8-K

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 14, 2006

NEOMEDIA TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	0-21743	36-3680347
(State or Other Jurisdiction Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
2201 Second Street, Suite 600, Fort Myers, Florida		33901
(Address of Principal Executive Offices)		(Zip Code)
	(239) - 337-3434
	(Registrant's Telephone Number, including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS

Disposition of Material Portion of Ownership in Sponge Limited

On February 20, 2006, NeoMedia Technologies, Inc. (“NeoMedia) acquired all of the outstanding shares of Sponge Limited (“Sponge”) of London in exchange for (i) approximately $6 million cash, (ii) 33,097,135 shares of NeoMedia common stock with a fair market value at the time of acquisition of approximately $13.1 million, and (iii) approximately $4.4 million contingent consideration in the form of NeoMedia common stock if, during the two-year period beginning at closing, the Sponge business earned in excess of approximately $2.3 million in net profits. Pursuant to the terms of the original merger agreement, the number of shares of NeoMedia common stock to be issued as consideration was calculated using a share price of $0.384, which was the volume-weighted average closing price of NeoMedia common stock for the ten days up to and including February 8, 2006. The merger agreement stipulated that, in the event that NeoMedia’s stock price at the time the consideration shares became saleable was less than $0.384, NeoMedia would have been obligated to compensate Sponge shareholders in cash for the difference between the price at the time the shares became saleable and $0.384. Assuming a stock price at the time the shares became saleable of $0.08, which was the last sale price on November 10, 2006, NeoMedia would have had a cash liability of $10.1 million resulting from this clause (the “Purchase Price Guarantee Obligation”).

On November 14, 2006, NeoMedia and Sponge signed a definitive share purchase and settlement agreement (the “Agreement”), pursuant to which NeoMedia divested of a material portion of its ownership interest in Sponge. The material terms of the Agreement are as follows:

- NeoMedia returns 92.5% of its ownership interest in Sponge, retaining 7.5% ownership of Sponge;

- NeoMedia relinquishes its Board of Directors positions at Sponge

- The 33,097,135 shares of NeoMedia common stock that were issued as consideration to acquire Sponge are returned to NeoMedia and retired;

- All obligations under the original merger agreement, including the Purchase Price Guarantee Obligation, are terminated; and

- Sponge returns $100,000 cash (net of attorney fees) to NeoMedia at closing and $150,000 cash to NeoMedia on March 7, 2007.

The Agreement is attached hereto as exhibit 16.1. On November 16, 2006, NeoMedia issued a press release with respect to the Agreement, attached hereto as Exhibit 16.2.

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ITEM 9.01. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS

Pro Forma Financial Information

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

1. Basis of Presentation

Current Transaction

Acquisition and Disposition of Sponge Ltd.

On February 20, 2006, NeoMedia Technologies, Inc. (“NeoMedia) acquired all of the outstanding shares of Sponge Limited (“Sponge”) of London in exchange for (i) approximately $6 million cash, (ii) 33,097,135 shares of NeoMedia common stock with a fair market value at the time of acquisition of approximately $13.1 million, and (iii) approximately $4.4 million contingent consideration in the form of NeoMedia common stock if, during the two-year period beginning at closing, the Sponge business earned in excess of approximately $2.3 million in net profits. Pursuant to the terms of the original merger agreement, the number of shares of NeoMedia common stock to be issued as consideration was calculated using a share price of $0.384, which was the volume-weighted average closing price of NeoMedia common stock for the ten days up to and including February 8, 2006. The merger agreement stipulated that, in the event that NeoMedia’s stock price at the time the consideration shares became saleable was less than $0.384, NeoMedia would have been obligated to compensate Sponge shareholders in cash for the difference between the price at the time the shares became saleable and $0.384. Assuming a stock price at the time the shares became saleable of $0.08, which was the last sale price on November 10, 2006, NeoMedia would have had a cash liability of $10.1 million resulting from this clause (the “Purchase Price Guarantee Obligation”).

On November 14, 2006, NeoMedia and Sponge signed a definitive share purchase and settlement agreement (the “Agreement”), pursuant to which NeoMedia divested of a material portion of its ownership interest in Sponge. The material terms of the Agreement are as follows:

- NeoMedia returns 92.5% of its ownership interest in Sponge, retaining 7.5% ownership of Sponge;

- NeoMedia relinquishes its Board of Directors positions at Sponge

- The 33,097,135 shares of NeoMedia common stock that were issued as consideration to acquire Sponge are returned to NeoMedia and retired;

- All obligations under the original merger agreement, including the Purchase Price Guarantee Obligation, are terminated; and

- Sponge returns $100,000 cash (net of attorney fees) to NeoMedia at closing and $150,000 cash to NeoMedia on March 7, 2007.

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Other Material Acquisitions Since Last Fiscal Year-end

Acquisition of BSD Software, Inc.

On March 21, 2006, NeoMedia acquired all of the outstanding common shares of BSD. Pursuant to the terms of the merger, BSD was merged with and into NeoMedia Telecom Services, Inc., a wholly-owned subsidiary of NeoMedia. The separate corporate existence of BSD ceased as of the effective time of the merger, and NeoMedia Telecom Services, Inc. continues as the surviving corporation. In exchange for all of the outstanding shares of BSD, NeoMedia issued 7,123,698 shares of its common stock, valued at $0.3467, which is the volume-weighted average closing price of NeoMedia stock for the five days prior to the effective time of the merger. Each BSD shareholder received approximately 0.2019 share of NeoMedia common stock for each share of BSD common stock held.

Acquisition of Gavitec AG

On February 17, 2006, NeoMedia and Gavitec signed a definitive sale and purchase agreement, subject to closing conditions, under which NeoMedia acquired all of the outstanding shares of Gavitec in exchange for $1,800,000 cash and 13,660,511 shares of NeoMedia common stock, calculated by dividing $5,400,000 by the volume-weighted average closing price of NeoMedia common stock for the ten days up to and including February 16, 2006. On February 23, 2006, NeoMedia and Gavitec completed the closing requirements and the acquisition became effective. In the event that NeoMedia’s stock price at the time the consideration shares are saleable is less than $0.389, NeoMedia is obligated to compensate Gavitec shareholders in cash for the difference between the price at the time the shares become saleable and $0.389.

Acquisition of 12Snap AG

On February 10, 2006, NeoMedia and 12Snap signed a definitive sale and purchase agreement, subject to closing conditions, under which NeoMedia acquired all of the outstanding shares of 12Snap in exchange for $2,500,000 cash and 49,294,581 shares of NeoMedia common stock. On February 28, 2006, NeoMedia and 12Snap completed the closing requirements and the acquisition became effective. Pursuant to the terms of the merger agreement, the number of shares of NeoMedia common stock to be issued as consideration was calculated using a share price of $0.3956. In the event that NeoMedia’s stock price at the time the consideration shares are saleable is less than $0.3956, NeoMedia is obligated to compensate 12Snap shareholders in cash for the difference between the price at the time the shares become saleable and $0.3956.

Acquisition of Mobot, Inc.

On February 17, 2006, NeoMedia Technologies, Inc. (“NeoMedia) acquired all of the outstanding shares of Mobot, Inc. (www.mobot.com) (“Mobot”) in exchange for $3,500,000 cash and $6,500,000 in shares of NeoMedia common stock. The $6,500,000 stock portion of the purchase price is represented by 16,931,493 shares of NeoMedia common stock. Pursuant to the terms of the merger agreement, the number of shares of NeoMedia common stock to be issued as stock consideration was calculated using a share price of $0.3839. In the event that NeoMedia’s stock price at the time the consideration shares are saleable is less than $0.3839, NeoMedia is obligated to compensate Mobot shareholders in cash for the difference between the price at the time the shares become saleable and $0.3839. In addition to cash and stock, at closing NeoMedia forgave notes payable totaling $1,500,000 due from Mobot. This amount is considered other additional consideration in the purchase price allocation.

Audited financials statements for Sponge were included in amendment no. 2 to form 8-K filed with SEC on June 21, 2006. Audited financials statements for Mobot were included in amendment no. 1 to form 8-K filed with SEC on May 3, 2006. Audited financials statements for 12Snap were included in amendment no. 1 to form 8-K filed with SEC on May 8, 2006. Audited financials statements for Gavitec were included in amendment no. 1 to form 8-K filed with SEC on May 8, 2006. Audited financials statements for BSD were included in amendment no. 1 to form 8-K filed with SEC on June 2, 2006. BSD, Gavitec, Mobot and 12Snap balance sheets as of December 31, 2005 and statements of operations for the year ended December 31, 2005 are shown for pro forma purposes only.

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Presentation

The unaudited pro forma condensed combined historical statement of operations for the year ended December 31, 2005 gives effect to the acquisitions of BSD, Gavitec, 12Snap and Mobot as if they had occurred as of January 1, 2005, combining the historical results of NeoMedia for the year ended December 31, 2005 with the historical results of each entity for the year ended December 31, 2005. The acquisition and disposition of Sponge is assumed to have occurred on January 1, 2005, such that the net effect of the Sponge acquisition and disposition on the pro forma consolidated results of operations for the year ended December 31, 2005 is zero. Sponge’s operations for the year ended December 31, 2005 are shown separately in the pro forma statement of operations for informational purposes only.

The unaudited pro forma condensed combined historical statement of operations for the nine months ended September 30, 2006 gives effect to the acquisitions of BSD, Gavitec, 12Snap and Mobot as if they had occurred as of January 1, 2006, combining the historical results of NeoMedia for the nine months ended September 30, 2006 with the historical results of each entity for the nine months ended September 30, 2006. The acquisition and disposition of Sponge is assumed to have occurred on January 1, 2006, such that the net effect of the Sponge acquisition and disposition on the pro forma consolidated results of operations for the nine months ended September 30, 2006 is zero. Sponge’s operations for the nine months ended September 30, 2006 are shown separately in the pro forma statement of operations for informational purposes only.

The unaudited pro forma condensed combined balance sheet as of September 30, 2006 gives effect to the acquisitions of BSD, Gavitec, 12Snap and Mobot as if they had occurred as of September 30, 2006. The acquisition and disposition of Sponge is also assumed to have occurred on September 30, 2006, such that the net effect of the Sponge acquisition and disposition on the pro forma condensed combined balance sheet as of September 30, 2006 is zero.

The unaudited pro forma combined financial statements included in this filing have been prepared by the managements of BSD, NeoMedia, Sponge, Gavitec, 12Snap, and Mobot without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the managements of NeoMedia, BSD, Sponge, Gavitec, 12Snap, and Mobot believe that the disclosures are adequate to make the information not misleading.

The pro forma adjustments are based on currently available information and upon estimates and assumptions that we believe are reasonable under the circumstances. The unaudited pro forma financial data do not purport to represent what NeoMedia’s financial position or results of operations would actually have been if such transactions had occurred on those dates and are not necessarily representative of NeoMedia’s financial position or results of operations for any future period. The unaudited pro forma financial statements should be read in conjunction with the separate historical financial statements and footnotes of NeoMedia included in Form 10-KSB for the year ended December 31, 2005 and in Form 10-Q for the three and nine months ended September 20, 2006, and with the separate historical financial statements and footnotes of Sponge for the years ended September 30, 2005 and 2004 (included in Form 8-K/A filed with the SEC on June 21, 2006), with the separate historical financial statements and footnotes of BSD for the years ended December 31, 2005 and 2004 (included in Form 8-K/A filed with the SEC on June 2, 2006), with the separate historical financial statements and footnotes of Gavitec for the years ended December 31, 2005 and 2004 (in Form 8-K/A filed with the SEC on May 8, 2006), with the separate historical financial statements and footnotes of 12Snap for the years ended December 31, 2005 and 2004 (included in Form 8-K/A filed with the SEC on May 8, 2006), and with the separate historical financial statements and footnotes of Mobot for the years ended December 31, 2005 and 2004 (included in Form 8-K/A filed with the SEC on May 3, 2006).

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2. Preliminary Price Allocation

A final determination of the sale of the assets and liabilities of Sponge has not been made. The allocation reflected in the unaudited pro forma combined financial statements is based on management’s best judgment and estimate of the accounting treatment of the transaction, and should be considered preliminary. The final allocation could differ materially from the pro forma allocation included herein.

3. Pro forma Net Loss Per Share

The pro forma basic and dilutive net loss per share are based on the pro forma  weighted average number of shares of NeoMedia's common stock as if the shares issued to acquire BSD, Gavitec, 12Snap and Mobot had been issued at the beginning of the period shown, and if Sponge shares were issued and retired at the beginning of the period shown. Dilutive shares are not included in the computation of pro forma dilutive net loss per share as their effect would be anti-dilutive.

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NeoMedia Technologies, Inc.

Unaudited Pro-forma Condensed Combined Balance Sheet

September 30, 2006

(In thousands of US Dollars)

				Pro-forma
				Adjustments
ASSETS	(A)			Disposition				Pro-forma
	NeoMedia			of Sponge				Consolidated
Current assets:	(unaudited)			(unaudited)				(unaudited)
Cash and cash equivalents	$	3,133			($142	)	(E) (F)	$	2,991
Trade accounts receivable, net		6,097			(785	)	(F)		5,312
Inventories, net		53			—				53
Investment in marketable securities		255			—				255
Prepaid expenses and other current assets		753			111		(F)		864
Assets held for sale from Micro Paint Repair business unit;		3,451			—				3,451
Total current assets		13,742			(816	)			12,926
Property and equipment, net		564			(43	)			521
Capitalized patents, net		2,922			—				2,922
Customer contracts and relationships		2,239			(352	)	(C ) (F)		1,887
Capitalized software platform		13,655			(1,188	)	(C ) (F)		12,467
Other intangible assets		2,589			(796	)	(C ) (F)		1,793
Goodwill		50,082			(16,799	)	(C ) (F)		33,283
Long Term investment in Sponge		0			1,456		(D) (F)		1,456
Cash surrender value of life insurance policy		797			—				797
Other long-term assets		1,232			—				1,232
Total assets	$	87,822			($18,538	)		$	69,284
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	5,550			($96	)	(F)	$	5,454
Accrued expenses		4,771			(809	)	(F)		3,962
Amounts payable under settlement agreements		97			—				97
Taxes payable		1,178			(29	)	(F)		1,149
Deferred revenues and other		1,925			(75	)	(F)		1,850
Liabilities in excess of assets of discontinued business unit		676			—				676
Notes and loans payable		2,340			—				2,340
Liabilities held for sale from Micro Paint Repair business unit		750			—				750
Derivative financial instruments		26,677			—				26,677
Total current liabilities		43,964			(1,009	)			42,955
Long-term debt and convertible debentures		73			—				73
Shareholders’ deficit:
Preferred stock		2,931			—				2,931
Common stock (B)		6,552			(331	)	(B)		6,221
Additional paid-in capital		155,359			(17,098	)	(B)		138,261
Accumulated other comprehensive income (loss)		(660	)		—				(660	)
Retained earnings (accumulated deficit)		(119,618	)		(100	)	(F)		(119,718	)
Treasury stock		(779	)		—				(779	)
Total shareholders’ deficit		43,785			(17,529	)			26,256
Total liabilities and shareholders’ deficit	$	87,822			($18,538	)		$	69,284

Pro-forma Adjustments

(A) -	NeoMedia consolidated balance sheet as of September 30, 2006 includes Sponge balances.
(B) -	Adjustment to retire 33,097,135 shares of stock returned from Sponge to NeoMedia pursuant to the terms of the disposition. As of September 30, 2006, NeoMedia’s $0.01 par value common stock consists of 5,000,000,000 authorized shares, 656,853,390 historical shares and 623,756,255 pro forma shares issued; and 655,211,964 historical shares and 622,114,829 pro forma shares outstanding
(C) -	Adjustment to remove intangible assets and goodwill related to the acquisition of Sponge
(D) -	Adjustment to establish 7.5% remaining ownership of sponge, based on actual fair value paid by NeoMedia for Sponge of $19.4 million.
(E) -	Adjustment to reflect cash being returned from Sponge and note receivable due to NeoMedia.
(F) -	Sponge balance sheet amounts included in with NeoMedia.

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NeoMedia Technologies, Inc.

Unaudited Pro-forma Combined Condensed Statement of Operations

For the Nine Months Ended September 30, 2006

(In thousands of US Dollars, except per share data)

																					Pro				Pro
				Acquisition			Acquisition			Acquisition			Acquisition			Acquisition		Disposition			Forma				Forma
				(A)			(A)			(A)			(A)			(A)		(B)			Adjust-				Consol-
	NeoMedia			Mobot			Sponge			Gavitec			12Snap			BSD		Sponge			ments				idated
NET SALES:	(unaudited)*			(unaudited)*			(unaudited)*			(unaudited)*			(unaudited)*			(unaudited)*		(unaudited)*			(unaudited)				(unaudited)
Net sales	$	14,129		$	344		$	1,496		$	1,012		$	7,495		$	8,508		($1,496	)		($16,432	)	(C)	$	15,056
Cost of sales		8,887			83			424			374			2,062			7,100		(424	)		(9,190	)	(C)(D)		9,316
GROSS PROFIT		5,242			261			1,072			638			5,433			1,408		(1,072	)		(7,242	)			5,740
Selling, general and administrative expenses		13,471			837			1,536			660			4,388			1,113		(1,536	)		(6,531	)	(C)(D)		13,938
Stock based compensation expense		4,948			0			0			0			0			0		0			0				4,948
Research and development costs		2,309			431			0			451			932			0		0			(1,645	)	(C)(D)		2,478
Income (loss) from operations		(15,486	)		(1,007	)		(464	)		(473	)		113			295		464			933				(15,625	)
Loss on extinguishment of debt, net		(1,858	)		—			—			55			—			—		—			—				(1,803	)
Other income (loss)		—			—			—			—			—			—		—			—				0
Write off of deferred eqity financing costs		(13,256	)		—			—			—			—			—		—			—				(13,256	)
Change in fair value from revaluation of warrants and embedded conversion features		6,523			—			—			—			—			—		—			—				6,523
Interest income (expense), net		(191	)		—			—			—			(165	)		26		—			128		(C)		(202	)
Income before provision for income taxes		(24,268	)		(1,007	)		(464	)		(418	)		(52	)		321		464			1,061				(24,363	)
Provision for income taxes		—			—			—			—			—			—		—			—				—
Income (loss) from continuing operations		(24,268	)		(1,007	)		(464	)		(418	)		(52	)		321		464			1,061				(24,363	)
Discontinued operations
Loss from discontinued Micro Paint Repair business unit		(2,826	)		—			—			—			—			—		—			—				(2,826	)
Net income (loss)		(27,094	)		(1,007	)		(464	)		(418	)		(52	)		321		464			1,061				(27,189	)
NET INCOME (LOSS) PER
SHARE--BASIC AND DILUTED		($0.04	)																							($0.04	)
Weighted average number of common shares-basic and diluted		602,132,555																				46,461,692		(E)		648,594,247

* -	Derived from unaudited interim financial statements for the nine months ended September 30, 2006
(A) -	Results of Mobot, Sponge, Gavitec, 12Snap, and BSD were included in NeoMedia's consolidated results for the nine months ended September 30, 2006 as follows: Mobot (February 18 - September 30), Sponge (February 24 - September 30), Gavitec (February 24 - September 30), 12Snap (March 1 - September 30), and BSD (March 22 - September 30). These columns reflect the results of operations of each acquired entity, estimated for the entire nine month period, as if these entities were acquired on January 1, 2006.
(B) -	For pro forma purposes, the Sponge acquisition and disposition are both assumed to have occurred on January 1, 2006, so there is no net effect on the pro forma consolidated statement of operations resulting from the Sponge acquisition and disposition. Sponge results are shown separately for presentation purposes only.
(C) -	Adjustments to reflect portion of Mobot, Gavitec, Sponge, 12Snap, and BSD operations that were included in NeoMedia's consolidated operations for the nine months ended September 30, 2006.
(D) -	Adjustments to reflect amortization of acquired intangible assets for the nine months ended September 30, 2006, as if the acquisitions had occurred on January 1, 2006, of $0.1 million for each cost of sales and Selling, general and administrative expenses.
(E) -	Adjustment to increase the number of shares included in NeoMedia's actual weighted average shares outstanding for the nine months ended September 30, 2006 to the weighted average number of shares that would have been outstanding for pro forma purposes if the acquisitions had occurred on January 1, 2006. For pro forma purposes, the Sponge acquisition and disposition are both assumed to have occurred on January 1, 2006, so there is no net effect on weighted average shares outstanding resulting from the Sponge acquisition and disposition.

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NeoMedia Technologies, Inc.

Unaudited Pro-forma Combined Condensed Statement of Operations

For the Year Ended December 31, 2005

(In thousands of US Dollars, except per share data)

																						Pro				Pro
																						Forma				Forma
	(A)			(A)			(A)			(A)			(A)			(A)			(B)			Adjust-				Consol-
	NeoMedia			Mobot			Sponge			Gavitec			12Snap			BSD			Sponge			ments				idated
NET SALES:	*			*			(unaudited)**			*			*			(unaudited)***			(unaudited)**			(unaudited)				(unaudited)
Technology license, service and products		877			300			2,248			772			7,396			8,437			(2,248	)		—				17,782
Micro paint repair products and services		1,279			—			—			—			—			—			—			—				1,279
Total net sales		2,156			300			2,248			772			7,396			8,437			(2,248	)		0				19,061
COST OF SALES:
Technology license, service and products		659			0			1,296			722			0			6,973			(1,296	)		1,886		(C)		10,240
Micro paint repair products and services		913			—			—			—			—			—			—			—				913
Total cost of sales		1,572			0			1,296			722			0			6,973			(1,296	)		1,886				11,153
GROSS PROFIT		584			300			952			50			7,396			1,464			(952	)		(1,886	)			7,908
Selling, general and administrative expenses		7,561			1,180			796			972			7,147			1,184			(796	)		718		(C)		18,762
Impairment charge		335			0			0			0			0			0			0			0				335
Research and development costs		934			552			0			503			1,515			0			0			0				3,504
Income (loss) from operations		(8,246	)		(1,432	)		156			(1,425	)		(1,266	)		280			(156	)		(2,604	)			(14,693	)
Loss on extinguishment of debt, net		172						0			0			0			0			0			0				172
Other income (loss)		0						57			296			230			0			(57	)		0				526
Impairment charge on investments		(780	)					0			0			0			0			0			0				(780	)
Interest income (expense), net		(293	)		(42	)		18			0			(515	)		(150	)		(18	)		0				(1,000	)
Income before provision for income taxes		(9,147	)		(1,474	)		231			(1,129	)		(1,551	)		130			(231	)		(2,604	)			(15,775	)
Provision for income taxes		—			—			(60	)		—			—			—			60			—				—
Net income (loss)		(9,147	)		(1,474	)		171			(1,129	)		(1,551	)		130			(171	)		(2,604	)			(15,775	)
NET INCOME (LOSS) PER
SHARE--BASIC AND DILUTED		($0.02	)																								($0.03	)
Weighted average number of common shares-basic and diluted		451,857,851																					129,039,321		(D)		580,897,172

* -	Derived from audited financial statements
** -	Sponge fiscal year end is September 30. Results shown are for the year ended December 31, 2005, compiled from Sponge’s audited financial statements for the year ended September 30, 2005 and interim financial statements for the three months ended December 31, 2005 and 2004.
*** -	BSD fiscal year end is July 31. Results shown are for the year ended January 31, 2006, compiled from BSD’s audited financial statements for the year ended July 31, 2005 and interim financial statements for the six months ended January 31, 2006 and 2005
(A) -	For pro forma presentation purposes, Gavitec and 12Snap results are converted from Euros to US Dollars at a rate of 0.80844 Euro/US Dollar, which was the average exchange rate for the period January 1, 2005 - December 31, 2005.
(B) -	For pro forma purposes, the Sponge acquisition and disposition are both assumed to have occurred on January 1, 2005, so there is no net effect on the pro forma consolidated statement of operations resulting from the Sponge acquisition and disposition. Sponge results are shown separately for presentation purposes only.
(C) -	Adjustment to reflect amortization of acquired intangible assets for the year ended December 31, 2005, as if the acquisitions had occurred on January 1, 2005, of $1.9 million for Cost of sales and $0.7 million for Selling, general and administrative expenses.
(D) -	Adjustment to reflect the number of shares that would have been outstanding for pro forma purposes if the acquisitions had occurred on January 1, 2005. For pro forma purposes, the Sponge acquisition and disposition are both assumed to have occurred on January 1, 2006, so there is no net effect on weighted average shares outstanding resulting from the Sponge acquisition and disposition.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NeoMedia Technologies, Inc.
	(Registrant)
Date: November 20, 2006	By:	/s/ Charles T. Jensen
		Charles T. Jensen, President, Chief Executive Officer and Director

10

EXHIBIT INDEX

Exhibit No.	Description
16.1	Definitive share purchase and settlement agreement between NeoMedia and Sponge
16.2	Press release dated November 16, 2006

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EX-16.1

Dated November 14, 2006

(1)NEOMEDIA TECHNOLOGIES, INC.

(2)ALEXANDER MEISL AND OTHERS

(3)THOMAS BUCK

-and-

(4)SPONGE LIMITED

________________________

SHARE PURCHASE & SETTLEMENT AGREEMENT

RELATING TO SPONGE LIMITED

________________________

SIMONS MUIRHEAD & BURTON

50 Broadwick Street

London W1F 7AG

Tel: 0207 556 3100

Ref: SMG/JG

AGREEMENT dated November 14, 2006

BETWEEN:

(1) Neomedia Technologies, Inc (incorporated under the laws of the State of Delaware, USA, Charter No. 2648151) whose registered office is at 2201 Second Street, Suite 600, Ft. Myers, Florida 33901, USA (‘the Seller’)

(2) The Persons whose names and addresses are set out in Column (1) of Schedule 1 (‘the Buyers’)

(3) Thomas Buck of 168C King Street, London W6 0QU (“TB”)

(4) Sponge Limited (incorporated under the laws of England and Wales with number 3101024) whose registered office is at 11-12 Charlotte Mews, London W1T 4EQ (the “Company”)

1 INTERPRETATION

1.1 In this Agreement, unless the context otherwise requires -

‘Business Day’ means a day (other than a Saturday, Sunday or public holiday) when banks in the City of London are open for business.

‘Buyers’ Solicitors’ means Simons Muirhead & Burton, 50 Broadwick Street, London W1F 7AG;

“Call Option Notice” a notice in writing under clause 8.1 from the Buyers requiring the Seller to sell for an amount equal to the Sale Price all the Seller’s Remaining Shares;

‘Company’ means Sponge Limited, particulars of which are set out in Schedule 2;

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‘Competent Authority’ includes any national or supra-national court, the European Commission and any governmental or local authority or other body exercising powers pursuant to any Act of Parliament or Royal Charter;

‘Completion’ means the completion of the sale and purchase of the Sale Shares in accordance with the provisions of clause 4;

‘Completion Date’ means the date of this Agreement;

‘connected with’ will be construed in accordance with S.839 of the Income and Corporation Taxes Act 1988

‘Consideration’ has the meaning given in clause 3.1;

‘Consideration Shares’ has the meaning ascribed thereto in the Original Share Purchase Agreement;

‘Encumbrance’ means any interest or equity of any person (including any right to acquire, option or right of pre-emption) or any mortgage, charge, pledge, lien, assignment, hypothecation, security, title, retention or any other security agreement or arrangement or adverse rights of any description;

‘Escrow Shares’ means the 3,400,390 Consideration Shares placed into escrow under the Original Share Purchase Agreement;

“Group” means in relation to a company, any subsidiary or holding company of that company or any other subsidiary of any holding company of that company;

‘Initial Consideration Shares’ means the 29,696,745 Consideration Shares issued to the Buyers at or shortly following completion of the Original Share Purchase Agreement (but excluding, for the avoidance of doubt, the Escrow Shares);

‘Original Share Purchase Agreement’ means the Share Purchase Agreement dated 23 February 2006 between the Seller, each of the Buyers and TB;

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‘Sale Price’ has the meaning given in Article 10.10 in the Company’s Articles of Association adopted on or about the date of this Agreement

“the Seller’s Remaining Shares” means the seven hundred and fifty (750) ordinary shares in the capital of the Company and any and all other shares and securities in the capital of the Company held by the Seller or any company in its Group or in which it has an interest from time to time;

‘Sale Shares’ means the 9,250 ordinary shares in the Company specified in Column (2) of Schedule 1 and the 61,000 preference shares in the Company specified in Column (3) of Schedule 1;

‘Seller’s Solicitors’ means Kirkpatrick & Lockhart Nicholson Graham LLP of 110 Cannon Street, London EC4N 6AR;

‘subsidiary’ in relation to a company wherever incorporated (a holding company) means a “subsidiary” as defined in section 736 of the Companies Act 1985;

‘Warranties’ means the representations and warranties contained in Schedule 4;

1.2 In this Agreement, unless the context otherwise requires, a reference to a clause or a Schedule is a reference to a clause of or a Schedule to this Agreement and a reference to this Agreement includes a reference to each Schedule.

1.3 The headings in this Agreement are for convenience only and shall not affect its interpretation.

1.4 References to the parties hereto include their respective successors in title, assignees, estates and legal personal representatives.

1.5 References to the singular shall include a reference to the plural and vice versa unless the context otherwise requires.A reference to one gender includes a reference to the other gender.

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1.6 References to statutes or statutory provisions and orders or regulations made thereunder include that statute provision order or regulation as amended, modified re-enacted or replaced from time to time before the date hereof and to any previous statute, statutory provision order or regulation amended modified re-enacted or replaced by such statute provision order or regulation.

1.7 The expression “person” shall mean any natural person, partnership, joint venture, corporation (wherever incorporated), trust, firm, association, government, governmental or supra-governmental agency, authority or department or any other entity, whether acting in an individual, fiduciary or other capacity.

2 SALE OF THE sale SHARES

2.1 The Seller shall sell to each of the Buyers with full title guarantee and, notwithstanding any limitation otherwise implied by the Law of Property (Miscellaneous Provisions) Act 1994, free from all Encumbrances and with all rights now or hereafter becoming attached to them that number of Sale Shares set against that Buyer’s name in Schedule 1 and each of the Buyers shall buy that respective number of Sale Shares on the date of Completion.

2.2 The Seller hereby waives any rights which it may have under the articles of association of the Company or otherwise to have the Sale Shares or any of them offered to him for purchase.

2.3 The Buyers will not be obliged to complete the purchase of any of the Shares unless the purchase of all the Sale Shares is completed simultaneously.

3 CONSIDERATION

3.1 The Consideration for the Sale Shares will be satisfied by

(a) the payment to the Seller of fifty two thousand three hundred and fifty six pounds sterling (£52,356) on Completion;

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(b) (subject to Completion taking place) the payment to the Seller of one hundred and fifty thousand United States dollars (US$150,000) on 7 March 2007; and

(c) the return to the Seller of the Initial Consideration Shares and the Escrow Shares.

3.2 The consideration received by the Seller shall be deemed to be reduced by the amount of any payment made to any of the Buyers under clause 5.

4 COMPLETION

4.1 The sale and purchase of the Sale Shares shall be completed on the Completion Date when the matters set out in this clause 4 will take place.

4.2 At Completion, the Seller shall

(a) deliver or cause to be delivered the documents and evidence set out in Part 1 of Schedule 3

(b) procure that a board meeting of the Company is held at which the matters identified in Part 2 of Schedule 3 are carried out; and

(c) deliver any other documents referred to in this Agreement as being required to be delivered by the Seller.

4.3 At Completion, the Buyers shall pay, or procure the payment in accordance with clause 6.2 of, twenty eight thousand eight hundred and fifty six pounds sterling (£28,856) (being the amount payable under clause 3.1(a) less the Seller’s agreed contribution to the Buyers’ legal fees as provided in clause 11.11) by same day bank transfer to the Seller's Solicitors (who are irrevocably authorised to receive the same). Payment made in accordance with this clause shall constitute a valid discharge of the Buyers’ obligations under clause 3.1(a). The details of the Seller’s Solicitors client account are as follows: Lloyds TSB Bank plc, Sort code 30-95-74, Account number 0214272, Reference Neomedia.

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4.4 If in any respect the Seller does not comply with the provisions of Schedule 3 on Completion then the Buyers may, without prejudice to any other rights they have:-

(a) defer Completion to a date not more than 28 days after the date on which Completion would otherwise have taken place (and so that the provisions of this sub-clause will apply to Completion as so deferred); or

(b) proceed to Completion so far as practicable (without prejudice to its rights hereunder); or

(c) terminate this Agreement and clause 11.12 shall apply.

4.5 The Seller agrees and acknowledges that for so long as it remains the registered holder of any of the Sale Shares after Completion it will:

(a) hold each of the Sale Shares and the dividends and other distributions of profits or surplus or other assets declared, paid or made in respect of it after Completion and all rights arising out of or in connection with it in trust for the respective Buyer of such Sale Share;

(b) deal with each of the Sale Shares and all such dividends, distributions and rights as the respective Buyer may direct;

(c) vote at all meetings which it shall be entitled to attend as the registered holder of each of the Sale Shares in such manner as the respective Buyer shall direct; and

(d) execute all instruments of proxy or other documents in respect of each of the Sale Shares which the respective Buyer may require to enable that Buyer to attend and vote at any such meeting.

and the Seller hereby irrevocably authorises the respective Buyer to appoint some person to execute on behalf of the Seller all instruments or proxies or other documents as the respective Buyer may require and which may be necessary to enable the respective Buyer to attend and vote at general meetings of the Company and to do anything necessary to give effect to the rights contained in this clause 4.5.

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4.6 Each Buyer shall (or within 15 days of Completion shall) deliver to the Seller’s Solicitors stock certificates representing the number of Consideration Shares set opposite his/her/its name in Column 4 of Schedule 1 duly endorsed or accompanied by duly executed stock powers in favour of the Seller. For the avoidance of doubt, no failure by one or more individual Buyers to deliver such stock certificates by the relevant date or at all will invalidate Completion.

5 warranties

5.1 The Seller represents and warrants to each of the Buyers that at Completion the Warranties are true accurate and not misleading.

5.2 The Seller acknowledges that the Warranties are given by the Seller with the intention of inducing the Buyers to enter into this Agreement and that the Buyers are entering into this Agreement in reliance upon the Warranties.

5.3 Without prejudice to the right of the Buyers to claim on any other basis or take advantage of any other remedies available to them, if any Warranty is breached or proves to be untrue or misleading, the Seller shall pay to the Buyers on demand:

(a) the amount necessary to put the Company into the position it would have been in if the Warranty had not been breached or had not been untrue or misleading; and

(b) all costs and expenses (including, without limitation, damages, claims, demands, proceedings, costs, tax liabilities, legal and other professional fees and costs, penalties, expenses and consequential losses whether directly or indirectly arising) incurred by any of the Buyers or the Company as a result of such breach or of the Warranty being untrue or misleading (including a reasonable amount in respect of management time).

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If any payment made in accordance with the provisions of this clause 5 gives rise to a liability to taxation or increased liability to taxation on the part of any Buyer (or would but for the availability of any relief, allowance, set off, deduction, credit or other relief to taxation have given rise to such a liability) then such payment will also include any amount necessary to ensure that such Buyer is in the same after tax position (including preserving any reliefs) as such Buyer would have been in had the payment not given rise to a liability to taxation or increased liability to taxation.

5.4 Warranties qualified by the expression “so far as the Seller is aware”(or any similar expression) are deemed to be given to the best of the knowledge, information and belief of Martin Copus, David Dodge, Charles Jensen and the officers and/or employees of the Seller and/or any company in its Group and/or of any person providing services to the Seller and/or to any company in its Group after they have made careful enquiries (save for warranty 2 where such warranty (but only to the extent qualified as above) will be deemed given based on the actual knowledge of Martin Copus, David Dodge, Charles Jensen and the officers and/or employees of the Seller and/or any company in its Group and/or of any person providing services to the Seller and/or to any company in its Group). For the avoidance of doubt, if any agreement or arrangement or resolution or corporate action has been agreed, signed, undertaken and/or entered into by any of Martin Copus, David Dodge, Charles Jensen and/or the officers and/or employees of the Seller and/or any company in its Group and/or of any person providing services to the Seller and/or to any company in its Group (and/or at any meeting at which any of them were present) then the Seller will be deemed aware of such agreement and/or arrangement and/or resolution and/or corporate action.

5.5 Each of the Warranties is separate and, unless otherwise specifically provided, is not limited by reference to any other Warranty or any other provision in this agreement.

5.6 The Seller’s liability under the Warranties shall be limited to an amount equal to the amount of the Consideration.

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6 Termination of original share purchase agreement

6.1 The parties hereby agree and acknowledge (the Company to the extent that it is a party thereto) that the Original Share Purchase Agreement, the Tax Deed, the Service Agreements and all related documentation signed on or about the date of the Original Share Purchase Agreement are terminated at Completion and the Escrow Agreement and the Escrow Account Instructions are terminated with effect from completion of the matters set out in clauses 6.3 and 6.2 respectively and none of the above shall be enforceable by any party against the other as to any of its terms and conditions (whether or not any alleged breach has occurred before the date of this Agreement) and it is agreed for the avoidance of doubt and without limitation, that

(a) the Buyers and TB may retain for their own account the Cash Consideration (and for the avoidance of doubt the Primary Warrantors may retain the Escrow Cash) and (save to the extent it is being used to satisfy the Consideration as set out in clause 6.2) the Seller hereby waives any right it may have and agrees to make no claim in relation thereto

(b) each of the Buyers and TB hereby waives any right he may have in relation to the Initial Consideration Shares, the Escrow Shares, the Top-Up Amount and/or the Deferred Consideration, and further waives any contractual or other claim he may have arising out of the same matters or the non-performance thereof

(c) the Seller hereby waives any right it may have and agrees to make no claim in relation to the Warranties and/or under any indemnity in the Original Share Purchase Agreement.

(d) the Seller hereby releases each of the Buyers and TB from any restriction binding on him preventing him undertaking any kind of business or approaching and/or dealing in any way with any person under the Original Share Purchase Agreement including but not limited to those in clause 11 of such agreement.

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6.2 It is agreed that the Escrow Cash should be released in full without any deduction, set off or withholding of any kind to the Primary Warrantors and the Seller and the Primary Warrantors hereby irrevocably instruct the Buyers’ Solicitors and the Seller’s Solicitors to pay the full amount of the Escrow Cash by bank transfer as to twenty eight thousand eight hundred and fifty six pounds sterling (£28,856) to the Seller’s Solicitors client account in satisfaction of the Buyers’ obligation under clause 4.3 and at the same time to pay the balance to the Buyers’ Solicitors client account as follows: Royal Bank of Scotland, Sort Code: 16-01-23, Account number 14249079.

6.3 The Primary Warrantors and the Seller hereby irrevocably instruct the Escrow Agent to release the Escrow Shares to the Seller on Completion.

6.4 “Cash Consideration”, “Initial Consideration Shares”, “Top-Up Amount”, “Deferred Consideration”, “Tax Deed”, “Service Agreements”, “Escrow Cash”, “Primary Warrantors”, “Escrow Agreement” and “Escrow Account Instructions” in this clause 6 will have the same meaning as in the Original Share Purchase Agreement and “Escrow Agent” will have the same meaning as in the Escrow Agreement unless the contrary intention is clear.

6.5 The Seller hereby releases and discharges, and will procure that all members of the Seller’s Group will release and discharge, the Company and its subsidiary from all actions, causes of action, obligations and liabilities of any kind in relation to any loans, advances or other indebtedness of any kind whatsoever made by the Seller and/or any member of the Seller’s Group to the Company and/or its subsidiary and the Seller hereby waives, and will procure that each member of the Seller’s Group will waive, any right it may have and agrees to make no claim in relation thereto.

6.6 Save for their obligations in this Agreement which will remain in full force and effect (and without prejudice to clause 6.1), the Buyers and TB and the Company on the one part, and the Seller on the other, hereby release each other from all and any claims, demands and causes of action of which the parties are aware at the date of this Agreement relating to the purchase of shares in the Company by the Seller and/or any and all dealings by the Seller and/or any of the companies in its Group with the Company and its subsidiary prior to the date of this Agreement. Save for their obligations in this Agreement which will remain in full force and effect (and without prejudice to clause 6.1), the Buyers and TB and the Company on the one part, and the Seller on the other, hereby agree that the execution of this Agreement shall constitute full and final settlement of any and all claims or liabilities of any nature whatsoever of which the parties are aware at the date of this Agreement between the Parties and/or any successors in title, group companies, directors, officers, employees, servants, agents of any Party relating to the purchase of shares by the Seller in the Company and/or any and all dealings between the Seller and/or any of the companies in its Group and the Company and its subsidiary prior to the date of this Agreement. The Seller agrees with each of the Buyers and TB and the Company to procure that any and all members of the Seller’s Group give a release and waiver of claims in the same form as the above mutatis mutandis promptly following a written request from any of the Buyers to that effect after the date of this Agreement. The Company hereby agrees to pay the Seller the sum of one pound (£1) in consideration for it agreeing to enter into this Agreement.

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6.7 The Buyers agree that the Seller will not be obliged to fund the expenses of the Company or to lend the Company any amounts after the date of this Agreement.

6.8 The Seller hereby waives any right it may have to any dividend as a holder of the Preference Shares prior to Completion and agrees to make no claim in relation thereto.

7 northern & shell guarantee

7.1 The Primary Warrantors (as defined in the Original Share Purchase Agreement) undertake to use reasonable endeavours to procure that the Seller is released from the Guarantee following Completion and unconditionally undertake jointly and severally to indemnify the Seller until any liquidator, administrator, administrative receiver or receiver is appointed in respect of the Seller or over its assets or anything analogous takes place under the laws of any other jurisdiction in respect of any and all amounts paid by, and any and all claims, losses or liabilities incurred or suffered by, the Seller under or in respect of the Guarantee at any time after Completion.

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7.2 The Seller shall give the Primary Warrantors prompt written notice of any claim under the Northern & Shell Agreement (a “Claim”) for which the Primary Warrantors may be liable under clause 7.1. The Seller agrees that it will not agree, compromise and/or settle any Claim without the prior written consent of the Primary Warrantors. Subject to being indemnified for any reasonable costs it incurs (such costs to be approved in advance by the Primary Warrantors), the Seller shall take such action and give such information and assistance as the Primary Warrantors may reasonably request in writing to avoid, dispute, resist, mitigate, compromise or defend any Claim and to appeal against any judgment given in respect thereof. On the written request of the Primary Warrantors, the sole conduct of any legal proceedings of whatsoever nature arising out of any Claim shall be delegated to the Primary Warrantors. For this purpose and subject to being indemnified for any reasonable costs it incurs (such costs to be approved in advance by the Primary Warrantors), the Seller shall give or procure to be given to the Primary Warrantors all such assistance as the Primary Warrantors may reasonably require and in defence of any Claim shall use the same solicitors and other professional advisers as the Primary Warrantors (save only to the extent that a conflict of interest arises when the Seller may use other solicitors and other professional advisers). The Primary Warrantors shall keep the Seller fully and promptly informed of any proceedings relating to the Claim, shall consult the Seller on any matter which is or is likely to be material in relation to any such proceedings and shall take account of all reasonable requirements of the Seller in relation to such proceedings.

7.3 In this Clause 7 "the Guarantee" means the guarantee given by the Seller in favour of Northern & Shell plc under the Agreement dated 18 August 2006 between (1) Express Newspapers (2) Northern & Shell plc (3) the Company and (4) the Seller for the provision of telephony services (the “Northern & Shell Agreement”).

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8 option to purchase seller’s remaining shares in the company

8.1 The Buyers shall have the right (but not the obligation) to require the Seller to sell the Seller’s Remaining Shares to the Buyers for an amount equal to the Sale Price by serving a Call Option Notice upon the Seller, such notice to be given at any time after the date of this Agreement. If such Call Option Notice is served, the Seller will be deemed to have immediately served a Transfer Notice in respect of all the Seller’s Remaining Shares for the purposes of the Company’s Articles of Association which for these purposes will be deemed to be those adopted on or about the date of this Agreement (subject to the remaining provisions of this clause 8).

8.2 In the event of the Buyers serving a Call Option Notice upon the Seller, the Seller and the Buyers will attempt to agree in good faith the Sale Price for the Seller’s Remaining Shares and in the event agreement is not reached within 28 days of the date of the relevant Call Option Notice the calculation of the Sale Price shall be determined by the auditors of the Company in the same way as provided under Article 10.10 of the Company’s Articles of Association adopted on or about the date of this Agreement (save that the last sentence of such Article will not apply and in the second sentence of such Article the word “disregarding” shall apply in place of the words “taking into account”).

8.3 Completion of the sale and purchase of the Seller’s Remaining Shares will take place within 10 business days of the determination of the Sale Price when the Seller will execute stock transfer forms in respect of the Seller’s Remaining Shares in favour of the Buyers in the proportion in which the Sale Price is contributed by the Buyers (or as they may direct) and will deliver the same to the Buyers together with its share certificate(s) in respect of such shares and the Buyers will simultaneously pay an amount equal to the Sale Price in cash to the Seller (or as it may direct). The Seller’s Remaining Shares shall be deemed to be sold by the Seller with full title guarantee with effect from the date of such transfer free from any Encumbrance with all rights attaching thereto. The Seller will waive any rights which it may have under the articles of association of the Company or otherwise to have the Seller’s Remaining Shares or any of them offered to it for purchase.

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8.4 If the Seller (or any member of its Group) does not execute stock transfer forms in respect of the Seller’s Remaining Shares within 14 days of being required to do so, then (on paying an amount equal to the Sale Price to the Company) the Buyers shall be entitled to appoint a director of the Company to execute the necessary stock transfer form(s) on behalf of the Seller (and/or any member of its Group) and the directors of the Company will register the Buyers in the proportion in which the Sale Price is contributed by the Buyers (or as they may direct) as the holder of the Seller’s Remaining Shares, and after the Buyers (or their nominees) have been registered as the holder the validity of such proceedings shall not be questioned by any person.

8.5 Save pursuant to a Call Option Notice or Article 10.9 of the Company’s Articles of Association (as adopted on or about the date of this Agreement), the Seller will not transfer, sell, dispose of, charge, encumber, collateralise or hold as security any interest in any of the Seller’s Remaining Shares without the prior written consent of the Buyers or agree (whether subject to any condition precedent or condition subsequent or otherwise) to do any of such things

9 confidentiality and announcements

9.1 The Seller undertakes to each of the Buyers and the Company that it will not at any time hereafter use or divulge or communicate to any person other than to its professional advisors any confidential information of the Company or any subsidiary, including without limitation any information concerning the business, finance, sales and marketing methods, contractual arrangements, intellectual property rights or other dealings, transactions or affairs of the Company or any subsidiary which has come to its knowledge and it will use its best endeavours to prevent the publication or disclosure of any confidential information concerning such matters. This restriction will continue to apply after the sale of the Sale Shares without limit in time but will cease to apply to information or knowledge which may properly come into the public domain through no fault of the Seller, its officers, employees or agents.

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9.2 No public announcement, communication or circular concerning the transactions referred to in this Agreement shall be made or despatched at any time by the Seller without the prior written consent of the Buyers (the Buyers hereby authorising Alexander Meisl to give such consent on their behalf) and the Seller shall not in any event make any reference to the terms of this Agreement in any announcement, communication or circular (save in any of the above cases as may be required by law or the rules of a recognised investment exchange in which event the Seller shall make reasonable endeavours to procure the prior approval of the Buyers as to the content of such disclosure and in any event but without limitation the Seller will not make any derogatory statements about the Company and/or any of the Buyers).

9.3 The Buyers will co-operate with the Seller at the Seller’s cost and expense in relation to any regulatory filings or reporting requirements in respect of the Company, including without limitation, supplying any necessary information in a timely manner.

10 SERVICE OF NOTICES

10.1 Any notice or other communication to be given or served under or in connection with this Agreement shall be in writing and may be -

(a) delivered by hand;

(b) sent by ordinary first class (or airmail in the case of notices to or from any country outside the United Kingdom), special delivery or recorded delivery post (in each case, pre-paid); or

(c) sent by fax;

to the party due to receive the notice at the following address -

(i) in the case of the Seller, at its registered office from time to time, fax number: 001 239 337 3668, marked for the attention of the Company Secretary, and

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(ii) in the case of each of the Buyers, at his address set out in Column (1) of Schedule 1;

(iii) in the case of the Company, at its registered office from time to time, fax number: +44 20 7580 6408, marked for the attention of Alexander Meisl,

or at such other address or fax number as may previously by notice given in accordance with this clause have been specified by that party.

10.2 A notice is deemed to be given or served -

(a) if delivered by hand, at the time it is left at the address;

(b) if sent by pre-paid post (whether ordinary first class, airmail, special delivery or recorded delivery), on the second Business Day after posting; and

(c) if sent by fax, on receipt of a clear transmission report.

10.3 In the case of a notice given or served by fax or by hand, where this occurs after 5.00pm on a Business Day, or on a day which is not a Business Day, the date of service shall be deemed to be the next Business Day.

11 GENERAL

11.1 No modification or variation of this Agreement shall be effective unless it is made in writing.

11.2 This Agreement (together with all documents which are required by its terms to be entered into) sets out the entire agreement and understanding between the parties in connection with the Company and the sale and purchase of the Sale Shares. The parties acknowledge that they have not been induced to enter into this Agreement by any representation, warranty, agreement, promise or assurance by any of the others or any other person save for those contained in this Agreement. Each of the parties agrees that (except in respect of fraud) it shall have no right or remedy in respect of any other representation, warranty, agreement, promise or assurance save for those contained in this Agreement.

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11.3 If any provision of this Agreement is held by a Competent Authority to be invalid or unenforceable in whole or in part, this Agreement shall continue to be valid as to its other provisions and the remainder of the affected provision.

11.4 The provisions of this Agreement including the Warranties shall not be extinguished or affected by and shall remain in full force and effect notwithstanding Completion.

11.5 The Seller shall from time to time and at all times after the Completion Date at its own expense upon request by any Buyer execute or procure the execution of all documents and the doing of any acts as that Buyer may reasonably require for the purposes of vesting the relevant Sale Shares in the Buyer (or such person as it shall direct) and giving to that Buyer the full benefit of this Agreement. Each Buyer shall from time to time and at all times after the Completion Date at its own cost and expense upon request by the Seller execute or procure the execution of all documents and the doing of any acts as the Sellers may reasonably require for the purposes of giving to the Seller the full benefit of this Agreement.

11.6 No term of this Agreement shall be enforceable under the Contracts (Rights of Third Parties) Act 1999 by any person other than the parties to this Agreement.

11.7 This Agreement may be executed in more than one counterpart and shall come into force once each party has executed such a counterpart in identical form and exchanged it with the other parties.

11.8 This Agreement shall be governed by and construed in accordance with English law and the Seller submits to the exclusive jurisdiction of the English courts provided that nothing in this Agreement will prevent any Buyer taking action against the Seller in any other jurisdiction.

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11.9 This Agreement shall be binding on and endure for the benefit of the personal representatives and successors in title of the parties. None of the parties may assign their rights under this Agreement without the prior written consent of the other parties.

11.10 Time shall be of the essence of this Agreement.

11.11 Each party shall bear their own costs in relation to this Agreement save that the Seller will contribute £20,000 exclusive of VAT towards the Buyers’ costs in this matter. The Buyers will pay the Company’s legal fees in relation to this Agreement.

11.12 This Clause and clauses 9.1, 9.2, 11.8 and 11.11 will continue to have effect notwithstanding the termination or rescission of this Agreement and any rights or obligations of the parties in respect of any breach of this Agreement accruing prior to, on or as a result of such termination or rescission shall continue to subsist notwithstanding such termination or rescission. For the avoidance of doubt but without limitation, if this Agreement is terminated under clause 4.4 then the provisions of clause 6 will be deemed void ab initio and without force or effect.

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Signedby	)
for and on behalf of	)
NEOMEDIA TECHNOLOGIES, INC	)	/s/ Charles T. Jensen
	)
Signed by	)
ALEXANDER MEISL	)
	)	/s/ Alexander Meisl
	)
Signed by	)
THERESA MEISL	)
	)	/s/ Alexander Meisl (with power of attorney)
	)
Signed by	)
JUSTIN BYAM SHAW	)
	)	/s/ Alexander Meisl (with power of attorney)
	)
Signed by	)
DANIEL PARKER	)
	)	/s/ Daniel Parker
	)
Signed by	)
SAMANTHA FLINT	)
	)	/s/ Daniel Parker (with power of attorney)
	)
Signed by	)
HELEN BEARE	)
	)	/s/ Daniel Parker (with power of attorney)
	)

Signed by	)
MARK GIBBONS	)
	)	/s/ Alexander Meisl (with power of attorney)
	)
Signed by	)
MATTHEW KNOX	)
	)	/s/ Alexander Meisl (with power of attorney)
	)
Signed by	)
DOUGLAS MCDONALD	)
	)	/s/ Alexander Meisl (with power of attorney)
	)
Signed by	)
PHILIP TRELEASE	)
	)	/s/ Alexander Meisl (with power of attorney)
	)
Signed by	)
GEORGE GREIG	)
	)	/s/ Alexander Meisl (with power of attorney)
	)
Signed by	)
THOMAS BUCK	)
	)	/s/ Alexander Meisl (with power of attorney)
	)
Signedby	)
for and on behalf of	)
SPONGE LIMITED	)	/s/ Alexander Meisl (with power of attorney)
	)

EX-16.2

For Immediate Release
Press Contacts:
Charles T. Jensen	David A. Kaminer
NeoMedia Technologies, Inc.	NeoMedia Technologies, Inc.
+(239) 337-3434	+(914) 684-1934
cjensen@neom.com	dkaminer@kamgrp.com

NeoMedia Revises its Mobile Marketing Strategy,

Announces Sale of its Recently Acquired UK Subsidiary

FORT MYERS, FLA., Nov. 16, 2006 - NeoMedia Technologies, Inc. (OTC BB: NEOM), said today that it is continuing to revise its mobile marketing strategy, announcing the sale of recently acquired Sponge Ltd., a subsidiary based in the U.K., back to its founders. Previously, NeoMedia had announced the signing of a non-binding Letter of Intent to sell its micro paint repair business unit in order to concentrate its corporate marketing resources on mobile marketing opportunities for its patented qode® product platform.

Charles T. Jensen, president and CEO of NeoMedia, said “that this agreement with Sponge is another significant step by company management to target corporate resources on the introduction of our patented qode suite of productsin European markets and in North America and China. We decided it is in the best interest of our shareholders to continue to fine-tune our focus, trim our cash burn rate, and reverse substantial dilution.”

Under the terms of the agreement, NeoMedia receives back from Sponge 33,097,135 shares of its own stock and $100,000 (net of attorney fees) in cash, and is due an additional $150,000 by March 7, 2007. NeoMedia also retains a 7.5% interest in the London-based company which develops and implements mobile marketing campaigns, mobile applications and delivers content for U.K. and international customers.

All other agreements of NeoMedia relating to the acquisition are terminated, including the purchase price guarantee clause which called for NeoMedia to make up, in cash, any decrease in the value of shares issued as consideration for the acquisition of Sponge. Based on NeoMedia’s current share price, this obligation would have been in excess of $10 million.

“NeoMedia’s plan and intent,” said Mr. Jensen, “is to build shareholder value by focusing our development and marketing expertise on next-generation mobile applications and opportunities, especially for our qode direct-to-mobile-web cell phone technology. To do so successfully, NeoMedia must also concentrate its resources in order to continue to build our presence and products, here in the U.S., in Europe, and around the world.”

NeoMedia’s patented qode (www.qode.com) suite is an easy-to-use set of applications -- qode®reader and qode®window -- which provide One Click to Content™ connectivity for products, print, packaging and other physical objects to link directly to specific desired content on the Mobile Internet. qode®reader works with camera phones, letting users “click” on two-dimensional “smart codes” to access the Mobile Web site to which the code is linked, while qode®window lets users reach the same destination by entering a key word, slogan, or product barcode number.

“NeoMedia,” said Mr. Jensen, “looks forwardto a continuing working relationship with Sponge founding partners Alex Meisl and Dan Parker and their team as part owner and co-marketing partner.”

About NeoMedia Technologies, Inc.

NeoMedia Technologies, Inc. (www.neom.com), is a diversified global company offering leading edge, technologically advanced products and solutions for companies and consumers, built upon its solid family of patented products and processes, and management experience and expertise. Its NeoMedia Mobile group of companies offers end-to-end mobile enterprise and mobile marketing solutions through its flagship qode direct-to-mobile-web technology and ground-breaking products and services from four of the leading mobile marketing providers in the U.S. and Europe. By linking consumers and companies to the interactive electronic world, NeoMedia delivers one-to-one, permission-based, personalized and profiled dialogue -- anytime and anywhere.

This press release contains forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. With the exception of historical information contained herein, the matters discussed in this press release involve risk and uncertainties. Actual results could differ materially from those expressed in any forward-looking statement.

qode is a registered trademark, andqode®reader, qode®window and One Click to Content are trademarks of NeoMedia Technologies, Inc. Other trademarks are properties of their respective owners.