~~carry~~that ~~these~~have ~~financial~~occurred ~~instruments as liabilities in the accompanying balance sheet. Election to carry the instruments at fair value in their entirety is not available~~ since ~~their~~inception ~~terms have not been modified. Significant components of the compound embedded derivative include (i) the embedded conversion feature, (ii) down-round anti-dilution protection features~~ and ~~(iii) default, non-delivery and buy-in puts, all of which were combined into one compound instrument that is carried at fair value as a derivative liability. Changes in~~ the ~~fair~~number ~~value~~ of ~~the~~common ~~compound~~shares ~~derivative~~issued ~~liability~~upon ~~are recorded within income each period~~conversion.

Conversions and Repayments – Our preferred stock and convertible debentures are convertible into shares of our common stock. Upon conversion of any of the convertible financial instruments in which the compound embedded derivative is bifurcated, the carrying amount of the debt, including any unamortized premium or discount, and the related derivative instrument liability are credited to the capital accounts upon conversion to reflect the stock issued and no gain or loss is recognized. For instruments that are recorded in their entirety at the fair value of the hybrid instrument, the fair value of the hybrid instrument converted is credited to the capital accounts upon conversion to reflect the stock issued and no gain or loss is recognized. Beginning in April 2013, the trading market price of our common stock (and the conversion price) was less than its par value. We are limited to issuing shares of common stock at no less than the par value, and all shares of our common stock issued in those conversions were issued at par value. However, the methodology used to estimate the number of shares of convertible debentures and preferred stock converted during this time are based upon the value received for the shares issued, with the difference between that value and the par value recorded as a deemed dividend.

	Preferred shares		Preferred shares		Preferred shares		Common shares
	issued		converted		remaining		issued
	(in thousands)

Series C Preferred Stock		22		18		4		1,109,780
Series D Preferred Stock		25		22		3		16,344

Page 37 40

The ~~following~~outstanding ~~table~~principal ~~provides~~and aaccrued ~~summary~~interest for the debentures as of December 31, 2014 is reflected in the ~~preferred~~following ~~stock~~table ~~conversions~~in ~~that~~addition ~~have~~to ~~occurred~~the principal and interest converted since inception and the number of common shares issued upon conversion.

	Preferred shares		Preferred shares	Preferred shares		Common shares
	Outstanding principal and accrued interest at December 31, 2014			Principal and accrued interest converted since inception			Common Shares issued
	issued		converted	remaining		issued
	(in thousands)
	(in thousands)
Debentures	$	39,766		$	12,529			2,228,803
Series C Preferred Stock	22		17	5		314,619
Series D Preferred Stock	25		22	3		245,162

Warrants – YA Global ~~The~~holds ~~outstanding~~warrants ~~principal~~to ~~and~~purchase ~~accrued~~shares ~~interest~~of ~~for~~our common stock that were issued in connection with the convertible debentures asand ofthe ~~December~~Series C 31and Series D preferred stock. The warrants are exercisable at a fixed exercise price which, ~~2013~~from istime ~~reflected~~to time, has been reduced due to anti-dilution provisions when we have entered into subsequent financing arrangements with a lower price. The exercise prices may be reset again in the ~~following~~future ~~table~~if inwe subsequently issue stock or enter into a financing arrangement with a lower price. In addition, upon each adjustment in the exercise price, the number of warrant shares issuable is adjusted to the ~~principal~~number ~~and~~of ~~interest~~shares ~~converted~~determined by ~~since~~multiplying ~~inception~~the ~~and~~warrant exercise price in effect prior to the adjustment by the number of ~~common~~warrant shares ~~issued~~issuable ~~upon~~prior ~~conversion~~to the adjustment divided by the warrant exercise price resulting from the adjustment.

	Outstanding principal and accrued interest at December 31, 2013		Principal and accrued interest converted since inception		Common Shares issued
	(in thousands)
Debentures	$	42,811	$	11,747		4,403,415

The warrants issued to YA Global do not meet all of the established criteria for equity classification in ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity, and accordingly, are recorded as derivative liabilities at fair value. Changes in the fair value of the warrants are charged or credited to income each period.

~~Warrants –~~Effective YAFebruary ~~Global~~1, ~~holds~~2013, ~~warrants~~1.4 ~~to purchase shares~~ billion of ~~our~~the ~~common~~1.9 ~~stock~~billion ~~that~~warrants ~~were~~held ~~issued~~by inYA ~~connection~~Global ~~with~~were ~~the~~cancelled ~~convertible debentures~~ and the ~~Series~~remaining C500 ~~and~~million ~~Series~~had Dtheir ~~preferred stock. The warrants are exercisable at a fixed~~ exercise price ~~which, from time to time, has been~~ reduced ~~due~~ to $0.0001 ~~anti-dilution~~per ~~provisions when we have entered into subsequent financing arrangements with a lower price~~share. ~~The~~These ~~exercise~~changes ~~prices~~resulted ~~may be reset again~~ in ~~the future if we subsequently issue stock or enter into~~ a ~~financing~~decrease ~~arrangement with a lower price. In addition, upon each adjustment~~ in ~~the~~fair ~~exercise~~value ~~price,~~of the ~~number~~warrants of ~~warrant~~approximately ~~shares~~$1.6 ~~issuable~~million isduring ~~adjusted to~~ the first ~~number~~quarter of ~~shares~~2013 ~~determined~~as byreflected ~~multiplying~~in the ~~warrant~~Gain ~~exercise~~from ~~price~~change in ~~effect~~fair ~~prior~~value ~~to the adjustment by the number~~ of ~~warrant~~derivative ~~shares~~liabilities ~~issuable~~- ~~prior to the adjustment divided by the warrant exercise price resulting from the adjustment~~warrants.

Fair value disclosures for Series ~~The~~C ~~warrants~~and ~~issued~~D toBifurcated YAEmbedded ~~Global~~Derivative doInstruments ~~not~~– ~~meet~~For ~~all~~financings ofin which the ~~established~~embedded ~~criteria~~derivative ~~for~~instruments are ~~equity~~bifurcated ~~classification~~and inrecorded ~~ASC 815-40~~separately, ~~Derivatives~~the ~~and~~compound ~~Hedging~~embedded –derivative ~~Contracts~~instruments inare ~~Entity’s~~valued ~~Own~~using ~~Equity,~~a ~~and~~Monte ~~accordingly,~~Carlo ~~are~~Simulation methodology ~~recorded~~because asthat ~~derivative~~model ~~liabilities~~embodies atcertain ~~fair~~relevant ~~value.~~assumptions ~~Changes~~(including, inbut ~~the~~not ~~fair~~limited ~~value~~to, ofinterest ~~the~~rate ~~warrants~~risk, ~~are~~credit risk, ~~charged~~and orconversion/redemption ~~credited~~privileges) that are necessary to ~~income~~value ~~each~~these ~~period~~complex derivatives.

~~Effective~~The ~~February~~conversion 1,price ~~2013,~~in ~~1.4~~each ~~billion~~ of the ~~1.9~~convertible debentures ~~billion~~is ~~warrants~~subject ~~held~~to byadjustment YAfor ~~Global~~down-round, ~~were~~anti-dilution ~~cancelled~~protection. ~~and~~Accordingly, ~~the~~if ~~remaining~~we ~~500~~sell ~~million~~common ~~had~~stock ~~their~~or ~~exercise~~common ~~price reduced to $0.0001 per~~ share. indexed ~~These~~financial ~~changes~~instruments ~~resulted~~below inthe astated ~~decrease~~or invariable ~~fair~~conversion ~~value~~price of the ~~warrants~~debenture, ~~of approximately $1.6 million during~~ the ~~first~~conversion ~~quarter~~price ofadjusts ~~2013~~to asthat lower ~~reflected in the Gain from change in fair value of derivative liabilities - warrants~~amount.

~~Fair~~The ~~value~~assumptions ~~disclosures~~included ~~for~~in ~~Series~~the Ccalculations are highly subjective and Dsubject ~~Bifurcated~~to ~~Embedded~~interpretation. ~~Derivative~~Assumptions ~~Instruments –~~used ~~For~~as ~~financings~~of December, in2014 ~~which~~included ~~the~~exercise ~~embedded~~estimates/behaviors and ~~derivative~~the ~~instruments~~following ~~are~~other ~~bifurcated~~significant ~~and~~estimates: ~~recorded~~(i) ~~separately,~~Preferred ~~the~~Stock: ~~compound~~remaining ~~embedded~~term ~~derivative~~of ~~instruments~~0.59 ~~are~~years, ~~valued~~equivalent ~~using~~volatility aof ~~Monte~~676%, stated ~~Carlo~~dividend ~~Simulation~~of ~~methodology~~8%, ~~because~~equivalent ~~that~~credit-risk ~~model~~adjusted ~~embodies~~rate ~~certain~~of ~~relevant~~13.0% ~~assumptions~~and ~~(including,~~conversion ~~but~~price ~~not~~of ~~limited~~$0.000097. ~~to,~~Equivalent ~~interest~~amounts ~~rate~~reflect the ~~risk,~~net ~~credit~~results ~~risk,~~of ~~and~~multiple ~~conversion/redemption~~modeling ~~privileges)~~simulations that ~~are~~the ~~necessary~~Monte toCarlo ~~value~~Simulation ~~these~~methodology ~~complex~~applies ~~derivatives~~to underlying assumptions.

~~The~~Due to the variability of the conversion prices, fluctuations in the trading market price of our common stock may result in significant variations to the calculated conversion price. For each debenture, we analyze the ratio of the ~~convertible~~conversion ~~debentures~~price is(as ~~subject~~calculated tobased ~~adjustment~~on the percentage of VWAP for ~~down-round,~~the appropriate ~~anti~~look-~~dilution~~back ~~protection~~period) to the trading market price for a period of time equal to the term of the debenture to determine the average ratio for the term of the note. ~~Accordingly~~Each quarter, the ratio in effect on the date of the valuation is compared with the average ratio over the term of the debenture to determine if wethe ~~sell~~calculated ~~common~~conversion ~~stock~~price is representative of past trends or if it is considered unrepresentative due to a large fluctuation in the common ~~share~~stock ~~indexed~~price ~~financial~~over ~~instruments~~a ~~below~~short period of time. If the ~~stated~~calculated conversion orprice results in a ratio that deviates significantly from the average ratio over the term of the agreement, the average ratio of the conversion price to the trading market price is then multiplied by the current trading market price to determine the variable conversion price for use in the fair value calculations. This variable conversion price is then compared with the fixed conversion price and, as required by the terms of the ~~debenture~~debentures, the lower of the two amounts is used as the conversion price in ~~adjusts~~the Monte Carlo Simulation model used for valuation purposes. On December 31, 2014, the fixed conversion price for each of the debentures was equal to ~~that~~or ~~lower~~higher ~~amount~~than the calculated variable conversion price. Accordingly, the variable conversion price was used in the Monte Carlo Simulation model. This analysis is performed each quarter to determine if the calculated conversion price is reasonable for purposes of determining the fair value of the embedded conversion features (for instruments recorded under ASC 815-15-25-1) or the fair value of the hybrid instrument (for instruments recorded under ASC 815-15-25-4).

~~The~~Page assumptions included in the calculations are highly subjective and subject to interpretation. Assumptions used as of December 31, 2013 included exercise estimates/behaviors and the following other significant estimates: (i) Preferred Stock: remaining term of 1.59 years, equivalent volatility range of 203% to 206%, stated dividend of 8%, equivalent credit-risk adjusted rate of 13.0% and conversion price of $0.000194. Equivalent amounts reflect the net results of multiple modeling simulations that the Monte Carlo Simulation methodology applies to underlying assumptions.41

The following table reflects the face value ~~Page~~of 38the instruments, their amortized carrying value and the fair value of the separately-recognized compound embedded derivative, as well the number of common shares into which the instruments are convertible as of December 31, 2014 and 2013.

Due to the variability of the conversion prices, fluctuations in the trading market price of our common stock may result in significant variations to the calculated conversion price. For each debenture, we analyze the ratio of the conversion price (as calculated based on the percentage of VWAP for the appropriate look-back period) to the trading market price for a period of time equal to the term of the debenture to determine the average ratio for the term of the note. Each quarter, the ratio in effect on the date of the valuation is compared with the average ratio over the term of the debenture to determine if the calculated conversion price is representative of past trends or if it is considered unrepresentative due to a large fluctuation in the common stock price over a short period of time. If the calculated conversion price results in a ratio that deviates significantly from the average ratio over the term of the agreement, the average ratio of the conversion price to the trading market price is then multiplied by the current trading market price to determine the variable conversion price for use in the fair value calculations. This variable conversion price is then compared with the fixed conversion price and, as required by the terms of the debentures, the lower of the two amounts is used as the conversion price in the Monte Carlo Simulation model used for valuation purposes. On December 31, 2013, the fixed conversion price for each of the debentures was equal to or higher than the calculated variable conversion price. Accordingly, the variable conversion price was used in the Monte Carlo Simulation model. This analysis is performed each quarter to determine if the calculated conversion price is reasonable for purposes of determining the fair value of the embedded conversion features (for instruments recorded under ASC 815-15-25-1) or the fair value of the hybrid instrument (for instruments recorded under ASC 815-15-25-4).

December 31, 2014

	Face		Carrying		Embedded Conversion		Common Stock
	Value		Value		Feature		Shares
	(in thousands)

Series C Preferred Stock	$	4,332	$	4,332	$	5		44,659,794
Series D Preferred Stock		348		348		0		3,588,660
Total	$	4,680	$	4,680	$	5		48,248,454

The following table reflects the face value of the instruments, their amortized carrying value and the fair value of the separately-recognized compound embedded derivative, as well the number of common shares into which the instruments are convertible as of December 31, 2013 and 2012.

December 31, 2013 (Restated)							Embedded		Common
	Face		Carrying		Accrued		Conversion		Stock
	Value		Value		Interest		Feature		Shares
	(in thousands)

Series C Preferred Stock	$	4,816	$	4,816	$	-	$	276		24,823,015
Series D Preferred Stock		348		348		-		20		1,794,330
Total	$	5,164	$	5,164	$	-	$	296		26,617,345

December 31, 2013
	Face		Carrying		Embedded Conversion		Common Stock
	Value		Value		Feature		Shares
	(in thousands)
Series C Preferred Stock	$	4,816	$	4,816	$	22,015	24,823,015
Series D Preferred Stock		348		348		1,591	1,794,330
Total	$	5,164	$	5,164	$	23,606	26,617,345

The terms of the embedded conversion features in the convertible instruments presented above provide for variable conversion rates that are indexed to our quoted common stock price. As a result, the number of indexed shares is subject to continuous fluctuation. For presentation purposes, the number of shares of common stock into which the embedded conversion feature of the Series C and Series D preferred stock was convertible as of December 31, 2014 and 2013 was calculated as face value plus assumed dividends (if declared), divided by the lesser of the fixed rate or the calculated variable conversion price using the 125 day look-back period.

December 31, 2012							Embedded		Common
	Face		Carrying		Accrued		Conversion		Stock
	Value		Value		Interest		Feature		Shares
	(in thousands)
Series C Preferred Stock	$	4,840	$	4,840	$	-	$	1,988	923,953
Series D Preferred Stock		348		348		-		143	66,457
Total	$	5,188	$	5,188	$	-	$	2,131	990,410
Debentures:
2006	$	53	$	53	$	7		16	11,871

Changes in the fair value of derivative instrument liabilities related to the bifurcated embedded derivative features of convertible instruments not carried at fair value are reported as Loss from Change in Fair Value of Derivative Liability – Series C and Series D Preferred Stock and Debentures in the accompanying consolidated statements of operations.

~~The~~Gain/(Loss) ~~terms~~from ofchange ~~the embedded conversion features~~ in ~~the~~fair ~~convertible~~value ~~instruments presented above provide for variable conversion rates that are indexed to our quoted common stock price. As a result, the number~~ of ~~indexed~~derivative ~~shares~~liability – ~~is subject to continuous fluctuation. For presentation purposes, the number of shares of common stock into which the embedded conversion feature of the~~ Series C and ~~Series~~ D ~~preferred~~Preferred ~~stock~~Stock ~~was convertible as of December 31, 2013~~ and ~~2012 was calculated as face value plus assumed dividends (if declared), divided by the lesser of the fixed rate or the calculated variable conversion price using the 125 day look-back period.~~ debentures

Page 39 Changes in the fair value of derivative instrument liabilities related to the bifurcated embedded derivative features of convertible instruments not carried at fair value are reported as Loss from Change in Fair Value of Derivative Liability – Series C and Series D Preferred Stock and Debentures in the accompanying consolidated statements of operations.

	Year ended December 31,
	2014		2013 (Restated)
	(in thousands)
Series C Preferred Stock	$	270	$	1,712
Series D Preferred Stock		19		123

Debentures:
2006		-		6
2008		-		-
2009		-		-
2010		-		-
2011		-		-
2012		-		-
Gain/(loss) from change in fair value of derivative liability	$	289	$	1,841

~~Loss~~Page ~~from change in fair value of derivative liability – Series C and D Preferred Stock and debentures~~42

	Year ended December 31,
	2013		2012
	(in thousands)
Series C Preferred Stock	$	(20,036)	$	(2,066)
Series D Preferred Stock		(1,448)		(1,286)
Debentures:
2006		15		(3,005)
2008		-		(1,350)
2009		-		(484)
2010		-		(34)
2011		-		(4,825)
2012		-		15
Loss from change in fair value of derivative liability	$	(21,469)	$	(13,035)

Hybrid Financial Instruments Carried at Fair Value – At inception, the March 2007, August 2007, April 2008, May 2008 and April 2012 convertible debentures were recorded in their entirety at fair value as hybrid instruments in accordance with ASC 815-15-25-4 with subsequent changes in fair value charged or credited to income each period. As of May 25, 2012, we elected the fair value option for all other convertible debentures held by YA Global upon a re-measurement date that was triggered by significant modifications of the financial instruments. The convertible debentures continued to be recorded in their entirety at fair value upon their consolidation into six Consolidated Debentures effective July 1, 2013.

~~Hybrid~~Because ~~Financial~~these ~~Instruments~~debentures ~~Carried~~are atcarried ~~Fair~~in their ~~Value –~~entirety Atat ~~inception~~fair value, the ~~March~~value ~~2007,~~of ~~August~~the ~~2007,~~embedded ~~April~~conversion ~~2008,~~feature ~~May~~is ~~2008~~embodied ~~and~~in ~~April~~those ~~2012~~fair ~~convertible~~values. ~~debentures~~We ~~were~~estimate ~~recorded~~the infair value ~~their~~of ~~entirety~~the athybrid ~~fair~~instrument as the present value asof ~~hybrid~~the ~~instruments~~cash inflows ~~accordance~~of ~~with~~the ~~ASC~~instrument, ~~815-15-25-4~~using ~~with~~a ~~subsequent~~risk-adjusted ~~changes~~interest inrate, ~~fair~~enhanced by the value ~~charged~~of orthe ~~credited~~conversion tooption, ~~income~~valued ~~each~~using ~~period.~~a AsMonte ofCarlo ~~May~~model. ~~25,~~This ~~2012,~~method wewas ~~elected~~considered ~~the~~by ~~fair~~our ~~value~~management ~~option~~to ~~for~~be ~~all~~the most ~~other~~appropriate ~~convertible~~method ~~debentures~~of ~~held~~encompassing bythe YAcredit ~~Global~~risk ~~upon~~and aexercise ~~re-measurement~~behavior ~~date~~ that ~~was~~a ~~triggered~~market byparticipant ~~significant~~would ~~modifications~~consider ofwhen valuing the hybrid financial ~~instruments~~instrument. ~~The~~ ~~convertible~~Inputs ~~debentures~~used ~~continued~~ to bevalue ~~recorded~~the inhybrid ~~their~~instruments ~~entirety~~as atof ~~fair~~December 31, 2014 included: (i) present value of ~~upon~~future ~~their~~cash ~~consolidation~~flows ~~into~~for ~~six~~the ~~Consolidated~~debentures ~~Debentures~~using an effective ~~July~~market 1interest rate of 13.0%, ~~2013~~(ii) remaining term of 0.59 years, (iii) equivalent volatility of 676% and anti-dilution adjusted conversion prices ranging from $0.000090 - $0.000095.

~~Because~~The ~~these~~following ~~debentures~~table ~~are~~reflects ~~carried in their entirety at fair value,~~ the ~~value~~face value of the ~~embedded~~financial ~~conversion~~instruments, ~~feature is embodied in those fair values. We estimate~~ the fair value of the hybrid ~~instrument~~financial ~~as the present value of the cash flows of the~~ instrument, ~~using~~and ~~a risk-adjusted interest rate, enhanced by~~ the ~~value~~number of ~~the~~common ~~conversion~~shares ~~option,~~into ~~valued~~which ~~using a Monte Carlo model. This method was considered by our management to be~~ the instruments ~~most~~are ~~appropriate~~convertible ~~method of encompassing the credit risk and exercise behavior that a market participant would consider when valuing the hybrid financial instrument. Inputs used to value the hybrid instruments~~ as of December 31, ~~2013~~2014 included: (i) present value of future cash flows for the debentures using an effective market interest rate of 13.0%, (ii) remaining term of 1.59 years, (iii) equivalent volatility range of 203% to 209% and ~~anti-dilution adjusted conversion prices ranging from $0~~2013.~~00018 - $0.00019.~~

The following table reflects the face value of the financial instruments, the fair value of the hybrid financial instrument and the number of common shares into which the instruments are convertible as of December 31, 2013 and 2012.

December 31, 2014					Common
	Face		Fair		Stock
	Value		Value		Shares
	(in thousands)
Debentures:
2006	$	1,962	$	2,019		23,871,436
2007		814		1,000		11,549,397
2008		1,925		1,949		22,598,665
2009		7		46		517,119
2011		785		800		9,469,332
2012		972		1,111		12,926,448
2013		29,212		30,298		354,041,487
2014		170		162		1,930,434
Total	$	35,845	$	37,384		436,904,318

Page 40 43

December 31, 2013						Common
December 31, 2013 (Restated)							Common
	Face		~~Fair~~	Fair		~~Stock~~	Stock
	Value		~~Value~~	Value		~~Shares~~	Shares
	(in thousands)
Debentures:
2006	$	1,962	$	~~13,512~~$	2,008	~~12,285,288~~		819,019
2007		839		~~3,587~~	533	~~3,244,058~~		216,720
2008		2,047		~~12,825~~	1,905	~~11,689,415~~		779,294
2009		134		~~1,018~~	151	~~923,440~~		61,563
2011		852		5,745		5,226,562
2010		852			854			348,437
2012		972		9,369		8,524,582
2011		972			1,392			568,305
2013		34,211		211,395		192,394,516
2012		34,211			31,407			12,826,301
Total	$	41,017	$	~~257,451~~$	38,250	~~234,287,861~~		15,619,639

December 31, 2012					Common
	Face		Fair		Stock
	Value		Value		Shares
	(in thousands)
Debentures:
2006	$	6,180	$	14,758	5,196,283
2007		6,856		17,172	6,098,480
2008		6,468		15,492	5,487,497
2009		1,644		3,565	1,243,390
2010		3,806		7,178	2,512,724
2011		1,954		3,080	1,084,237
2012		1,979		3,047	1,073,527
Total	$	28,887	$	64,292	22,696,138

Changes in the fair value of convertible instruments that are carried in their entirety at fair value are reported as Gain (loss) from change in fair value of hybrid financial instruments in the accompanying consolidated statements of operations. The changes in fair value of these hybrid financial instruments were as follows:

~~Changes in the fair value of convertible instruments that are carried in their entirety at fair value are reported as~~ Gain (loss) from change in fair value of hybrid financial instruments ~~in the accompanying consolidated statements of operations. The changes in fair value of these hybrid financial instruments were as follows:~~

Gain (loss) from change in fair value of hybrid financial instruments

	Year ended December 31,
	2014			2013 (Restated)
	(in thousands)

2006	$	(255	)	$	11,604
2007		(82	)		16,381
2008		(220	)		13,291
2009		(6	)		2,113
2010		-			7,177
2011		(93	)		1,748
2012		(126	)		1,321
2013		(3,412	)		(31,826	)
2014		(8	)		-
		(4,173	)		21,809
Less: Day-one loss from debenture financings		-			-
Gain (loss) from changes in fair value of hybrid instruments	$	(4,173	)	$	21,809

	Year ended December 31,
	2013		2012
	(in thousands)
2006	$	100	$	2,680
2007		13,343		798
2008		2,339		5,433
2009		1,249		708
2010		7,178		1,858
2011		(3,146)		840
2012		(7,060)		771
2013		(211,395)		-
		(197,392)		13,088
Less: Day-one loss from debenture financings		-		(1,162)
Gain (loss) from changes in fair value of hybrid instruments	$	(197,392)	$	11,926

Warrants – The following table summarizes the warrants outstanding, their fair value and their exercise price after adjustment for anti-dilution provisions:

Warrants – The following table summarizes the warrants outstanding, their fair value and their exercise price after adjustment for anti-dilution provisions:

			December 31, 2014						December 31, 2013 (Restated)
			Anti- Dilution						Anti- Dilution
			Adjusted						Adjusted
	Expiration		Exercise				Fair		Exercise				Fair
	Year		Price ($)		Warrants		Value		Price ($)		Warrants		Value
			(in thousands)								(in thousands)
Warrants issued with preferred stock:
Series D Preferred Stock		2017		0.000100		5,825	$	0		.000100		87,368	$	110

Warrants issued with debentures:
2008		2015		0.000100		15,872		1		0.000100		238,079		294
2010		2015		0.000100		5,423		1		0.000100		81,350		101
2011		2016		0.000100		3,884		0		0.000100		58,246		72
2012		2017		0.000100		2,330		0		0.000100		34,947		43

Total						33,333	$	2				499,990	$	620

Page 41 44

		December 31, 2013				December 31, 2012
		Anti- Dilution				Anti- Dilution
		Adjusted				Adjusted
	Expiration	Exercise		Fair		Exercise		Fair
	Year	Price ($)	Warrants	Value		Price ($)	Warrants	Value
			(in thousands)				(in thousands)
Warrants issued with preferred stock:
Series D Preferred Stock	2017	0.000100	87,368	$	121	0.00684	328,947	$	709
Warrants issued with debentures:
2008	2015	0.000100	238,079		324	0.00684	896,382		1,691
2010	2015	0.000100	81,350		111	0.00684	306,287		571
2011	2016	0.000100	58,246		80	0.00684	219,298		453
2012	2017	0.000100	34,947		48	0.00684	131,579		263
Total			499,990	$	684		1,882,493	$	3,687

The warrants are valued using a binomial lattice option valuation methodology because that model embodies all of the significant relevant assumptions that address the features underlying these instruments. Significant assumptions used in this model as of December 31, 2014 included an expected life equal to the remaining term of the warrants, an expected dividend yield of zero, estimated volatility ranging from 475% to 1080%, and risk-free rates of return ranging from 0.08% to 0.91%. For the risk-free rates of return, we use the published yields on zero-coupon Treasury Securities with maturities consistent with the remaining term of the warrants and volatility is based upon our expected common stock price volatility over the remaining term of the warrants. As a result of the repricing on February 1, 2013, the exercise price of the warrants is currently $0.0001. The anti-dilution provisions are still applicable so in the future the fixed exercise price of the warrants may be reset to equal to the lowest price of any subsequently issued common share indexed instruments with a conversion price below the current exercise price of the warrant.

~~The~~Changes warrants are valued using a binomial lattice option valuation methodology because that model embodies all of the significant relevant assumptions that address the features underlying these instruments. Significant assumptions used in ~~this model as of December 31, 2013 included an expected life equal to~~ the ~~remaining~~fair ~~term~~value of the warrants, are anreported ~~expected~~as ~~dividend~~Gain ~~yield of zero, estimated volatility ranging~~ from ~~203%~~change toin ~~209%,~~fair ~~and~~value ~~risk-free rates~~ of ~~return~~derivative ~~ranging~~liability ~~from~~– ~~0.13% to 0.44%. For the risk-free rates of return, we use the published yields on zero-coupon Treasury Securities with maturities consistent with the remaining term of the~~ warrants ~~and~~in ~~volatility is based upon our expected common stock price volatility over~~ the ~~remaining~~accompanying ~~term~~consolidated statement of ~~the warrants~~operations. ~~As a result of the repricing on February 1, 2013, the exercise price of the warrants is currently $0.0001.~~ The ~~anti-dilution~~changes ~~provisions are still applicable so~~ in the ~~future~~fair ~~the~~value ~~fixed exercise price~~ of the warrants ~~may~~were beas ~~reset to equal to the lowest price of any subsequently issued common share indexed instruments with a conversion price below the current exercise price of the warrant.~~follows:

~~Changes in the fair value of the warrants are reported as~~ Gain from change in fair value of derivative liability – – warrants ~~in the accompanying consolidated statement of operations. The changes in the fair value of the warrants were as follows:~~

Gain from change in fair value of derivative liability – warrants

	Year ended December 31,
	2014		2013 (Restated)
	(in thousands)
Warrants issued with preferred stock:
Series D Preferred Stock	$	12	$	58

Warrants issued with debentures:
2007		-		-
2008		276		1,370
2010		212		1,051
2011		75		374
2012		43		214
Total	$	618	$	3,067

	Year ended December 31,
	2013		2012
	(in thousands)
Warrants issued with preferred stock:
Series D Preferred Stock	$	588	$	1,826
Warrants issued with debentures:
2007		-		1,510
2008		1,366		5,185
2010		457		1,764
2011		378		1,233
2012		214		(171)
Total	$	3,003	$	11,347

Reconciliation of changes in fair value – Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. Our derivative financial instruments that are measured at fair value on a recurring basis are all measured at fair value using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

~~Reconciliation~~Page of changes in fair value – Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to their fair value measurement. Our derivative financial instruments that are measured at fair value on a recurring basis are all measured at fair value using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.45

The following represents a reconciliation ~~Page~~of 42the changes in fair value of financial instruments measured at fair value using Level 3 inputs and changes in the fair value of hybrid instruments carried at fair value during the year ended December 31, 2014 (in thousands):

The following represents a reconciliation of the changes in fair value of financial instruments measured at fair value using Level 3 inputs and changes in the fair value of hybrid instruments carried at fair value during the year ended December 31, 2013 (in thousands):

	Compound
	Embedded			Warrant			Hybrid
	Derivatives			Derivatives			Instruments			Total

Beginning balance, December 31, 2013:	$	296		$	620		$	38,250		$	39,166

Fair value adjustments:
Compound embedded derivatives		(289	)		-			-			(289	)
Warrant derivatives		-			(618	)		-			(618	)
Hybrid instruments		-			-			4,173			4,173

Debt Extinguishment								(4,247	)		(4,247	)

Conversions:
Series C Preferred Stock		(1	)		-			-			(1	)
August 24, 2006 financing		-			-			(213	)		(213	)
December 29, 2006 financing		-			-			(61	)		(61	)
March 27, 2007 financing		-			-			(97	)		(97	)
October 28, 2008 financing		-			-			(155	)		(155	)
August 14, 2009 financing		-			-			(140	)		(140	)
February 8, 2011 financing		-			-			(35	)		(35	)
March 11, 2011 financing								(11	)		(11	)
April 13, 2011 financing		-			-			(3	)		(3	)
May 31, 2011 financing		-			-			(1	)		(1	)
June 28, 2011 financing								(3	)		(3	)
December 8, 2011 financing		-			-			(31	)		(31	)
July 1, 2013 financing								(40	)		(40	)
Sep 15, 2014 financing		-			-			(1	)		(1	)
Ending balance, December 31, 2014	$	6		$	2		$	37,384		$	37,392

	Compound
	Embedded		Warrant		Hybrid
	Derivatives		Derivatives		Instruments		Total
Beginning balance, December 31, 2012:	$	2,147	$	3,687	$	64,292	$	70,126
Fair value adjustments:
Compound embedded derivatives		21,469		-		-		21,469
Warrant derivatives		-		(3,003)		-		(3,003)
Hybrid instruments		-		-		197,392		197,392
Conversions:
Series C Preferred Stock		(10)		-		-		(10)
August 24, 2006 financing		-		-		(644)		(644)
December 29, 2006 financing		-		-		(503)		(503)
March 27, 2007 financing		-		-		(242)		(242)
April 11, 2008 financing		-		-		(71)		(71)
July 29, 2008 financing		-		-		(234)		(234)
October 18, 2008 financing		-		-		(23)		(23)
July 15, 2009 financing		-		-		(823)		(823)
August 14, 2009 financing		-		-		(475)		(475)
February 8, 2011 financing		-		-		(28)		(28)
April 13, 2011 financing		-		-		(199)		(199)
October 25, 2011 financing		-		-		(37)		(37)
December 8, 2011 financing		-		-		(217)		(217)
February 6, 2012 financing		-		-		(29)		(29)
March 26, 2012 financing		-		-		(141)		(141)
June 1, 2012 financing		-		-		(567)		(567)
Ending balance, December 31, 2013	$	23,606	$	684	$	257,451	$	281,741

Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, valuation techniques are sensitive to changes in the trading market price of our common stock, which has a high estimated historical volatility. Because derivative financial instruments are initially and subsequently carried at fair values, our income will reflect the volatility in these estimate and assumption changes.

~~Estimating~~Note ~~fair~~Payable ~~values~~– In 2014, ofwe ~~derivative~~received ~~financial~~financing ~~instruments requires the development~~ of ~~significant and subjective estimates that may~~$242,000 ~~and~~from ~~are~~YA ~~likely~~Global to, ~~change~~meet ~~over~~short ~~the~~term ~~duration~~cash ofneeds ~~the instrument with~~ related ~~changes~~to inlegal ~~internal and external market factors~~expenses. InThe ~~addition,~~financing ~~valuation~~was through ~~techniques~~secured ~~are~~debentures ~~sensitive to changes~~ in the ~~trading~~form ~~market price~~ of ~~our~~a ~~common~~line ~~stock,~~of ~~which~~credit ~~has~~with avarying ~~high~~maturity ~~estimated~~dates ~~historical~~in ~~volatility~~2016. ~~Because~~The ~~derivative~~interest ~~financial~~rate ~~instruments~~is ~~are~~12% ~~initially~~payable annually ~~and~~on ~~subsequently~~the ~~carried~~anniversary atof ~~fair values, our income will reflect~~ the ~~volatility~~individual ~~in these estimate and assumption changes~~debenture.

Note 5 – Goodwill and Other Intangible Assets

At December 31, 2013 ~~and 2012~~, we had goodwill of $3.4 million, representing the excess of the purchase price paid for NeoMedia Europe GmbH over the fair value of the identifiable net assets and liabilities acquired, based on an independent appraisal of the assets and liabilities acquired. We performed the two step goodwill impairment test at December 31, 2014 and determined there was impairment of our goodwill as reflected on our balance sheet ($3,418,000). Our assessment conducted as of December 31, 2014 concluded that on a qualitative and quantitative basis there is impairment of goodwill on our balance sheet.

Page 43 46

The following table summarizes other intangible assets:

							Total
									Total Intangibles
							Intangibles
	Patents and Other				Proprietary				and Proprietary
	Patents and						and
	Intangibles				Software				Software
	Other			Proprietary			Proprietary
	(in thousands)
	Intangibles			Software			Software
December 31, 2012	$	1,489			$	100			$	1,589
	(in thousands)
Amortization		(276	)			(100	)			(376	)
December 31, 2011	$	1,764		$	757		$	2,521
December 31, 2013		1,213				-				1,213
Additions		-			-			-
Amortization		(266	)			-				(266	)
Amortization		(275)			(657)			(932)
December 31, 2014	$	947			$	-			$	947
December 31, 2012		1,489			100			1,589
Weighted-average remaining amortization period in years		4.7				-
Additions		-			-			-
Amortization		(276)			(100)			(376)
December 31, 2013	$	1,213		$	-		$	1,213
Weighted-average remaining amortization period in years		5.7			-

As of December 31, ~~2013~~2014, we estimate future amortization expense of intangible assets to be (in thousands):

2014	$	259
2015	$	244
2015		244
2016		216
2017		134
2018 and thereafter		360
2018		134
Total future amortization expense	$	1,213
2019		134
2020 and thereafter		85
Total future amortization expense	$	947

~~Note~~The 6following –table ~~Accrued~~summarizes ~~Liabilities~~amortization as of December 31, 2014:

The following table summarizes our accrued liabilities of December 31, 2013 and 2012:

		End of	Remaining		Preliminary Value at 12/31/14
	Date	Useful	Useful				Accum.			Net Book
Asset	Acquired	Life	Life (yrs.)		Cost		Depr/Amort			Value

Barcode Ecosystem:
Core Patents	Various	11/1/2016		1.9	$	5,250,839	$	(4,303,676	)	$	947,163
Proprietary software	2/23/2006	2/23/2013		0	$	4,600,000	$	(4,600,000	)		-
Copyrights	2/23/2006	2/23/2011		0	$	50,000	$	(50,000	)		-
					$	9,900,839	$	(8,953,676	)	$	947,163

	As of December 31,
	2013		2012
	(in thousands)
Accrued operating expenses	$	112	$	347
Accrued legal		114		27
Accrued payroll related expenses		65		6
Accrued interest		-		19
Total	$	291	$	399

The following table summarizes amortization as of December 31, 2013:

On May 25, 2012, the terms of the debentures held by YA Global were modified to extend the stated maturity dates and reduce the interest rates to 9.5% per year. The effect of the modifications exceeded a significance threshold relative to the debentures’ cash flows resulting in an effective extinguishment whereby the existing debentures were considered to be retired and new debentures issued. Following the modification, the debentures are carried as hybrid instruments and are recorded at fair value. As a result, interest associated with the debentures is considered and accounted for in the consolidated statements of operations within the change in fair value of hybrid financial instruments line item rather than being reflected as an interest expense. Similarly, amounts previously reflected in the consolidated balance sheets as accrued interest are now considered and accounted for within the debentures payable – carried at fair value line item.

		End of	Remaining		Preliminary Value at 12/31/13
	Date	Useful	Useful				Accum.			Net Book
Asset	Acquired	Life	Life (yrs.)		Cost		Depr/Amort			Value

Barcode Ecosystem:
Core Patents	Various	11/1/2016		2.8	$	5,250,839	$	(4,037,353	)	$	1,213,486
Proprietary software	2/23/2006	2/23/2013		0	$	4,600,000	$	(4,600,000	)		-
Copyrights	2/23/2006	2/23/2011		0	$	50,000	$	(50,000	)		-
					$	9,900,839	$	(8,687,353	)	$	1,213,486

~~Note~~Page ~~7 – Income Taxes~~47

AsNote of6 ~~December~~– ~~31,~~Accrued 2013 and 2012, the types of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts which gave rise to deferred taxes, and their tax effects were as follows:Liabilities

~~Page~~The 44following table summarizes our accrued liabilities of December 31, 2014 and 2013:

	As of December 31,
	2013		2012
	2014			2013
	(in thousands)
Net operating loss carry forwards (NOL)	$	66,472	$	63,714
Accrued operating expenses	$	176		$	112
Capital loss		3,515		3,515
Accrued legal		82			114
Write-off of long-lived assets		730		526
Accrued payroll related expenses		45			65
Amortization of intangibles		(227)		(670)
Total	$	303		$	291
Stock-based compensation		2,596		2,596
Capitalized software development costs and fixed assets		-		136
Deferred revenue		870		1,568
Alternative minimum tax credit carry forward		47		43
Accruals		3,206		2,554
Impairment loss		2,752		2,752
Derivative gain/loss		108,837		9,375
Interest expense		4,437		4,437
Total deferred tax assets		193,235		90,546
Valuation allowance		(193,235)		(90,546)
Net deferred tax asset	$	-	$	-

~~Due~~Note to7 ~~the~~– ~~uncertainty~~Income of the utilization and recoverability of the loss carry-forwards and other deferred tax assets, we have provided a valuation allowance for the deferred tax assets, as it is more likely than not that the deferred tax assets will not be realizable.Taxes

~~For~~As ~~the~~of ~~years ended~~ December 31, ~~2013~~2014 and ~~2012~~2013, the ~~income~~types of temporary differences between the tax ~~benefit~~basis ~~differed~~of ~~from~~assets ~~the~~and ~~amount~~liabilities ~~computed~~and bytheir ~~applying~~financial ~~the~~reporting ~~statutory~~amounts ~~federal~~which ~~rate~~gave ofrise to ~~34%~~deferred taxes, and their tax effects were as follows:

		Year Ended December 31,
	As of December 31,
		2013			2012
	2014				2013
	(in thousands)	~~(in thousands)~~
Benefit at federal statutory rate	$	(73,038)		$	(6,610)
					Restated
State income taxes, net of federal benefit		(6,564)			(753)
Net operating loss carry forwards (NOL)	$	65,372			$	67,322
Permanent and other difference, net		(23,087)			2,803
Capital loss		3,394				3,515
Increase in valuation allowance	$	(102,689)		$	(4,560)
Write-off of long-lived assets		508				526
Amortization of intangibles		422				(209	)
Stock-based compensation		2,507				2,596
Deferred revenue		843				870
Alternative minimum tax credit carry forward		42				43
Accruals		93				3,206
Impairment loss		2,657				2,752
Derivative gain/loss		14,243				10,296
Interest expense		4,284				4,437
Total deferred tax assets		94,365				95,354
Valuation allowance		(94,365	)			(95,354	)
Net deferred tax asset	$	-			$	-

~~During~~Due ~~the year ended December 31, 2013, we determined that a deferred tax liability previously estimated~~ to ~~be realized by NeoMedia Europe GmbH should be reduced to zero based on certain economic changes of~~ the ~~subsidiary~~uncertainty ~~during 2013. The economic changes included, but were not limited to, the termination~~ of ~~its hardware business and related sales activities that allowed it to generate revenue independently in~~ the ~~local market or otherwise,~~ utilization and ~~the~~recoverability ~~completion~~ of ~~a repositioning of~~ the ~~subsidiary~~loss ~~from a self~~carry-~~contained,~~forwards ~~revenue~~and ~~generating~~other ~~operation~~deferred totax aassets, ~~cost~~we ~~center~~have ~~primarily~~provided ~~focused on research and development. As~~ a ~~result~~valuation ofallowance for the ~~change~~deferred tax ~~in estimate~~assets, weas ~~recorded~~it anis ~~income~~more ~~tax~~likely ~~benefit~~than ofnot ~~$706,000~~that ~~to reduce~~ the deferred tax ~~liability~~assets towill ~~zero~~not be realizable.

AsPage of December 31, 2013, we had net operating loss carry forwards for federal tax purposes totaling approximately $172 million, which may be used to offset future taxable income and which, if unused, expire between 2014 and 2033, and net operating loss carry-forwards for Colorado tax purposes totaling $7.2 million. As a result of certain of our equity activities, we anticipate that the annual usage of our pre-1998 net operating loss carry forwards may be further restricted pursuant to the provisions of Section 382 of the Internal Revenue Code.48

InThe ~~addition~~following tois ~~the~~a ~~above,~~reconciliation ~~our~~of ~~subsidiary~~the ~~NeoMedia~~statutory ~~Europe~~federal ~~GmbH,~~income tax ~~had~~rate ~~foreign~~applied ~~operations~~to ~~and is not included in our consolidated income~~ pre-tax ~~balances~~accounting ~~above.~~net ~~NeoMedia~~loss ~~Europe~~compared ~~GmbH~~to ~~did~~the ~~not have~~ income ~~tax~~taxes ~~expense~~in ~~during~~ the ~~years~~consolidated ~~ended~~statement ~~December~~of ~~31, 2013 and 2012.~~operations:

NeoMedia Europe GmbH has net operating loss carry forwards that are estimated to be $11.5 million and $11.4 million as of December 31, 2013 and 2012, respectively. Due to the uncertainty of the utilization and recoverability of the loss carry forwards, we have reserved for the deferred tax assets through a valuation allowance, as it is more likely than not that the deferred tax assets will not be realizable.

	12/31/2014			12/31/2013 (Restated)

Federal Taxes	$	(609	)	$	(9,830	)
State Taxes, net fed benefit		(59	)		(883	)
Permanent and other differences, net		1,656			5,906
Decrease in Valuation Allowance	$	988		$	(4,807	)

During the year ended December 31, 2013, we determined that a deferred tax liability previously estimated to be realized by NeoMedia Europe GmbH should be reduced to zero based on certain economic changes of the subsidiary during 2013. The economic changes included, but were not limited to, the termination of its hardware business and related sales activities that allowed it to generate revenue independently in the local market or otherwise, and the completion of a repositioning of the subsidiary from a self-contained, revenue generating operation to a cost ~~Page~~center 45primarily focused on research and development. As a result of the change in estimate, we recorded an income tax benefit of $706,000 to reduce the deferred tax liability to zero.

WeAs ~~have~~of ~~not~~December ~~taken~~31, ~~any~~2014, ~~uncertain~~we ~~tax~~had ~~positions~~net onoperating loss ~~any~~carry offorwards ~~our~~for ~~open~~federal ~~income~~ tax ~~returns~~purposes ~~filed~~totaling ~~through~~approximately ~~the~~$65.4 ~~period~~million, ~~ended~~which ~~December~~may ~~31,~~be ~~2013.~~used ~~Our~~to ~~methods~~offset offuture ~~accounting~~taxable ~~are~~income and ~~based~~which, onif ~~established~~unused, ~~income~~expire ~~tax~~between ~~principles~~2015 inand ~~the~~2034, ~~Internal~~and ~~Revenue~~a ~~Code~~capital ~~and~~loss ~~are~~carry-forward ~~properly~~of ~~calculated~~$3.4 ~~and~~million. ~~reflected~~As ~~within~~a ~~our~~result ~~income~~of ~~tax~~certain ~~returns.~~of our Inequity ~~addition~~activities, we ~~have~~anticipate ~~filed~~that ~~income~~the ~~tax~~annual ~~returns~~usage inof ~~all~~our ~~applicable~~pre-1998 ~~jurisdictions~~net inoperating ~~which~~loss wecarry ~~had~~forwards ~~material~~may ~~nexus~~be ~~warranting~~further anrestricted pursuant ~~income~~to ~~tax~~the ~~return~~provisions ~~filing~~of Section 382 of the Internal Revenue Code.

WeIn ~~re-assess~~addition to the ~~validity~~above, of our ~~conclusions~~subsidiary NeoMedia ~~regarding~~Europe ~~uncertain~~GmbH, ~~tax~~had ~~positions~~foreign onoperations aand ~~quarterly~~is ~~basis~~not toincluded ~~determine~~in ~~if facts or circumstances have arisen that might cause us to change~~ our ~~judgment~~consolidated ~~regarding~~income ~~the likelihood of a~~ tax ~~position’s~~balances ~~sustainability under audit~~above. WeNeoMedia ~~have~~Europe GmbH ~~determined~~did ~~that~~not ~~there~~have ~~were~~income ~~no uncertain~~ tax ~~positions~~expense ~~for~~during the years ended December 31, ~~2013~~2014 and ~~2012~~2013. ~~Due to the carry forward of NOL’s, Federal and state income tax returns are subject to audit for varying periods beginning in 1992.~~

NeoMedia Europe GmbH has net operating ~~Note~~loss 8carry –forwards ~~Commitments~~that are estimated to be $11.5 million and ~~Contingencies~~$11.4 million as of December 31, 2014 and 2013, respectively. Due to the uncertainty of the utilization and recoverability of the loss carry forwards, we have reserved for the deferred tax assets through a valuation allowance, as it is more likely than not that the deferred tax assets will not be realizable.

We have not taken any uncertain tax positions on any of our open income tax returns filed through the period ended December 31, 2013. Our methods of accounting are ~~party~~based toon established ~~various~~income ~~commitments~~tax principles in the Internal Revenue Code and ~~contingencies~~are properly calculated and reflected within our income tax returns. In addition, ~~including:~~we have filed income tax returns in all applicable jurisdictions in which we had material nexus warranting an income tax return filing.

·We ~~Operating~~re-assess ~~leases~~the validity of our conclusions regarding uncertain tax positions on a quarterly basis to determine if facts or circumstances have arisen that might cause us to change our judgment regarding the likelihood of a tax position’s sustainability under audit. We have determined that there were no uncertain tax positions for ~~office~~the ~~facilities,~~years ~~which~~ended ~~include~~December ~~minimum~~31, ~~rents~~2014 and ~~reimbursed~~2013. ~~operating~~Due ~~expenses~~to asthe ~~well~~carry asforward ~~options~~of NOL’s, Federal and state income tax returns are subject to ~~renew~~audit for ~~additional~~varying periods; beginning in 1992.

·Note ~~Employment~~8 ~~agreement~~– ~~with~~Commitments ~~future~~and ~~payment obligations;~~Contingencies

·We ~~Long-term~~are ~~debt~~party ~~obligations~~to ~~include~~various ~~principal~~commitments ~~for convertible debentures~~ and contingencies, ~~related estimated interest over the life of the debentures. Any future settlement of convertible debt would impact our cash payments.~~including:

~~The~~· ~~following~~Operating ~~table~~leases ~~sets~~for ~~forth~~office ~~the~~facilities, ~~future~~which include minimum ~~payments~~rents ~~due~~and ~~under~~reimbursed ~~the~~operating ~~above~~expenses ~~commitments~~as well as ofoptions ~~December~~to ~~31,~~renew ~~2013~~for ~~(in~~additional ~~thousands):~~periods; · Employment agreement with future payment obligations;

	2014		2015		2016		2017		Total
Operating leases	$	54	$	11	$	-	$	-	$	65
Employment agreements		175		-		-		-		175
Long-term debt		-		47,241		-		-		47,241
Total	$	229	$	47,252	$	-	$	-	$	47,481

Long-term debt obligations include principal for convertible debentures and related estimated interest over the life of the debentures. Any future settlement of convertible debt would impact our cash payments.

~~The~~Page above table does not include future obligations associated with a new lease agreement we entered into for our corporate headquarters in Boulder, Colorado on February 19, 2014. The agreement provides for a five year lease of 2,303 square feet expiring on March 31, 2019 with estimated rent and monthly rent payments over the term of $5,689. We intend to sublease certain portions of the lease that are unused by us. Additionally, we entered into an amended lease arrangement for NeoMedia Europe GmbH’s office lease in February 2014 to reduce the rented area to approximately 125 square meters with the same lease expiration date and reduced monthly rent of approximately $1,400. The amended NeoMedia Europe GmbH lease is also not reflected in the above table.49

~~Legal~~The ~~Proceedings~~following –table ~~From~~sets ~~time~~forth tothe ~~time,~~future minimum wepayments ~~are~~due ~~involved~~under ~~in various legal actions arising in~~ the ~~normal~~above ~~course~~commitments ~~of business, both~~ as ~~claimant and defendant. Although it is not possible to determine with certainty the outcome~~ of ~~these~~December ~~matters~~31, we believe the eventual resolution of any ongoing legal actions is unlikely to have a material impact on our financial position or operating results. If the resolution of ongoing legal actions is not in our favor, our financial position and operating results could be materially adversely impacted.2014:

Note 9 – Stock-Based Compensation

	2015		2016		2017		2018		2019		Total
Operating leases	$	68	$	68	$	68	$	68	$	17	$	289
Employment agreements		96										96
Long-term debt	$	35,845									$	35,845
Total	$	36,009	$	68	$	68	$	68	$	17	$	36,230

WeThe ~~have~~above ~~five~~table ~~stock~~includes ~~option~~future ~~plans,~~obligations asassociated ~~summarized~~with a ~~below.~~new ~~Options~~lease ~~issued~~agreement ~~under~~we ~~these~~entered ~~plans~~into ~~have~~for aour ~~term~~corporate ofheadquarters 10in ~~years.~~Boulder, ~~The~~Colorado ~~plans~~on ~~allow~~February ~~for~~19, ~~exercise~~2014. ~~prices~~The ofagreement ~~options~~provides for ~~issued~~a ~~under~~five ~~the~~year ~~Option~~lease ~~Plans~~of to2,303 besquare ~~set~~feet atexpiring ~~amounts~~on ~~less~~March ~~than~~31, ~~the~~2019 ~~fair~~with ~~market~~estimated ~~value~~average ~~per~~rent ~~share~~and ofmonthly ~~our~~rent ~~common~~payments ~~stock on~~ over the ~~date~~term of ~~grant~~$5,689. ~~Options~~We ~~may~~intend beto ~~granted~~sublease ~~with~~certain ~~any~~portions ~~vesting~~of ~~schedule as approved by~~ the ~~stock~~lease ~~option~~that ~~committee~~are ofunused ~~our~~by ~~Board~~us. ~~of Directors~~Additionally, ~~but~~we ~~generally~~entered ~~the~~into ~~vesting~~an amended ~~periods~~lease ~~range~~arrangement ~~from~~for ~~immediate~~NeoMedia toEurope 5GmbH’s ~~years.~~office ~~Common~~lease ~~shares~~in ~~required~~February 2014 to bereduce ~~issued~~the onrented ~~the~~area ~~exercise~~to ofapproximately 125 ~~stock~~square ~~options~~meters ~~would~~with bethe ~~issued~~same ~~from~~lease ~~our~~expiration ~~authorized~~date and ~~unissued~~reduced ~~shares. We~~monthly ~~have~~rent ~~not~~of ~~registered~~approximately ~~the 600~~$1,~~000~~400. ~~shares~~The ~~underlying~~lease ~~the~~on ~~options~~GmbH inexpires March ~~the~~2015 ~~2005 Plan~~ and asthere aare ~~result,~~no ~~all~~future

The right to receive mandatory cash dividends equal to the greater of $0.001 per share or 100 times the amount of all dividends (cash or non-cash, other than dividends of shares of common stock) paid to holders of the common stock, which dividend is payable 30 days after the conclusion of each calendar quarter and immediately following the declaration of a dividend on common stock;

One hundred votes per share of Series A Preferred on each matter submitted to a vote of our shareholders;

The right to elect two directors at any meeting at which directors are to be elected, and to fill any vacancy on our Board of Directors previously filled by a director appointed by the Series A Preferred holders;

The right to receive an amount, in preference to the holders of common stock, equal to the amount per share payable to holders of common stock, plus all accrued and unpaid dividends, and following payment of 1/100th of the liquidation preference to the holders of each share of common stock, an additional amount per share equal to 100 times the per share amount paid to the holders of common stock;

The right to exchange each share of Series A Preferred for 100 times the consideration received per share of common stock in connection with any merger, consolidation, combination or other transaction in which shares of common stock are exchanged for or converted into cash, securities or other property; and

The right to be redeemed in accordance with our shareholder rights plan.

Filing Compare · NEOMEDIA TECHNOLOGIES INC