10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10 - Q

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

For the quarterly period ended September 30, 2013

or

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

For the transition period from __________ to ____________

Commission File Number 0-21743

NeoMedia Technologies, Inc.

(Exact Name of Issuer as Specified In Its Charter)

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

100 W Arapahoe Avenue, Suite 9, Boulder, Colorado 80302

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

303-546-7946

(Registrants’ telephone number, including area code)

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 for such shorter period that the registrant was required to submit and post such files). Yes  x    No ¨

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 number of outstanding shares of the registrant’s Common Stock on October 28, 2013 was 4,984,827,279.

NeoMedia Technologies, Inc.

Form 10-Q

For the Quarterly Period Ended September 30, 2013

Index

		Page
PART I	Financial Information	3
ITEM 1.	Financial Statements	3
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	25
ITEM 4.	Controls and Procedures	25
PART II	Other Information	26
ITEM 1.	Legal Proceedings	26
ITEM 1A.	Risk Factors	27
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
ITEM 3.	Defaults upon Senior Securities	27
ITEM 4.	Mine Safety Disclosures	27
ITEM 5.	Other Information	27
ITEM 6.	Exhibits	27
Signatures		29

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PART I — FINANCIAL INFORMATION

ITEM 1. Financial Statements

NeoMedia Technologies, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

	September 30, 2013		December 31, 2012
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	157	$	611
Trade accounts receivable		613		217
Prepaid expenses and other assets		132		120
Total current assets		902		948
Property and equipment, net		21		44
Goodwill		3,418		3,418
Proprietary software, net		-		99
Patents and other intangible assets, net		1,283		1,490
Other long term assets		-		40
Total assets	$	5,624	$	6,039
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable	$	377	$	506
Accrued expenses		534		399
Deferred revenue and customer prepayments		2,509		3,735
Notes payable		83		50
Deferred tax liability		706		706
Derivative financial instruments – warrants		184		3,687
Derivative financial instruments - Series C and D preferred stock and debentures payable		6,905		2,147
Debentures payable - carried at amortized cost		-		53
Debentures payable - carried at fair value		107,018		64,292
Total current liabilities		118,316		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, respectively, and a liquidation value of $4,816 and $4,480 at September 30, 2013 and December 31, 2012, respectively		4,816		4,840
Series D convertible preferred stock, $0.01 par value, 25,000 shares authorized, 3,481 shares issued and outstanding and a liquidation value of $348 at September 30, 2013 and December 31, 2012		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 September 30, 2013 and December 31, 2012, respectively		4,985		2,106
Additional paid in capital		190,946		188,814
Accumulated deficit		(312,906)		(264,630)
Accumulated other comprehensive loss		(102)		(235)
Treasury stock, at cost, 2,012 shares of common stock		(779)		(779)
Total shareholders' deficit		(117,856)		(74,724)
Total liabilities and shareholders' deficit	$	5,624	$	6,039

Refer to Notes to Condensed Consolidated Financial Statements.

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NeoMedia Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited)

(in thousands, except share and per share data)

	For the three months ended September 30,				For the nine months ended  September 30,
	2013		2012		2013		2012
Revenue	$	1,602	$	680	$	3,871	$	1,867
Cost of revenues		300		639		600		667
Gross profit		1,302		41		3,271		1,200
Sales and marketing expenses		16		112		124		532
General and administrative expenses		723		313		2,245		2,226
Research and development costs		123		195		507		788
Other operating losses (gains)		-		-		(227)		-
Operating income (loss)		440		(579)		622		(2,346)
Impairment loss on cash surrender value of life insurance policy		-		(527)		-		(527)
Gain on derecognition of accrued expenses and purchase price guarantee		-		8,300		-		8,300
Gain (loss) on extinguishment of debt		53		-		53		(27,479)
Gain (loss) from change in fair value of hybrid financial instruments		(24,165)		6,353		(46,959)		11,958
Gain (loss) from change in fair value of derivative liability - warrants		92		4,897		3,503		5,818
Gain (loss) from change in fair value of derivative liability - Series C and D preferred stock and debentures		(2,620)		1,036		(4,769)		(13,262)
Interest income (expense)		-		(10)		16		(4,407)
Net income (loss)		(26,200)		19,470		(47,534)		(21,945)
Deemed dividends on convertible preferred stock		-		-		(16)		-
Deemed dividends on convertible debentures		(45)		-		(726)		-
Net income (loss) available to common shareholders	$	(26,245)	$	19,470	$	(48,276)	$	(21,945)
Comprehensive income (loss):
Net income (loss)		(26,200)		19,470		(47,534)		(21,945)
Other comprehensive gain (loss) - investment in GmbH and foreign currency adjustment		-		(3)		133		(18)
Comprehensive income (loss):	$	(26,200)	$	19,467	$	(47,401)	$	(21,963)
Net income (loss) per common share, basic and diluted:
Basic	$	(0.005)	$	0.013	$	(0.013)	$	(0.020)
Fully diluted	$	(0.005)	$	0.004	$	(0.013)	$	(0.020)
Weighted average number of common shares:
Basic		4,984,827,279		1,510,797,881		3,823,483,604		1,075,605,167
Fully diluted		4,984,827,279		8,475,377,392		3,823,483,604		1,075,605,167

Refer to Notes to Condensed Consolidated Financial Statements.

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NeoMedia Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	For the nine months ended September 30,
	2013		2012
Cash Flows from Operating Activities:
Net income (loss)	$	(47,534)	$	(21,945)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		325		647
(Gain) loss on extinguishment of debt		(53)		27,479
Gain on derecognition of accrued expenses and purchase price guarantee		-		(8,300)
(Gain) loss from change in fair value of hybrid financial instruments		46,959		(11,958)
(Gain) loss from change in fair value of derivative liability - warrants		(3,503)		(5,818)
(Gain) loss from change in fair value of derivative liability - Series C and D preferred stock and debentures		4,769		13,262
Interest expense related to convertible debt		-		4,407
Stock-based compensation expense		1		15
Impairment loss on cash surrender value of life insurance policy		-		527
Changes in operating assets and liabilities:
Trade accounts receivable		(386)		107
Prepaid expenses and other assets		59		(26)
Accounts payable and accrued expenses		52		(243)
Deferred revenue and customer prepayments		(1,225)		469
Net cash used in operating activities		(536)		(1,377)
Cash Flows from Investing Activities:
Acquisition of property and equipment		-		(5)
Net cash used in investing activities		-		(5)
Cash Flows from Financing Activities:
Borrowing under short-term notes payable		110		110
Payments on short-term notes payable		(27)		-
Borrowing under convertible debt instruments		-		2,500
Net cash provided by financing activities		83		2,610
Effect of exchange rate changes on cash		(1)		18
Net change in cash and cash equivalents		(454)		1,246
Cash and cash equivalents, beginning of period		611		30
Cash and cash equivalents, end of period	$	157	$	1,276
Supplemental cash flow information:
Non-cash financing activities:
Series C preferred stock converted to common stock	$	24	$	878
Series D preferred stock converted to common stock		-		2,342
Convertible debentures converted to common stock		4,233		13,825
Deemed dividend on Series C preferred stock issued		16		-
Deemed dividend on convertible debentures converted		726		-

Refer to Notes to Condensed Consolidated Financial Statements.

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 NeoMedia Technologies, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

September 30, 2013

(Unaudited)

Note 1 – General

Business –  NeoMedia Technologies, Inc., a Delaware corporation (“NeoMedia”, and also referred to herein as “us”, “we” and “our”), was founded in 1989 and is headquartered in Boulder, Colorado. We have pioneered 2D mobile barcode technology and infrastructure solutions that enable the mobile barcode ecosystem world-wide. NeoMedia strives to harness the power of mobile devices in innovative ways with state-of-the-art mobile barcode services and technology. With this technology, mobile phones with cameras become barcode scanners, which enable a range of practical applications including mobile marketing, mobile commerce and advertising. We also offer barcode management services, reader solutions as well as licensing of our Intellectual Property (“IP”) portfolio.

Going Concern – We have historically incurred operating losses, and we may continue to generate negative cash flows as we implement our business plan. 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 accounting principles generally accepted in the United States of America (“US GAAP”), which contemplates our continuation as a going concern. Our net loss for the nine months ended September 30, 2013 and 2012 was $47.5 million and $21.9 million, respectively, including $48.2 million and $23.0 million, respectively, of net losses related to our financing instruments. Our operating income was $0.6 million for the nine months ended September 30, 2013, and our operating loss was $2.3 million for the nine months ended September 30, 2012.

Net cash used by operations during the nine months ended September 30, 2013 and 2012 was $0.5 million and $1.4 million, respectively. As of September 30, 2013, we have an accumulated deficit of $312.9 million. We also have a working capital deficit of $117.4 million, including $114.1 million in current liabilities for our derivative and debenture financing instruments.

As of September 30, 2013, we do not have sufficient authorized shares of common stock available for issuance to satisfy the conversion rights under certain outstanding convertible debenture and series of preferred stock. If the holders of such debentures and preferred stock request the conversion of such holdings to common stock, we would be unable to respond to the request which would result in an event of default under such instruments. Although we are making best efforts to pursue options to be able to honor the conversion rights of the debenture holders and preferred stock, we can provide no assurance that we will be successful with these efforts.

The items discussed above raise doubt about our ability to continue as a going concern.

We currently do not 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 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 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. 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.

The 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 the three and nine months ended September 30, 2013, there were 75 million and 2,879 million shares of common stock issued for these conversions, respectively. We cannot predict if or when each holder may or may not elect to convert into common shares.

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Our financial statements do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Note 2 – Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared without audit pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. We believe these statements include all adjustments, which are of a normal and recurring nature, considered necessary for a fair presentation of the financial statements. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K filed with the SEC on April 1, 2013. The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the full year.

Basis of Presentation – The condensed consolidated financial statements include the accounts of NeoMedia Technologies, Inc. and its wholly-owned subsidiary. We operate as one reportable segment. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates – The preparation of the condensed 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. Actual results could differ from those estimates. Changes in facts and circumstances may result in revised estimates, which are recorded in the period in which they become known.

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 included, among other things, the termination of the hardware business and 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 of the change in functional currency, translation gains and losses associated with the conversion of the NeoMedia Europe GmbH financial statements will be prospectively recorded in our results from operations effective July 1, 2013.

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 internally developed software.

We recognized revenue when: (a) persuasive evidence of the sales arrangement 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 (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 agreements, whereby continued performance or future obligations are considered inconsequential to the relevant license technology, are recognized as revenue upon delivery of the technology. We typically use signed contractual agreements as persuasive evidence of a sales arrangement.

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If 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.

Revisions to 2013 Interim Reporting – In connection with the completion of our third quarter 2013 reporting, we identified certain errors associated with our first and second quarter 2013 interim reporting. We assessed the impact of these errors and concluded that the errors did not result in a material misstatement. To correct the errors, we have revised our nine months ended September 30, 2013 reporting as discussed below. Our assessment considered the guidance provided by Accounting Standards Codification (ASC) Topic 250, Accounting Changes and Error Corrections and ASC Topic 250-10-S99-1, Assessing Materiality. Based on our conclusion that the errors were not material individually or in aggregate to any of the prior reporting periods, we determined amendments to previously filed financial statement reports were not required in accordance with the applicable ASC guidance. We also concluded that the revisions applicable to prior periods should be reflected herein and will be reflected in future filings containing such information.

The condensed consolidated statements of operations for the six months ended June 30, 2013 included a clerical error resulting in an understatement of general and administrative expenses of approximately $51,000. The revised net loss for the six months ended June 30, 2013 was $21,335,000, and there was no material effect on the basic and fully diluted net loss per share of $0.007. The previously reported condensed consolidated statements of operations for the three months ended March 31, 2013 and June 30, 2013 were properly stated.

As discussed in Note 4 – Financing, we are limited to issuing shares of common stock in connection with preferred stock and debenture conversions at no less than par value. The methodology used to determine the number of common stock shares issued for debentures and preferred stock is based upon the market value received for the shares issued, and any short-fall between the par value of the shares issued and the market value of the shares is recorded as a deemed dividend. During the three and six months ended June 30, 2013, the conversion of debentures and Series C Preferred Stock resulted in deemed dividends of $681,000 and $16,000, respectively, and the deemed dividend amounts were not reflected in the net loss available to common shareholders. The revised net loss available to common shareholders reflecting the inclusion of the deemed dividends was $31,069,000 and $22,032,000 for the three and six months ended June 30, 2013, respectively. The revised net loss available to common shareholders for the six months ended June 30, 2013 includes the impact of the correction to the general and administrative expenses noted in the above paragraph.

The condensed consolidated balance sheet as of June 30, 2013 included certain errors in connection with our consolidation of NeoMedia Europe GmbH. As a result of the errors, accounts payable and accrued expenses were understated by $163,000 and $38,000, respectively, as of June 30, 2013. Additionally, the accumulated other comprehensive income (loss) reported within shareholders’ deficit reflected income of $99,000 but should have reflected a loss of $102,000. The condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2013 reflected other comprehensive losses of $223,000 and $334,000, respectively, but should have reflected other comprehensive gains of $22,000 and $133,000, respectively. The revised comprehensive losses for the three and six months ended June 30, 2013 were $30,350,000 and $21,202,000, respectively. The revised comprehensive loss for the six months ended June 30, 2013 includes the impact of the correction to the general and administrative expenses noted in the above paragraph.

The condensed consolidated statements of cash flows for the three months ended March 31, 2013 overstated net cash used in operating activities and effect of exchange rate changes on cash by approximately $113,000. The revised net cash used in operating activities was approximately $547,000 and the effect of exchange rate changes on cash was negative $2,000. The condensed consolidated statements of cash flows for the six months ended June 30, 2013 overstated net cash used in operating activities and effect of exchange rate changes on cash by approximately $334,000. The revised net cash used in operating activities was approximately $541,000 and the effect of exchange rate changes on cash was $0.

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Basic and Diluted Net Income (Loss) Per Common Share – The components of basic and diluted income (loss) per share attributable to NeoMedia Technologies, Inc. common stock shareholders were as follows (in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Numerator:
Net income (loss) available to common shareholders	$	(26,245)	$	19,470	$	(48,276)	$	(21,945)
Effect of dilutive securities
Change in fair value of derivative liability    Series C and D preferred stock and    debentures		-		1,036		-		-
Change in fair value of derivative liability -     warrants		-		4,897		-		-
Change in fair value of hybrid financial     instruments		-		6,353		-		-
Interest expense on convertible debt		-		(10)		-		-
Numerator for diluted income (loss) per    common share	$	(26,245)	$	31,746	$	(48,276)	$	(21,945)
Denominator
Weighted average shares used to compute basic    income (loss) per common share		4,984,827,279		1,510,797,881		3,823,483,604		1,075,605,167
Effect of dilutive securities:
Derivative warrants		-		1,091,953,786		-		-
Convertible debentures		-		5,129,818,595		-		-
Convertible preferred stock		-		742,807,130		-		-
Denominator for diluted Income (loss) per    common share		4,984,827,279		8,475,377,392		3,823,483,604		1,075,605,167
Basic income (loss) per common share	$	(0.005)	$	0.013	$	(0.013)	$	(0.020)
Diluted income (loss) per common share	$	(0.005)	$	0.004	$	(0.013)	$	(0.020)

We excluded 513,342,555 dilutive securities from the calculation of diluted income (loss) per common share for the three months and nine months ended September 30, 2013 because inclusion of these securities would be antidilutive. 

Recent Accounting Pronouncements

In 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.

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In March 2013, the FASB issued ASU No. 2013-05, Liabilities (Topic 830): Parent’s Accounting for Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. The ASU is effective beginning after December 15, 2013 and requires the release of any cumulative translation adjustment into net income upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in foreign entity. We do not anticipate that the accounting pronouncement will have a material impact on our consolidated financial statements in future periods.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The ASU is effective for periods beginning after December 15, 2013 and standardizes the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. We do not anticipate that the accounting pronouncement will have a material impact on our consolidated financial statements in future periods.

From time to time, 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.

 Note 3 – Accrued Liabilities

Accrued liabilities consist of the following as of September 30, 2013 and December 31, 2012:

	September 30,		December 31,
	2013		2012
	(in thousands)
Accrued operating expenses	$	223	$	347
Accrued payroll related expenses		51		6
Accrued interest		-		19
Accrued legal fees		260		27
Total	$	534	$	399

Note 4 – Financing

At September 30, 2013, financial instruments arising from our 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 Debentures – We 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 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.

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The 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.

We evaluated the financing transactions in accordance with ASC 815, Derivatives and Hedging, and determined that the conversion features of the Series C and Series D preferred stock and the Consolidated Debentures were not afforded the exemption for conventional convertible instruments due to their variable conversion rates. The contracts have no explicit limit on the number of shares issuable, so they did not meet the conditions set forth in current accounting standards for equity classification. Accordingly, either the embedded derivative instruments, including the conversion option, must be bifurcated and accounted for as derivative instrument liabilities or, as permitted by ASC 815-15-25-4, Recognition of Embedded Derivatives, the instruments may be carried in their entirety at fair value.

At inception, we elected to bifurcate the embedded derivatives related to the Series C and Series D preferred stock, while electing the fair value option for the Consolidated Debentures. ASC 825, Financial Instruments, allows us to elect the fair value option for recording financial instruments when they are initially recognized or if there is an event that requires re-measurement of the instruments at fair value, such as a significant modification of the debt.

The terms of the debentures held by YA Global prior to the consolidation 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 common stock at the applicable conversion price. Because the effect of the modifications 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 as extinguishments, whereby the existing debentures are considered to be 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 nine months ended September 30, 2012.

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. 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.

Debentures assigned to other investors by YA Global were also modified effective July 1, 2013 to extend the maturity date to August 1, 2015 and revise the conversion price to the lower of $2.00 or 90% of the lowest volume-weighted average price for 125 days prior to the conversion.

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The follwoing table summarizes the significant terms of each of the debentures for which the entire hybrid instrument is recorded at fair value as of September 30, 2013:

							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	$	2,263	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2007		1,150	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2008		1,216	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2009		172	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2011		864	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2012		612	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2013		22,344	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2013		12,299	-		$	2.00	$	0.00019	95	%	125 Days
Total	$	40,920

We continue to bifurcate the compound embedded derivatives related to the Series C and Series D preferred stock and carry these financial instruments as liabilities in the accompanying balance sheet. Election to carry the instruments at fair value in their entirety is not available since their 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 value of the compound derivative liability are charged or credited to income each period.

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.

The following table provides a summary of the preferred stock conversions that have occurred since inception and the number of common shares issued upon conversion.

	Preferred shares	Preferred shares	Preferred shares	Common shares
	issued	converted	remaining	issued
	(in thousands)
Series C Preferred Stock	22	17	5	314,619
Series D Preferred Stock	25	22	3	245,162

The outstanding principal and accrued interest for the debentures as of September 30, 2013 is reflected in the following table in addition to the principal and interest converted since inception and the number of common shares issued upon conversion.

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	Outstanding principal and accrued interest at September 30, 2013		Principal and accrued interest converted since inception		Common Shares issued
	(in thousands)
Debentures	$	43,665	$	11,747	4,403,415

As of September 30, 2013, we do not have sufficient authorized shares of common stock available for issuance to satisfy the conversion rights under certain outstanding convertible debenture and series of preferred stock. If the holders of such debentures and preferred stock request the conversion of such holdings to common stock, we would be unable to respond to the request which would request in an event of default under such instruments. Although we will pursue other options to increase the number of shares authorized for issuance in order to honor the conversion rights of the debentures and preferred stock, we can provide no assurance that we will be successful with these efforts.

Warrants – 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.

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.

Effective February 1, 2013, 1.4 billion of the 1.9 billion warrants held by YA Global were cancelled and the remaining 500 million had their exercise price reduced to $0.0001 per share. These changes resulted in a decrease in fair value of the warrants of approximately $1.6 million during the first quarter of 2013 as reflected in the gain (loss) from change in fair value of derivative liabilities-warrants.

Fair value disclosures for Series C and D Bifurcated Embedded Derivative Instruments – For financings in which the embedded derivative instruments are bifurcated and recorded separately, the compound embedded derivative instruments are valued using a Monte Carlo Simulation methodology because that model embodies certain relevant assumptions (including, but not limited to, interest rate risk, credit risk, and conversion/redemption privileges) that are necessary to value these complex derivatives.

The conversion price in each of the convertible debentures is subject to adjustment for down-round, anti-dilution protection. Accordingly, if we sell common stock or common share indexed financial instruments below the stated or variable conversion price of the debenture, the conversion price adjusts to that lower amount.

The assumptions included in the calculations are highly subjective and subject to interpretation. Assumptions used as of September 30, 2013 included exercise estimates/behaviors and the following other significant estimates: (i) Preferred Stock: remaining term of 1.84 years, equivalent volatility of 165%, equivalent interest rate of 8%, equivalent credit-risk adjusted rate of 6.31% 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.

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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 September 30, 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).

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 September 30, 2013 and December 31, 2012.

September 30, 2013
	Face		Carrying		Embedded Conversion		Common Stock
	Value		Value		Feature		Shares
	(in thousands)
Series C Preferred Stock	$	4,816	$	4,816	$	6,440	24,823,015
Series D Preferred Stock		348		348		465	1,794,330
Total	$	5,164	$	5,164	$	6,905	26,617,345

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

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 September 30, 2013 and December 31, 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.

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 Gain (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.

Page 14

Gain (loss) from change in fair value of derivative liability – Series C and D Preferred Stock and debentures

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
	(in thousands)				(in thousands)
Series C Preferred Stock	$	(2,473)	$	918	$	(4,462)	$	(2,284)
Series D Preferred Stock		(178)		44		(322)		(1,302)
Debentures:
2006		31		74		15		(2,996)
2008		-		-		-		(1,350)
2009		-		-		-		(486)
2010		-		-		-		(34)
2011		-		-		-		(4,825)
2012		-		-		-		15
Gain (loss) from change in fair value of derivative liability	$	(2,620)	$	1,036	$	(4,769)	$	(13,262)

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.

Because these debentures are carried in their entirety at fair value, the value of the embedded conversion feature is embodied in those fair values. We estimate the fair value of the hybrid instrument as the present value of the cash flows of the instrument, using a risk-adjusted interest rate, enhanced by the value of the conversion option, valued using a Monte Carlo model. This method was considered by our management to be the most appropriate 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 September 30, 2013 included: (i) present value of future cash flows for the debentures using a risk adjusted interest rate of 9.50% or zero if the instrument is non-interest bearing, (ii) remaining term of 1.84 years, (iii) equivalent volatility of 165%, equivalent interest rate of 9.5% or zero for non-interest bearing debt, equivalent credit-risk adjusted rate of 6.31% and anti-dilution adjusted conversion prices ranging from $0.00018 - $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 September 30, 2013 and December 31, 2012.

September 30, 2013					Common
	Face		Fair		Stock
	Value		Value		Shares
	(in thousands)
Debentures:
2006	$	2,263	$	7,858	17,386,106
2007		1,150		3,001	6,707,442
2008		1,216		5,234	11,511,771
2009		172		876	1,919,461
2011		864		2,557	5,687,898
2012		612		1,786	3,974,950
2013		34,643		85,706	191,799,671
Total	$	40,920	$	107,018	238,987,299

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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:

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

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
	(in thousands)				(in thousands)
2006	$	11,069	$	902	$	5,754	$	2,637
2007		19,420		1,994		13,929		1,005
2008		16,569		1,914		9,930		5,465
2009		2,672		477		1,391		912
2010		9,693		799		7,178		1,695
2011		635		155		42		666
2012		1,483		427		523		740
2013		(85,706)		-		(85,706)		-
		(24,165)		6,668		(46,959)		13,120
Less: Day-one loss from debenture financings		-		(315)		-		(1,162)
Gain (loss) from changes in fair value of hybrid instruments	$	(24,165 )	$	6,353	$	(46,959 )	$	11,958

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

		September 30, 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	$	33	0.00684	328,947	$	709
Warrants issued with debentures:
2008	2015	0.000100	238,079		86	0.00684	896,382		1,691
2010	2015	0.000100	81,350		30	0.00684	306,287		571
2011	2016	0.000100	58,246		23	0.00684	219,298		453
2012	2017	0.000100	34,947		12	0.00684	131,579		263
Total			499,990	$	184		1,882,493	$	3,687

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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 September 30, 2013 included an expected life equal to the remaining term of the warrants, an expected dividend yield of zero, estimated volatility ranging from 175% to 188%, and risk-free rates of return ranging from 0.02% to 0.63%. 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 $.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.

Changes in the fair value of the warrants are reported as (Gain) loss 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 (loss) from change in fair value of derivative liability- warrants

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
	(in thousands)				(in thousands)
Warrants issued with preferred stock:
Series D Preferred Stock	$	16	$	847	$	675	$	795
Warrants issued with debentures:
2007		-		492		-		1,511
2008		44		2,107		1,605		2,657
2010		15		718		543		901
2011		11		565		431		566
2012		6		168		249		(612)
Total	$	92	$	4,897	$	3,503	$	5,818

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.

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 nine months ended September 30, 2013:

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	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		4,768		-		-		4,768
Warrant derivatives		-		(3,503)		-		(3,503)
Hybrid instruments		-		-		46,959		46,959
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, September 30, 2013	$	6,905	$	184	$	107,018	$	114,107

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.

Note 5 – Contingencies

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 effect on our financial position or operating results.

Note 6 – Stock-Based Compensation

Total stock-based compensation expense recorded in the statement of operations was $206 and $1,000 for the three months ended September 30, 2013 and 2012, respectively, and $992 and $15,000 for the nine months ended September 30, 2013 and 2012, respectively.

A summary of the transactions and status of our granted, vested and exercisable options during the nine months ended September 30, 2013 follows:

							Weighted-
							Average
			Weighted-				Contractual
			Average		Aggregate		Life
			Exercise		Intrinsic		Remaining
	Shares		Price		Value		in Years
	(in thousands)				(in thousands)
Outstanding at December 31, 2012		1,340	$	0.017	$	-
Granted		-		-		-
Exercised		-		-		-
Forfeited		(167)		-		-
Outstanding at September 30, 2013		1,173	$	0.017	$	-		7.9
Exercisable at September 30, 2013		903	$	0.018	$	-		7.8

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The following table summarizes information about our stock options outstanding at September 30, 2013:

Options Outstanding							Options Exercisable
			Weighted-
			Average		Weighted-				Weighted-
			Remaining		Average Exercise				Average
Exercise Prices	Number of Shares		Life		Price		Number of Shares		Exercise Price
	(in thousands)		(in years)				(in thousands)
$0.008		200		9.0	$	0.008		40	$	0.008
$0.014 - $0.017		884		7.8		0.015		774		0.016
$0.050		89		7.4		0.047		89		0.047
		1,173		7.9		0.017		903		0.018

Note 7 – Geographic Information

Revenue, classified by geographic location from which the revenue was originated, was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
United States	$	1,602	$	598	$	3,806	$	1,759
Germany		-		82		65		108
Total revenue	$	1,602	$	680	$	3,871	$	1,867

Approximately $78,000 and $137,000 of total assets were located in Germany as of September 30, 2013 and December 31, 2012, respectively. All other assets were located in the U.S.

Note 8 – Subsequent Events

On October 11, 2013, we entered into a Debenture Redemption Agreement with YA Global. Under the agreement, we have the option to redeem outstanding amounts under the six secured convertible debentures issued by us and currently held by YA Global at a purchase price equal to 75% of the value of the amount being redeemed. The agreement may be terminated by either party upon 90 days’ written notice.

On October 25, 2013, we entered into an Amended and Restated Patent Security Agreement with YA Global. Under the agreement, a security interest in our IP Collateral as defined in the agreement was granted to YA Global in connection with our obligations to YA Global.

ITEM 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are a pioneer in 2D mobile barcode technology and infrastructure solutions that enable the mobile barcode ecosystem world-wide. We believe that our extensive intellectual property portfolio differentiates us from the competition. We strive to harness the power of mobile devices 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 advertising as well as mobile couponing. We offer barcode management and infrastructure solutions, barcode reader solutions and IP licensing.

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We are focused in two key areas: the first is the maximization of our patent portfolio through IP licensing and enforcement, and the second is our two tiered sales approach on partnering with brands and agencies directly as well as partnering with key mobile marketing organizations to maximize the reach of our barcode management and infrastructure solutions. We are focusing our sales and marketing activities primarily in the United States and Europe and pursue other regions opportunistically.

NeoMedia has been active in, and strived 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 and lead the licensing of our IP, focusing on the US market but covering all markets in which we have patent coverage. In early 2013, we won an appeal for a key patent in our portfolio in the EU and believe this European Patent Office (“EPO”) win is key to the growth of our patent licensing business in Europe. We currently have IP agreements with over thirty companies. We are hopeful that our IP licensing activities will continue to generate new licensees through the remainder of 2013 and through 2014. We intend to continue to vigorously pursue or defend, as applicable, claims affecting the business interests and intellectual property of the Company including litigation activities, where appropriate. In addition, through our licensing program, several companies, including technology companies and brands, have agreed to cease and desist in their mobile barcode activities.

Our barcode management and infrastructure solution includes our barcode reader (NeoReader®), our enterprise grade code platform (NeoSphere™) and our self-service code creation platform (QodeScan™). Mobile barcodes continue to be an increasingly important engagement tool for brands and marketers and we continue to see interest from prospective customers from across the globe.

We continue to be faced with downward price pressure in the market given the fragmented competitive environment for mobile barcode solutions as well as the ‘battle’ between free and fee based solutions. We believe that NeoMedia will continue to differentiate itself on the basis of its high quality product and service offerings, customizable and full service solutions and our robust intellectual property portfolio. The sales process for mobile barcodes is a consultative sales process and our research suggests that in most cases, organizations are seeking an end-to-end solution, including mobile websites, rich media, etc. Accordingly, NeoMedia has extended its partner relationships to offer its customers a full service solution. Given the consultative sale process, the sales cycles tend to be longer and more resource intensive. We are hopeful that QodeScan will help reduce the effort required to support small or low cost sales opportunities, freeing staff to focus on larger opportunities.

NeoMedia continues to promote an open and interoperable approach to the market to empower the mobile ecosystem - and deploys an indirect methodology for our customers. Our research suggests we are one of the few providers in the global ecosystem to offer Aztec, Code 39 and PDF417 code support, in addition to QR, Data matrix and a variety of 1D symbologies.

NeoReader has also experienced continued growth in the third quarter of 2013 compared to the prior year. With pre-install agreements with Sony Mobile and Samsung Electronics Italy, as well as being downloadable from the key “app stores” including Google Play™, Apple App Store™, Blackberry App World, Windows Marketplace, Nokia Store, Facebook and Amazon as well as via our own website, http://get.neoreader.com, our reader now has 40+ million installations. NeoReader is offered to consumers free of charge and we anticipate the growth in consumer utilization will continue and help encourage brand adoption of mobile barcodes. We added mobile advertising support to our NeoReader product as well as the opportunity to disable mobile ads, at an additional fee. NeoMedia also offers NeoReader SDK for enterprise opportunities and we have seen a significant increase in demand for NeoReader SDK, primarily from Asia and Europe. We believe we have the best decoding algorithms (speed and performance) in the industry, which differentiate our reader from the majority of solutions in the market.

As a result of our successes in our operating business, including our increasing revenues and stabilized costs, we have not had to take any additional outside funding since the Summer of 2012 and expect this to continue. In the third quarter of 2013, we generated, for the second consecutive quarter, what we deem to be meaningful operating income.

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Results of Operations

We continue to focus on growing our patent licensing and barcode management and infrastructure business. During the nine months ended September 30, 2013 our operating income was $0.6 million as compared to an operating loss during the nine months ended September 30, 2012 of $2.3 million. The improvement in our operating results is due to an increase in 2D core and IP licensing revenue as well as a decline in cost of revenues as a percentage of revenue and lower operating expenses. Our net loss was $47.5 million and $21.9 million for the nine months ended September 30, 2013 and 2012, respectively. Our net loss includes gains and losses from the change in fair value of our hybrid financial instruments, warrants and debentures. We incur these gains and losses principally as a result of changes in the market value of our common stock as well as changes in the terms of the related securities, such as the maturity dates and nature of the look-back features. During the nine months ended September 30, 2013 and 2012, we reported total net losses on our hybrid financial instruments, warrants and debentures of $48.2 million and $23.0 million, respectively. Changes in the fair value of our derivative liabilities caused significant variability in our overall net losses during the periods presented. Operationally, we focus on our income (loss) from operations in assessing our overall performance.

Income (Loss) from Operations

The following table sets forth financial information for our income (loss) from operations for each of the periods presented:

	Three months ended							Nine months ended
	September 30,							September 30,
	2013		2012		% Change			2013		2012		% Change
	(dollars in thousands)
Revenue	$	1,602	$	680		136	%	$	3,871	$	1,867		107	%
Cost of revenues		(300)		(639)		(53)	%		(600)		(667)		(10)	%
Gross profit		1,302		41		NM			3,271		1,200		173	%
Sales and marketing		(16)		(112)		(86)	%		(124)		(532)		(77)	%
General and administrative		(723)		(313)		131	%		(2,245)		(2,226)		1	%
Research and development		(123)		(195)		(37)	%		(507)		(788)		(36)	%
Other operating		-		-		NM			227		-		NM
Operating income (loss)	$	440	$	(579)		NM		$	622	$	(2,346)		NM

NM – Information is not meaningful.

Revenue. Revenues for the three months ended September 30, 2013 and 2012 were $1,602,000 and $680,000, respectively, an increase of $922,000, or 136%. Revenues for the nine months ended September 30, 2013 and 2012 were $3,871,000 and $1,867,000, respectively, an increase of $2,004,000, or 107%. The increases in revenue are primarily attributable to new IP licensing revenue as well as an increase in revenue from our NeoReader SDK sales.

Cost of Revenues. Cost of revenues was $300,000 for the three months ended September 30, 2013 compared with $639,000 for the three months ended September 30, 2012, a decrease of $339,000, or 53%. Cost of revenues was $600,000 for the nine months ended September 30, 2013 compared with $667,000 for the nine months ended September 30, 2012, a decrease of $67,000 or 10%. Cost of revenues primarily relates to third party professional fees incurred in connection with the sale of our IP licenses. Cost of revenues typically varies in a manner consistent with changes in our IP licenses revenue. Cost of revenues in the prior year’s periods relative to revenue was unusually high due to the expensing of certain professional fees associated with revenue that was initially recorded as deferred.

Sales and Marketing. Sales and marketing expenses were $16,000 and $112,000 for the three months ended September 30, 2013 and 2012, respectively, a decrease of $96,000, or 86%. Sales and marketing expenses were $124,000 and $532,000 for the nine months ended September 30, 2013 and 2012, respectively, a decrease of $408,000 or 77%. 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.

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General and Administrative. General and administrative expenses were $723,000 and $313,000 for the three months ended September 30, 2013 and 2012, respectively, an increase of $410,000, or 131%. General and administrative expenses were $2,245,000 and $2,226,000 for the nine months ended September 30, 2013 and 2012, respectively, an increase of $19,000 or 1%. The prior year’s quarter general and administrative expenses were unusually low due to certain cost reduction activities during the period. General and administrative expenses also increased during the third quarter of 2013 due to higher public company costs incurred in connection with our annual shareholder meeting as well as higher legal fees associated with certain arbitration activities.

Research and Development. Research and development expenses were $123,000 and $195,000 for the three months ended September 30, 2013 and 2012, respectively, a decrease of $72,000, or 37%. Research and development expenses were $507,000 and $788,000 for the nine months ended September 30, 2013 and 2012, respectively, a decrease of $281,000 or 36%. 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.

Other Operating Losses (Gains). The $227,000 of other gains realized during the nine months ended September 30, 2013 related to an arbitration proceeding and settlement in our favor, which concluded during the three month period ended June 30, 2013. There was no similar activity in the other periods presented.

Other Income (Expenses)

The following table sets forth financial information for our other income (expenses) for each of the periods presented:

	Three months ended							Nine months ended
	September 30,							September 30,
	2013		2012		% Change			2013		2012		% Change
	(dollars in thousands)
Impairment loss on cash surrender value of life insurance policy	$	-	$	(527)		NM		$	-	$	(527)		NM
Gain on derecognition of accrued expenses and purchase price guarantee		-		8,300		NM			-		8,300		NM
Gain (loss) on extinguishment of debt		53		-		NM			53		(27,479)		NM
Gain (loss) from change in fair value of hybrid financial instruments		(24,165)		6,353		NM			(46,959)		11,958		NM
Gain (loss) from change in fair value of derivative liability - warrants		92		4,897		(98)	%		3,503		5,818		(40)	%
Gain (loss) from change in fair value of derivative liability - Series C and D preferred stock and debentures		(2,620)		1,036		NM			(4,769)		(13,262)		64	%
Interest (expense) / income		-		(10)		NM			16		(4,407)		NM
Total other income (expense)	$	(26,640)	$	20,049		NM		$	(48,156)	$	(19,599)		(146)	%

NM – Information is not meaningful.

Impairment Loss On Cash Surrender Value of Life Insurance Policy. During the third quarter of 2012, we determined that we would be unable to collect the cash surrender value of a life insurance policy due to a dispute with the insurance company. Accordingly, we recorded a loss of $527,000 to impair the value of the policy as reflected in the results for the three and nine months ended September 30, 2012. There was no similar activity in the other periods presented.

Gain on Derecognition of Accrued Expenses and Purchase Price Guarantee. We determined during the third quarter of 2012 that certain accrued purchase price obligations and disputed expenses associated with a 2006 acquisition were no longer legally enforceable due to the expiration of the statutes of limitations. As a result, we de-recognized the liabilities, which resulted in a $8.3 million gain as reflected in the results for the three and nine month periods ended September 30, 2012. There was no similar activity in the other periods presented.

Gain (Loss) on Extinguishment of Debt. During the third quarter of 2013, we modified and consolidated our outstanding debentures resulting in a $53,000 gain on extinguishment. During the second quarter of 2012, we modified our debt causing the existing debentures to be effectively retired and new debentures issued. The differences in the fair values of the debt before and after the modification resulted in an extinguishment loss of approximately $27.5 million as reflected in the nine months ended September 30, 2012.

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Gain (Loss) from Change in Fair Value of Hybrid Financial Instruments. We carry certain of 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 the three months ended September 30, 2013 and 2012, the liability related to these hybrid instruments fluctuated, resulting in a loss of $24.2 million and a gain of $6.4 million, respectively. For the nine months ended September 30, 2013 and 2012, the liability related to these hybrid instruments fluctuated, resulting in a loss of $47.0 million and a gain of $12.0 million, respectively.

Gain (Loss) from Change in Fair Value of Derivative Liabilities – Warrants. We account for our outstanding common stock warrants that were issued in connection with our preferred stock and our debentures, at fair value. For the three months ended September 30, 2013 and 2012, the liability related to these instruments fluctuated, resulting in gains of $92,000 and $4.9 million, respectively. For the nine months ended September 30, 2013 and 2012, the liability related to warrants fluctuated resulting in gains of $3.5 million and $5.8 million, respectively.

Gain (Loss) from Change in Fair Value of Derivative Liabilities – 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 three months ended September 30, 2013 and 2012, the liability related to these hybrid instruments fluctuated, resulting in a loss of $2.6 million and a gain of $1.0 million, respectively. For the nine months ended September 30, 2013 and 2012, the liability related to the derivative instruments embedded in the Series C and D Preferred Stock and these debentures fluctuated, resulting in losses of $4.8 million and $13.3 million, respectively.

The changes in the fair values of our hybrid financial instruments and our derivative liabilities were primarily the result of fluctuations in the value of our common stock during the period as well as changes in the terms of the related security agreements. Because our common stock price has been volatile and because many of our derivative financial instruments include relatively low fixed conversion or exercise prices, it is possible that further fluctuations in the market price of our common stock could cause the fair value of these instruments to increase or decrease significantly in future periods. The fair values of these instruments are subject to volatility so long as the preferred stock, debentures and warrants are outstanding. These instruments will no longer be volatile upon their conversion or exercise into common stock.

Interest Expense Related to Convertible Debt. Following the May 25, 2012 modification of the debentures, which extended the due date, the debentures were 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.

Other Comprehensive Income (Loss). For the three months ended September 30, 2013 and 2012, other comprehensive losses were $0 and $3,000, respectively. For the nine months ended September 30, 2013, other comprehensive gains were $133,000 as compared to other comprehensive losses of $18,000 for the nine months ended September 30, 2012. 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 currency, the Euro, to U.S. dollars. As discussed above, we determined during the third quarter of 2013 that the functional currency of the foreign subsidiary changed to the U.S. dollar and as a result of the change in functional currency, translation gains and losses associated with the conversion of the NeoMedia Europe GmbH financial statements are recorded in our results from operations rather than through other comprehensive income (loss) effective July 1, 2013.

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Liquidity and Capital Resources

As of September 30, 2013, we had $157,000 in cash and cash equivalents, a decrease of $454,000, compared with $611,000 as of December 31, 2012.

Cash used in operating activities was $536,000 for the nine months ended September 30, 2013 representing a significant improvement as compared to $1,377,000 for the nine months ended September 30, 2012. The improvement is primarily due to increased revenue from IP licensing and NeoReader SDK sales and from decreased operational expenses.

There was no cash provided by or used in investing activities during the nine months ended September 30, 2013 as compared to $5,000 of cash used during the same prior period.

Net cash provided by financing activities during the nine months ended September 30, 2013 was $83,000 and reflects borrowings and repayments on a short-term notes payable in order to pay certain annual insurance premiums. Cash provided by financing activities during the nine months ended September 30, 2012 was $2.6 million, reflecting gross proceeds of $2,650,000 from six secured debentures issued to YA Global, net of $150,000 in structuring and due diligence fees as well as $110,000 associated with two bridge loans.

Going Concern – We have historically incurred operating losses, and we may continue to generate negative cash flows as we implement our business plan. 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 nine months ended September 30, 2013 and 2012 was $47.5 million and $21.9 million, respectively, including $48.2 million and $23.0 million, respectively, of net losses related to our financing instruments. Our operating income was $0.6 million for the nine months ended September 30, 2013, and our operating loss was $2.3 million for the nine months ended September 30, 2012.

Net cash used by operations during the nine months ended September 30, 2013 and 2012 was $0.5 million and $1.4 million, respectively. As of September 30, 2013, we have an accumulated deficit of $312.9 million. We also have a working capital deficit of $117.4 million, including $114.1 million in current liabilities for our derivative and debenture financing instruments.

As of September 30, 2013, we do not have sufficient authorized shares of common stock available for issuance to satisfy the conversion rights under certain outstanding convertible debenture and series of preferred stock. If the holders of such debentures and preferred stock request the conversion of such holdings to common stock, we would be unable to respond to the request which would result in an event of default under such instruments. Although we are making best efforts to pursue options to be able to honor the conversion rights of the debenture holders and preferred stock, we can provide no assurance that we will be successful with these efforts.

The items discussed above raise doubt about our ability to continue as a going concern.

We currently do not 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 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 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. 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.

The 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 the three and nine months ended September 30, 2013, there were 75 million and 2,879 million shares of common stock issued for these conversions, respectively. We cannot predict if or when each holder may or may not elect to convert into common shares.

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Our financial statements do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Sources of Cash and Projected Cash Requirements – As of September 30, 2013, our cash balance was $157,000. NeoMedia’s past financing agreements with YA Global have certain ramifications that could affect future liquidity and business operations. For example, pursuant to the terms of the debenture agreements between us and YA Global, without YA Global’s consent we cannot (i) issue or sell any shares of our common stock or our preferred stock without consideration or for consideration per share less than the closing bid price immediately prior to its issuance, (ii) issue or sell any preferred stock, warrant, option, right, contract, call, or other security or instrument granting the holder thereof the right to acquire our common stock for consideration per share less than the closing bid price immediately prior to its issuance, (iii) enter into any security instrument granting the holder a security interest in any of our assets or (iv) file any registration statements on Form S-8. In addition, pursuant to security agreements between us and YA Global, YA Global has a security interest in all of our assets. Such covenants could severely harm our ability to raise additional funds from sources other than YA Global, and would likely result in a higher cost of capital in the event we secured funding. Additionally, pursuant to the terms of the Investment Agreement between us and YA Global in connection with our Series C Preferred Stock, we cannot (i) enter into any debt arrangements in which we are the borrower, (ii) grant any security interest in any of our assets or (iii) grant any security below market price.

Critical Accounting Policies and Estimates

The significant accounting policies set forth in Note 2 to our audited consolidated financial statements included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2012, as updated by Note 2 to the Unaudited Condensed Consolidated Financial Statements included herein, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K, as amended, for the year ended December 31, 2012, appropriately represent, in all material respects, the current status of our critical accounting policies and estimates, the disclosure with respect to which is incorporated herein by reference. 

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

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

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on management’s evaluation, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as of the end of the period covered by this report, our CEO and CFO have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), are not effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

In connection with the quarterly reporting for the three and nine months ended September 30, 2013 and the evaluation of the disclosure controls and procedures, management concluded we have a material weakness related to our internal control over financial reporting and specifically, a lack of sufficient internal control procedures over our external reporting sufficient to prevent the revisions to the 2013 interim reporting described in Note 2 – Summary of Significant Accounting Policies herein. We assessed the impact of the errors and concluded that the errors did not result in a material misstatement. To correct the errors, we revised the nine months ended September 30, 2013 reporting.

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A material weakness is a deficiency, or combination of deficiencies, that result in a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented or detected on a timely basis. While the identified material weakness did not result in a material misstatement to our condensed consolidated financial statements, these deficiencies could, if not remediated, result in a material misstatement of future reported financial statements.

Changes in Internal Control over Financial Reporting

During the second quarter of 2013, management established certain accounting policies and procedures to provide proper oversight for financial reporting, which included detailed reviews of the condensed consolidated balance sheets and statements of operations. Management also established more formalized accounting policies and procedures to allow for the review of financial performance on a monthly basis and establish procedures to ensure proper treatment for recording financial transactions. Management also established review procedures to ensure recurring and non-recurring journal entries were properly reviewed and approved prior to preparation of the financial statements.

The material weakness noted above related to the revisions to the 2013 interim reporting was identified subsequent to the quarter ended September 30, 2013. In order to remediate the weakness, management has implemented additional controls and procedures subsequent to September 30, 2013 over the external reporting. The additional review procedures include, but are not limited to, processes to ensure new and complex transactions are properly researched and accounted for under the SEC and ASC reporting requirements.

The remediation plan has been implemented; however, the material weakness will not be considered remediated until the additional review procedures have been operating effectively for an adequate period of time. Management will consider the status of this remedial effort when assessing the effectiveness of the internal controls over financial reporting and other disclosure controls and procedures as of December 31, 2013. While management believes that the remedial efforts will resolve the identified material weakness, there is no assurance that management's remedial efforts conducted to date will be sufficient or that additional remedial actions will not be necessary.

Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, do not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

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.

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ITEM 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide information under this item.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

ITEM 3. Defaults upon Senior Securities

None

ITEM 4. Mine Safety Disclosures

Not Applicable

ITEM 5. Other Information

None

ITEM 6. Exhibits

Exhibit No.	Description	Filed Herewith	Form	Exhibit	Filing Date
3.1	Articles of Incorporation of Dev-Tech Associates, Inc. and amendment thereto		SB-2	3.1	11/25/1996
3.2	By-laws of the Company		8-K	3.2	12/21/2010
3.3	Restated Certificate of Incorporation of DevSys, Inc.		SB-2	3.3	11/25/1996
3.4	Articles of Merger and Agreement and Plan of Merger of DevSys, Inc. and Dev-Tech Associates, Inc.		SB-2	3.5	11/25/1996
3.5	Certificate of Merger of Dev-Tech Associates, Inc. into DevSys, Inc.		SB-2	3.6	11/25/1996
3.6	Articles of Incorporation of Dev-Tech Migration, Inc. and amendment thereto		SB-2	3.7	11/25/1996
3.7	Restated Certificate of Incorporation of DevSys Migration, Inc.		SB-2	3.9	11/25/1996
3.8	Form of Agreement and Plan of Merger of Dev-Tech Migration, Inc. into DevSys Migration, Inc.		SB-2	3.11	11/25/1996
3.9	Form of Certificate of Merger of Dev-Tech Migration, Inc. into DevSys Migration, Inc.		SB-2	3.12	11/25/1996
3.10	Certificate of Amendment to Certificate of Incorporation of DevSys, Inc. changing our name to NeoMedia Technologies, Inc.		SB-2	3.13	11/25/1996

3.11	Form of Certificate of Amendment to Certificate of Incorporation of the Company authorizing a reverse stock split	SB-2	3.14	11/25/1996
3.12	Form of Certificate of Amendment to Restated Certificate of Incorporation of the Company increasing authorized capital and creating preferred stock	SB-2	3.15	11/25/1996
3.13	Certificate of Designation of the Series C Convertible Preferred Stock dated February 17, 2006	8-K	10.9	2/21/2006
3.14	Certificate of Amendment to the Certificate of Designation of the Series C Convertible Preferred Stock dated January 5, 2010	8-K	3.1	1/11/2010
3.15	Certificate of Designation of the Series D Convertible Preferred Stock dated January 5, 2010	8-K	10.1	1/8/2010
3.16	Certificate of Amendment to the Certificate of Designation of the Series D Convertible Preferred Stock dated January 7, 2010	8-K	3.3	1/11/2010
3.17	Certificate of Amendment to the Certificate of Designation of the Series D Convertible Preferred Stock dated March 5, 2010	8-K	3.1	3/11/2010

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3.18	Preferability Letter dated August 1, 2013 from the Company’s Auditors, Stark Schenkein LLP regarding a change in the Company’s accounting policies related to revenue recognition		10-Q	18.1	8/5/2013
3.19*	Employment Agreement by and between the Company and Laura Marriott dated August 30, 2013		8-K	10.1	8/30/2013
10.1	Reaffirmation and Ratification Agreement by and between the Company and YA Global Investments, L.P. dated September 16, 2013	X
10.2	Amended, Restated and Consolidated Secured Convertible Debenture, No. NEOM-42, by and between the Company and YA Global Investments, L.P. dated September 16, 2013	X
10.3	Amended, Restated and Consolidated Secured Convertible Debenture, No. NEOM-43, by and between the Company and YA Global Investments, L.P. dated September 16, 2013	X
10.4	Amended, Restated and Consolidated Secured Convertible Debenture, No. NEOM-44, by and between the Company and YA Global Investments, L.P. dated September 16, 2013	X
10.5	Amended, Restated and Consolidated Secured Convertible Debenture, No. NEOM-45, by and between the Company and YA Global Investments, L.P. dated September 16, 2013	X
10.6	Amended, Restated and Consolidated Secured Convertible Debenture, No. NEOM-46, by and between the Company and YA Global Investments, L.P. dated September 16, 2013	X
10.7	Amended, Restated and Consolidated Secured Convertible Debenture, No. NEOM-47, by and between the Company and YA Global Investments, L.P. dated September 16, 2013	X
10.8	Debenture Redemption Agreement, by and between the Company and YA Global Investments, L.P. dated October 11, 2013	X
10.9	Amended and Restated Patent Security Agreement, by and between the Company and YA Global Investments, L.P. dated October 25, 2013	X
31.1	Certification by Principal Executive Officer pursuant to Rule 13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification by Principal Financial and Principal Accounting Officer pursuant to Rule 13a-14(a)/ 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification by Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification by Principal Financial and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X

101 Interactive data. The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows and (iv) related notes.  X 

* Denotes management contract or compensatory plan or arrangement.

Page 28

SIGNATURE

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

	NEOMEDIA TECHNOLOGIES, INC.
	(Registrant)
Dated: October 28, 2013	/s/ Colonel Barry S. Baer
	Colonel (Ret.) Barry S. Baer, Chief Financial Officer and Principal Financial and Accounting Officer

Page 29

EX-10.1

EXHIBIT 10.1

REAFFIRMATION AND RATIFICATION AGREEMENT

This REAFFIRMATION AND RATIFICATION AGREEMENT, dated as of September 16, 2013 (this “Agreement”), by and between YA GLOBAL INVESTMENTS, L.P., a Cayman Islands exempt limited partnership (hereinafter, the “Investor”), and NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation (the “Company”).

WHEREAS, Reference is made to certain financing arrangements entered into by and between the Company and certain of its former and/or current subsidiaries (collectively, the “Obligors”) and the Investor, evidenced by, among other things, the documents, instruments, and agreements listed on Exhibit X attached hereto and incorporated herein by reference (collectively, together with all other documents, instruments, and agreements executed in connection therewith or related thereto, the “Financing Documents”).

WHEREAS, the Company has requested that the Investor amend, restate and consolidate the Prior Debentures (as hereinafter defined) as of July 1, 2013, and the Investor is willing to do so, provided, among other things, the Company enters into this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Acknowledgement of Indebtedness

1.          The Company hereby acknowledges and agrees that as of June 30, 2013, it was liable to the Investor as follows (all amounts in USD) pursuant to these outstanding debentures (the “Prior Debentures”):

Outstanding Debenture	Issue Date	Outstanding Principal		Outstanding Interest			Total
CCP-1 Debenture	8/24/06	$	2,680,850	$	837,967		$	3,518,817
CCP-2 Debenture	12/29/06	$	1,648,241	$	1,468,287		$	3,116,528
NEOM-4-1 Debenture	3/27/07	$	5,203,870	$	2,718,625		$	7,922,495
NEOM 1-1 Debenture	8/24/07	$	1,305,490	$	1,170,307		$	2,475,797
NOEM 2008-1 Debenture	4/11/08	$	384,871	$	282,218		$	667,089
NEOM 2008-2 Debenture	5/16/08	$	493,424	$	354,622		$	848,046
NEOM 2008-3 Debenture	5/29/08	$	779,610	$	555,875		$	1,335,485
NEOM 2008-4 Debenture	7/10/08	$	135,938	$	94,583		$	230,521
NEOM 9-1 Debenture	7/29/08	$	1,648,616	$	1,436,447		$	3,085,063
NEOM 9-2 Debenture	10/28/08	$	1,648,616	$	1,258,093		$	2,906,709
NEOM 9-4 Debenture	5/1/09	$	53,037	$	134,704		$	187,741
NEOM 9-5 Debenture	6/5/09	$	715,000	$	372,192		$	1,087,192
NEOM 9-6 Debenture	7/15/09	$	241,000	$	71,382		$	312,382
NEOM 9-7 Debenture	8/14/09	$	155,000	$	76,973		$	231,973
NEOM 10-1 Debenture	5/27/10	$	2,006,137	$	770,357		$	2,776,494
NEOM 10-2 Debenture	8/13/10	$	550,000	$	194,745		$	744,745
NEOM 10-3 Debenture	9/29/10	$	475,000	$	159,626		$	634,626
NEOM 10-4 Debenture	10/28/10	$	400,000	$	129,973		$	529,973
NEOM 10-5 Debenture	12/15/10	$	375,000	$	72,257		$	447,257
NEOM 11-1 Debenture	1/10/11	$	450,000	$	39,847		$	489,847
NEOM 11-2 Debenture	2/28/11	$	62,994	$	3,072		$	66,066
NEOM 11-12 Debenture	2/28/12	$	0	$	78		$	78
NEOM-CF Debenture	12/8/12	$	0	$	1,132		$	1,132
NEOM 12-2 Debenture	2/6/12	$	450,000	$	52,480		$	502,480
NEOM 12-3 Debenture	3/26/12	$	127,405	$	24,739		$	152,144
NEOM 12-4 Debenture	4/26/12	$	352,606	$	28,629		$	381,235
NEOM 12-7 Debenture	7/29/12	$	0	$	(9,824	)	$	(9,824	)
	TOTAL	$	22,342,705	$	12,299,386		$	34,642,091

1

For all interest accruing from and after June 30, 2013 due under the Prior Debentures, and for all fees, late charges, redemption premiums, liquidated damages, costs, expenses, and costs of collection (including attorneys’ fees and expenses) and other amounts, heretofore or hereafter accrued or coming due or incurred by the Investor in connection with the protection, preservation, or enforcement of its rights and remedies under the Prior Debentures and all documents, instruments, and agreements executed in connection therewith or related thereto the Financing Documents, (including, without limitation, the preparation and negotiation of this Agreement).

Hereinafter all amounts due as set forth in this Section 1, and all amounts payable under this Agreement and the Financing Documents, shall be referred to collectively as the “Obligations.”

Waiver of Claims

2.          The Company along with the Obligors, for itself and on behalf of its former and/or current subsidiaries that are party to any of the Financing Documents hereby acknowledges and agrees that none of the Obligors have any offsets, defenses, claims, or counterclaims against the Investor, its general partner, and its investment manager, and each of their respective agents, servants, attorneys, advisors, officers, directors, employees, affiliates, partners, members, managers, predecessors, successors, and assigns (singly and collectively, as the “Released Parties”), with respect to the Obligations, the Financing Documents, the transactions set forth or otherwise contemplated in this Agreement, or otherwise, and that if the Obligors now have, or ever did have, any offsets, defenses, claims, or counterclaims against any of the Released Parties, whether known or unknown, at law or in equity, from the beginning of the world through this date and through the time of execution of this Agreement, all of them are hereby expressly WAIVED, and the Obligors each hereby RELEASE each of the Released Parties from any and all liability therefor.

Amended, Restated and Consolidated Debentures

2.          On the date hereof, the Company shall amend, restate and consolidate the Prior Debentures (as defined in Section 1 above) and deliver to the Investor six (6) Amended, Restated and Consolidated Secured Convertible Debentures (collectively, the “Amended, Restated and Consolidated Debentures”) as follows: (a) Amended, Restated and Consolidated Secured Convertible Debenture No. NEOM-42 dated March 27, 2007 in the original principal amount of Four Million Seven Hundred Ninety Five Thousand One Hundred Eighty Five and 00/100 Dollars ($4,795,185.00), (b) Amended, Restated and Consolidated Secured Convertible Debenture No. NEOM-43 dated December 29, 2006 in the original principal amount One Million Three Hundred Sixty Eight Thousand Eight Hundred Forty and 00/100 Dollars ($1,368,840.00), (c) Amended, Restated and Consolidated Secured Convertible Debenture No. NEOM-44 dated March 27, 2007 in the original principal amount Nine Hundred Thirty Nine Thousand Five Hundred Forty and 00/100 Dollars (939,540.00), (d) Amended, Restated and Consolidated Secured Convertible Debenture No. NEOM-45 dated April 26, 2012 in the original principal amount Seventeen Million Five Hundred Forty Seven Thousand Five Hundred Twenty Two and 00/100 Dollars ($17,547,522.00), (e) Amended, Restated and Consolidated Secured Convertible Debenture No. NEOM-46 dated June 29, 2008 in the original principal amount Six Million One Hundred Thirty Two Thousand Two Hundred Sixty Two and 00/100 Dollars ($6,132,262.00) and (f) Amended, Restated and Consolidated Secured Convertible Debenture No. NEOM-47 dated July 20, 2012 in the original principal amount Three Million Eight Hundred Fifty Eight Thousand Seven Hundred Forty Two and 00/100 Dollars ($3,858,742.00)

2

The Company hereby agrees that all accrued and unpaid interest under the Prior Debentures shall be incorporated into the principal balances of the Amended, Restated and Consolidated Debentures and it being understood that as of July 1, 2013 interest shall accrue on the outstanding principal balances of the Amended, Restated and Consolidated Debentures in accordance with their respective terms.

Reaffirmation and Ratification

3. The Company:

(a)          Hereby ratifies, confirms, and reaffirms all and singular the terms and conditions of the Financing Documents and acknowledges and agrees that the Financing Documents remain in full force and effect in accordance with their terms;

(b)          Hereby ratifies, confirms, and reaffirms that (i) the obligations secured by the Financing Documents include, without limitation, the Obligations, and any future modifications, amendments, substitutions or renewals thereof, (ii) all collateral, whether now existing or hereafter acquired, granted to the Investor pursuant to the Financing Documents or otherwise shall secure all of the Obligations until full and final payment of the Obligations, and (iii) the occurrence of a default and/or “Event of Default" under any Financing Document shall constitute an Event of Default under all of the Financing Documents, it being the express intent of the Company that all of the Obligations be fully cross-collateralized and cross-defaulted. Without limiting the foregoing, and for the avoidance of doubt, in order to secure all debts, liabilities, obligations, covenants and duties owing by the Company to the Investor, whether now existing or hereafter arising, including, without limitation, the Obligations, the Company hereby grants the Investor a security interest in all of its assets, whether now existing or hereafter acquired, including, without limitation, all accounts, inventory, goods, equipment, software and computer programs, securities, investment property, equity interests in any of the Company’s subsidiaries, financial assets, deposit accounts, chattel paper, electronic chattel paper, instruments, documents, letter-of-credit rights, health-care-insurance receivables, supporting obligations, notes secured by real estate, commercial tort claims, and general intangibles, including payment intangibles, and all products and proceeds of the foregoing; and

(c)          Shall, from and after the execution of this Agreement, execute and deliver to the Investor whatever additional documents, instruments, and agreements that the Investor may reasonably require in order to correct any document deficiencies, or to vest or perfect the Financing Documents and the collateral granted therein or herein more securely in the Investor and/or to otherwise give effect to the terms and conditions of this Agreement, and hereby authorizes the Investor to file any financing statements (including financing statements with a generic description of the collateral such as “all assets”), and take any other normal and customary steps, the Investor deems necessary to perfect or evidence the Investor’s security interests and liens in any such collateral. This Agreement constitutes an authenticated record.

Miscellaneous

(a)          Nothing contained in this Agreement shall be construed or interpreted or is intended as a waiver of any default and/or Event of Default or of any rights, powers, privileges or remedies that the Investor has or may have under the Financing Documents or applicable law on account of any such default and/or Event of Default.

3

(b)          Each party has full power, right and authority to enter into and perform its obligations under this Agreement, and this Agreement has been duly executed and delivered by each such party, constitutes the valid and binding obligation of each such party, and is enforceability against each such party in accordance with its terms.

(c)          This Agreement shall be governed by and construed in accordance with the laws of the state of New Jersey, without giving effect to the conflict of laws principles thereof.

(d)          This Agreement may be executed in counterparts, each of which shall be deemed an original and together shall constitute one and the same instrument.

(e)          This Agreement shall be binding upon and enforceable by, and inure to the benefit of, the parties hereto and their respective successors and assigns.

(f)          Any determination that any provision or application of this Agreement is invalid, illegal, or unenforceable in any respect, or in any instance, shall not affect the validity, legality, or enforceability of any such provision in any other instance, or the validity, legality, or enforceability of any other provision of this Agreement.

IN WITNESS WHEREOF, the parties have caused this Reaffirmation and Ratification Agreement to be duly executed as of date first above written.

COMPANY:
NEOMEDIA TECHNOLOGIES, INC.
By:	/s/ Laura Marriott
Name:	Laura Marriott
Title:	Chief Executive Officer
INVESTOR:
YA GLOBAL INVESTMENTS, L.P.
By:	Yorkville Advisors, LLC
	its Investment Manager
By:	/s/ Gerald Eicke
Name:	Gerald Eicke
Title:	Manager Member

4

EX-10.2

EXHIBIT 10.2

Consolidated Debenture #42

NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

NEOMEDIA TECHNOLOGIES, INC.

Amended, Restated and Consolidated Secured Convertible Debenture

Original Issuance Date:  March 27, 2007	Principal Amount: $4,795,185.00
No. NEOM-42

This Amended, Restated and Consolidated Secured Convertible Debenture (including all secured convertible debentures issued in exchange, transfer or replacement hereof, this “Debenture”) represents portions of the indebtedness previously evidenced by those certain Secured Convertible Debentures listed on Schedule ‘A’ attached hereto (as each may have been amended and is currently in effect, collectively, the “Prior Debentures”) issued by NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation (the “Company”), to YA GLOBAL INVESTMENTS, L.P. (f/k/a CORNELL CAPITAL PARTNERS, LP, the “Holder”) and amends and restates such portions (and is given in substitution for but not in satisfaction) of such Prior Debentures. Outstanding portions of the Prior Debentures are all merged into and superseded by this Debenture in the amounts set forth on Schedule ‘A’. The issuance of this Debenture does not effect a refinancing of all or any portion of the obligations under the Prior Debentures, it being the intention of the Company and the Holder to avoid effectuating a novation of any such obligations. The portion of each of the Prior Debentures that has been consolidated hereunder is memorialized on Schedule ‘A’, attached hereto.

FOR VALUE RECEIVED, the Company hereby promises to pay to the order of the Holder, or its registered assigns, the amount set out above as the Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof), plus interest (“Interest”) accruing on any outstanding Principal at the applicable Interest Rate from July 1, 2013 until the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Section 17.

Consolidated Debenture #42

(1) GENERAL TERMS

(a)          Payment of Principal. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal and accrued and unpaid Interest. The "Maturity Date" shall be August 1, 2015, as may be extended from time to time by the Holder. Other than as specifically permitted by this Debenture in Section 3(a) or otherwise, or pursuant to the Securities Purchase Agreements or other Transaction Documents, the Company may not prepay or redeem any portion of the outstanding Principal without the prior written consent of the Holder.

(b)          Interest. Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to 9.5% (“Interest Rate”). Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder shall be paid on the Maturity Date (or sooner as provided herein) to the Holder or its assignee in whose name this Debenture is registered on the records of the Company regarding registration and transfers of Debentures at the option of the Company in cash, or, provided that the Equity Conditions are then satisfied converted into Common Stock at the applicable Conversion Price on the Trading Day immediately prior to the date paid. .

(c)          Security. The Debenture is secured by all collateral granted by the Company and its affiliates to the Holder, in accordance with the terms and conditions that certain Security Agreement by and between the Holder and Company, dated July 29, 2008.

(2) EVENTS OF DEFAULT.

(a)          An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i)          the Company's failure to pay to the Holder any amount of Principal or other amounts when and as due under this Debenture (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder);

(ii)         The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company state that it is unable to pay its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

2

Consolidated Debenture #42

(iii)        The Company or any subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

(iv)        If the Common Stock is quoted or listed for trading on any of the following and it ceases to be so quoted or listed for trading and shall not again be quoted or listed for trading on any Primary Market within five (5) Trading Days of such delisting: (a) the NYSE Amex, (b) New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Select Market, or (e) the Nasdaq OTC Bulletin Board (“OTCBB”) (each, a “Primary Market”);

(v)         The Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section 17) unless in connection with such Change of Control Transaction this Debenture is retired;

(vi)        The Company's (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five (5) Business Days after the applicable Conversion Failure or (B) notice, written or oral, to the Holder, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of the Debenture into shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than pursuant to Section 4(c);

(vii)       The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within three (3) Business Days after such payment is due;

(viii)      The Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Debenture (except as may be covered by Section 2(a)(i) through 2(a)(vii) hereof) or any Transaction Document (as defined in Section 17) which is not cured within the time prescribed.

3

Consolidated Debenture #42

(b)          During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full unpaid Principal amount of this Debenture and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder's election, immediately due and payable in cash; provided however, the Holder may request (but shall have no obligation to request) payment of such amounts in Common Stock of the Company. Furthermore, in addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Debenture at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion Price. The Company hereby waives any presentment, demand, protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

(3) COMPANY REDEMPTION.

(a)          Company’s Additional Cash Redemption. The Company at its option shall have the right to redeem (“Optional Redemption”) a portion or all amounts outstanding under this Debenture prior to the Maturity Date provided that as of the date of the Holder’s receipt of a Redemption Notice (as defined herein) (i) the Closing Bid Price is less than the Fixed Conversion Price and (ii) no Event of Default has occurred. The Company shall pay an amount equal to the Principal amount being redeemed plus a redemption premium (“Redemption Premium”) equal to ten percent (10%) of the Principal amount being redeemed, and accrued Interest (collectively referred to as the “Company Additional Redemption Amount”). In order to make a redemption pursuant to this Section, the Company shall first provide written notice to the Holder of its intention to make a redemption (the “Redemption Notice”) setting forth the amount of Principal it desires to redeem. After receipt of the Redemption Notice the Holder shall have three (3) Business Days to elect to convert all or any portion of this Debenture, subject to the limitations set forth in Section 4(b). On the fourth (4th) Business Day after the Redemption Notice, the Company shall deliver to the Holder the Company Additional Redemption Amount with respect to the Principal amount redeemed after giving effect to conversions effected during the three (3) Business Day period.

(4)           CONVERSION OF DEBENTURE.         This Debenture shall be convertible into shares of the Company's Common Stock, on the terms and conditions set forth in this Section 4.

(a)          Conversion Right. Subject to the provisions of Section 4(c), at any time or times on or after the issuance date of this Debenture, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 4(b), at the Conversion Rate (as defined below). The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 4(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the "Conversion Rate"). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

4

Consolidated Debenture #42

(i)          "Conversion Amount" means the portion of the Principal and accrued Interest to be converted, redeemed or otherwise with respect to which this determination is being made.

(ii)         "Conversion Price" means, as of any Conversion Date (as defined below) or other date of determination the lesser of (a) $2.00 (the “Fixed Conversion Price”), subject to adjustment as provided herein, or (b) ninety percent (90%) of the lowest Volume Weighted Average Price during the 125 Trading Days immediately preceding the Conversion Date (the “Market Conversion Price”). The Fixed Conversion Price and the Market Conversion Price are collectively referred to as the “Conversion Price.” The Conversion Price may be adjusted pursuant to the other terms of this Debenture.

(b)          Mechanics of Conversion.

(i)          Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the "Conversion Notice") to the Company and (B) if required by Section 4(b)(iv), surrender this Debenture to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Debenture in the case of its loss, theft or destruction). On or before the third Business Day following the date of receipt of a Conversion Notice (the "Share Delivery Date"), the Company shall (X) if legends are not required to be placed on certificates of Common Stock pursuant to the Securities Purchase Agreements and provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to the Securities Purchase Agreements. If this Debenture is physically surrendered for conversion and the outstanding Principal of this Debenture is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder a new Debenture representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice. In the event of a partial conversion of this Debenture pursuant hereto, the amount converted shall be deducted from the installment amounts relating to the installment dates as set forth in the Conversion Notice.

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Consolidated Debenture #42

(ii)         Company's Failure to Timely Convert. If within three (3) Trading Days after the Company's receipt of the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3) Business Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point the Company's obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the Conversion Date.

(iii)        Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless (A) the full Conversion Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical surrender of this Debenture. The Holder and the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Debenture upon conversion.

(c)          Limitations on Conversions.

(i)          Beneficial Ownership. The Company shall not effect any conversions of this Debenture and the Holder shall not have the right to convert any portion of this Debenture or receive shares of Common Stock as payment hereunder to the extent that after giving effect to such conversion or receipt of such payment, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as payment. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 9.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the Principal of this Debenture is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for an amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum amount permitted to be converted on such Conversion Date in accordance with Section 4(a) and, any amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.

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(d)          Other Provisions.

(i)          Reserve

(1)         Initial Reserve. The Company covenants that it will at all times from and after the date hereof reserve and keep available out of its authorized and unissued shares of Common Stock, Three Billion (3,000,000,000) shares (the “Initial Share Reserve”) solely for the purpose of issuance of Common Stock pursuant to the securities initially issued by the Company to the Holder (the “Other Securities”).

(2)         Procedures to Increase Reserve. If at any time the total number of shares of Common Stock that may be issued pursuant to the Other Securities (in each case, and solely for the purpose of this clause, ignoring any restrictions or limitations on the number of shares of Common Stock that may be presently issuable pursuant to each instrument) exceeds the number of shares then reserved for issuance under the Initial Share Reserve, then the Holder shall have the right to provide written notice to the Company (a “Reserve Increase Notice”) to increase the Initial Share Reserve to a number of shares of Common Stock selected by the Holder, which shall not exceed the maximum number of shares of Common Stock that may be issuable pursuant to the instruments held by the Holder at the time of the Reserve Increase Notice (the Initial Share Reserve, as increased, the “YA Share Reserve”). Within sixty (60) days of receipt of a Reserve Increase Notice, the Company shall increase the Initial Share Reserve in accordance with such notice. Notwithstanding the foregoing, in the event the Company does not have a sufficient number of authorized shares of Common Stock available to satisfy its obligation to reserve for issuance such number of shares as set forth in the Reserve Increase Notice to create the YA Share Reserve, then (A) the Company shall promptly reserve such portion of its authorized shares of Common Stock that is available to be reserved for the creation of the YA Share Reserve, and (B) with respect to any shortfall, the Company shall (i) take all steps necessary to increase its authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the required amount as quickly as practicable, and (ii) use its best efforts to amend the Company’s certificate of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the required amount, as soon as practicable and in any event not later than the seventy-fifth (75^th) day after receipt of a Reserve Increase Notice. All reservations or increases of amounts of reserved shares and authorized shares of Common Stock under this section shall be subject to the due and proper approval, as applicable and required by all relevant laws, of the shareholders of the Company. With respect to the Company’s maintenance of the Initial Share Reserve and the YA Share Reserve as set forth in this section, an Event of Default shall only occur upon the Company’s inability to increase the amount of reserved shares of Common Stock via the amendment of its certificate of incorporation as prescribed above, subsequent to its receipt of a Reserve Increase Notice. The Company’s receipt of a Reserve Increase Notice shall not constitute an Event of Default.

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Consolidated Debenture #42

(ii)         All calculations under this Section 4 shall be rounded to the nearest $0.0001 or whole share.

(iii)        Nothing herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein for the Company 's failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

(5) Adjustments to Conversion Price

(a)          Adjustment of Conversion Price upon Issuance of Common Stock. If the Company, at any time while this Debenture is outstanding, issues or sells, or in accordance with this Section 5(a) is deemed to have issued or sold, any shares of Common Stock, excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities, for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such issue or sale (such price the "Applicable Price") (the foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For purposes of determining the adjusted Conversion Price under this Section 5(a), the following shall be applicable:

(i)          Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange or exercise of such Convertible Securities.

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Consolidated Debenture #42

(ii)         Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion or exchange or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price had been or are to be made pursuant to other provisions of this Section, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

(iii)        Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section, if the terms of any Option or Convertible Security that was outstanding as of the issuance date of this Debenture are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

(iv)        Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities by the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for the difference of (x) the aggregate fair market value of such Options and other securities issued or sold in such integrated transaction, less (y) the fair market value of the securities other than such Option, issued or sold in such transaction and the other securities issued or sold in such integrated transaction will be deemed to have been issued or sold for the balance of the consideration received by the Company. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the gross amount raised by the Company; provided, however, that such gross amount is not greater than 110% of the net amount received by the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Bid Price of such securities on the date of receipt. If any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10^th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

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(v)         Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(b)          Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company, at any time while this Debenture is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(c)          Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this Debenture) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

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(d)          Other Events. If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder under this Debenture; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 5.

(e)          Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any fundamental transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a "Corporate Event"), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, at the Holder's option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Debenture.

(f)          Whenever the Conversion Price is adjusted pursuant to Section 5 hereof, the Company shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(g)          In case of any (1) merger or consolidation of the Company or any subsidiary of the Company with or into another Person, or (2) sale by the Company or any subsidiary of the Company of more than one-half of the assets of the Company in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section 2(b), (B) convert the aggregate amount of this Debenture then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible debenture with an amount equal to the aggregate Principal of this Debenture then held by such Holder, plus all accrued and unpaid Interest and other amounts owing thereon, which such newly issued convertible Debenture shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures were issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

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(6) REISSUANCE OF THIS DEBENTURE.

(a)          Transfer. If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Debenture (in accordance with Section 6(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal, being transferred by the Holder and, if less then the entire outstanding Principal is being transferred, a new Debenture (in accordance with Section 6(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section 4(b)(iii) following conversion or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may be less than the Principal stated on the face of this Debenture.

(b)          Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section 6(d)) representing the outstanding Principal.

(c)          Debenture Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section 6(d)) representing in the aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principalas is designated by the Holder at the time of such surrender.

(d)          Issuance of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 6(a) or Section 6(c), the Principal designated by the Holder which, when added to the principal represented by the other new Debentures issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is the same as the Original Issuance Date of this Debenture, (iv) shall have the same rights and conditions as this Debenture and (v) shall represent the designation and applicable amount of accrued and unpaid Interest from the Issuance Date.

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(7)         NOTICES.         Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company, to:	NeoMedia Technologies, Inc.
	100 West Arapahoe Avenue, Suite 9
	Boulder, Colorado  80302
	Attention:  Chief Executive Officer or Chief Financial Officer
	Telephone:     (303) 546-7946
	Facsimile:      (636) 648-9922
With a copy to:	K&L Gates LLP
	200 South Biscayne Boulevard – Suite 3900
	Miami, FL  33131-2399
	Attention: Clayton E. Parker, Esq.
	Telephone:     (305) 539-3300
	Facsimile:       (305) 358-7095
If to the Holder:	David Gonzalez, Esq.
	1012 Springfield Ave.,
	Mountainside, New Jersey 07092
	Telephone:     (201) 985-8300
	Facsimile:       (201) 985-8266

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

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(8)         Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the principal of, Interest and other charges (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the Company.

(9)         This Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.

(10)        No indebtedness of the Company is senior to this Debenture in right of payment, whether with respect to Interest, damages or upon liquidation or dissolution or otherwise.

(11)        This Debenture shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Superior Courts of the State of New Jersey sitting in Hudson County, New Jersey and the U.S. District Court for the District of New Jersey sitting in Newark, New Jersey in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

(12)        If the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.

(13)        Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing.

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(14)        If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal of or Interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

(15)        Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

(16)        THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS DEBENTURE OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS DEBENTURE.

(17)        CERTAIN DEFINITIONS For purposes of this Debenture, the following terms shall have the following meanings:

(a)          “Approved Stock Plan” means a stock option plan that has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued only to any employee, officer, or director for services provided to the Company.

(b)          "Bloomberg" means Bloomberg Financial Markets.

(c)          “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

(d)          “Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c).

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Consolidated Debenture #42

(e)          “Closing Bid Price” means the price per share in the last reported trade of the Common Stock on a Primary Market or on the exchange which the Common Stock is then listed as quoted by Bloomberg.

(f)          “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.

(g)          “Commission” means the Securities and Exchange Commission.

(h)          “Common Stock” means the common stock, par value $0.001, of the Company and stock of any other class into which such shares may hereafter be changed or reclassified.

(i)          "Equity Conditions" means that each of the following conditions is satisfied: (i) on each day during the period beginning two (2) weeks prior to the applicable date of determination and ending on and including the applicable date of determination (the "Equity Conditions Measuring Period"), either (x) the Underlying Shares Registration Statement shall be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) all applicable shares of Common Stock to be issued in connection with the event requiring determination shall be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal Market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; (iii) during the Equity Conditions Measuring Period, the Company shall have delivered Conversion Shares upon conversion of the Debentures to the Holder on a timely basis as set forth in Section 4(b)(ii) hereof; (iv) any applicable shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 4(c) hereof and the rules or regulations of the Primary Market; (v) during the Equity Conditions Measuring Period, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; and (vii) the Company shall have no knowledge of any fact that would cause (x) the Registration Statements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) any applicable shares of Common Stock to be issued in connection with the event requiring determination not to be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws.

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Consolidated Debenture #42

(j)          "Equity Conditions Failure" means that on any applicable date the Equity Conditions have not been satisfied (or waived in writing by the Holder).

(k)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(l)          “Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan (b) shares of Common Stock issued or deemed to be issued by the Company upon the conversion, exchange or exercise of any right, option, obligation or security outstanding on the date prior to date of the Securities Purchase Agreements, provided that the terms of such right, option, obligation or security are not amended or otherwise modified on or after the date of the Securities Purchase Agreements, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of shares of Common Stock issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Securities Purchase Agreements, (c) shares issued in connection with any acquisition by the Company, whether through an acquisition of stock or a merger of any business, assets or technologies, leasing arrangement or any other transaction the primary purpose of which is not to raise equity capital, and (d) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of this Debenture.

(m)          “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

(n)          “Original Issuance Date” means the date of the first issuance of this Debenture regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Debenture.

(o)          “Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

(p)           “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

(q)          “Securities Purchase Agreements” means the Securities Purchase Agreements by and between the Company and Holder pursuant to which the Prior Debentures were purchased and issued.

(r)          “Trading Day” means a day on which the shares of Common Stock are quoted on the OTCBB or quoted or traded on such Primary Market on which the shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day.

(s)          “Transaction Documents” means the Securities Purchase Agreements or any other agreement delivered in connection with the Securities Purchase Agreements.

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(t)          “Underlying Shares” means the shares of Common Stock issuable upon conversion of this Debenture or as payment of Interest in accordance with the terms hereof.

(u)          "Volume Weighted Average Price" means, for any security as of any date, the daily dollar volume-weighted average price for such security on the Primary Market as reported by Bloomberg through its “Historical Prices – Px Table with Average Daily Volume” functions, or, if no dollar volume-weighted average price is reported for such security by Bloomberg, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the "pink sheets" by Pink Sheets LLC.

(v)         "Warrants" has the meaning ascribed to such term in the Securities Purchase Agreements, and shall include all warrants issued in exchange therefor or replacement thereof.

(18)        Amended and Restated Debenture. This Debenture represents the portions of the Prior Debentures that have been consolidated as set forth on Schedule ‘A’. The issuance of this Debenture is not in any way intended to constitute a novation of the obligations and liabilities existing under the Prior Debentures or evidence payment of all or any portion of such obligations and liabilities.

IN WITNESS WHEREOF, the Company has caused this Amended, Restated and Consolidated Secured Convertible Debenture to be duly executed by a duly authorized officer as of the ___16____ day of September___, 2013.

NEOMEDIA TECHNOLOGIES, INC.
By:	/s/ Laura Marriott
Name: Laura Marriott
Title: Chief Executive Officer

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EX-10.3

EXHIBIT 10.3

Consolidated Debenture #43

NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

NEOMEDIA TECHNOLOGIES, INC.

Amended, Restated and Consolidated Secured Convertible Debenture

Original Issuance Date:  December 29, 2006	Principal Amount: $1,368,840.00
No. NEOM-43

This Amended, Restated and Consolidated Secured Convertible Debenture (including all secured convertible debentures issued in exchange, transfer or replacement hereof, this “Debenture”) represents portions of the indebtedness previously evidenced by those certain Secured Convertible Debentures listed on Schedule ‘A’ attached hereto (as each may have been amended and is currently in effect, collectively, the “Prior Debentures”) issued by NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation (the “Company”), to YA GLOBAL INVESTMENTS, L.P. (f/k/a CORNELL CAPITAL PARTNERS, LP, the “Holder”) and amends and restates such portions (and is given in substitution for but not in satisfaction) of such Prior Debentures. Outstanding portions of the Prior Debentures are all merged into and superseded by this Debenture in the amounts set forth on Schedule ‘A’. The issuance of this Debenture does not effect a refinancing of all or any portion of the obligations under the Prior Debentures, it being the intention of the Company and the Holder to avoid effectuating a novation of any such obligations. The portion of each of the Prior Debentures that has been consolidated hereunder is memorialized on Schedule ‘A’, attached hereto.

FOR VALUE RECEIVED, the Company hereby promises to pay to the order of the Holder, or its registered assigns, the amount set out above as the Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Section 17.

Consolidated Debenture #43

(1)         GENERAL TERMS

(a)          Payment of Principal. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal. The "Maturity Date" shall be August 1, 2015, as may be extended from time to time by the Holder. Other than as specifically permitted by this Debenture in Section 3(a) or otherwise, or pursuant to the Securities Purchase Agreements or other Transaction Documents, the Company may not prepay or redeem any portion of the outstanding Principal without the prior written consent of the Holder.

(b)          Interest. This Debenture shall not accrue any interest.

(c)          Security. The Debenture is secured by all collateral granted by the Company and its affiliates to the Holder, in accordance with the terms and conditions that certain Security Agreement by and between the Holder and Company, dated July 29, 2008.

(2)         EVENTS OF DEFAULT.

(a)          An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i)          the Company's failure to pay to the Holder any amount of Principal or other amounts when and as due under this Debenture (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder);

(ii)         The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company state that it is unable to pay its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

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Consolidated Debenture #43

(iii)        The Company or any subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

(iv)        If the Common Stock is quoted or listed for trading on any of the following and it ceases to be so quoted or listed for trading and shall not again be quoted or listed for trading on any Primary Market within five (5) Trading Days of such delisting: (a) the NYSE Amex, (b) New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Select Market, or (e) the Nasdaq OTC Bulletin Board (“OTCBB”) (each, a “Primary Market”);

(v)         The Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section 17) unless in connection with such Change of Control Transaction this Debenture is retired;

(vi)        The Company's (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five (5) Business Days after the applicable Conversion Failure or (B) notice, written or oral, to the Holder, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of the Debenture into shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than pursuant to Section 4(c);

(vii)       The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within three (3) Business Days after such payment is due;

(viii)      The Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Debenture (except as may be covered by Section 2(a)(i) through 2(a)(vii) hereof) or any Transaction Document (as defined in Section 17) which is not cured within the time prescribed.

(b)          During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full unpaid Principal amount of this Debenture and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder's election, immediately due and payable in cash; provided however, the Holder may request (but shall have no obligation to request) payment of such amounts in Common Stock of the Company. Furthermore, in addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Debenture at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion Price. The Company hereby waives any presentment, demand, protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

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Consolidated Debenture #43

(3)         COMPANY REDEMPTION.

(a)          Company’s Additional Cash Redemption. The Company at its option shall have the right to redeem (“Optional Redemption”) a portion or all amounts outstanding under this Debenture prior to the Maturity Date provided that as of the date of the Holder’s receipt of a Redemption Notice (as defined herein) (i) the Closing Bid Price is less than the Fixed Conversion Price and (ii) no Event of Default has occurred. The Company shall pay an amount equal to the Principal amount being redeemed plus a redemption premium (“Redemption Premium”) equal to ten percent (10%) of the Principal amount being redeemed (referred to as the “Company Additional Redemption Amount”). In order to make a redemption pursuant to this Section, the Company shall first provide written notice to the Holder of its intention to make a redemption (the “Redemption Notice”) setting forth the amount of Principal it desires to redeem. After receipt of the Redemption Notice the Holder shall have three (3) Business Days to elect to convert all or any portion of this Debenture, subject to the limitations set forth in Sections 4(b) and (c). On the fourth (4th) Business Day after the Redemption Notice, the Company shall deliver to the Holder the Company Additional Redemption Amount with respect to thePrincipal amount redeemed after giving effect to conversions effected during the three (3) Business Day period.

(4)         CONVERSION OF DEBENTURE. This Debenture shall be convertible into shares of the Company's Common Stock, on the terms and conditions set forth in this Section 4.

(a)          Conversion Right. Subject to the provisions of Section 4(c), at any time or times on or after the issuance date of this Debenture, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 4(b), at the Conversion Rate (as defined below). The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 4(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the "Conversion Rate"). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

(i)          "Conversion Amount" means the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made.

(ii)         "Conversion Price" means, as of any Conversion Date (as defined below) or other date of determination the lesser of (a) $2.00 (the “Fixed Conversion Price”), subject to adjustment as provided herein, or (b) ninety-five percent (95%) of the lowest Volume Weighted Average Price during the 125 Trading Days immediately preceding the Conversion Date (the “Market Conversion Price”). The Fixed Conversion Price and the Market Conversion Price are collectively referred to as the “Conversion Price.” The Conversion Price may be adjusted pursuant to the other terms of this Debenture.

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Consolidated Debenture #43

(b)          Mechanics of Conversion.

(i)          Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the "Conversion Notice") to the Company and (B) if required by Section 4(b)(iv), surrender this Debenture to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Debenture in the case of its loss, theft or destruction). On or before the third Business Day following the date of receipt of a Conversion Notice (the "Share Delivery Date"), the Company shall (X) if legends are not required to be placed on certificates of Common Stock pursuant to the Securities Purchase Agreements and provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to the Securities Purchase Agreements. If this Debenture is physically surrendered for conversion and the outstanding Principal of this Debenture is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder a new Debenture representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice. In the event of a partial conversion of this Debenture pursuant hereto, the amount converted shall be deducted from the installment amounts relating to the installment dates as set forth in the Conversion Notice.

(ii)         Company's Failure to Timely Convert. If within three (3) Trading Days after the Company's receipt of the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3) Business Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point the Company's obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the Conversion Date.

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Consolidated Debenture #43

(iii)        Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless (A) the full Conversion Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical surrender of this Debenture. The Holder and the Company shall maintain records showing the Principal converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Debenture upon conversion.

(c)          Limitations on Conversions.

(i)          Beneficial Ownership. The Company shall not effect any conversions of this Debenture and the Holder shall not have the right to convert any portion of this Debenture or receive shares of Common Stock as payment hereunder to the extent that after giving effect to such conversion or receipt of such payment, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as payment. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 9.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the Principal of this Debenture is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for an amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum amount permitted to be converted on such Conversion Date in accordance with Section 4(a) and, any amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.

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Consolidated Debenture #43

(d)          Other Provisions.

(i)          Reserve

(1)   Initial Reserve. The Company covenants that it will at all times from and after the date hereof reserve and keep available out of its authorized and unissued shares of Common Stock, Three Billion (3,000,000,000) shares (the “Initial Share Reserve”) solely for the purpose of issuance of Common Stock pursuant to the securities initially issued by the Company to the Holder (the “Other Securities”).

(2)   Procedures to Increase Reserve. If at any time the total number of shares of Common Stock that may be issued pursuant to the Other Securities (in each case, and solely for the purpose of this clause, ignoring any restrictions or limitations on the number of shares of Common Stock that may be presently issuable pursuant to each instrument) exceeds the number of shares then reserved for issuance under the Initial Share Reserve, then the Holder shall have the right to provide written notice to the Company (a “Reserve Increase Notice”) to increase the Initial Share Reserve to a number of shares of Common Stock selected by the Holder, which shall not exceed the maximum number of shares of Common Stock that may be issuable pursuant to the instruments held by the Holder at the time of the Reserve Increase Notice (the Initial Share Reserve, as increased, the “YA Share Reserve”). Within sixty (60) days of receipt of a Reserve Increase Notice, the Company shall increase the Initial Share Reserve in accordance with such notice. Notwithstanding the foregoing, in the event the Company does not have a sufficient number of authorized shares of Common Stock available to satisfy its obligation to reserve for issuance such number of shares as set forth in the Reserve Increase Notice to create the YA Share Reserve, then (A) the Company shall promptly reserve such portion of its authorized shares of Common Stock that is available to be reserved for the creation of the YA Share Reserve, and (B) with respect to any shortfall, the Company shall (i) take all steps necessary to increase its authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the required amount as quickly as practicable, and (ii) use its best efforts to amend the Company’s certificate of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the required amount, as soon as practicable and in any event not later than the seventy-fifth (75^th) day after receipt of a Reserve Increase Notice. All reservations or increases of amounts of reserved shares and authorized shares of Common Stock under this section shall be subject to the due and proper approval, as applicable and required by all relevant laws, of the shareholders of the Company. With respect to the Company’s maintenance of the Initial Share Reserve and the YA Share Reserve as set forth in this section, an Event of Default shall only occur upon the Company’s inability to increase the amount of reserved shares of Common Stock via the amendment of its certificate of incorporation as prescribed above, subsequent to its receipt of a Reserve Increase Notice. The Company’s receipt of a Reserve Increase Notice shall not constitute an Event of Default.

(ii)         All calculations under this Section 4 shall be rounded to the nearest $0.0001 or whole share.

(iii)        Nothing herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein for the Company 's failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

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Consolidated Debenture #43

(5)         Adjustments to Conversion Price

(a)          Adjustment of Conversion Price upon Issuance of Common Stock. If the Company, at any time while this Debenture is outstanding, issues or sells, or in accordance with this Section 5(a) is deemed to have issued or sold, any shares of Common Stock, excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities, for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such issue or sale (such price the "Applicable Price") (the foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For purposes of determining the adjusted Conversion Price under this Section 5(a), the following shall be applicable:

(i)          Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange or exercise of such Convertible Securities.

(ii)         Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion or exchange or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price had been or are to be made pursuant to other provisions of this Section, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

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Consolidated Debenture #43

(iii)        Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section, if the terms of any Option or Convertible Security that was outstanding as of the issuance date of this Debenture are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

(iv)        Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities by the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for the difference of (x) the aggregate fair market value of such Options and other securities issued or sold in such integrated transaction, less (y) the fair market value of the securities other than such Option, issued or sold in such transaction and the other securities issued or sold in such integrated transaction will be deemed to have been issued or sold for the balance of the consideration received by the Company. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the gross amount raised by the Company; provided, however, that such gross amount is not greater than 110% of the net amount received by the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Bid Price of such securities on the date of receipt. If any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10^th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

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Consolidated Debenture #43

(v)         Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(b)          Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company, at any time while this Debenture is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(c)          Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this Debenture) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(d)          Other Events. If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder under this Debenture; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 5.

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Consolidated Debenture #43

(e)          Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any fundamental transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a "Corporate Event"), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, at the Holder's option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Debenture.

(f)          Whenever the Conversion Price is adjusted pursuant to Section 5 hereof, the Company shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(g)          In case of any (1) merger or consolidation of the Company or any subsidiary of the Company with or into another Person, or (2) sale by the Company or any subsidiary of the Company of more than one-half of the assets of the Company in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section 2(b), (B) convert the aggregate amount of this Debenture then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible debenture with an amount equal to the aggregate Principal of this Debenture then held by such Holder, plus other amounts owing thereon, which such newly issued convertible Debenture shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures were issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

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Consolidated Debenture #43

(6)         REISSUANCE OF THIS DEBENTURE.

(a)          Transfer. If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Debenture (in accordance with Section 6(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal, being transferred by the Holder and, if less then the entire outstanding Principal is being transferred, a new Debenture (in accordance with Section 6(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section 4(b)(iii) following conversion or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may be less than the Principal stated on the face of this Debenture.

(b)          Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section 6(d)) representing the outstanding Principal.

(c)          Debenture Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section 6(d)) representing in the aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principalas is designated by the Holder at the time of such surrender.

(d)          Issuance of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 6(a) or Section 6(c), the Principal designated by the Holder which, when added to the principal represented by the other new Debentures issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is the same as the Original Issuance Date of this Debenture, and (iv) shall have the same rights and conditions as this Debenture.

(7)         NOTICES.         Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

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Consolidated Debenture #43

If to the Company, to:	NeoMedia Technologies, Inc.
	100 West Arapahoe Avenue, Suite 9 Boulder, Colorado  80302¨
	Attention:  Chief Executive Officer or Chief Financial Officer
	Telephone:     (303) 546-7946
	Facsimile:      (636) 648-9922
With a copy to:	K&L Gates LLP
	200 South Biscayne Boulevard – Suite 3900
	Miami, FL  33131-2399
	Attention:      Clayton E. Parker, Esq.
	Telephone:    (305) 539-3300
	Facsimile:      (305) 358-7095
If to the Holder:	David Gonzalez, Esq.
	1012 Springfield Ave.,
	Mountainside, New Jersey 07092
	Telephone:     (201) 985-8300 Facsimile:       (201) 985-8266

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

(8)         Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the principal of, and other charges (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the Company.

(9)         This Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.

(10)        No indebtedness of the Company is senior to this Debenture in right of payment, whether with respect to damages or upon liquidation or dissolution or otherwise.

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Consolidated Debenture #43

(11)        This Debenture shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Superior Courts of the State of New Jersey sitting in Hudson County, New Jersey and the U.S. District Court for the District of New Jersey sitting in Newark, New Jersey in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

(12)        If the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.

(13)        Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing.

(14)        If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal of this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

(15)        Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

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Consolidated Debenture #43

(16)        THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS DEBENTURE OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS DEBENTURE.

(17)        CERTAIN DEFINITIONS For purposes of this Debenture, the following terms shall have the following meanings:

(a)          “Approved Stock Plan” means a stock option plan that has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued only to any employee, officer, or director for services provided to the Company.

(b)          "Bloomberg" means Bloomberg Financial Markets.

(c)          “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

(d)          “Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c).

(e)          “Closing Bid Price” means the price per share in the last reported trade of the Common Stock on a Primary Market or on the exchange which the Common Stock is then listed as quoted by Bloomberg.

(f)          “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.

(g)          “Commission” means the Securities and Exchange Commission.

(h)          “Common Stock” means the common stock, par value $0.001, of the Company and stock of any other class into which such shares may hereafter be changed or reclassified.

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Consolidated Debenture #43

(i)          "Equity Conditions" means that each of the following conditions is satisfied: (i) on each day during the period beginning two (2) weeks prior to the applicable date of determination and ending on and including the applicable date of determination (the "Equity Conditions Measuring Period"), either (x) the Underlying Shares Registration Statement shall be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) all applicable shares of Common Stock to be issued in connection with the event requiring determination shall be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal Market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; (iii) during the Equity Conditions Measuring Period, the Company shall have delivered Conversion Shares upon conversion of the Debentures to the Holder on a timely basis as set forth in Section 4(b)(ii) hereof; (iv) any applicable shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 4(c) hereof and the rules or regulations of the Primary Market; (v) during the Equity Conditions Measuring Period, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; and (vii) the Company shall have no knowledge of any fact that would cause (x) the Registration Statements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) any applicable shares of Common Stock to be issued in connection with the event requiring determination not to be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws.

(j)          "Equity Conditions Failure" means that on any applicable date the Equity Conditions have not been satisfied (or waived in writing by the Holder).

(k)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(l)          “Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan (b) shares of Common Stock issued or deemed to be issued by the Company upon the conversion, exchange or exercise of any right, option, obligation or security outstanding on the date prior to date of the Securities Purchase Agreements, provided that the terms of such right, option, obligation or security are not amended or otherwise modified on or after the date of the Securities Purchase Agreements, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of shares of Common Stock issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Securities Purchase Agreements, (c) shares issued in connection with any acquisition by the Company, whether through an acquisition of stock or a merger of any business, assets or technologies, leasing arrangement or any other transaction the primary purpose of which is not to raise equity capital, and (d) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of this Debenture.

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Consolidated Debenture #43

(m)          “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

(n)          “Original Issuance Date” means the date of the first issuance of this Debenture regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Debenture.

(o)          “Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

(p)           “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

(q)          “Securities Purchase Agreements” means the Securities Purchase Agreements by and between the Company and Holder pursuant to which the Prior Debentures were purchased and issued.

(r)          “Trading Day” means a day on which the shares of Common Stock are quoted on the OTCBB or quoted or traded on such Primary Market on which the shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day.

(s)          “Transaction Documents” means the Securities Purchase Agreements or any other agreement delivered in connection with the Securities Purchase Agreements.

(t)          “Underlying Shares” means the shares of Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof.

(u)          “Underlying Shares Registration Statement” means a registration statement covering among other things the resale of the Underlying Shares and naming the Holder as a “selling stockholder” thereunder.

(v)         "Volume Weighted Average Price" means, for any security as of any date, the daily dollar volume-weighted average price for such security on the Primary Market as reported by Bloomberg through its “Historical Prices – Px Table with Average Daily Volume” functions, or, if no dollar volume-weighted average price is reported for such security by Bloomberg, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the "pink sheets" by Pink Sheets LLC.

(w)          "Warrants" has the meaning ascribed to such term in the Securities Purchase Agreements, and shall include all warrants issued in exchange therefor or replacement thereof.

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Consolidated Debenture #43

(18)        Amended and Restated Debenture. This Debenture represents the portions of the Prior Debentures that have been consolidated as set forth on Schedule ‘A’. The issuance of this Debenture is not in any way intended to constitute a novation of the obligations and liabilities existing under the Prior Debentures or evidence payment of all or any portion of such obligations and liabilities.

IN WITNESS WHEREOF, the Company has caused this Amended, Restated and Consolidated Secured Convertible Debenture to be duly executed by a duly authorized officer as of the __16_ day of September_, 2013_.

NEOMEDIA TECHNOLOGIES, INC.
By:	/s/ Laura Marriott
Name:		Laura Marriott
Title:		Chief Executive Officer

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EX-10.4

EXHIBIT 10.4

Consolidated Debenture #44

NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

NEOMEDIA TECHNOLOGIES, INC.

Amended, Restated and Consolidated Secured Convertible Debenture

Original Issuance Date:  March 27, 2007	Principal Amount: $939,540.00
No. NEOM-44

This Amended, Restated and Consolidated Secured Convertible Debenture (including all secured convertible debentures issued in exchange, transfer or replacement hereof, this “Debenture”) represents portions of the indebtedness previously evidenced by those certain Secured Convertible Debentures listed on Schedule ‘A’ attached hereto (as each may have been amended and is currently in effect, collectively, the “Prior Debentures”) issued by NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation (the “Company”), to YA GLOBAL INVESTMENTS, L.P. (f/k/a CORNELL CAPITAL PARTNERS, LP, the “Holder”) and amends and restates such portions (and is given in substitution for but not in satisfaction) of such Prior Debentures. Outstanding portions of the Prior Debentures are all merged into and superseded by this Debenture in the amounts set forth on Schedule ‘A’. The issuance of this Debenture does not effect a refinancing of all or any portion of the obligations under the Prior Debentures, it being the intention of the Company and the Holder to avoid effectuating a novation of any such obligations. The portion of each of the Prior Debentures that has been consolidated hereunder is memorialized on Schedule ‘A’, attached hereto.

FOR VALUE RECEIVED, the Company hereby promises to pay to the order of the Holder, or its registered assigns, the amount set out above as the Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Section 17.

Consolidated Debenture #44

(1)          GENERAL TERMS

(a)          Payment of Principal. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal. The "Maturity Date" shall be August 1, 2015, as may be extended from time to time by the Holder. Other than as specifically permitted by this Debenture in Section 3(a) or otherwise, or pursuant to the Securities Purchase Agreements or other Transaction Documents, the Company may not prepay or redeem any portion of the outstanding Principal without the prior written consent of the Holder.

(b)          Interest. This Debenture shall not accrue any interest.

(c)          Security. The Debenture is secured by all collateral granted by the Company and its affiliates to the Holder, in accordance with the terms and conditions that certain Security Agreement by and between the Holder and Company, dated July 29, 2008.

(2)         EVENTS OF DEFAULT.

(a)          An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i)          the Company's failure to pay to the Holder any amount of Principal or other amounts when and as due under this Debenture (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder);

(ii)         The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company state that it is unable to pay its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

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Consolidated Debenture #44

(iii)        The Company or any subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

(iv)        If the Common Stock is quoted or listed for trading on any of the following and it ceases to be so quoted or listed for trading and shall not again be quoted or listed for trading on any Primary Market within five (5) Trading Days of such delisting: (a) the NYSE Amex, (b) New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Select Market, or (e) the Nasdaq OTC Bulletin Board (“OTCBB”) (each, a “Primary Market”);

(v)         The Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section 17) unless in connection with such Change of Control Transaction this Debenture is retired;

(vi)        The Company's (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five (5) Business Days after the applicable Conversion Failure or (B) notice, written or oral, to the Holder, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of the Debenture into shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than pursuant to Section 4(c);

(vii)       The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within three (3) Business Days after such payment is due;

(viii)      The Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Debenture (except as may be covered by Section 2(a)(i) through 2(a)(vii) hereof) or any Transaction Document (as defined in Section 17) which is not cured within the time prescribed.

(b)          During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full unpaid Principal amount of this Debenture and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder's election, immediately due and payable in cash; provided however, the Holder may request (but shall have no obligation to request) payment of such amounts in Common Stock of the Company. Furthermore, in addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Debenture at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion Price. The Company hereby waives any presentment, demand, protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

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(3)         COMPANY REDEMPTION.

(a)          Company’s Additional Cash Redemption. The Company at its option shall have the right to redeem (“Optional Redemption”) a portion or all amounts outstanding under this Debenture prior to the Maturity Date provided that as of the date of the Holder’s receipt of a Redemption Notice (as defined herein) (i) the Closing Bid Price is less than the Fixed Conversion Price and (ii) no Event of Default has occurred. The Company shall pay an amount equal to the Principal amount being redeemed plus a redemption premium (“Redemption Premium”) equal to ten percent (10%) of the Principal amount being redeemed (referred to as the “Company Additional Redemption Amount”). In order to make a redemption pursuant to this Section, the Company shall first provide written notice to the Holder of its intention to make a redemption (the “Redemption Notice”) setting forth the amount of Principal it desires to redeem. After receipt of the Redemption Notice the Holder shall have three (3) Business Days to elect to convert all or any portion of this Debenture, subject to the limitations set forth in Section 4(b) and (c). On the fourth (4th) Business Day after the Redemption Notice, the Company shall deliver to the Holder the Company Additional Redemption Amount with respect to thePrincipal amount redeemed after giving effect to conversions effected during the three (3) Business Day period.

(4)         CONVERSION OF DEBENTURE.This Debenture shall be convertible into shares of the Company's Common Stock, on the terms and conditions set forth in this Section 4.

(a)          Conversion Right. Subject to the provisions of Section 4(c), at any time or times on or after the issuance date of this Debenture, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 4(b), at the Conversion Rate (as defined below). The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 4(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the "Conversion Rate"). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

(i)          "Conversion Amount" means the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made.

(ii)         "Conversion Price" means, as of any Conversion Date (as defined below) or other date of determination the lesser of (a) $2.00 (the “Fixed Conversion Price”), subject to adjustment as provided herein, or (b) ninety-five percent (95%) of the lowest Volume Weighted Average Price during the 125 Trading Days immediately preceding the Conversion Date (the “Market Conversion Price”). The Fixed Conversion Price and the Market Conversion Price are collectively referred to as the “Conversion Price.” The Conversion Price may be adjusted pursuant to the other terms of this Debenture.

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(b)          Mechanics of Conversion.

(i)          Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the "Conversion Notice") to the Company and (B) if required by Section 4(b)(iv), surrender this Debenture to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Debenture in the case of its loss, theft or destruction). On or before the third Business Day following the date of receipt of a Conversion Notice (the "Share Delivery Date"), the Company shall (X) if legends are not required to be placed on certificates of Common Stock pursuant to the Securities Purchase Agreements and provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to the Securities Purchase Agreements. If this Debenture is physically surrendered for conversion and the outstanding Principal of this Debenture is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder a new Debenture representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice. In the event of a partial conversion of this Debenture pursuant hereto, the amount converted shall be deducted from the installment amounts relating to the installment dates as set forth in the Conversion Notice.

(ii)         Company's Failure to Timely Convert. If within three (3) Trading Days after the Company's receipt of the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3) Business Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point the Company's obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the Conversion Date.

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Consolidated Debenture #44

(iii)        Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless (A) the full Conversion Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical surrender of this Debenture. The Holder and the Company shall maintain records showing the Principal converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Debenture upon conversion.

(c)          Limitations on Conversions.

(i)          Beneficial Ownership. The Company shall not effect any conversions of this Debenture and the Holder shall not have the right to convert any portion of this Debenture or receive shares of Common Stock as payment hereunder to the extent that after giving effect to such conversion or receipt of such payment, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as payment. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 9.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the Principal of this Debenture is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for an amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum amount permitted to be converted on such Conversion Date in accordance with Section 4(a) and, any amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.

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(d)          Other Provisions.

(i)          Reserve

(1)         Initial Reserve. The Company covenants that it will at all times from and after the date hereof reserve and keep available out of its authorized and unissued shares of Common Stock, Three Billion (3,000,000,000) shares (the “Initial Share Reserve”) solely for the purpose of issuance of Common Stock pursuant to the securities initially issued by the Company to the Holder (the “Other Securities”).

(2)         Procedures to Increase Reserve. If at any time the total number of shares of Common Stock that may be issued pursuant to the Other Securities (in each case, and solely for the purpose of this clause, ignoring any restrictions or limitations on the number of shares of Common Stock that may be presently issuable pursuant to each instrument) exceeds the number of shares then reserved for issuance under the Initial Share Reserve, then the Holder shall have the right to provide written notice to the Company (a “Reserve Increase Notice”) to increase the Initial Share Reserve to a number of shares of Common Stock selected by the Holder, which shall not exceed the maximum number of shares of Common Stock that may be issuable pursuant to the instruments held by the Holder at the time of the Reserve Increase Notice (the Initial Share Reserve, as increased, the “YA Share Reserve”). Within sixty (60) days of receipt of a Reserve Increase Notice, the Company shall increase the Initial Share Reserve in accordance with such notice. Notwithstanding the foregoing, in the event the Company does not have a sufficient number of authorized shares of Common Stock available to satisfy its obligation to reserve for issuance such number of shares as set forth in the Reserve Increase Notice to create the YA Share Reserve, then (A) the Company shall promptly reserve such portion of its authorized shares of Common Stock that is available to be reserved for the creation of the YA Share Reserve, and (B) with respect to any shortfall, the Company shall (i) take all steps necessary to increase its authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the required amount as quickly as practicable, and (ii) use its best efforts to amend the Company’s certificate of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the required amount, as soon as practicable and in any event not later than the seventy-fifth (75^th) day after receipt of a Reserve Increase Notice. All reservations or increases of amounts of reserved shares and authorized shares of Common Stock under this section shall be subject to the due and proper approval, as applicable and required by all relevant laws, of the shareholders of the Company. With respect to the Company’s maintenance of the Initial Share Reserve and the YA Share Reserve as set forth in this section, an Event of Default shall only occur upon the Company’s inability to increase the amount of reserved shares of Common Stock via the amendment of its certificate of incorporation as prescribed above, subsequent to its receipt of a Reserve Increase Notice. The Company’s receipt of a Reserve Increase Notice shall not constitute an Event of Default.

(ii)         All calculations under this Section 4 shall be rounded to the nearest $0.0001 or whole share.

(iii)        Nothing herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein for the Company 's failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

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(5)         Adjustments to Conversion Price

(a)          Adjustment of Conversion Price upon Issuance of Common Stock. If the Company, at any time while this Debenture is outstanding, issues or sells, or in accordance with this Section 5(a) is deemed to have issued or sold, any shares of Common Stock, excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities, for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such issue or sale (such price the "Applicable Price") (the foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For purposes of determining the adjusted Conversion Price under this Section 5(a), the following shall be applicable:

(i)          Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange or exercise of such Convertible Securities.

(ii)         Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion or exchange or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price had been or are to be made pursuant to other provisions of this Section, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

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(iii)        Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section, if the terms of any Option or Convertible Security that was outstanding as of the issuance date of this Debenture are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

(iv)        Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities by the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for the difference of (x) the aggregate fair market value of such Options and other securities issued or sold in such integrated transaction, less (y) the fair market value of the securities other than such Option, issued or sold in such transaction and the other securities issued or sold in such integrated transaction will be deemed to have been issued or sold for the balance of the consideration received by the Company. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the gross amount raised by the Company; provided, however, that such gross amount is not greater than 110% of the net amount received by the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Bid Price of such securities on the date of receipt. If any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10^th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

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(v)         Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(b)          Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company, at any time while this Debenture is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(c)          Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this Debenture) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(d)          Other Events. If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder under this Debenture; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 5.

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(e)          Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any fundamental transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a "Corporate Event"), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, at the Holder's option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Debenture.

(f)          Whenever the Conversion Price is adjusted pursuant to Section 5 hereof, the Company shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(g)          In case of any (1) merger or consolidation of the Company or any subsidiary of the Company with or into another Person, or (2) sale by the Company or any subsidiary of the Company of more than one-half of the assets of the Company in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section 2(b), (B) convert the aggregate amount of this Debenture then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible debenture with an amount equal to the aggregate Principal of this Debenture then held by such Holder, plus other amounts owing thereon, which such newly issued convertible Debenture shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures were issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

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(6)         REISSUANCE OF THIS DEBENTURE.

(a)          Transfer. If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Debenture (in accordance with Section 6(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal, being transferred by the Holder and, if less then the entire outstanding Principal is being transferred, a new Debenture (in accordance with Section 6(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section 4(b)(iii) following conversion or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may be less than the Principal stated on the face of this Debenture.

(b)          Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section 6(d)) representing the outstanding Principal.

(c)          Debenture Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section 6(d)) representing in the aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principalas is designated by the Holder at the time of such surrender.

(d)          Issuance of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 6(a) or Section 6(c), the Principal designated by the Holder which, when added to the principal represented by the other new Debentures issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is the same as the Original Issuance Date of this Debenture, and (iv) shall have the same rights and conditions as this Debenture.

(7)         NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

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If to the Company, to:	NeoMedia Technologies, Inc.
	100 West Arapahoe Avenue, Suite 9 Boulder, Colorado  80302
	Attention:  Chief Executive Officer or Chief Financial Officer
	Telephone: (303) 546-7946
	Facsimile:  (636) 648-9922
With a copy to:	K&L Gates LLP
	200 South Biscayne Boulevard – Suite 3900
	Miami, FL  33131-2399
	Attention: Clayton E. Parker, Esq.
	Telephone: (305) 539-3300
	Facsimile:  (305) 358-7095
If to the Holder:	David Gonzalez, Esq.
	1012 Springfield Ave.,
	Mountainside, New Jersey 07092
	Telephone: (201) 985-8300 Facsimile:  (201) 985-8266

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

(8)         Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the principal of, and other charges (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the Company.

(9)         This Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.

(10)        No indebtedness of the Company is senior to this Debenture in right of payment, whether with respect to damages or upon liquidation or dissolution or otherwise.

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Consolidated Debenture #44

(11)        This Debenture shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Superior Courts of the State of New Jersey sitting in Hudson County, New Jersey and the U.S. District Court for the District of New Jersey sitting in Newark, New Jersey in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

(12)        If the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.

(13)        Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing.

(14)        If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal of this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

(15)        Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

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Consolidated Debenture #44

(16)        THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS DEBENTURE OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS DEBENTURE.

(17)        CERTAIN DEFINITIONS For purposes of this Debenture, the following terms shall have the following meanings:

(a)          “Approved Stock Plan” means a stock option plan that has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued only to any employee, officer, or director for services provided to the Company.

(b)          "Bloomberg" means Bloomberg Financial Markets.

(c)          “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

(d)          “Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c).

(e)          “Closing Bid Price” means the price per share in the last reported trade of the Common Stock on a Primary Market or on the exchange which the Common Stock is then listed as quoted by Bloomberg.

(f)          “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.

(g)          “Commission” means the Securities and Exchange Commission.

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Consolidated Debenture #44

(h)          “Common Stock” means the common stock, par value $0.001, of the Company and stock of any other class into which such shares may hereafter be changed or reclassified.

(i)          "Equity Conditions" means that each of the following conditions is satisfied: (i) on each day during the period beginning two (2) weeks prior to the applicable date of determination and ending on and including the applicable date of determination (the "Equity Conditions Measuring Period"), either (x) the Underlying Shares Registration Statement shall be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) all applicable shares of Common Stock to be issued in connection with the event requiring determination shall be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal Market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; (iii) during the Equity Conditions Measuring Period, the Company shall have delivered Conversion Shares upon conversion of the Debentures to the Holder on a timely basis as set forth in Section 4(b)(ii) hereof; (iv) any applicable shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 4(c) hereof and the rules or regulations of the Primary Market; (v) during the Equity Conditions Measuring Period, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; and (vii) the Company shall have no knowledge of any fact that would cause (x) the Registration Statements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) any applicable shares of Common Stock to be issued in connection with the event requiring determination not to be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws.

(j)          "Equity Conditions Failure" means that on any applicable date the Equity Conditions have not been satisfied (or waived in writing by the Holder).

(k)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(l)          “Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan (b) shares of Common Stock issued or deemed to be issued by the Company upon the conversion, exchange or exercise of any right, option, obligation or security outstanding on the date prior to date of the Securities Purchase Agreements, provided that the terms of such right, option, obligation or security are not amended or otherwise modified on or after the date of the Securities Purchase Agreements, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of shares of Common Stock issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Securities Purchase Agreements, (c) shares issued in connection with any acquisition by the Company, whether through an acquisition of stock or a merger of any business, assets or technologies, leasing arrangement or any other transaction the primary purpose of which is not to raise equity capital, and (d) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of this Debenture.

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Consolidated Debenture #44

(m)          “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

(n)          “Original Issuance Date” means the date of the first issuance of this Debenture regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Debenture.

(o)          “Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

(p)           “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

(q)          “Securities Purchase Agreements” means the Securities Purchase Agreements by and between the Company and Holder pursuant to which the Prior Debentures were purchased and issued.

(r)          “Trading Day” means a day on which the shares of Common Stock are quoted on the OTCBB or quoted or traded on such Primary Market on which the shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day.

(s)          “Transaction Documents” means the Securities Purchase Agreements or any other agreement delivered in connection with the Securities Purchase Agreements.

(t)          “Underlying Shares” means the shares of Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof.

(u)          “Underlying Shares Registration Statement” means a registration statement covering among other things the resale of the Underlying Shares and naming the Holder as a “selling stockholder” thereunder.

(v)         "Volume Weighted Average Price" means, for any security as of any date, the daily dollar volume-weighted average price for such security on the Primary Market as reported by Bloomberg through its “Historical Prices – Px Table with Average Daily Volume” functions, or, if no dollar volume-weighted average price is reported for such security by Bloomberg, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the "pink sheets" by Pink Sheets LLC.

(w)          "Warrants" has the meaning ascribed to such term in the Securities Purchase Agreements, and shall include all warrants issued in exchange therefor or replacement thereof.

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Consolidated Debenture #44

(18)        Amended and Restated Debenture. This Debenture represents the portions of the Prior Debentures that have been consolidated as set forth on Schedule ‘A’. The issuance of this Debenture is not in any way intended to constitute a novation of the obligations and liabilities existing under the Prior Debentures or evidence payment of all or any portion of such obligations and liabilities.

IN WITNESS WHEREOF, the Company has caused this Amended, Restated and Consolidated Secured Convertible Debenture to be duly executed by a duly authorized officer as of the __16 day of September____, 2013_.

NEOMEDIA TECHNOLOGIES, INC.
By:	/s/ Laura Marriott
Name:	Laura Marriott
Title:	Chief Executive Officer

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EX-10.5

EXHIBIT 10.5

Consolidated Debenture #45

NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

NEOMEDIA TECHNOLOGIES, INC.

Amended, Restated and Consolidated Secured Convertible Debenture

Original Issuance Date:  April 26, 2012	Principal Amount: $17,547,522.00
No. NEOM-45

This Amended, Restated and Consolidated Secured Convertible Debenture (including all secured convertible debentures issued in exchange, transfer or replacement hereof, this “Debenture”) represents portions of the indebtedness previously evidenced by those certain Secured Convertible Debentures listed on Schedule ‘A’ attached hereto (as each may have been amended and is currently in effect, collectively, the “Prior Debentures”) issued by NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation (the “Company”), to YA GLOBAL INVESTMENTS, L.P. (f/k/a CORNELL CAPITAL PARTNERS, LP, the “Holder”) and amends and restates such portions (and is given in substitution for but not in satisfaction) of such Prior Debentures. Outstanding portions of the Prior Debentures are all merged into and superseded by this Debenture in the amounts set forth on Schedule ‘A’. The issuance of this Debenture does not effect a refinancing of all or any portion of the obligations under the Prior Debentures, it being the intention of the Company and the Holder to avoid effectuating a novation of any such obligations. The portion of each of the Prior Debentures that has been consolidated hereunder is memorialized on Schedule ‘A’, attached hereto.

FOR VALUE RECEIVED, the Company hereby promises to pay to the order of the Holder, or its registered assigns, the amount set out above as the Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof), plus interest (“Interest”) accruing on any outstanding Principal at the applicable Interest Rate from July 1, 2013 until the same becomes due and payable, whether upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Section 17.

Consolidated Debenture #45

(1)          GENERAL TERMS

(a)          Payment of Principal. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal and accrued and unpaid Interest. The "Maturity Date" shall be August 1, 2015, as may be extended from time to time by the Holder. Other than as specifically permitted by this Debenture in Section 3(a) or otherwise, or pursuant to the Securities Purchase Agreements or other Transaction Documents, the Company may not prepay or redeem any portion of the outstanding Principal without the prior written consent of the Holder.

(b)          Interest. Interest shall accrue on the outstanding principal balance hereof at an annual rate equal to 9.5% (“Interest Rate”). Interest shall be calculated on the basis of a 365-day year and the actual number of days elapsed, to the extent permitted by applicable law. Interest hereunder shall be paid on the Maturity Date (or sooner as provided herein) to the Holder or its assignee in whose name this Debenture is registered on the records of the Company regarding registration and transfers of Debentures at the option of the Company in cash, or, provided that the Equity Conditions are then satisfied converted into Common Stock at the applicable Conversion Price on the Trading Day immediately prior to the date paid. .

(c)          Security. The Debenture is secured by all collateral granted by the Company and its affiliates to the Holder, in accordance with the terms and conditions that certain Security Agreement by and between the Holder and Company, dated July 29, 2008.

(2)          EVENTS OF DEFAULT.

(a)          An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i)          the Company's failure to pay to the Holder any amount of Principal or other amounts when and as due under this Debenture (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder);

(ii)         The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company state that it is unable to pay its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

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Consolidated Debenture #45

(iii)        The Company or any subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

(iv)        If the Common Stock is quoted or listed for trading on any of the following and it ceases to be so quoted or listed for trading and shall not again be quoted or listed for trading on any Primary Market within five (5) Trading Days of such delisting: (a) the NYSE Amex, (b) New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Select Market, or (e) the Nasdaq OTC Bulletin Board (“OTCBB”) (each, a “Primary Market”);

(v)         The Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section 17) unless in connection with such Change of Control Transaction this Debenture is retired;

(vi)        The Company's (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five (5) Business Days after the applicable Conversion Failure or (B) notice, written or oral, to the Holder, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of the Debenture into shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than pursuant to Section 4(c);

(vii)       The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within three (3) Business Days after such payment is due;

(viii)      The Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Debenture (except as may be covered by Section 2(a)(i) through 2(a)(vii) hereof) or any Transaction Document (as defined in Section 17) which is not cured within the time prescribed.

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Consolidated Debenture #45

(b)          During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full unpaid Principal amount of this Debenture and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder's election, immediately due and payable in cash; provided however, the Holder may request (but shall have no obligation to request) payment of such amounts in Common Stock of the Company. Furthermore, in addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Debenture at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion Price. The Company hereby waives any presentment, demand, protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

(3)          COMPANY REDEMPTION.

(a)          Company’s Additional Cash Redemption. The Company at its option shall have the right to redeem (“Optional Redemption”) a portion or all amounts outstanding under this Debenture prior to the Maturity Date provided that as of the date of the Holder’s receipt of a Redemption Notice (as defined herein) (i) the Closing Bid Price is less than the Fixed Conversion Price and (ii) no Event of Default has occurred. The Company shall pay an amount equal to the Principal amount being redeemed plus a redemption premium (“Redemption Premium”) equal to ten percent (10%) of the Principal amount being redeemed, and accrued Interest (collectively referred to as the “Company Additional Redemption Amount”). In order to make a redemption pursuant to this Section, the Company shall first provide written notice to the Holder of its intention to make a redemption (the “Redemption Notice”) setting forth the amount of Principal it desires to redeem. After receipt of the Redemption Notice the Holder shall have three (3) Business Days to elect to convert all or any portion of this Debenture, subject to the limitations set forth in Section 4(b). On the fourth (4th) Business Day after the Redemption Notice, the Company shall deliver to the Holder the Company Additional Redemption Amount with respect to the Principal amount redeemed after giving effect to conversions effected during the three (3) Business Day period.

(4)          CONVERSION OF DEBENTURE.   This Debenture shall be convertible into shares of the Company's Common Stock, on the terms and conditions set forth in this Section 4.

(a)          Conversion Right. Subject to the provisions of Section 4(c), at any time or times on or after the issuance date of this Debenture, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 4(b), at the Conversion Rate (as defined below). The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 4(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the "Conversion Rate"). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

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Consolidated Debenture #45

(i)          "Conversion Amount" means the portion of the Principal and accrued Interest to be converted, redeemed or otherwise with respect to which this determination is being made.

(ii)         "Conversion Price" means, as of any Conversion Date (as defined below) or other date of determination the lesser of (a) $2.00 (the “Fixed Conversion Price”), subject to adjustment as provided herein, or (b) ninety percent (90%) of the lowest Volume Weighted Average Price during the 125 Trading Days immediately preceding the Conversion Date (the “Market Conversion Price”). The Fixed Conversion Price and the Market Conversion Price are collectively referred to as the “Conversion Price.” The Conversion Price may be adjusted pursuant to the other terms of this Debenture.

(b)          Mechanics of Conversion.

(i)          Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the "Conversion Notice") to the Company and (B) if required by Section 4(b)(iv), surrender this Debenture to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Debenture in the case of its loss, theft or destruction). On or before the third Business Day following the date of receipt of a Conversion Notice (the "Share Delivery Date"), the Company shall (X) if legends are not required to be placed on certificates of Common Stock pursuant to the Securities Purchase Agreements and provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to the Securities Purchase Agreements. If this Debenture is physically surrendered for conversion and the outstanding Principal of this Debenture is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder a new Debenture representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice. In the event of a partial conversion of this Debenture pursuant hereto, the amount converted shall be deducted from the installment amounts relating to the installment dates as set forth in the Conversion Notice.

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Consolidated Debenture #45

(ii)         Company's Failure to Timely Convert. If within three (3) Trading Days after the Company's receipt of the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3) Business Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point the Company's obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the Conversion Date.

(iii)        Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless (A) the full Conversion Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical surrender of this Debenture. The Holder and the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Debenture upon conversion.

(c)   Limitations on Conversions.

(i)          Beneficial Ownership. The Company shall not effect any conversions of this Debenture and the Holder shall not have the right to convert any portion of this Debenture or receive shares of Common Stock as payment hereunder to the extent that after giving effect to such conversion or receipt of such payment, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as payment. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 9.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the Principal of this Debenture is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for an amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum amount permitted to be converted on such Conversion Date in accordance with Section 4(a) and, any amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.

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Consolidated Debenture #45

(d)  Other Provisions.

(i)          Reserve

(1)  Initial Reserve. The Company covenants that it will at all times from and after the date hereof reserve and keep available out of its authorized and unissued shares of Common Stock, Three Billion (3,000,000,000) shares (the “Initial Share Reserve”) solely for the purpose of issuance of Common Stock pursuant to the securities initially issued by the Company to the Holder (the “Other Securities”).

(2)  Procedures to Increase Reserve. If at any time the total number of shares of Common Stock that may be issued pursuant to the Other Securities (in each case, and solely for the purpose of this clause, ignoring any restrictions or limitations on the number of shares of Common Stock that may be presently issuable pursuant to each instrument) exceeds the number of shares then reserved for issuance under the Initial Share Reserve, then the Holder shall have the right to provide written notice to the Company (a “Reserve Increase Notice”) to increase the Initial Share Reserve to a number of shares of Common Stock selected by the Holder, which shall not exceed the maximum number of shares of Common Stock that may be issuable pursuant to the instruments held by the Holder at the time of the Reserve Increase Notice (the Initial Share Reserve, as increased, the “YA Share Reserve”). Within sixty (60) days of receipt of a Reserve Increase Notice, the Company shall increase the Initial Share Reserve in accordance with such notice. Notwithstanding the foregoing, in the event the Company does not have a sufficient number of authorized shares of Common Stock available to satisfy its obligation to reserve for issuance such number of shares as set forth in the Reserve Increase Notice to create the YA Share Reserve, then (A) the Company shall promptly reserve such portion of its authorized shares of Common Stock that is available to be reserved for the creation of the YA Share Reserve, and (B) with respect to any shortfall, the Company shall (i) take all steps necessary to increase its authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the required amount as quickly as practicable, and (ii) use its best efforts to amend the Company’s certificate of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the required amount, as soon as practicable and in any event not later than the seventy-fifth (75^th) day after receipt of a Reserve Increase Notice. All reservations or increases of amounts of reserved shares and authorized shares of Common Stock under this section shall be subject to the due and proper approval, as applicable and required by all relevant laws, of the shareholders of the Company. With respect to the Company’s maintenance of the Initial Share Reserve and the YA Share Reserve as set forth in this section, an Event of Default shall only occur upon the Company’s inability to increase the amount of reserved shares of Common Stock via the amendment of its certificate of incorporation as prescribed above, subsequent to its receipt of a Reserve Increase Notice. The Company’s receipt of a Reserve Increase Notice shall not constitute an Event of Default.

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(ii)         All calculations under this Section 4 shall be rounded to the nearest $0.0001 or whole share.

(iii)        Nothing herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein for the Company 's failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

(5) Adjustments to Conversion Price

(a) Adjustment of Conversion Price upon Issuance of Common Stock. If the Company, at any time while this Debenture is outstanding, issues or sells, or in accordance with this Section 5(a) is deemed to have issued or sold, any shares of Common Stock, excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities, for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such issue or sale (such price the "Applicable Price") (the foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For purposes of determining the adjusted Conversion Price under this Section 5(a), the following shall be applicable:

(i)          Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange or exercise of such Convertible Securities.

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(ii)         Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion or exchange or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price had been or are to be made pursuant to other provisions of this Section, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

(iii)        Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section, if the terms of any Option or Convertible Security that was outstanding as of the issuance date of this Debenture are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

(iv)        Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities by the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for the difference of (x) the aggregate fair market value of such Options and other securities issued or sold in such integrated transaction, less (y) the fair market value of the securities other than such Option, issued or sold in such transaction and the other securities issued or sold in such integrated transaction will be deemed to have been issued or sold for the balance of the consideration received by the Company. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the gross amount raised by the Company; provided, however, that such gross amount is not greater than 110% of the net amount received by the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Bid Price of such securities on the date of receipt. If any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10^th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

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(v)         Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(b) Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company, at any time while this Debenture is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(c) Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this Debenture) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

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(d) Other Events. If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder under this Debenture; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 5.

(e) Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any fundamental transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a "Corporate Event"), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, at the Holder's option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Debenture.

(f) Whenever the Conversion Price is adjusted pursuant to Section 5 hereof, the Company shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(g) In case of any (1) merger or consolidation of the Company or any subsidiary of the Company with or into another Person, or (2) sale by the Company or any subsidiary of the Company of more than one-half of the assets of the Company in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section 2(b), (B) convert the aggregate amount of this Debenture then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible debenture with an amount equal to the aggregate Principal of this Debenture then held by such Holder, plus all accrued and unpaid Interest and other amounts owing thereon, which such newly issued convertible Debenture shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures were issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

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(6)          REISSUANCE OF THIS DEBENTURE.

(a)          Transfer. If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Debenture (in accordance with Section 6(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal, being transferred by the Holder and, if less then the entire outstanding Principal is being transferred, a new Debenture (in accordance with Section 6(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section 4(b)(iii) following conversion or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may be less than the Principal stated on the face of this Debenture.

(b)          Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section 6(d)) representing the outstanding Principal.

(c)          Debenture Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section 6(d)) representing in the aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principalas is designated by the Holder at the time of such surrender.

(d)          Issuance of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 6(a) or Section 6(c), the Principal designated by the Holder which, when added to the principal represented by the other new Debentures issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is the same as the Original Issuance Date of this Debenture, (iv) shall have the same rights and conditions as this Debenture and (v) shall represent accrued and unpaid Interest from the Issuance Date.

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(7)                NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company, to:	NeoMedia Technologies, Inc.
	100 West Arapahoe Avenue, Suite 9 Boulder, Colorado  80302
	Attention:  Chief Executive Officer or Chief Financial Officer
	Telephone:     (303) 546-7946
	Facsimile:      (636)  648-9922
With a copy to:	K&L Gates LLP
	200 South Biscayne Boulevard – Suite 3900
	Miami, FL  33131-2399
	Attention:      Clayton E. Parker, Esq.
	Telephone:    (305) 539-3300
	Facsimile:      (305) 358-7095
If to the Holder:	David Gonzalez, Esq.
	1012 Springfield Ave.,
	Mountainside, New Jersey 07092
	Telephone:      (201) 985-8300
	Facsimile:       (201) 985-8266

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

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(8)         Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the principal of, Interest and other charges (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the Company.

(9)         This Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.

(10)        No indebtedness of the Company is senior to this Debenture in right of payment, whether with respect to Interest, damages or upon liquidation or dissolution or otherwise.

(11)        This Debenture shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Superior Courts of the State of New Jersey sitting in Hudson County, New Jersey and the U.S. District Court for the District of New Jersey sitting in Newark, New Jersey in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

(12)        If the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.

(13)        Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing.

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(14)        If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal of or Interest on this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

(15)        Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

(16)        THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS DEBENTURE OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS DEBENTURE.

(17)        CERTAIN DEFINITIONS For purposes of this Debenture, the following terms shall have the following meanings:

(a)          “Approved Stock Plan” means a stock option plan that has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued only to any employee, officer, or director for services provided to the Company.

(b)          "Bloomberg" means Bloomberg Financial Markets.

(c)          “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

(d)          “Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c).

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(e)          “Closing Bid Price” means the price per share in the last reported trade of the Common Stock on a Primary Market or on the exchange which the Common Stock is then listed as quoted by Bloomberg.

(f)          “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.

(g)          “Commission” means the Securities and Exchange Commission.

(h)          “Common Stock” means the common stock, par value $0.001, of the Company and stock of any other class into which such shares may hereafter be changed or reclassified.

(i)          "Equity Conditions" means that each of the following conditions is satisfied: (i) on each day during the period beginning two (2) weeks prior to the applicable date of determination and ending on and including the applicable date of determination (the "Equity Conditions Measuring Period"), either (x) the Underlying Shares Registration Statement shall be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) all applicable shares of Common Stock to be issued in connection with the event requiring determination shall be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal Market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; (iii) during the Equity Conditions Measuring Period, the Company shall have delivered Conversion Shares upon conversion of the Debentures to the Holder on a timely basis as set forth in Section 4(b)(ii) hereof; (iv) any applicable shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 4(c) hereof and the rules or regulations of the Primary Market; (v) during the Equity Conditions Measuring Period, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; and (vii) the Company shall have no knowledge of any fact that would cause (x) the Registration Statements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) any applicable shares of Common Stock to be issued in connection with the event requiring determination not to be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws.

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Consolidated Debenture #45

(j)          "Equity Conditions Failure" means that on any applicable date the Equity Conditions have not been satisfied (or waived in writing by the Holder).

(k)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(l)          “Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan (b) shares of Common Stock issued or deemed to be issued by the Company upon the conversion, exchange or exercise of any right, option, obligation or security outstanding on the date prior to date of the Securities Purchase Agreements, provided that the terms of such right, option, obligation or security are not amended or otherwise modified on or after the date of the Securities Purchase Agreements, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of shares of Common Stock issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Securities Purchase Agreements, (c) shares issued in connection with any acquisition by the Company, whether through an acquisition of stock or a merger of any business, assets or technologies, leasing arrangement or any other transaction the primary purpose of which is not to raise equity capital, and (d) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of this Debenture.

(m)          “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

(n)          “Original Issuance Date” means the date of the first issuance of this Debenture regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Debenture.

(o)          “Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

(p)           “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

(q)          “Securities Purchase Agreements” means the Securities Purchase Agreements by and between the Company and Holder pursuant to which the Prior Debentures were purchased and issued.

(r)          “Trading Day” means a day on which the shares of Common Stock are quoted on the OTCBB or quoted or traded on such Primary Market on which the shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day.

(s)          “Transaction Documents” means the Securities Purchase Agreements or any other agreement delivered in connection with the Securities Purchase Agreements.

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Consolidated Debenture #45

(t)          “Underlying Shares” means the shares of Common Stock issuable upon conversion of this Debenture or as payment of Interest in accordance with the terms hereof.

(u)          "Volume Weighted Average Price" means, for any security as of any date, the daily dollar volume-weighted average price for such security on the Primary Market as reported by Bloomberg through its “Historical Prices – Px Table with Average Daily Volume” functions, or, if no dollar volume-weighted average price is reported for such security by Bloomberg, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the "pink sheets" by Pink Sheets LLC.

(v)         "Warrants" has the meaning ascribed to such term in the Securities Purchase Agreements, and shall include all warrants issued in exchange therefor or replacement thereof.

(18)        Amended and Restated Debenture. This Debenture represents the portions of the Prior Debentures that have been consolidated as set forth on Schedule ‘A’. The issuance of this Debenture is not in any way intended to constitute a novation of the obligations and liabilities existing under the Prior Debentures or evidence payment of all or any portion of such obligations and liabilities.

IN WITNESS WHEREOF, the Company has caused this Amended, Restated and Consolidated Secured Convertible Debenture to be duly executed by a duly authorized officer as of the 16 day of September      , 2013.

NEOMEDIA TECHNOLOGIES, INC.
By:	/s/ Laura Marriott
Name:	Laura Marriott
Title:	Chief Executive Officer

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EX-10.6

EXHIBIT 10.6

Consolidated Debenture #46

NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

NEOMEDIA TECHNOLOGIES, INC.

Amended, Restated and Consolidated Secured Convertible Debenture

Original Issuance Date:  June 29, 2008	Principal Amount: $6,132,262.00
No. NEOM-46

This Amended, Restated and Consolidated Secured Convertible Debenture (including all secured convertible debentures issued in exchange, transfer or replacement hereof, this “Debenture”) represents portions of the indebtedness previously evidenced by those certain Secured Convertible Debentures listed on Schedule ‘A’ attached hereto (as each may have been amended and is currently in effect, collectively, the “Prior Debentures”) issued by NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation (the “Company”), to YA GLOBAL INVESTMENTS, L.P. (f/k/a CORNELL CAPITAL PARTNERS, LP, the “Holder”) and amends and restates such portions (and is given in substitution for but not in satisfaction) of such Prior Debentures. Outstanding portions of the Prior Debentures are all merged into and superseded by this Debenture in the amounts set forth on Schedule ‘A’. The issuance of this Debenture does not effect a refinancing of all or any portion of the obligations under the Prior Debentures, it being the intention of the Company and the Holder to avoid effectuating a novation of any such obligations. The portion of each of the Prior Debentures that has been consolidated hereunder is memorialized on Schedule ‘A’, attached hereto.

FOR VALUE RECEIVED, the Company hereby promises to pay to the order of the Holder, or its registered assigns, the amount set out above as the Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Section 17.

Consolidated Debenture #46

(1) GENERAL TERMS

(a)          Payment of Principal. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal. The "Maturity Date" shall be August 1, 2015, as may be extended from time to time by the Holder. Other than as specifically permitted by this Debenture in Section 3(a) or otherwise, or pursuant to the Securities Purchase Agreements or other Transaction Documents, the Company may not prepay or redeem any portion of the outstanding Principal without the prior written consent of the Holder.

(b)          Interest. This Debenture shall not accrue any interest.

(c)          Security. The Debenture is secured by all collateral granted by the Company and its affiliates to the Holder, in accordance with the terms and conditions that certain Security Agreement by and between the Holder and Company, dated July 29, 2008.

(2) EVENTS OF DEFAULT.

(a)          An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i)          the Company's failure to pay to the Holder any amount of Principal or other amounts when and as due under this Debenture (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder);

(ii)         The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company state that it is unable to pay its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

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Consolidated Debenture #46

(iii)        The Company or any subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

(iv)        If the Common Stock is quoted or listed for trading on any of the following and it ceases to be so quoted or listed for trading and shall not again be quoted or listed for trading on any Primary Market within five (5) Trading Days of such delisting: (a) the NYSE Amex, (b) New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Select Market, or (e) the Nasdaq OTC Bulletin Board (“OTCBB”) (each, a “Primary Market”);

(v)         The Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section 17) unless in connection with such Change of Control Transaction this Debenture is retired;

(vi)        The Company's (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five (5) Business Days after the applicable Conversion Failure or (B) notice, written or oral, to the Holder, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of the Debenture into shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than pursuant to Section 4(c);

(vii)       The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within three (3) Business Days after such payment is due;

(viii)      The Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Debenture (except as may be covered by Section 2(a)(i) through 2(a)(vii) hereof) or any Transaction Document (as defined in Section 17) which is not cured within the time prescribed.

(b)          During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full unpaid Principal amount of this Debenture and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder's election, immediately due and payable in cash; provided however, the Holder may request (but shall have no obligation to request) payment of such amounts in Common Stock of the Company. Furthermore, in addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Debenture at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion Price. The Company hereby waives any presentment, demand, protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

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Consolidated Debenture #46

(3) COMPANY REDEMPTION.

(a)          Company’s Additional Cash Redemption. The Company at its option shall have the right to redeem (“Optional Redemption”) a portion or all amounts outstanding under this Debenture prior to the Maturity Date provided that as of the date of the Holder’s receipt of a Redemption Notice (as defined herein) (i) the Closing Bid Price is less than the Fixed Conversion Price and (ii) no Event of Default has occurred. The Company shall pay an amount equal to the Principal amount being redeemed plus a redemption premium (“Redemption Premium”) equal to ten percent (10%) of the Principal amount being redeemed (referred to as the “Company Additional Redemption Amount”). In order to make a redemption pursuant to this Section, the Company shall first provide written notice to the Holder of its intention to make a redemption (the “Redemption Notice”) setting forth the amount of Principal it desires to redeem. After receipt of the Redemption Notice the Holder shall have three (3) Business Days to elect to convert all or any portion of this Debenture, subject to the limitations set forth in Section 4(b) and (c). On the fourth (4th) Business Day after the Redemption Notice, the Company shall deliver to the Holder the Company Additional Redemption Amount with respect to thePrincipal amount redeemed after giving effect to conversions effected during the three (3) Business Day period.

(4)         CONVERSION OF DEBENTURE.   This Debenture shall be convertible into shares of the Company's Common Stock, on the terms and conditions set forth in this Section 4.

(a)          Conversion Right. Subject to the provisions of Section 4(c), at any time or times on or after the issuance date of this Debenture, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 4(b), at the Conversion Rate (as defined below). The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 4(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the "Conversion Rate"). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

(i)          "Conversion Amount" means the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made.

(ii)         "Conversion Price" means, as of any Conversion Date (as defined below) or other date of determination the lesser of (a) $2.00 (the “Fixed Conversion Price”), subject to adjustment as provided herein, or (b) ninety-five percent (95%) of the lowest Volume Weighted Average Price during the 125 Trading Days immediately preceding the Conversion Date (the “Market Conversion Price”). The Fixed Conversion Price and the Market Conversion Price are collectively referred to as the “Conversion Price.” The Conversion Price may be adjusted pursuant to the other terms of this Debenture.

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Consolidated Debenture #46

(b)          Mechanics of Conversion.

(i)          Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the "Conversion Notice") to the Company and (B) if required by Section 4(b)(iv), surrender this Debenture to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Debenture in the case of its loss, theft or destruction). On or before the third Business Day following the date of receipt of a Conversion Notice (the "Share Delivery Date"), the Company shall (X) if legends are not required to be placed on certificates of Common Stock pursuant to the Securities Purchase Agreements and provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to the Securities Purchase Agreements. If this Debenture is physically surrendered for conversion and the outstanding Principal of this Debenture is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder a new Debenture representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice. In the event of a partial conversion of this Debenture pursuant hereto, the amount converted shall be deducted from the installment amounts relating to the installment dates as set forth in the Conversion Notice.

(ii)         Company's Failure to Timely Convert. If within three (3) Trading Days after the Company's receipt of the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3) Business Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point the Company's obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the Conversion Date.

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Consolidated Debenture #46

(iii)        Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless (A) the full Conversion Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical surrender of this Debenture. The Holder and the Company shall maintain records showing the Principal converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Debenture upon conversion.

(c)          Limitations on Conversions.

(i)          Beneficial Ownership. The Company shall not effect any conversions of this Debenture and the Holder shall not have the right to convert any portion of this Debenture or receive shares of Common Stock as payment hereunder to the extent that after giving effect to such conversion or receipt of such payment, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as payment. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 4.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the Principal of this Debenture is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for an amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum amount permitted to be converted on such Conversion Date in accordance with Section 4(a) and, any amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.

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Consolidated Debenture #46

(d)          Other Provisions.

(i)          Reserve

(1)         Initial Reserve. The Company covenants that it will at all times from and after the date hereof reserve and keep available out of its authorized and unissued shares of Common Stock, Three Billion (3,000,000,000) shares (the “Initial Share Reserve”) solely for the purpose of issuance of Common Stock pursuant to the securities initially issued by the Company to the Holder (the “Other Securities”).

(2)         Procedures to Increase Reserve. If at any time the total number of shares of Common Stock that may be issued pursuant to the Other Securities (in each case, and solely for the purpose of this clause, ignoring any restrictions or limitations on the number of shares of Common Stock that may be presently issuable pursuant to each instrument) exceeds the number of shares then reserved for issuance under the Initial Share Reserve, then the Holder shall have the right to provide written notice to the Company (a “Reserve Increase Notice”) to increase the Initial Share Reserve to a number of shares of Common Stock selected by the Holder, which shall not exceed the maximum number of shares of Common Stock that may be issuable pursuant to the instruments held by the Holder at the time of the Reserve Increase Notice (the Initial Share Reserve, as increased, the “YA Share Reserve”). Within sixty (60) days of receipt of a Reserve Increase Notice, the Company shall increase the Initial Share Reserve in accordance with such notice. Notwithstanding the foregoing, in the event the Company does not have a sufficient number of authorized shares of Common Stock available to satisfy its obligation to reserve for issuance such number of shares as set forth in the Reserve Increase Notice to create the YA Share Reserve, then (A) the Company shall promptly reserve such portion of its authorized shares of Common Stock that is available to be reserved for the creation of the YA Share Reserve, and (B) with respect to any shortfall, the Company shall (i) take all steps necessary to increase its authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the required amount as quickly as practicable, and (ii) use its best efforts to amend the Company’s certificate of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the required amount, as soon as practicable and in any event not later than the seventy-fifth (75^th) day after receipt of a Reserve Increase Notice. All reservations or increases of amounts of reserved shares and authorized shares of Common Stock under this section shall be subject to the due and proper approval, as applicable and required by all relevant laws, of the shareholders of the Company. With respect to the Company’s maintenance of the Initial Share Reserve and the YA Share Reserve as set forth in this section, an Event of Default shall only occur upon the Company’s inability to increase the amount of reserved shares of Common Stock via the amendment of its certificate of incorporation as prescribed above, subsequent to its receipt of a Reserve Increase Notice. The Company’s receipt of a Reserve Increase Notice shall not constitute an Event of Default.

(ii)         All calculations under this Section 4 shall be rounded to the nearest $0.0001 or whole share.

(iii)        Nothing herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein for the Company 's failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

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Consolidated Debenture #46

(5)         Adjustments to Conversion Price

(a)          Adjustment of Conversion Price upon Issuance of Common Stock. If the Company, at any time while this Debenture is outstanding, issues or sells, or in accordance with this Section 5(a) is deemed to have issued or sold, any shares of Common Stock, excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities, for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such issue or sale (such price the "Applicable Price") (the foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For purposes of determining the adjusted Conversion Price under this Section 5(a), the following shall be applicable:

(i)          Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange or exercise of such Convertible Securities.

(ii)         Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion or exchange or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price had been or are to be made pursuant to other provisions of this Section, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

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Consolidated Debenture #46

(iii)        Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section, if the terms of any Option or Convertible Security that was outstanding as of the issuance date of this Debenture are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

(iv)        Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities by the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for the difference of (x) the aggregate fair market value of such Options and other securities issued or sold in such integrated transaction, less (y) the fair market value of the securities other than such Option, issued or sold in such transaction and the other securities issued or sold in such integrated transaction will be deemed to have been issued or sold for the balance of the consideration received by the Company. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the gross amount raised by the Company; provided, however, that such gross amount is not greater than 110% of the net amount received by the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Bid Price of such securities on the date of receipt. If any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10^th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

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(v)         Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(b)          Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company, at any time while this Debenture is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(c)          Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this Debenture) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(d)          Other Events. If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder under this Debenture; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 5.

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Consolidated Debenture #46

(e)          Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any fundamental transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a "Corporate Event"), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, at the Holder's option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Debenture.

(f)          Whenever the Conversion Price is adjusted pursuant to Section 5 hereof, the Company shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(g)          In case of any (1) merger or consolidation of the Company or any subsidiary of the Company with or into another Person, or (2) sale by the Company or any subsidiary of the Company of more than one-half of the assets of the Company in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section 2(b), (B) convert the aggregate amount of this Debenture then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible debenture with an amount equal to the aggregate Principal of this Debenture then held by such Holder, plus other amounts owing thereon, which such newly issued convertible Debenture shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures were issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

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Consolidated Debenture #46

(6) REISSUANCE OF THIS DEBENTURE.

(a)          Transfer. If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Debenture (in accordance with Section 6(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal, being transferred by the Holder and, if less then the entire outstanding Principal is being transferred, a new Debenture (in accordance with Section 6(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section 4(b)(iii) following conversion or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may be less than the Principal stated on the face of this Debenture.

(b)          Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section 6(d)) representing the outstanding Principal.

(c)          Debenture Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section 6(d)) representing in the aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principalas is designated by the Holder at the time of such surrender.

(d)          Issuance of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 6(a) or Section 6(c), the Principal designated by the Holder which, when added to the principal represented by the other new Debentures issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is the same as the Original Issuance Date of this Debenture, and (iv) shall have the same rights and conditions as this Debenture.

(7)         NOTICES.         Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

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Consolidated Debenture #46

If to the Company, to:	NeoMedia Technologies, Inc.
	100 West Arapahoe Avenue, Suite 9
	Boulder, Colorado  80302
	Attention:  Chief Executive Officer or Chief Financial Officer
	Telephone:    (303) 546-7946
	Facsimile:      (636) 648-9922
With a copy to:	K&L Gates LLP
	200 South Biscayne Boulevard – Suite 3900
	Miami, FL  33131-2399
	Attention: Clayton E. Parker, Esq.
	Telephone:    (305) 539-3300
	Facsimile:      (305) 358-7095
If to the Holder:	David Gonzalez, Esq.
	1012 Springfield Ave.,
	Mountainside, New Jersey 07092
	Telephone:    (201) 985-8300
	Facsimile:      (201) 985-8266

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

(8)         Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the principal of, and other charges (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the Company.

(9)         This Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.

(10)        No indebtedness of the Company is senior to this Debenture in right of payment, whether with respect to damages or upon liquidation or dissolution or otherwise.

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Consolidated Debenture #46

(11)        This Debenture shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Superior Courts of the State of New Jersey sitting in Hudson County, New Jersey and the U.S. District Court for the District of New Jersey sitting in Newark, New Jersey in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

(12)        If the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.

(13)        Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing.

(14)        If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal of this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

(15)        Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

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Consolidated Debenture #46

(16)        THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS DEBENTURE OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS DEBENTURE.

(17)        CERTAIN DEFINITIONS For purposes of this Debenture, the following terms shall have the following meanings:

(a)          “Approved Stock Plan” means a stock option plan that has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued only to any employee, officer, or director for services provided to the Company.

(b)          "Bloomberg" means Bloomberg Financial Markets.

(c)          “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

(d)          “Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c).

(e)          “Closing Bid Price” means the price per share in the last reported trade of the Common Stock on a Primary Market or on the exchange which the Common Stock is then listed as quoted by Bloomberg.

(f)          “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.

(g)          “Commission” means the Securities and Exchange Commission.

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Consolidated Debenture #46

(h)          “Common Stock” means the common stock, par value $0.001, of the Company and stock of any other class into which such shares may hereafter be changed or reclassified.

(i)          "Equity Conditions" means that each of the following conditions is satisfied: (i) on each day during the period beginning two (2) weeks prior to the applicable date of determination and ending on and including the applicable date of determination (the "Equity Conditions Measuring Period"), either (x) the Underlying Shares Registration Statement shall be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) all applicable shares of Common Stock to be issued in connection with the event requiring determination shall be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal Market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; (iii) during the Equity Conditions Measuring Period, the Company shall have delivered Conversion Shares upon conversion of the Debentures to the Holder on a timely basis as set forth in Section 4(b)(ii) hereof; (iv) any applicable shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 4(c) hereof and the rules or regulations of the Primary Market; (v) during the Equity Conditions Measuring Period, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; and (vii) the Company shall have no knowledge of any fact that would cause (x) the Registration Statements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) any applicable shares of Common Stock to be issued in connection with the event requiring determination not to be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws.

(j)          "Equity Conditions Failure" means that on any applicable date the Equity Conditions have not been satisfied (or waived in writing by the Holder).

(k)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(l)          “Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan (b) shares of Common Stock issued or deemed to be issued by the Company upon the conversion, exchange or exercise of any right, option, obligation or security outstanding on the date prior to date of the Securities Purchase Agreements, provided that the terms of such right, option, obligation or security are not amended or otherwise modified on or after the date of the Securities Purchase Agreements, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of shares of Common Stock issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Securities Purchase Agreements, (c) shares issued in connection with any acquisition by the Company, whether through an acquisition of stock or a merger of any business, assets or technologies, leasing arrangement or any other transaction the primary purpose of which is not to raise equity capital, and (d) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of this Debenture.

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Consolidated Debenture #46

(m)          “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

(n)          “Original Issuance Date” means the date of the first issuance of this Debenture regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Debenture.

(o)          “Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

(p)           “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

(q)          “Securities Purchase Agreements” means the Securities Purchase Agreements by and between the Company and Holder pursuant to which the Prior Debentures were purchased and issued.

(r)          “Trading Day” means a day on which the shares of Common Stock are quoted on the OTCBB or quoted or traded on such Primary Market on which the shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day.

(s)          “Transaction Documents” means the Securities Purchase Agreements or any other agreement delivered in connection with the Securities Purchase Agreements.

(t)          “Underlying Shares” means the shares of Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof.

(u)          “Underlying Shares Registration Statement” means a registration statement covering among other things the resale of the Underlying Shares and naming the Holder as a “selling stockholder” thereunder.

(v)         "Volume Weighted Average Price" means, for any security as of any date, the daily dollar volume-weighted average price for such security on the Primary Market as reported by Bloomberg through its “Historical Prices – Px Table with Average Daily Volume” functions, or, if no dollar volume-weighted average price is reported for such security by Bloomberg, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the "pink sheets" by Pink Sheets LLC.

(w)          "Warrants" has the meaning ascribed to such term in the Securities Purchase Agreements, and shall include all warrants issued in exchange therefor or replacement thereof.

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Consolidated Debenture #46

(18)        Amended and Restated Debenture. This Debenture represents the portions of the Prior Debentures that have been consolidated as set forth on Schedule ‘A’. The issuance of this Debenture is not in any way intended to constitute a novation of the obligations and liabilities existing under the Prior Debentures or evidence payment of all or any portion of such obligations and liabilities.

IN WITNESS WHEREOF, the Company has caused this Amended, Restated and Consolidated Secured Convertible Debenture to be duly executed by a duly authorized officer as of the __16__ day of September__, 2013_.

NEOMEDIA TECHNOLOGIES, INC.
By:	/s/ Laura Marriott
Name: Laura Marriott
Title: Chief Executive Officer

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EX-10.7

EXHIBIT 10.7

Consolidated Debenture #47

NEITHER THIS DEBENTURE NOR THE SECURITIES INTO WHICH THIS DEBENTURE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.

NEOMEDIA TECHNOLOGIES, INC.

Amended, Restated and Consolidated Secured Convertible Debenture

Original Issuance Date: July 20, 2012	Principal Amount: $3,858,742.00
No. NEOM-47

This Amended, Restated and Consolidated Secured Convertible Debenture (including all secured convertible debentures issued in exchange, transfer or replacement hereof, this “Debenture”) represents portions of the indebtedness previously evidenced by those certain Secured Convertible Debentures listed on Schedule ‘A’ attached hereto (as each may have been amended and is currently in effect, collectively, the “Prior Debentures”) issued by NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation (the “Company”), to YA GLOBAL INVESTMENTS, L.P. (f/k/a CORNELL CAPITAL PARTNERS, LP, the “Holder”) and amends and restates such portions (and is given in substitution for but not in satisfaction) of such Prior Debentures. Outstanding portions of the Prior Debentures are all merged into and superseded by this Debenture in the amounts set forth on Schedule ‘A’. The issuance of this Debenture does not effect a refinancing of all or any portion of the obligations under the Prior Debentures, it being the intention of the Company and the Holder to avoid effectuating a novation of any such obligations. The portion of each of the Prior Debentures that has been consolidated hereunder is memorialized on Schedule ‘A’, attached hereto.

FOR VALUE RECEIVED, the Company hereby promises to pay to the order of the Holder, or its registered assigns, the amount set out above as the Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether upon the Maturity Date (as defined below), acceleration, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Section 17.

Consolidated Debenture #47

(1)         GENERAL TERMS

(a)          Payment of Principal. On the Maturity Date, the Company shall pay to the Holder an amount in cash representing all outstanding Principal. The "Maturity Date" shall be August 1, 2015, as may be extended from time to time by the Holder. Other than as specifically permitted by this Debenture in Section 3(a) or otherwise, or pursuant to the Securities Purchase Agreements or other Transaction Documents, the Company may not prepay or redeem any portion of the outstanding Principal without the prior written consent of the Holder.

(b)          Interest. This Debenture shall not accrue any interest.

(c)          Security. The Debenture is secured by all collateral granted by the Company and its affiliates to the Holder, in accordance with the terms and conditions that certain Security Agreement by and between the Holder and Company, dated July 29, 2008.

(2)         EVENTS OF DEFAULT.

(a)          An “Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

(i)          the Company's failure to pay to the Holder any amount of Principal or other amounts when and as due under this Debenture (including, without limitation, the Company's failure to pay any redemption payments or amounts hereunder);

(ii)         The Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of the Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the Company or any subsidiary of the Company state that it is unable to pay its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;

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Consolidated Debenture #47

(iii)        The Company or any subsidiary of the Company shall default in any of its obligations under any other debenture or any mortgage, credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists or shall hereafter be created and such default shall result in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise become due and payable;

(iv)         If the Common Stock is quoted or listed for trading on any of the following and it ceases to be so quoted or listed for trading and shall not again be quoted or listed for trading on any Primary Market within five (5) Trading Days of such delisting: (a) the NYSE Amex, (b) New York Stock Exchange, (c) the Nasdaq Global Market, (d) the Nasdaq Select Market, or (e) the Nasdaq OTC Bulletin Board (“OTCBB”) (each, a “Primary Market”);

(v)          The Company or any subsidiary of the Company shall be a party to any Change of Control Transaction (as defined in Section 17) unless in connection with such Change of Control Transaction this Debenture is retired;

(vi)         The Company's (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five (5) Business Days after the applicable Conversion Failure or (B) notice, written or oral, to the Holder, including by way of public announcement, at any time, of its intention not to comply with a request for conversion of the Debenture into shares of Common Stock that is tendered in accordance with the provisions of the Debentures, other than pursuant to Section 4(c);

(vii)        The Company shall fail for any reason to deliver the payment in cash pursuant to a Buy-In (as defined herein) within three (3) Business Days after such payment is due;

(viii)      The Company shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach or default of any provision of this Debenture (except as may be covered by Section 2(a)(i) through 2(a)(vii) hereof) or any Transaction Document (as defined in Section 17) which is not cured within the time prescribed.

(b)          During the time that any portion of this Debenture is outstanding, if any Event of Default has occurred, the full unpaid Principal amount of this Debenture and other amounts owing in respect thereof, to the date of acceleration shall become at the Holder's election, immediately due and payable in cash; provided however, the Holder may request (but shall have no obligation to request) payment of such amounts in Common Stock of the Company. Furthermore, in addition to any other remedies, the Holder shall have the right (but not the obligation) to convert this Debenture at any time after (x) an Event of Default or (y) the Maturity Date at the Conversion Price. The Company hereby waives any presentment, demand, protest or other notice of any kind, (other than required notice of conversion) and the Holder may immediately and without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such declaration may be rescinded and annulled by Holder at any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

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Consolidated Debenture #47

(3)         COMPANY REDEMPTION.

(a)          Company’s Additional Cash Redemption. The Company at its option shall have the right to redeem (“Optional Redemption”) a portion or all amounts outstanding under this Debenture prior to the Maturity Date provided that as of the date of the Holder’s receipt of a Redemption Notice (as defined herein) (i) the Closing Bid Price is less than the Fixed Conversion Price and (ii) no Event of Default has occurred. The Company shall pay an amount equal to the Principal amount being redeemed plus a redemption premium (“Redemption Premium”) equal to ten percent (10%) of the Principal amount being redeemed (referred to as the “Company Additional Redemption Amount”). In order to make a redemption pursuant to this Section, the Company shall first provide written notice to the Holder of its intention to make a redemption (the “Redemption Notice”) setting forth the amount of Principal it desires to redeem. After receipt of the Redemption Notice the Holder shall have three (3) Business Days to elect to convert all or any portion of this Debenture, subject to the limitations set forth in Section 4(b) and (c). On the fourth (4th) Business Day after the Redemption Notice, the Company shall deliver to the Holder the Company Additional Redemption Amount with respect to thePrincipal amount redeemed after giving effect to conversions effected during the three (3) Business Day period.

(4)         CONVERSION OF DEBENTURE. This Debenture shall be convertible into shares of the Company's Common Stock, on the terms and conditions set forth in this Section 4.

(a)          Conversion Right. Subject to the provisions of Section 4(c), at any time or times on or after the issuance date of this Debenture, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares of Common Stock in accordance with Section 4(b), at the Conversion Rate (as defined below). The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to this Section 4(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the "Conversion Rate"). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount.

(i)          "Conversion Amount" means the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made.

(ii)         "Conversion Price" means, as of any Conversion Date (as defined below) or other date of determination the lesser of (a) $2.00 (the “Fixed Conversion Price”), subject to adjustment as provided herein, or (b) ninety-five percent (95%) of the lowest Volume Weighted Average Price during the 125 Trading Days immediately preceding the Conversion Date (the “Market Conversion Price”). The Fixed Conversion Price and the Market Conversion Price are collectively referred to as the “Conversion Price.” The Conversion Price may be adjusted pursuant to the other terms of this Debenture.

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(b)          Mechanics of Conversion.

(i)          Optional Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"), the Holder shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York Time, on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit I (the "Conversion Notice") to the Company and (B) if required by Section 4(b)(iv), surrender this Debenture to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking reasonably satisfactory to the Company with respect to this Debenture in the case of its loss, theft or destruction). On or before the third Business Day following the date of receipt of a Conversion Notice (the "Share Delivery Date"), the Company shall (X) if legends are not required to be placed on certificates of Common Stock pursuant to the Securities Purchase Agreements and provided that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system or (Y) if the Transfer Agent is not participating in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled which certificates shall not bear any restrictive legends unless required pursuant to the Securities Purchase Agreements. If this Debenture is physically surrendered for conversion and the outstanding Principal of this Debenture is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon as practicable and in no event later than three (3) Business Days after receipt of this Debenture and at its own expense, issue and deliver to the holder a new Debenture representing the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Debenture shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission of a Conversion Notice. In the event of a partial conversion of this Debenture pursuant hereto, the amount converted shall be deducted from the installment amounts relating to the installment dates as set forth in the Conversion Notice.

(ii)         Company's Failure to Timely Convert. If within three (3) Trading Days after the Company's receipt of the facsimile copy of a Conversion Notice the Company shall fail to issue and deliver a certificate to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"), and if on or after such Trading Day the Holder purchases (in an open market transaction or otherwise) Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock issuable upon such conversion that the Holder anticipated receiving from the Company (a "Buy-In"), then the Company shall, within three (3) Business Days after the Holder's request and in the Holder's discretion, either (i) pay cash to the Holder in an amount equal to the Holder's total purchase price (including brokerage commissions and other out of pocket expenses, if any) for the shares of Common Stock so purchased (the "Buy-In Price"), at which point the Company's obligation to deliver such certificate (and to issue such Common Stock) shall terminate, or (ii) promptly honor its obligation to deliver to the Holder a certificate or certificates representing such Common Stock and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common Stock, times (B) the Closing Bid Price on the Conversion Date.

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(iii)        Book-Entry. Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Debenture in accordance with the terms hereof, the Holder shall not be required to physically surrender this Debenture to the Company unless (A) the full Conversion Amount represented by this Debenture is being converted or (B) the Holder has provided the Company with prior written notice (which notice may be included in a Conversion Notice) requesting reissuance of this Debenture upon physical surrender of this Debenture. The Holder and the Company shall maintain records showing the Principal converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Debenture upon conversion.

(c)          Limitations on Conversions.

(i)          Beneficial Ownership. The Company shall not effect any conversions of this Debenture and the Holder shall not have the right to convert any portion of this Debenture or receive shares of Common Stock as payment hereunder to the extent that after giving effect to such conversion or receipt of such payment, the Holder, together with any affiliate thereof, would beneficially own (as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as payment. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess of 9.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation contained in this Section applies, the determination of which portion of the Principal of this Debenture is convertible shall be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for an amount of this Debenture that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for the maximum amount permitted to be converted on such Conversion Date in accordance with Section 4(a) and, any amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Debenture. The provisions of this Section may be waived by a Holder (but only as to itself and not to any other Holder) upon not less than 65 days prior notice to the Company. Other Holders shall be unaffected by any such waiver.

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(d)          Other Provisions.

(i)          Reserve

(1)         Initial Reserve. The Company covenants that it will at all times from and after the date hereof reserve and keep available out of its authorized and unissued shares of Common Stock, Three Billion (3,000,000,000) shares (the “Initial Share Reserve”) solely for the purpose of issuance of Common Stock pursuant to the securities initially issued by the Company to the Holder (the “Other Securities”).

(2)         Procedures to Increase Reserve. If at any time the total number of shares of Common Stock that may be issued pursuant to the Other Securities (in each case, and solely for the purpose of this clause, ignoring any restrictions or limitations on the number of shares of Common Stock that may be presently issuable pursuant to each instrument) exceeds the number of shares then reserved for issuance under the Initial Share Reserve, then the Holder shall have the right to provide written notice to the Company (a “Reserve Increase Notice”) to increase the Initial Share Reserve to a number of shares of Common Stock selected by the Holder, which shall not exceed the maximum number of shares of Common Stock that may be issuable pursuant to the instruments held by the Holder at the time of the Reserve Increase Notice (the Initial Share Reserve, as increased, the “YA Share Reserve”). Within sixty (60) days of receipt of a Reserve Increase Notice, the Company shall increase the Initial Share Reserve in accordance with such notice. Notwithstanding the foregoing, in the event the Company does not have a sufficient number of authorized shares of Common Stock available to satisfy its obligation to reserve for issuance such number of shares as set forth in the Reserve Increase Notice to create the YA Share Reserve, then (A) the Company shall promptly reserve such portion of its authorized shares of Common Stock that is available to be reserved for the creation of the YA Share Reserve, and (B) with respect to any shortfall, the Company shall (i) take all steps necessary to increase its authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the required amount as quickly as practicable, and (ii) use its best efforts to amend the Company’s certificate of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the required amount, as soon as practicable and in any event not later than the seventy-fifth (75^th) day after receipt of a Reserve Increase Notice. All reservations or increases of amounts of reserved shares and authorized shares of Common Stock under this section shall be subject to the due and proper approval, as applicable and required by all relevant laws, of the shareholders of the Company. With respect to the Company’s maintenance of the Initial Share Reserve and the YA Share Reserve as set forth in this section, an Event of Default shall only occur upon the Company’s inability to increase the amount of reserved shares of Common Stock via the amendment of its certificate of incorporation as prescribed above, subsequent to its receipt of a Reserve Increase Notice. The Company’s receipt of a Reserve Increase Notice shall not constitute an Event of Default.

(ii)         All calculations under this Section 4 shall be rounded to the nearest $0.0001 or whole share.

(iii)        Nothing herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein for the Company 's failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security. The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

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(5)         Adjustments to Conversion Price

(a)          Adjustment of Conversion Price upon Issuance of Common Stock. If the Company, at any time while this Debenture is outstanding, issues or sells, or in accordance with this Section 5(a) is deemed to have issued or sold, any shares of Common Stock, excluding shares of Common Stock deemed to have been issued or sold by the Company in connection with any Excluded Securities, for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such issue or sale (such price the "Applicable Price") (the foregoing a "Dilutive Issuance"), then immediately after such Dilutive Issuance the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For purposes of determining the adjusted Conversion Price under this Section 5(a), the following shall be applicable:

(i)          Issuance of Options. If the Company in any manner grants or sells any Options and the lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the granting or sale of such Option for such price per share. For purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon the exercise of any such Option or upon conversion or exchange or exercise of any Convertible Securities issuable upon exercise of such Option" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon granting or sale of the Option, upon exercise of the Option and upon conversion or exchange or exercise of any Convertible Security issuable upon exercise of such Option. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options or upon the actual issuance of such Common Stock upon conversion or exchange or exercise of such Convertible Securities.

(ii)         Issuance of Convertible Securities. If the Company in any manner issues or sells any Convertible Securities and the lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this Section, the "lowest price per share for which one share of Common Stock is issuable upon such conversion or exchange or exercise" shall be equal to the sum of the lowest amounts of consideration (if any) received or receivable by the Company with respect to any one share of Common Stock upon the issuance or sale of the Convertible Security and upon the conversion or exchange or exercise of such Convertible Security. No further adjustment of the Conversion Price shall be made upon the actual issuance of such share of Common Stock upon conversion or exchange or exercise of such Convertible Securities, and if any such issue or sale of such Convertible Securities is made upon exercise of any Options for which adjustment of the Conversion Price had been or are to be made pursuant to other provisions of this Section, no further adjustment of the Conversion Price shall be made by reason of such issue or sale.

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(iii)        Change in Option Price or Rate of Conversion. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the issue, conversion, exchange or exercise of any Convertible Securities, or the rate at which any Convertible Securities are convertible into or exchangeable or exercisable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be adjusted to the Conversion Price which would have been in effect at such time had such Options or Convertible Securities provided for such changed purchase price, additional consideration or changed conversion rate, as the case may be, at the time initially granted, issued or sold. For purposes of this Section, if the terms of any Option or Convertible Security that was outstanding as of the issuance date of this Debenture are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. No adjustment shall be made if such adjustment would result in an increase of the Conversion Price then in effect.

(iv)         Calculation of Consideration Received. In case any Option is issued in connection with the issue or sale of other securities by the Company, together comprising one integrated transaction in which no specific consideration is allocated to such Options by the parties thereto, the Options will be deemed to have been issued for the difference of (x) the aggregate fair market value of such Options and other securities issued or sold in such integrated transaction, less (y) the fair market value of the securities other than such Option, issued or sold in such transaction and the other securities issued or sold in such integrated transaction will be deemed to have been issued or sold for the balance of the consideration received by the Company. If any Common Stock, Options or Convertible Securities are issued or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the gross amount raised by the Company; provided, however, that such gross amount is not greater than 110% of the net amount received by the Company therefor. If any Common Stock, Options or Convertible Securities are issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company will be the fair value of such consideration, except where such consideration consists of securities, in which case the amount of consideration received by the Company will be the Closing Bid Price of such securities on the date of receipt. If any Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Options or Convertible Securities, as the case may be. The fair value of any consideration other than cash or securities will be determined jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event requiring valuation (the "Valuation Event"), the fair value of such consideration will be determined within five (5) Business Days after the tenth (10^th) day following the Valuation Event by an independent, reputable appraiser jointly selected by the Company and the Holder. The determination of such appraiser shall be deemed binding upon all parties absent manifest error and the fees and expenses of such appraiser shall be borne by the Company.

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(v)          Record Date. If the Company takes a record of the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issue or sale of the Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(b)          Adjustment of Conversion Price upon Subdivision or Combination of Common Stock. If the Company, at any time while this Debenture is outstanding, shall (a) pay a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock, (b) subdivide outstanding shares of Common Stock into a larger number of shares, (c) combine (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (d) issue by reclassification of shares of the Common Stock any shares of capital stock of the Company, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event. Any adjustment made pursuant to this Section shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

(c)          Purchase Rights. If at any time the Company grants, issues or sells any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of Common Stock (the "Purchase Rights"), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Debenture (without taking into account any limitations or restrictions on the convertibility of this Debenture) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

(d)          Other Events. If any event occurs of the type contemplated by the provisions of this Section 5 but not expressly provided for by such provisions (including, without limitation, the granting of stock appreciation rights, phantom stock rights or other rights with equity features), then the Company's Board of Directors will make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder under this Debenture; provided that no such adjustment will increase the Conversion Price as otherwise determined pursuant to this Section 5.

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(e)          Other Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any fundamental transaction pursuant to which holders of shares of Common Stock are entitled to receive securities or other assets with respect to or in exchange for shares of Common Stock (a "Corporate Event"), the Company shall make appropriate provision to insure that the Holder will thereafter have the right to receive upon a conversion of this Debenture, at the Holder's option, (i) in addition to the shares of Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without taking into account any limitations or restrictions on the convertibility of this Debenture) or (ii) in lieu of the shares of Common Stock otherwise receivable upon such conversion, such securities or other assets received by the holders of shares of Common Stock in connection with the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Debenture initially been issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance satisfactory to the Required Holders. The provisions of this Section shall apply similarly and equally to successive Corporate Events and shall be applied without regard to any limitations on the conversion or redemption of this Debenture.

(f)          Whenever the Conversion Price is adjusted pursuant to Section 5 hereof, the Company shall promptly mail to the Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

(g)          In case of any (1) merger or consolidation of the Company or any subsidiary of the Company with or into another Person, or (2) sale by the Company or any subsidiary of the Company of more than one-half of the assets of the Company in one or a series of related transactions, a Holder shall have the right to (A) exercise any rights under Section 2(b), (B) convert the aggregate amount of this Debenture then outstanding into the shares of stock and other securities, cash and property receivable upon or deemed to be held by holders of Common Stock following such merger, consolidation or sale, and such Holder shall be entitled upon such event or series of related events to receive such amount of securities, cash and property as the shares of Common Stock into which such aggregate principal amount of this Debenture could have been converted immediately prior to such merger, consolidation or sales would have been entitled, or (C) in the case of a merger or consolidation, require the surviving entity to issue to the Holder a convertible debenture with an amount equal to the aggregate Principal of this Debenture then held by such Holder, plus other amounts owing thereon, which such newly issued convertible Debenture shall have terms identical (including with respect to conversion) to the terms of this Debenture, and shall be entitled to all of the rights and privileges of the Holder of this Debenture set forth herein and the agreements pursuant to which this Debentures were issued. In the case of clause (C), the conversion price applicable for the newly issued shares of convertible preferred stock or convertible debentures shall be based upon the amount of securities, cash and property that each share of Common Stock would receive in such transaction and the Conversion Price in effect immediately prior to the effectiveness or closing date for such transaction. The terms of any such merger, sale or consolidation shall include such terms so as to continue to give the Holder the right to receive the securities, cash and property set forth in this Section upon any conversion or redemption following such event. This provision shall similarly apply to successive such events.

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(6)         REISSUANCE OF THIS DEBENTURE.

(a)          Transfer. If this Debenture is to be transferred, the Holder shall surrender this Debenture to the Company, whereupon the Company will forthwith issue and deliver upon the order of the Holder a new Debenture (in accordance with Section 6(d)), registered in the name of the registered transferee or assignee, representing the outstanding Principal, being transferred by the Holder and, if less then the entire outstanding Principal is being transferred, a new Debenture (in accordance with Section 6(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any assignee, by acceptance of this Debenture, acknowledge and agree that, by reason of the provisions of Section 4(b)(iii) following conversion or redemption of any portion of this Debenture, the outstanding Principal represented by this Debenture may be less than the Principal stated on the face of this Debenture.

(b)          Lost, Stolen or Mutilated Debenture. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Debenture, and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Debenture, the Company shall execute and deliver to the Holder a new Debenture (in accordance with Section 6(d)) representing the outstanding Principal.

(c)          Debenture Exchangeable for Different Denominations. This Debenture is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Debenture or Debentures (in accordance with Section 6(d)) representing in the aggregate the outstanding Principal of this Debenture, and each such new Debenture will represent such portion of such outstanding Principalas is designated by the Holder at the time of such surrender.

(d)          Issuance of New Debentures. Whenever the Company is required to issue a new Debenture pursuant to the terms of this Debenture, such new Debenture (i) shall be of like tenor with this Debenture, (ii) shall represent, as indicated on the face of such new Debenture, the Principal remaining outstanding (or in the case of a new Debenture being issued pursuant to Section 6(a) or Section 6(c), the Principal designated by the Holder which, when added to the principal represented by the other new Debentures issued in connection with such issuance, does not exceed the Principal remaining outstanding under this Debenture immediately prior to such issuance of new Debentures), (iii) shall have an issuance date, as indicated on the face of such new Debenture, which is the same as the Original Issuance Date of this Debenture, and (iv) shall have the same rights and conditions as this Debenture.

(7)         NOTICES. Any notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); or (iii) one (1) Trading Day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

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If to the Company, to:	NeoMedia Technologies, Inc.
	100 West Arapahoe Avenue, Suite 9
	Boulder, Colorado  80302¨
	Attention:  Chief Executive Officer or Chief Financial Officer
	Telephone:	(303) 546-7946
	Facsimile:	(636)648-9922
With a copy to:	K&L Gates LLP
	200 South Biscayne Boulevard – Suite 3900
	Miami, FL  33131-2399
	Attention:	Clayton E. Parker, Esq.
	Telephone:	(305) 539-3300
	Facsimile:	(305) 358-7095
If to the Holder:	David Gonzalez, Esq.
	1012 Springfield Ave.,
	Mountainside, New Jersey 07092
	Telephone:	(201) 985-8300
	Facsimile:	(201) 985-8266

or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above, respectively.

(8)         Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligations of the Company, which are absolute and unconditional, to pay the principal of, and other charges (if any) on, this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct obligation of the Company.

(9)         This Debenture shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the terms hereof.

(10)        No indebtedness of the Company is senior to this Debenture in right of payment, whether with respect to damages or upon liquidation or dissolution or otherwise.

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(11)        This Debenture shall be governed by and construed in accordance with the laws of the State of New Jersey, without giving effect to conflicts of laws thereof. Each of the parties consents to the jurisdiction of the Superior Courts of the State of New Jersey sitting in Hudson County, New Jersey and the U.S. District Court for the District of New Jersey sitting in Newark, New Jersey in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions.

(12)        If the Company fails to strictly comply with the terms of this Debenture, then the Company shall reimburse the Holder promptly for all fees, costs and expenses, including, without limitation, attorneys’ fees and expenses incurred by the Holder in any action in connection with this Debenture, including, without limitation, those incurred: (i) during any workout, attempted workout, and/or in connection with the rendering of legal advice as to the Holder’s rights, remedies and obligations, (ii) collecting any sums which become due to the Holder, (iii) defending or prosecuting any proceeding or any counterclaim to any proceeding or appeal; or (iv) the protection, preservation or enforcement of any rights or remedies of the Holder.

(13)        Any waiver by the Holder of a breach of any provision of this Debenture shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture. Any waiver must be in writing.

(14)        If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect, and if any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder shall violate applicable laws governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum permitted rate of interest. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the Principal of this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impeded the execution of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been enacted.

(15)        Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

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Consolidated Debenture #47

(16)        THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS DEBENTURE OR ANY TRANSACTION DOCUMENT OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES’ ACCEPTANCE OF THIS DEBENTURE.

(17)        CERTAIN DEFINITIONS For purposes of this Debenture, the following terms shall have the following meanings:

(a)          “Approved Stock Plan” means a stock option plan that has been approved by the Board of Directors of the Company, pursuant to which the Company’s securities may be issued only to any employee, officer, or director for services provided to the Company.

(b)          "Bloomberg" means Bloomberg Financial Markets.

(c)          “Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day on which banking institutions are authorized or required by law or other government action to close.

(d)          “Change of Control Transaction” means the occurrence of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the voting securities of the Company (except that the acquisition of voting securities by the Holder or any other current holder of convertible securities of the Company shall not constitute a Change of Control Transaction for purposes hereof), (b) a replacement at one time or over time of more than one-half of the members of the board of directors of the Company which is not approved by a majority of those individuals who are members of the board of directors on the date hereof (or by those individuals who are serving as members of the board of directors on any date whose nomination to the board of directors was approved by a majority of the members of the board of directors who are members on the date hereof), (c) the merger, consolidation or sale of fifty percent (50%) or more of the assets of the Company or any subsidiary of the Company in one or a series of related transactions with or into another entity, or (d) the execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events set forth above in (a), (b) or (c).

(e)          “Closing Bid Price” means the price per share in the last reported trade of the Common Stock on a Primary Market or on the exchange which the Common Stock is then listed as quoted by Bloomberg.

(f)          “Convertible Securities” means any stock or securities (other than Options) directly or indirectly convertible into or exercisable or exchangeable for Common Stock.

(g)          “Commission” means the Securities and Exchange Commission.

(h)          “Common Stock” means the common stock, par value $0.001, of the Company and stock of any other class into which such shares may hereafter be changed or reclassified.

15

Consolidated Debenture #47

(i)          "Equity Conditions" means that each of the following conditions is satisfied: (i) on each day during the period beginning two (2) weeks prior to the applicable date of determination and ending on and including the applicable date of determination (the "Equity Conditions Measuring Period"), either (x) the Underlying Shares Registration Statement shall be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) all applicable shares of Common Stock to be issued in connection with the event requiring determination shall be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws; (ii) on each day during the Equity Conditions Measuring Period, the Common Stock is designated for quotation on the Principal Market and shall not have been suspended from trading on such exchange or market nor shall delisting or suspension by such exchange or market been threatened or pending either (A) in writing by such exchange or market or (B) by falling below the then effective minimum listing maintenance requirements of such exchange or market; (iii) during the Equity Conditions Measuring Period, the Company shall have delivered Conversion Shares upon conversion of the Debentures to the Holder on a timely basis as set forth in Section 4(b)(ii) hereof; (iv) any applicable shares of Common Stock to be issued in connection with the event requiring determination may be issued in full without violating Section 4(c) hereof and the rules or regulations of the Primary Market; (v) during the Equity Conditions Measuring Period, there shall not have occurred either (A) an Event of Default or (B) an event that with the passage of time or giving of notice would constitute an Event of Default; and (vii) the Company shall have no knowledge of any fact that would cause (x) the Registration Statements required pursuant to the Registration Rights Agreement not to be effective and available for the resale of all applicable shares of Common Stock to be issued in connection with the event requiring determination or (y) any applicable shares of Common Stock to be issued in connection with the event requiring determination not to be eligible for sale without restriction and without the need for registration under any applicable federal or state securities laws.

(j)          "Equity Conditions Failure" means that on any applicable date the Equity Conditions have not been satisfied (or waived in writing by the Holder).

(k)          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(l)          “Excluded Securities” means, (a) shares issued or deemed to have been issued by the Company pursuant to an Approved Stock Plan (b) shares of Common Stock issued or deemed to be issued by the Company upon the conversion, exchange or exercise of any right, option, obligation or security outstanding on the date prior to date of the Securities Purchase Agreements, provided that the terms of such right, option, obligation or security are not amended or otherwise modified on or after the date of the Securities Purchase Agreements, and provided that the conversion price, exchange price, exercise price or other purchase price is not reduced, adjusted or otherwise modified and the number of shares of Common Stock issued or issuable is not increased (whether by operation of, or in accordance with, the relevant governing documents or otherwise) on or after the date of the Securities Purchase Agreements, (c) shares issued in connection with any acquisition by the Company, whether through an acquisition of stock or a merger of any business, assets or technologies, leasing arrangement or any other transaction the primary purpose of which is not to raise equity capital, and (d) the shares of Common Stock issued or deemed to be issued by the Company upon conversion of this Debenture.

16

Consolidated Debenture #47

(m)          “Options” means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

(n)          “Original Issuance Date” means the date of the first issuance of this Debenture regardless of the number of transfers and regardless of the number of instruments, which may be issued to evidence such Debenture.

(o)          “Person” means a corporation, an association, a partnership, organization, a business, an individual, a government or political subdivision thereof or a governmental agency.

(p)           “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

(q)          “Securities Purchase Agreements” means the Securities Purchase Agreements by and between the Company and Holder pursuant to which the Prior Debentures were purchased and issued.

(r)          “Trading Day” means a day on which the shares of Common Stock are quoted on the OTCBB or quoted or traded on such Primary Market on which the shares of Common Stock are then quoted or listed; provided, that in the event that the shares of Common Stock are not listed or quoted, then Trading Day shall mean a Business Day.

(s)          “Transaction Documents” means the Securities Purchase Agreements or any other agreement delivered in connection with the Securities Purchase Agreements.

(t)          “Underlying Shares” means the shares of Common Stock issuable upon conversion of this Debenture in accordance with the terms hereof.

(u)          “Underlying Shares Registration Statement” means a registration statement covering among other things the resale of the Underlying Shares and naming the Holder as a “selling stockholder” thereunder.

(v)          "Volume Weighted Average Price" means, for any security as of any date, the daily dollar volume-weighted average price for such security on the Primary Market as reported by Bloomberg through its “Historical Prices – Px Table with Average Daily Volume” functions, or, if no dollar volume-weighted average price is reported for such security by Bloomberg, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as reported in the "pink sheets" by Pink Sheets LLC.

(w)          "Warrants" has the meaning ascribed to such term in the Securities Purchase Agreements, and shall include all warrants issued in exchange therefor or replacement thereof.

17

Consolidated Debenture #47

(18)        Amended and Restated Debenture. This Debenture represents the portions of the Prior Debentures that have been consolidated as set forth on Schedule ‘A’. The issuance of this Debenture is not in any way intended to constitute a novation of the obligations and liabilities existing under the Prior Debentures or evidence payment of all or any portion of such obligations and liabilities.

IN WITNESS WHEREOF, the Company has caused this Amended, Restated and Consolidated Secured Convertible Debenture to be duly executed by a duly authorized officer as of the __16 day of September, 2013_.

NEOMEDIA TECHNOLOGIES, INC.
By:	/s/ Laura Marriott
Name:	Laura Marriott
Title:	Chief Executive Officer

18

EX-10.8

EXHIBIT 10.8

DEBENTURE REDEMPTION AGREEMENT

THIS DEBENTURE REDEMPTION AGREEMENT (the “Agreement”), effective as of the 11th day of October, 2013, (the “Effective Date”) by and between YA GLOBAL INVESTMENTS, L.P., a Cayman Islands exempt limited partnership (the “Seller”) and NEOMEDIA TECHNOLOGIES, INC., a Delaware corporation (the “Buyer”).

RECITALS

WHEREAS, the Seller owns certain secured convertible debentures issued by the Buyer as identified on Schedule A attached hereto (the “Securities”); and

WHEREAS, subject to the terms and conditions set forth herein, the Buyer desires to have the option to redeem from the Seller the unpaid principal amounts outstanding of the Securities, and the Seller desires to grant to the Buyer such option to redeem such amounts as set forth herein.

NOW, THEREFORE, in consideration of the promises and the respective covenants herein contained, the parties, intending to be legally bound, hereby agree as follows:

AGREEMENT

1.    Recitals. The foregoing Recitals are true and correct in all respects and are hereby incorporated by reference herein.

2.    Redemption Amounts; Sale and Purchase of the Securities.

(a)    Sale and Purchase of the Securities. Subject to the terms and conditions hereof, at the option of the Buyer, the Seller shall sell, transfer and deliver to the Buyer at each Closing (as hereinafter defined) the applicable Redemption Amount, and the Buyer shall purchase all of such Redemption Amount, free and clear of all security interests, liens, claims, encumbrances, pledges, agreements, rights of first refusal and options of any kind or nature whatsoever (each purchase, a “Redemption”).

(b)    Redemption Amount. Five (5) business days prior to each Closing, the Buyer shall select an amount of the unpaid outstanding principal balance owed to the Seller that it desires to redeem at such Closing (the “Redemption Amount”) and shall have the right to purchase such Redemption Amount for a purchase price (the “Purchase Price”) equal to seventy-five percent (75%) of such Redemption Amount. For the avoidance of doubt, the Purchase Price is equal to a twenty-five percent (25%) reduction in the Redemption Amount.

(c)    Mechanics of Redemption. To redeem any amount of the Securities, on any date the Seller shall transmit by facsimile (or otherwise deliver), for receipt on such date, a copy of an executed notice of redemption in the form attached hereto as Exhibit I (the “Redemption Notice”). Once the Seller receives a Redemption Notice, it shall within three (3) business days return such executed Redemption Notice to the Buyer, which shall memorialize how the Redemption Amount shall be allocated among the Securities. The Seller shall have full discretion on how the Redemption Amount shall be allocated amongst the outstanding Securities held by the Seller.

3.    The Closing Date; and Deliveries at the Closing.

(a)    Closing. Each closing of the sale and purchase of a Redemption Amount (each “Closing”) will take place at the offices of the Buyer, or at such other place, at such time as the parties may establish (the date of each such Closing being hereinafter referred to as a “Closing Date”).

(b)          Deliveries of the Seller. At each Closing, the Seller shall deliver or cause to be delivered to the Buyer such documents and instruments as the Buyer may reasonably request to evidence the Redemption. Notwithstanding the foregoing, the Seller shall not be required to physically surrender any of the physical instruments evidencing the Securities to the Buyer unless (i) the full amount outstanding under such Security is being redeemed or (ii) the Seller has provided the Buyer with prior written notice requesting reissuance of such Security upon physical surrender of the Security. The Seller and the Buyer shall maintain records showing the principal and interest redeemed under each of the Securities that constitute each Redemption Amount, and shall use such other methods so as to not require physical surrender of a partial redemption of any of the Securities.

(c)           Deliveries by Buyer. At each Closing, the Buyer shall deliver the following to the Seller:

(i)    subject to the terms and conditions hereof, the applicable Purchase Price as provided in Section 2 hereof; which shall be wired to details (“Wire Information” set forth in Schedule B.

(ii)    such other documents and instruments as the Seller may reasonably request.

4.    At-Will Termination. This Agreement is an at-will agreement and may be terminated by either Party upon 90 days’ prior written notice, of which receipt is acknowledged by the receiving party (such notice, a “Notice of Termination”).

5.    Representations and Warranties of Seller.

(a)    Organization. The Seller is an exempt limited partnership duly formed, validly existing and in good standing under the laws of the Cayman Islands, and has the requisite corporate power and authority and all governmental licenses, authorizations, consents and approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to have such power and authority would not, in the aggregate, have a material adverse effect on the business, operations or financial condition of the Seller.

(b)    Title to Securities. The Seller has good, marketable and unencumbered title to the Securities, free and clear of all pledges, security interests, liens, claims, encumbrances, agreements (other than this Agreement), rights of first refusal, and options of any kind or nature whatsoever. The Seller has full right and authority to transfer and deliver all of each Redemption Amount to the Buyer as contemplated hereby. Upon consummation of the transactions contemplated hereby, the Seller will have transferred to the Buyer good, marketable and unencumbered title to each such Redemption Amount, free and clear of all pledges, security interests, liens, claims, encumbrances, agreements, rights of first refusal and options of any kind or nature whatsoever.

(c)    Power and Authority. The Seller has full power and authority to execute and deliver this Agreement and the other transaction documents referred to herein, to perform its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the other transaction documents referred to herein, the performance of the obligations of the Seller hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby has been duly and validly authorized by the Seller. Each of this Agreement and the other transaction documents delivered or to be delivered by the Seller hereunder has been, or at each Closing will be, duly and validly executed and delivered by the Seller and constitutes, or at each Closing will constitute, the legal, valid and binding agreement of the Seller and is, or at each Closing will be, enforceable in accordance with its respective terms.

(d)    Seller’s Investment Representations.

(i)    The Seller is familiar with the conditions (financial and otherwise), properties, assets, liabilities, business, operation and prospects of the Buyer.

(ii)    The Seller and its advisors have had an opportunity to ask questions of, and to receive information from, the Buyer and persons acting on its behalf concerning the terms and conditions of the Seller’s sale of the Securities, the terms of this Agreement and the transactions contemplated hereby.

(e)    Consents and Approvals; No Violation. There is no requirement applicable to the Seller to obtain any authorization, license, consent or approval of any nongovernmental person as a condition to the lawful consummation of the transactions contemplated by this Agreement. The execution and delivery of this Agreement and the other transaction documents referred to herein by the Seller and the performance by the Buyer of its obligations hereunder and thereunder will not: (A) conflict with or result in any breach of any provision of the charter documents of the Seller; (B) result in a default or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions of any note, credit agreement, bond, mortgage, indenture, agreement, lease or other instrument or obligation to which Seller is a party or by which Seller or any of its assets may be bound, except for such defaults or rights of termination, cancellation or acceleration (i) which individually or in the aggregate would not have a material adverse effect upon the Seller or (ii) as to which requisite waivers or consents have been obtained by Seller or will be obtained prior to each Closing; or (C) violate any order, writ, injunction or decree applicable to Seller. To Seller’s knowledge, there is no requirement to make any filing with, or to obtain any permit, authorization, license, consent or approval of, any governmental or regulatory authority as a condition to the lawful consummation of the transactions contemplated by this Agreement. To Seller’s knowledge, the execution, performance and delivery of this Agreement do not, and the consummation of the transaction contemplated hereby will not constitute a violation of any material law, rule, regulation or government permit or license applicable to the Seller.

6.    Representations and Warranties of Buyer.

The Buyer represents and warrants to the Seller as follows:

(a)    Organization. The Buyer is a corporation duly formed, validly existing and in good standing under the laws of the State of Delaware, and has the requisite corporate power and authority and all governmental licenses, authorizations, consents and approvals to own, lease and operate its properties and to carry on its business as now being conducted, except where the failure to have such power and authority would not, in the aggregate, have a material adverse effect on the business, operations or financial condition of the Buyer.

(b)    Authority Concerning this Agreement. The Buyer has the requisite corporate power and authority to execute and deliver this Agreement and the other transaction documents referred to herein and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the transaction documents referred to herein and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action on the part of the Buyer. Each of this Agreement and the other transaction documents delivered or to be delivered by the Buyer hereunder has been, or at each Closing will be, duly and validly executed and delivered by the Buyer and constitutes, or at each Closing will constitute, the legal, valid and binding agreement of the Buyer, and is, or at each Closing will be, enforceable in accordance with its terms.

7.    Miscellaneous Provisions.

(a)    Certain Expenses. Whether or not the transactions contemplated hereby are consummated, except as otherwise provided herein, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby will be paid by the party incurring such costs and expenses.

(b)    Amendment and Modification. This Agreement may be amended, modified or supplemented at any time prior to or after the Closing Date but only by written agreement that identifies this Agreement and is signed by all the parties hereto.

(c)    Waiver of Compliance; Consents. Except as otherwise provided in this Agreement, any failure of any of the parties to comply with any obligation, representation, warranty, covenant, agreement or condition herein may be waived by the party entitled to the benefits thereof only by a written instrument signed by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, representation, warranty, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

(d)    Governing Law and Jurisdiction. This Agreement shall be governed by and construed under the laws of the State of New Jersey without regard to its conflicts of law rules.

(e)    Counterparts. This Agreement may be executed in one or more counterparts, none of which need contain the signatures of all parties, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

(f)    Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other tribunal to be invalid, void, unenforceable or against its public or regulatory policy, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

(g)    Interpretation. The descriptive headings contained in this Agreement are for convenience of reference only and shall have no effect on the interpretation or meaning hereof. The word “Agreement” refers to the body of this Agreement and all Schedules attached hereto or referred to herein. “Herein,” “hereof” and the like refer to this Agreement as a whole. As used in this Agreement, the singular shall include the plural, the plural shall include the singular and each gender shall include all genders.

(h)    Entire Agreement. This Agreement, including and Schedules attached hereto (and any other instruments executed and delivered at the Closing), embodies the entire agreement and understanding of the parties with respect to the transactions contemplated by this Agreement. There are no representations, warranties, covenants or agreements among the parties with respect to the subject matter hereof except as set forth herein or in the other agreements described in the previous sentence. The Schedules hereto are an integral part of this Agreement and are incorporated by reference herein. This Agreement supersedes all prior discussions, negotiations, agreements and understandings (both written and oral) between the parties with respect to the transactions contemplated hereby that are not reflected or set forth in this Agreement or the Schedules attached hereto.

(i)    Securities Redemption Provisions. The parties hereto acknowledge and agree that this Agreement shall be deemed to be in compliance with, and not in violation of, any redemption provisions set forth in the Securities and that (i) the Buyer shall not be required to pay any redemption premium, under Section 3 of the Securities, in connection with the Redemption, and (ii) the Seller shall not exercise all or any portion of any of the Securities, under Section 3 of the Securities, in connection with this Redemption.

IN WITNESS WHEREOF, the parties hereto have executed this Debenture Redemption Agreement as of the date first above written.

BUYER:		SELLER:
NEOMEDIA TECHNOLOGIES, INC.		YA GLOBAL INVESTMENTS L.P.
		By: Yorkville Advisors, LLC
		Its: Investment Manager
By:	/s/ Laura Marriott
Name:	Laura A. Marriott
Title:	Chief Executive Officer	By:	/s/ Jerry Eicke
		Name:	Jerry Eicke
		Title:	Managing Member

EX-10.9

EXHIBIT 10.9

AMENDED AND RESTATED PATENT SECURITY AGREEMENT

THIS AMENDED AND RESTATED PATENT SECURITY AGREEMENT (this “Agreement”), dated as of October 25, 2013, by and between NEOMEDIA TECHNOLOGIES INC., a Delaware corporation with an address of 100 W Arapahoe Avenue, Suite 9, Boulder, Colorado 80302 (the “Grantor”) and YA Global Investments, L.P., a Cayman Islands exempt limited partnership with an address of 1012 Springfield Avenue, Mountainside, New Jersey 07092, for itself and as collateral agent for certain other lenders (in such capacity, the “Secured Party”).

RECITALS:

A.           Reference is made to that certain (i) Security Agreement dated as of July 29, 2008 by and between the Grantor and the Secured Party (as may be amended and supplemented from time to time, collectively, the “Security Agreement”) and (ii) Patent Security Agreement entered into and made effective as of July 29, 2008 (the “Patent Security Agreement”) by and between the Grantor and the Secured Party.

B.           It is a condition under Section 6.18 of the Security Agreement that the Grantor execute and deliver this Agreement to the Secured Party.

C.           The Grantor has determined that the execution, delivery and performance of this Agreement directly benefits, and is in the best interest, of the Grantor.

NOW THEREFORE, in consideration of the mutual covenants, agreements, warranties, and representations herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

AGREEMENT:

SECTION 1.          Definitions.

(a)          Generally. All references herein to the UCC shall mean the Uniform Commercial Code as in effect from time to time in the State of New Jersey; provided, however, that if a term is defined in Article 9 of the UCC differently than in another Article thereof, the term shall have the meaning set forth in Article 9; provided further that, if by reason of mandatory provisions of law, perfection, or the effect of perfection or non-perfection, of the security interest in any IP Collateral (as hereinafter defined) or the availability of any remedy hereunder is governed by the Uniform Commercial Code as in effect in a jurisdiction other than New Jersey, “UCC” means the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection or effect of perfection or non-perfection or availability of such remedy, as the case may be.

(b)          Definition of Certain Terms Used Herein. Unless the context otherwise requires, all capitalized terms used but not defined in this Agreement shall have the meanings set forth in the Security Agreement. In addition, as used herein, the following terms shall have the following meanings:

“Copyrights” shall mean all copyrights, copyright applications and like protections in each work of authorship or derivative work thereof of the Grantor, whether registered or unregistered, whether published or unpublished and whether or not constituting a trade secret, including, without limitation, the United States copyright registrations listed on EXHIBIT A annexed hereto and made a part hereof, together with any goodwill of the business connected with, and symbolized by, any of the foregoing.

EXHIBIT 10.9

“Copyright Licenses” shall mean all agreements, whether written or oral, providing for the grant by or to the Grantor of any right under any Copyright, including, without limitation, the agreements listed on EXHIBIT A annexed hereto and made a part hereof.

“Copyright Office” shall mean the United States Copyright Office or any other federal governmental agency which may hereafter perform its functions.

“Event of Default” shall mean (i) an Event of Default under the Security Agreement; (ii) the occurrence of a default or breach under this Agreement; or (iii) the occurrence of a default or event of default under any of the Financing Documents.

“Financing Documents” shall have the meaning assigned to such term in the Ratification Agreement.

“IP Collateral” shall have the meaning assigned to such term in SECTION 2 of this Agreement.

“Licenses” shall mean, collectively, the Copyright Licenses, Patent Licenses, Trademark Licenses, and any other license providing for the grant by or to the Grantor of any right under any IP Collateral.

“Obligations” shall mean any and all debts, liabilities, obligations, covenants and duties owing by the Grantor to the Secured Party and/or to any entity (each such entity, a “Secured Party Assignee”) to whom the Secured Party has assigned any such debts, liabilities, obligations, covenants and duties, in each case, whether now existing or hereafter arising, of every nature, type, and description, whether liquidated, unliquidated, primary, secondary, secured, unsecured, direct, indirect, absolute, or contingent, and whether or not evidenced by a note, guaranty, or other instrument, and any amendments, extensions, renewals or increases thereof, including, without limitation, all those under the Transaction Documents and all other Financing Documents, and any other or related documents, and all reasonable costs and expenses incurred by the Secured Party in the enforcement of its rights and remedies in connection with any of the foregoing, including, but not limited to, reasonable attorneys’ fees and expenses, and all obligations of the Grantor to the Secured Party and/or to any Secured Party Assignee to perform acts or refrain from taking any action.

“Patents” shall mean all patents and applications for patents of the Grantor, and the inventions and improvements therein disclosed, and any and all divisions, revisions, reissues and continuations, continuations-in-part, extensions, and reexaminations of said patents including, without limitation, the United States patent registrations listed on EXHIBIT B annexed hereto and made a part hereof.

“Patent Licenses” shall mean all agreements, whether written or oral, providing for the grant by or to the Grantor of any right under any Patent, including, without limitation, the agreements listed on EXHIBIT B annexed hereto and made a part hereof.

“PTO” shall mean the United States Patent and Trademark Office or any other federal governmental agency which may hereafter perform its functions.

“Ratification Agreement” shall mean that certain Twentieth Ratification Agreement dated as of July 20, 2012 by and between the Grantor and the Secured Party.

2

EXHIBIT 10.9

“Trademarks” shall mean all trademarks, trade names, corporate names, Grantor names, domain names, business names, fictitious business names, trade dress, trade styles, service marks, designs, logos and other source or business identifiers of the Grantor, whether registered or unregistered, including, without limitation, the United States trademark registrations listed on EXHIBIT C annexed hereto and made a part hereof, together with any goodwill of the business connected with, and symbolized by, any of the foregoing.

“Trademark Licenses” shall mean all agreements, whether written or oral, providing for the grant by or to the Grantor of any right under any Trademark, including, without limitation, the agreements listed on EXHIBIT C annexed hereto and made a part hereof.

SECTION 2.          Grant of Security Interest. In furtherance and as confirmation of the security interest granted by the Grantor to the Secured Party under the Security Agreement, and as further security for the payment or performance in full of the Obligations, the Grantor hereby grants to the Secured Party, for itself and as collateral agent for certain other lenders, a continuing security interest, with a power of sale (which power of sale shall be exercisable only following the occurrence and during the continuance of an Event of Default), in all of the present and future right, title and interest of the Grantor in and to the following property, and each item thereof, whether now owned or existing or hereafter acquired or arising, together with all products, proceeds, substitutions, and accessions of or to any of the following property (collectively, the “IP Collateral”):

(a)          All Copyrights and Copyright Licenses;

(b)          All Patents and Patent Licenses;

(c)          All Trademarks and Trademark Licenses;

(d)          All other Licenses;

(e)          All renewals of any of the foregoing;

(f)          All trade secrets, know-how and other proprietary information; works of authorship and other copyright works (including copyrights for computer programs), and all tangible and intangible property embodying the foregoing; inventions (whether or not patentable) and all improvements thereto; industrial design applications and registered industrial designs; books, records, writings, computer tapes or disks, flow diagrams, specification sheets, computer software, source codes, object codes, executable code, data, databases, and other physical manifestations, embodiments or incorporations of any of the foregoing, and any Licenses in any of the foregoing, and all other IP Collateral and proprietary rights;

(g)          All General Intangibles connected with the use of, or related to, any and all IP Collateral (including, without limitation, all goodwill of the Grantor and its business, products and services appurtenant to, associated with, or symbolized by, any and all IP Collateral and the use thereof);

(h)          All income, royalties, damages and payments now and hereafter due and/or payable under and with respect to any of the foregoing, including, without limitation, payments under all Licenses entered into in connection therewith and damages and payments for past or future infringements, misappropriations or dilutions thereof;

(i)          The right to sue for past, present and future infringements, misappropriations, and dilutions of any of the foregoing; and

(j)          All of the Grantor’s rights corresponding to any of the foregoing throughout the world.

3

EXHIBIT 10.9

SECTION 3.          Protection of IP Collateral By Grantor. Except as set forth below in this SECTION 3, the Grantor shall undertake the following with respect to each of the items described in SECTION 2:

(a)          Pay all renewal fees and other fees and costs associated with maintaining the IP Collateral and with the processing and prosecution of the IP Collateral and take all other steps reasonably necessary to maintain each registration of the IP Collateral.

(b)          Take all actions reasonably necessary to prevent any of the IP Collateral from becoming forfeited, abandoned, dedicated to the public, invalidated or impaired in any way.

(c)          At the Grantor’s sole cost, expense, and risk, pursue the processing and prosecution of each application for registration which is the subject of the security interest created herein and not abandon or delay any such efforts.

(d)          At the Grantor’s sole cost, expense, and risk, take any and all action which the Grantor reasonably deem necessary or desirable under the circumstances to protect the IP Collateral from infringement, misappropriation or dilution, including, without limitation, the prosecution and defense of infringement actions.

SECTION 4.          Grantor’s Representations and Warranties. In addition to any representations and warranties contained in any of the other Transaction Documents, the Grantor represents and warrants that:

(a)          EXHIBIT A is a true, correct and complete list of all United States Copyright registrations owned by the Grantor and all Copyright Licenses to which the Grantor is a party as of the date hereof.

(b)          EXHIBIT B is a true, correct and complete list of all United States Patents owned by the Grantor and all Patent Licenses to which the Grantor is a party as of the date hereof.

(c)          EXHIBIT C is a true, correct and complete list of all United States Trademark registrations owned by the Grantor and all Trademark Licenses to which the Grantor is a party as of the date hereof.

(d)          Except as set forth in EXHIBITS A, B and C, none of the IP Collateral owned by the Grantor is the subject of any licensing or franchise agreement pursuant to which the Grantor is the licensor or franchisor as of the date hereof.

(e)          The Grantor shall not transfer or otherwise encumber any interest in the IP Collateral, except for non-exclusive licenses granted by the Grantor in the ordinary course of business, as set forth in this Agreement, or Permitted Liens.

(f)          The Grantor owns, or is licensed to use, all IP Collateral in connection with the conduct of its business. No claim has been asserted and is pending by any person challenging or questioning the use by the Grantor of any of its IP Collateral, or the validity or effectiveness of any of its IP Collateral. The Grantor considers that the use by the Grantor of the IP Collateral does not infringe the rights of any person in any material respect. No holding, decision or judgment has been rendered by any governmental authority which would limit, cancel or question the validity of, or a Grantor’s rights in, any IP Collateral in any material respect.

4

EXHIBIT 10.9

(g)          Performance of this Agreement does not conflict with or result in a breach of any material agreement to which the Grantor is bound;

(h)          The Grantor shall give the Secured Party prompt written notice, with reasonable detail, following the occurrence of any of the following:

(i)          The Grantor’s obtaining rights to, or being issued a registration in or receiving an issuance of, any new IP Collateral, or otherwise acquiring ownership of any registered IP Collateral (other than the acquisition by the Grantor of the right to sell products containing the trademarks of others in the ordinary course of the Grantor’s business).

(ii)         The Grantor becoming entitled to the benefit of any registered IP Collateral whether as licensee or licensor (other than commercially available off the shelf computer programs, products or applications and the Grantor’s right to sell products containing the trademarks of others in the ordinary course of the Grantor’s business).

(iii)        The Grantor entering into any new Licenses with respect to the IP Collateral (other than commercially available off the shelf computer programs, products or applications and the Grantor’s right to sell products containing the trademarks of others in the ordinary course of the Grantor’s business).

(iv)        The Grantor’s knowing, or having reason to know, that any registration relating to any IP Collateral may, other than as provided in SECTION 3 above, become forfeited, abandoned or dedicated to the public, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the PTO, the Copyright Office or any court or tribunal) regarding the Grantor’s ownership of, or the validity or enforceability of, any IP Collateral or the Grantor’s right to register the same or to own and maintain the same.

SECTION 5.          Agreement Applies to Future IP Collateral.

(a)          The provisions of this Agreement shall automatically apply to any such additional property or rights described in SECTION 4(h) above, all of which shall be deemed to be and treated as “IP Collateral” within the meaning of this Agreement. Upon the acquisition by the Grantor of any additional IP Collateral, the Grantor shall promptly deliver to the Secured Party an updated EXHIBIT A, B, and/or C (as applicable) to this Agreement and hereby authorizes the Secured Party to file, at the Grantor’s expense, such updated Exhibit as set forth in SECTION 5(b).

(b)          The Grantor shall execute and deliver, and have recorded, any and all agreements, instruments, documents and papers as the Secured Party may reasonably request to evidence the Secured Party’s security interest in any IP Collateral (including, without limitation, filings with the PTO, the Copyright Office or any similar office), and the Grantor hereby constitutes the Secured Party as its attorney-in-fact to execute and file all such writings for the foregoing purposes, all such acts of such attorney being hereby ratified and confirmed; provided, however, that the Secured Party’s taking of such action shall not be a condition to the creation or perfection of the security interest created hereby.

(c)          The Grantor authorizes and requests that the Copyright Office and the PTO record this Agreement, and any amendments thereto or copies thereof.

5

EXHIBIT 10.9

SECTION 6.          Grantor’s Rights To Enforce IP Collateral. Prior to the occurrence of an Event of Default, the Grantor shall have the exclusive right to sue for past, present and future infringement of the IP Collateral, including the right to seek injunctions and/or money damages in an effort by the Grantor to protect the IP Collateral against encroachment by third parties, provided, however, that:

(a)          The Grantor provides the Secured Party with written notice of the Grantor’s institution of any legal proceedings for enforcement of any IP Collateral.

(b)          Any money damages awarded or received by the Grantor on account of such suit (or the threat of such suit) shall constitute IP Collateral.

(c)          Upon the occurrence and during the continuance of any Event of Default, the Secured Party, by notice to the Grantor, may terminate or limit the Grantor’s rights under this SECTION 6.

SECTION 7.          Secured Party’s Actions To Protect IP Collateral. In the event of:

(a)          The Grantor’s failure, within ten (10) business days of written notice from the Secured Party, to cure any failure by the Grantor to observe or perform any of the Grantor’s covenants, agreements or other obligations hereunder; and/or

(b)          the occurrence and continuance of any other Event of Default,

the Secured Party, acting in its own name or in that of the Grantor, may (but shall not be required to) act in the Grantor’s place and stead and/or in the Secured Party’s own right in connection therewith, including, without limitation, commencing and continuing litigation in connection with the IP Collateral.

SECTION 8.          Rights Upon Event of Default. Upon the occurrence and during the continuance of an Event of Default, unless such Event of Default has been cured, in addition to all other rights and remedies, the Secured Party may exercise all rights and remedies of a secured party under the UCC, with respect to the IP Collateral, in addition to which the Secured Party may sell, license, assign, transfer, or otherwise dispose of the IP Collateral, subject to those restrictions to which the Grantor is subject under applicable law and by contract. Any person may conclusively rely upon an affidavit of an officer of the Secured Party that an Event of Default has occurred and that the Secured Party is authorized to exercise such rights and remedies. In connection with such exercise of rights, the Secured Party shall have a non-exclusive, royalty-free license to use the IP Collateral, including, without limitation, the right to sublicense the IP Collateral and to receive the royalties therefrom.

SECTION 9.          Secured Party As Attorney-In-Fact.

(a)          The Grantor hereby irrevocably makes, constitutes and appoints the Secured Party (and all officers, employees or agents designated by the Secured Party) as and for the Grantor’s true and lawful agent and attorney-in-fact, effective following the occurrence and during the continuance of any Event of Default, unless such Event of Default has been cured, and in such capacity the Secured Party shall have the right, with power of substitution for the Grantor and in the Grantor’s names or otherwise, for the use and benefit of the Secured Party:

(i)          To supplement and amend from time to time EXHIBITS A, B and C of this Agreement to include any newly developed, applied for, registered, or acquired IP Collateral of the Grantor and any intent-to-use Trademark applications for which a statement of use or an amendment to allege use has been filed and accepted by the PTO.

(ii)         To exercise any of the rights and powers referenced herein.

6

EXHIBIT 10.9

(iii)        To execute all such instruments, documents, and papers as the Secured Party reasonably determines to be necessary or desirable in connection with the exercise of such rights and remedies and to cause the sale, license, assignment, transfer, or other disposition of the IP Collateral, subject to those restrictions to which the Grantor is subject under applicable law and by contract.

(b)          The power of attorney granted herein, being coupled with an interest, shall be irrevocable until this Agreement is terminated in writing by a duly authorized officer of the Secured Party.

(c)          The Secured Party shall not be obligated to do any of the acts or to exercise any of the powers authorized by SECTION 9(a), but if the Secured Party elects to do any such act or to exercise any of such powers, it shall not be accountable for more than it actually receives as a result of such exercise of power.

SECTION 10.         Intent. This Agreement is being executed and delivered by the Grantor for the purpose of registering and confirming the grant of the security interest of the Secured Party in the IP Collateral with the PTO and the Copyright Office. It is intended that the security interest granted pursuant to this Agreement is granted as a supplement to, and not in limitation of, the security interest granted to the Secured Party under the Security Agreement. All provisions of the Security Agreement (including, without limitation, the rights, remedies, powers, privileges and discretions of the Secured Party thereunder) shall apply to the IP Collateral. In the event of a conflict between this Agreement and the Security Agreement, the terms of this Agreement shall control with respect to the IP Collateral and the terms of the Security Agreement shall control with respect to all other Pledged Property.

SECTION 11.         Further Assurances. The Grantor agrees, at its own expense, to execute, acknowledge, deliver and cause to be duly filed all such further documents, financing statements, agreements and instruments and take all such further actions as the Secured Party may from time to time reasonably request to better assure, preserve, protect and perfect the security interest in the IP Collateral granted pursuant to this Agreement and the rights and remedies created hereby or the validity or priority of such security interest, including the payment of any fees and taxes required in connection with the execution and delivery of this Agreement, the granting of the security interest and the filing of any financing statements or other documents in connection herewith or therewith.

SECTION 12.         Indemnity. The Grantor agrees to defend, indemnify and hold harmless the Secured Party and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities claimed or asserted by any other party in connection with the transactions contemplated by this Agreement, and (b) all losses or expenses in any way suffered, incurred, or paid by the Secured Party as a result of or in any way arising out of, following or consequential to transactions between the Secured Party and the Grantor, whether under this Agreement or otherwise (including, without limitation, attorneys’ fees and expenses); provided that the foregoing indemnity shall not apply to losses, claims, damages, liabilities or related expenses to the extent that they have resulted from the unlawful or willful misconduct, or gross negligence, of the Secured Party.

SECTION 13.         Release of IP Collateral. Upon irrevocable payment and performance in full of all Obligations, the Secured Party shall, at the Grantor’s expense, execute and deliver to the Grantor all instruments and other documents as may be necessary or proper to release the lien on any security interest in the IP Collateral which has been granted hereunder.

SECTION 14.          Additional Grantors. Pursuant to Section 6.13 of the Security Agreement, any subsidiary of the Grantor that was not in existence or not a subsidiary on the date of the Security Agreement is required to become a party to this Agreement. Such subsidiary shall become a party hereunder, and grant security interests in its assets in favor of the Secured Party, with the same force and effect as if originally named herein. The rights and obligations of the Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new subsidiaries as a party to this Agreement.

7

EXHIBIT 10.9

SECTION 15.          Notices. Unless otherwise provided herein, all demands, notices, consents, service of process, requests and other communications hereunder shall be in writing and shall be delivered to the addresses set forth in the first paragraph of this Agreement.

SECTION 16.          Binding Effect. All of the covenants and obligations contained herein shall be binding upon and shall inure to the benefit of the respective parties, their successors and assigns.

SECTION 17.          Governing Law; Venue. The validity, interpretation and performance of this Agreement shall be determined in accordance with the laws of the State of New Jersey without regard to the principles of conflict of laws. The parties further agree that any action between them shall be heard in Hudson County, New Jersey or Federal district courts located in Newark, New Jersey, and expressly consent to the jurisdiction and venue of the Superior Court of New Jersey, sitting in Hudson County and the United States District Court for the District of New Jersey sitting in Newark, New Jersey for the adjudication of any civil action asserted pursuant to this Paragraph, provided, however, that nothing herein shall prevent the Secured Party from enforcing its rights and remedies (including, without limitation, by filing a civil action) with respect to the IP Collateral and/or the Grantor in any other jurisdiction which the Secured Party deems necessary or appropriate in order to realize on the IP Collateral or to otherwise enforce the Secured Party’s rights against the Grantor or the IP Collateral.

SECTION 18.          JURY TRIAL. AS A MATERIAL INDUCEMENT FOR THE SECURED PARTY TO MAKE FINANCIAL ACCOMMODATIONS TO THE GRANTOR, THE GRANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS AGREEMENT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION.

SECTION 19.          Severability. If any provision of this Agreement is, for any reason, deemed to be invalid or unenforceable, the remaining provisions of this Agreement will nevertheless be valid and enforceable and will remain in full force and effect. Any provision of this Agreement that is held invalid or unenforceable by a court of competent jurisdiction will be deemed modified to the extent necessary to make it valid and enforceable and as so modified will remain in full force and effect.

SECTION 20.          Amendment and Waiver. This Agreement may be amended, or any provision of this Agreement may be waived, provided that any such amendment or waiver will be binding on a party hereto only if such amendment or waiver is set forth in a writing executed by the parties hereto. The waiver by any such party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other breach. The Secured Party’s failure to exercise any right, remedy or option under this Agreement or other agreement between the Secured Party and the Grantor or delay by the Secured Party in exercising the same will not operate as a waiver. No waiver by the Secured Party shall affect its right to require strict performance of this Agreement.

SECTION 21.         Liability of Grantor. The Grantor and any subsidiary that becomes a party hereto under SECTION 14 hereof are and shall be jointly and severally liable for any and all Obligations.

8

EXHIBIT 10.9

SECTION 22.          Entire Agreement. This Agreement and the other documents or agreements delivered in connection herewith set forth the entire understanding of the parties with respect to the subject matter hereof, and shall not be modified or affected by any offer, proposal, statement or representation, oral or written, made by or for any party in connection with the negotiation of the terms hereof, and may be modified only by instruments signed by all of the parties hereto.

SECTION 23.         Counterparts. This Agreement may be executed and delivered by exchange of facsimile signatures of the Secured Party and the Grantor, and those signatures need not be affixed to the same copy. This Agreement may be executed in any number of counterparts.

SECTION 24.         Amended and Restated. This Agreement amends and restates in its entirety (and is given in substitution for but not in satisfaction of) the Patent Security Agreement. It is not the intention of the Grantor or the Secured Party to effectuate a novation of any obligations arising under the Patent Security Agreement.

[remainder of page intentionally blank]

9

IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Patent Security Agreement as of the date first above written.

GRANTOR:
NEOMEDIA TECHNOLOGIES INC.,
a Delaware corporation
By:	/s/ Laura Marriott
Name:	Laura Marriott
Title:	CEO

IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Patent Security Agreement as of the date first above written.

SECURED PARTY:
YA GLOBAL INVESTMENTS, L.P.,
a Cayman Islands exempt limited partnership
By:	Yorkville Advisors, LLC,
	its Investment Manager
	By:	/s/ Jerry Eicke
	Name:	Jerry Eicke
	Title:	Managing Member

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Laura A. Marriott, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 of NeoMedia Technologies, Inc.

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.  The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 28, 2013	By:	/s/ Laura A. Marriott
		Laura A. Marriott
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Barry S. Baer, certify that:

1.   I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2013 of NeoMedia Technologies, Inc.

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report.

4.   The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; and

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; and

(c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting.

5.   The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: October 28, 2013	By:	/s/ Colonel Barry S. Baer
		Colonel (Ret.) Barry S. Baer
		Chief Financial Officer and Principal Financial and Accounting Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of NeoMedia Technologies, Inc., a Delaware corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2013 as filed with the Securities and Exchange Commission (the “Report”), Laura A. Marriott, does hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to her knowledge:

1.              The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.              The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

/s/   Laura A. Marriott

Laura A. Marriott

Chief Executive Officer,

Principal Executive Officer

October 28, 2013

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report of NeoMedia Technologies, Inc., a Delaware corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2013 as filed with the Securities and Exchange Commission (the “Report”), Barry S. Baer, does hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), that to his knowledge:

1.              The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.              The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

/s/ Colonel Barry S. Baer

Colonel (Ret.) Barry S. Baer, Chief Financial Officer and Principal Financial and Accounting Officer,

October 28, 2013

XML

Accrued Liabilities (Tables)

9 Months Ended

Sep. 30, 2013

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities [Table Text Block]

Accrued liabilities consist of the following as of September 30, 2013 and December 31, 2012:

	September 30,		December 31,
	2013		2012
	(in thousands)
Accrued operating expenses	$	223	$	347
Accrued payroll related expenses		51		6
Accrued interest		-		19
Accrued legal fees		260		27
Total	$	534	$	399

XML

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenue	$ 1,602	$ 680	$ 3,871	$ 1,867
Cost of revenues	300	639	600	667
Gross profit	1,302	41	3,271	1,200
Sales and marketing expenses	16	112	124	532
General and administrative expenses	723	313	2,245	2,226
Research and development costs	123	195	507	788
Other operating losses (gains)	0	0	(227)	0
Operating income (loss)	440	(579)	622	(2,346)
Impairment loss on cash surrender value of life insurance policy	0	(527)	0	(527)
Gain on derecognition of accrued expenses and purchase price guarantee	0	8,300	0	8,300
Gain (loss) on extinguishment of debt	53	0	53	(27,479)
Gain (loss) from change in fair value of hybrid financial instruments	(24,165)	6,353	(46,959)	11,958
Gain (loss) from change in fair value of derivative liability - warrants	92	4,897	3,503	5,818
Gain (loss) from change in fair value of derivative liability - Series C and D preferred stock and debentures	(2,620)	1,036	(4,769)	(13,262)
Interest income (expense)	0	(10)	16	(4,407)
Net income (loss)	(26,200)	19,470	(47,534)	(21,945)
Deemed dividends on convertible preferred stock	0	0	(16)	0
Deemed dividends on convertible debentures	(45)	0	(726)	0
Net income (loss) available to common shareholders	(26,245)	19,470	(48,276)	(21,945)
Comprehensive income (loss):
Net income (loss)	(26,200)	19,470	(47,534)	(21,945)
Other comprehensive gain (loss) - investment in GmbH and foreign currency adjustment	0	(3)	133	(18)
Comprehensive income (loss):	$ (26,200)	$ 19,467	$ (47,401)	$ (21,963)
Net income (loss) per common share, basic and diluted:
Basic (in dollars per share)	$ (0.005)	$ 0.013	$ (0.013)	$ (0.020)
Fully diluted (in dollars per share)	$ (0.005)	$ 0.004	$ (0.013)	$ (0.020)
Weighted average number of common shares:
Basic (in shares)	4,984,827,279	1,510,797,881	3,823,483,604	1,075,605,167
Fully diluted (in shares)	4,984,827,279	8,475,377,392	3,823,483,604	1,075,605,167

XML

Contingencies

9 Months Ended

Sep. 30, 2013

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 5 – Contingencies

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 effect on our financial position or operating results.

XML

Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012
Accrued operating expenses	$ 223		$ 347
Accrued payroll related expenses	51		6
Accrued interest	0		19
Accrued legal fees	260		27
Total	$ 534	$ 38	$ 399

XML

Financing (Tables)

9 Months Ended

Sep. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Significant Terms Debentures for Entire Hybrid Instrument [Table Text Block]

The follwoing table summarizes the significant terms of each of the debentures for which the entire hybrid instrument is recorded at fair value as of September 30, 2013:

							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	$	2,263	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2007		1,150	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2008		1,216	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2009		172	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2011		864	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2012		612	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2013		22,344	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2013		12,299	-		$	2.00	$	0.00019	95	%	125 Days
Total	$	40,920

Schedule of Number of Shares Issued Convertible Preferred Stock [Table Text Block]

The following table provides a summary of the preferred stock conversions that have occurred since inception and the number of common shares issued upon conversion.

	Preferred shares	Preferred shares	Preferred shares	Common shares
	issued	converted	remaining	issued
	(in thousands)
Series C Preferred Stock	22	17	5	314,619
Series D Preferred Stock	25	22	3	245,162

Schedule of Debt Conversions [Table Text Block]

The outstanding principal and accrued interest for the debentures as of September 30, 2013 is reflected in the following table in addition to the principal and interest converted since inception and the number of common shares issued upon conversion.

	Outstanding principal and accrued interest at September 30, 2013		Principal and accrued interest converted since inception		Common Shares issued
	(in thousands)
Debentures	$	43,665	$	11,747	4,403,415

Schedule of Activities of Compound Embedded Derivative [Table Text Block]

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 September 30, 2013 and December 31, 2012.

September 30, 2013
	Face		Carrying		Embedded Conversion		Common Stock
	Value		Value		Feature		Shares
	(in thousands)
Series C Preferred Stock	$	4,816	$	4,816	$	6,440	24,823,015
Series D Preferred Stock		348		348		465	1,794,330
Total	$	5,164	$	5,164	$	6,905	26,617,345

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

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

Gain (loss) from change in fair value of derivative liability – Series C and D Preferred Stock and debentures

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
	(in thousands)				(in thousands)
Series C Preferred Stock	$	(2,473)	$	918	$	(4,462)	$	(2,284)
Series D Preferred Stock		(178)		44		(322)		(1,302)
Debentures:
2006		31		74		15		(2,996)
2008		-		-		-		(1,350)
2009		-		-		-		(486)
2010		-		-		-		(34)
2011		-		-		-		(4,825)
2012		-		-		-		15
Gain (loss) from change in fair value of derivative liability	$	(2,620)	$	1,036	$	(4,769)	$	(13,262)

Schedule of Hybrid Financial Instrument Disclosure [Table Text Block]

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 September 30, 2013 and December 31, 2012.

September 30, 2013					Common
	Face		Fair		Stock
	Value		Value		Shares
	(in thousands)
Debentures:
2006	$	2,263	$	7,858	17,386,106
2007		1,150		3,001	6,707,442
2008		1,216		5,234	11,511,771
2009		172		876	1,919,461
2011		864		2,557	5,687,898
2012		612		1,786	3,974,950
2013		34,643		85,706	191,799,671
Total	$	40,920	$	107,018	238,987,299

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

Schedule of Fair Value Hybrid Financial Instrument Disclosure [Table Text Block]

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

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
	(in thousands)				(in thousands)
2006	$	11,069	$	902	$	5,754	$	2,637
2007		19,420		1,994		13,929		1,005
2008		16,569		1,914		9,930		5,465
2009		2,672		477		1,391		912
2010		9,693		799		7,178		1,695
2011		635		155		42		666
2012		1,483		427		523		740
2013		(85,706)		-		(85,706)		-
		(24,165)		6,668		(46,959)		13,120
Less: Day-one loss from debenture financings		-		(315)		-		(1,162)
Gain (loss) from changes in fair value of hybrid instruments	$	(24,165 )	$	6,353	$	(46,959 )	$	11,958

Schedule of Warrants Embedded Warrants Fair Value Outstanding and Anti-Dilutive Adjustment Disclosure [Table Text Block]

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

		September 30, 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	$	33	0.00684	328,947	$	709
Warrants issued with debentures:
2008	2015	0.000100	238,079		86	0.00684	896,382		1,691
2010	2015	0.000100	81,350		30	0.00684	306,287		571
2011	2016	0.000100	58,246		23	0.00684	219,298		453
2012	2017	0.000100	34,947		12	0.00684	131,579		263
Total			499,990	$	184		1,882,493	$	3,687

Schedule of Changes in Fair Value of Warrants [Table Text Block]

The changes in the fair value of the warrants were as follows:

Gain (loss) from change in fair value of derivative liability- warrants

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
	(in thousands)				(in thousands)
Warrants issued with preferred stock:
Series D Preferred Stock	$	16	$	847	$	675	$	795
Warrants issued with debentures:
2007		-		492		-		1,511
2008		44		2,107		1,605		2,657
2010		15		718		543		901
2011		11		565		431		566
2012		6		168		249		(612)
Total	$	92	$	4,897	$	3,503	$	5,818

Schedule of Reconciliation Changes in Fair Value of Financial Instruments and Hybrid Instruments Carried at Fair Value [Table Text Block]

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 nine months ended September 30, 2013:

	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		4,768		-		-		4,768
Warrant derivatives		-		(3,503)		-		(3,503)
Hybrid instruments		-		-		46,959		46,959
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, September 30, 2013	$	6,905	$	184	$	107,018	$	114,107

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Stock-Based Compensation (Details Textual) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Allocated Share-based Compensation Expense	$ 206	$ 1,000	$ 992	$ 15,000

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Financing (Details 2) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Debt Conversion [Line Items]
Debentures, Outstanding principal and accrued interest	$ 43,665
Debentures, Principal and accrued interest converted since inception	$ 11,747
Common shares issued (in shares)	4,403,415

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Financing (Details 1)	9 Months Ended
	Sep. 30, 2013
Series C Preferred Stock [Member]
Debt Conversion [Line Items]
Preferred shares issued	22
Preferred shares converted	17
Preferred shares remaining	5
Common shares issued	314,619
Series D Preferred Stock [Member]
Debt Conversion [Line Items]
Preferred shares issued	25
Preferred shares converted	22
Preferred shares remaining	3
Common shares issued	245,162

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Financing (Details 9) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Debt Conversion [Line Items]
Beginning balance, December 31, 2012:			$ 70,126
Fair value adjustments:
Compound embedded derivatives	2,620	(1,036)	4,769	13,262
Warrant derivatives	(92)	(4,897)	(3,503)	(5,818)
Hybrid instruments	24,165	(6,353)	46,959	(11,958)
Conversions:
Series C Preferred Stock			(10)
August 24, 2006 financing			(644)
December 29, 2006 financing			(503)
March 27, 2007 financing			(242)
April 11, 2008 financing			(71)
July 29, 2008 financing			(234)
October 18, 2008 financing			(23)
July 15, 2009 financing			(823)
August 14, 2009 financing			(475)
February 8, 2011 financing			(28)
April 13, 2011 financing			(199)
October 25, 2011 financing			(37)
December 8, 2011 financing			(217)
February 6, 2012 financing			(29)
March 26, 2012 financing			(141)
June 1, 2012 financing			(567)
Ending balance, September 30, 2013	114,107		114,107
Embedded Derivative Financial Instruments [Member]
Debt Conversion [Line Items]
Beginning balance, December 31, 2012:			2,147
Fair value adjustments:
Compound embedded derivatives			4,768
Warrant derivatives			0
Hybrid instruments			0
Conversions:
Series C Preferred Stock			(10)
August 24, 2006 financing			0
December 29, 2006 financing			0
March 27, 2007 financing			0
April 11, 2008 financing			0
July 29, 2008 financing			0
October 18, 2008 financing			0
July 15, 2009 financing			0
August 14, 2009 financing			0
February 8, 2011 financing			0
April 13, 2011 financing			0
October 25, 2011 financing			0
December 8, 2011 financing			0
February 6, 2012 financing			0
March 26, 2012 financing			0
June 1, 2012 financing			0
Ending balance, September 30, 2013	6,905		6,905
Warrant [Member]
Debt Conversion [Line Items]
Beginning balance, December 31, 2012:			3,687
Fair value adjustments:
Compound embedded derivatives			0
Warrant derivatives			(3,503)
Hybrid instruments			0
Conversions:
Series C Preferred Stock			0
August 24, 2006 financing			0
December 29, 2006 financing			0
March 27, 2007 financing			0
April 11, 2008 financing			0
July 29, 2008 financing			0
October 18, 2008 financing			0
July 15, 2009 financing			0
August 14, 2009 financing			0
February 8, 2011 financing			0
April 13, 2011 financing			0
October 25, 2011 financing			0
December 8, 2011 financing			0
February 6, 2012 financing			0
March 26, 2012 financing			0
June 1, 2012 financing			0
Ending balance, September 30, 2013	184		184
Hybrid Instrument [Member]
Debt Conversion [Line Items]
Beginning balance, December 31, 2012:			64,292
Fair value adjustments:
Compound embedded derivatives			0
Warrant derivatives			0
Hybrid instruments			46,959
Conversions:
Series C Preferred Stock			0
August 24, 2006 financing			(644)
December 29, 2006 financing			(503)
March 27, 2007 financing			(242)
April 11, 2008 financing			(71)
July 29, 2008 financing			(234)
October 18, 2008 financing			(23)
July 15, 2009 financing			(823)
August 14, 2009 financing			(475)
February 8, 2011 financing			(28)
April 13, 2011 financing			(199)
October 25, 2011 financing			(37)
December 8, 2011 financing			(217)
February 6, 2012 financing			(29)
March 26, 2012 financing			(141)
June 1, 2012 financing			(567)
Ending balance, September 30, 2013	$ 107,018		$ 107,018

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Geographic Information (Details Textual) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Assets	$ 5,624	$ 6,039
Germany [Member]
Assets	$ 78	$ 137

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Financing (Details 6) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Debt Conversion [Line Items]
Unrealized Gain On Hybrid Instrument	$ (24,165)	$ 6,668	$ (46,959)	$ 13,120
Less: Day-one loss from debenture financings	0	(315)	0	(1,162)
Gain (loss) from changes in fair value of hybrid instruments	(24,165)	6,353	(46,959)	11,958
Debentures 2006 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from changes in fair value of hybrid instruments	11,069	902	5,754	2,637
Debentures 2007 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from changes in fair value of hybrid instruments	19,420	1,994	13,929	1,005
Debentures 2008 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from changes in fair value of hybrid instruments	16,569	1,914	9,930	5,465
Debentures 2009 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from changes in fair value of hybrid instruments	2,672	477	1,391	912
Debentures 2010 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from changes in fair value of hybrid instruments	9,693	799	7,178	1,695
Debentures 2011 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from changes in fair value of hybrid instruments	635	155	42	666
Debentures 2012 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from changes in fair value of hybrid instruments	1,483	427	523	740
Debentures 2013 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from changes in fair value of hybrid instruments	$ (85,706)	$ 0	$ (85,706)	$ 0

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Financing (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Debt Conversion [Line Items]
Face Amount	$ 40,920
Debenture Issuance 2006 [Member]
Debt Conversion [Line Items]
Face Amount	2,263
Interest Rate	9.50%
Fixed Price	$ 2.00
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Anti-Dilution Adjusted Price	$ 0.00018
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance 2007 [Member]
Debt Conversion [Line Items]
Face Amount	1,150
Interest Rate	9.50%
Fixed Price	$ 2.00
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Anti-Dilution Adjusted Price	$ 0.00018
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance 2008 [Member]
Debt Conversion [Line Items]
Face Amount	1,216
Interest Rate	9.50%
Fixed Price	$ 2.00
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Anti-Dilution Adjusted Price	$ 0.00018
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance 2009 [Member]
Debt Conversion [Line Items]
Face Amount	172
Interest Rate	9.50%
Fixed Price	$ 2.00
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Anti-Dilution Adjusted Price	$ 0.00018
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance 2011 [Member]
Debt Conversion [Line Items]
Face Amount	864
Interest Rate	9.50%
Fixed Price	$ 2.00
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Anti-Dilution Adjusted Price	$ 0.00018
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance 2012 [Member]
Debt Conversion [Line Items]
Face Amount	612
Interest Rate	9.50%
Fixed Price	$ 2.00
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Anti-Dilution Adjusted Price	$ 0.00018
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance 2013 One [Member]
Debt Conversion [Line Items]
Face Amount	22,344
Interest Rate	9.50%
Fixed Price	$ 2.00
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Anti-Dilution Adjusted Price	$ 0.00018
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance 2013 Two [Member]
Debt Conversion [Line Items]
Face Amount	$ 12,299
Interest Rate	0.00%
Fixed Price	$ 2.00
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Anti-Dilution Adjusted Price	$ 0.00019
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Percentage	95.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days

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General

9 Months Ended

Sep. 30, 2013

General [Abstract]

General and Going Concern [Text Block]

Note 1 – General

Business –  NeoMedia Technologies, Inc., a Delaware corporation (“NeoMedia”, and also referred to herein as “us”, “we” and “our”), was founded in 1989 and is headquartered in Boulder, Colorado. We have pioneered 2D mobile barcode technology and infrastructure solutions that enable the mobile barcode ecosystem world-wide. NeoMedia strives to harness the power of mobile devices in innovative ways with state-of-the-art mobile barcode services and technology. With this technology, mobile phones with cameras become barcode scanners, which enable a range of practical applications including mobile marketing, mobile commerce and advertising. We also offer barcode management services, reader solutions as well as licensing of our Intellectual Property (“IP”) portfolio.

Going Concern – We have historically incurred operating losses, and we may continue to generate negative cash flows as we implement our business plan. 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 accounting principles generally accepted in the United States of America (“US GAAP”), which contemplates our continuation as a going concern. Our net loss for the nine months ended September 30, 2013 and 2012 was $47.5 million and $21.9 million, respectively, including $48.2 million and $23.0 million, respectively, of net losses related to our financing instruments. Our operating income was $0.6 million for the nine months ended September 30, 2013, and our operating loss was $2.3 million for the nine months ended September 30, 2012.

Net cash used by operations during the nine months ended September 30, 2013 and 2012 was $0.5 million and $1.4 million, respectively. As of September 30, 2013, we have an accumulated deficit of $312.9 million. We also have a working capital deficit of $117.4 million, including $114.1 million in current liabilities for our derivative and debenture financing instruments.

As of September 30, 2013, we do not have sufficient authorized shares of common stock available for issuance to satisfy the conversion rights under certain outstanding convertible debenture and series of preferred stock. If the holders of such debentures and preferred stock request the conversion of such holdings to common stock, we would be unable to respond to the request which would result in an event of default under such instruments. Although we are making best efforts to pursue options to be able to honor the conversion rights of the debenture holders and preferred stock, we can provide no assurance that we will be successful with these efforts.

The items discussed above raise doubt about our ability to continue as a going concern.

We currently do not 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 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 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. 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.

The 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 the three and nine months ended September 30, 2013, there were 75 million and 2,879 million shares of common stock issued for these conversions, respectively. We cannot predict if or when each holder may or may not elect to convert into common shares.

Our financial statements do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

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Accrued Liabilities

9 Months Ended

Sep. 30, 2013

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

 Note 3 – Accrued Liabilities

Accrued liabilities consist of the following as of September 30, 2013 and December 31, 2012:

	September 30,		December 31,
	2013		2012
	(in thousands)
Accrued operating expenses	$	223	$	347
Accrued payroll related expenses		51		6
Accrued interest		-		19
Accrued legal fees		260		27
Total	$	534	$	399

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 6 – Stock-Based Compensation

Total stock-based compensation expense recorded in the statement of operations was $206 and $1,000 for the three months ended September 30, 2013 and 2012, respectively, and $992 and $15,000 for the nine months ended September 30, 2013 and 2012, respectively.

A summary of the transactions and status of our granted, vested and exercisable options during the nine months ended September 30, 2013 follows:

							Weighted-
							Average
			Weighted-				Contractual
			Average		Aggregate		Life
			Exercise		Intrinsic		Remaining
	Shares		Price		Value		in Years
	(in thousands)				(in thousands)
Outstanding at December 31, 2012		1,340	$	0.017	$	-
Granted		-		-		-
Exercised		-		-		-
Forfeited		(167)		-		-
Outstanding at September 30, 2013		1,173	$	0.017	$	-		7.9
Exercisable at September 30, 2013		903	$	0.018	$	-		7.8

The following table summarizes information about our stock options outstanding at September 30, 2013:

Options Outstanding							Options Exercisable
			Weighted-
			Average		Weighted-				Weighted-
			Remaining		Average Exercise				Average
Exercise Prices	Number of Shares		Life		Price		Number of Shares		Exercise Price
	(in thousands)		(in years)				(in thousands)
$0.008		200		9.0	$	0.008		40	$	0.008
$0.014 - $0.017		884		7.8		0.015		774		0.016
$0.050		89		7.4		0.047		89		0.047
		1,173		7.9		0.017		903		0.018

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Financing

9 Months Ended

Sep. 30, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 4 – Financing

At September 30, 2013, financial instruments arising from our 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 Debentures – We 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 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.

The 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.

We evaluated the financing transactions in accordance with ASC 815, Derivatives and Hedging, and determined that the conversion features of the Series C and Series D preferred stock and the Consolidated Debentures were not afforded the exemption for conventional convertible instruments due to their variable conversion rates. The contracts have no explicit limit on the number of shares issuable, so they did not meet the conditions set forth in current accounting standards for equity classification. Accordingly, either the embedded derivative instruments, including the conversion option, must be bifurcated and accounted for as derivative instrument liabilities or, as permitted by ASC 815-15-25-4, Recognition of Embedded Derivatives, the instruments may be carried in their entirety at fair value.

At inception, we elected to bifurcate the embedded derivatives related to the Series C and Series D preferred stock, while electing the fair value option for the Consolidated Debentures. ASC 825, Financial Instruments, allows us to elect the fair value option for recording financial instruments when they are initially recognized or if there is an event that requires re-measurement of the instruments at fair value, such as a significant modification of the debt.

The terms of the debentures held by YA Global prior to the consolidation 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 common stock at the applicable conversion price. Because the effect of the modifications 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 as extinguishments, whereby the existing debentures are considered to be 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 nine months ended September 30, 2012.

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. 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.

Debentures assigned to other investors by YA Global were also modified effective July 1, 2013 to extend the maturity date to August 1, 2015 and revise the conversion price to the lower of $2.00 or 90% of the lowest volume-weighted average price for 125 days prior to the conversion.

 

The follwoing table summarizes the significant terms of each of the debentures for which the entire hybrid instrument is recorded at fair value as of September 30, 2013:

							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	$	2,263	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2007		1,150	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2008		1,216	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2009		172	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2011		864	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2012		612	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2013		22,344	9.5	%	$	2.00	$	0.00018	90	%	125 Days
2013		12,299	-		$	2.00	$	0.00019	95	%	125 Days
Total	$	40,920

We continue to bifurcate the compound embedded derivatives related to the Series C and Series D preferred stock and carry these financial instruments as liabilities in the accompanying balance sheet. Election to carry the instruments at fair value in their entirety is not available since their 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 value of the compound derivative liability are charged or credited to income each period.

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.

The following table provides a summary of the preferred stock conversions that have occurred since inception and the number of common shares issued upon conversion.

	Preferred shares	Preferred shares	Preferred shares	Common shares
	issued	converted	remaining	issued
	(in thousands)
Series C Preferred Stock	22	17	5	314,619
Series D Preferred Stock	25	22	3	245,162

The outstanding principal and accrued interest for the debentures as of September 30, 2013 is reflected in the following table in addition to the principal and interest converted since inception and the number of common shares issued upon conversion.

	Outstanding principal and accrued interest at September 30, 2013		Principal and accrued interest converted since inception		Common Shares issued
	(in thousands)
Debentures	$	43,665	$	11,747	4,403,415

As of September 30, 2013, we do not have sufficient authorized shares of common stock available for issuance to satisfy the conversion rights under certain outstanding convertible debenture and series of preferred stock. If the holders of such debentures and preferred stock request the conversion of such holdings to common stock, we would be unable to respond to the request which would request in an event of default under such instruments. Although we will pursue other options to increase the number of shares authorized for issuance in order to honor the conversion rights of the debentures and preferred stock, we can provide no assurance that we will be successful with these efforts.

Warrants – 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.

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.

Effective February 1, 2013, 1.4 billion of the 1.9 billion warrants held by YA Global were cancelled and the remaining 500 million had their exercise price reduced to $0.0001 per share. These changes resulted in a decrease in fair value of the warrants of approximately $1.6 million during the first quarter of 2013 as reflected in the gain (loss) from change in fair value of derivative liabilities-warrants.

Fair value disclosures for Series C and D Bifurcated Embedded Derivative Instruments – For financings in which the embedded derivative instruments are bifurcated and recorded separately, the compound embedded derivative instruments are valued using a Monte Carlo Simulation methodology because that model embodies certain relevant assumptions (including, but not limited to, interest rate risk, credit risk, and conversion/redemption privileges) that are necessary to value these complex derivatives.

The conversion price in each of the convertible debentures is subject to adjustment for down-round, anti-dilution protection. Accordingly, if we sell common stock or common share indexed financial instruments below the stated or variable conversion price of the debenture, the conversion price adjusts to that lower amount.

The assumptions included in the calculations are highly subjective and subject to interpretation. Assumptions used as of September 30, 2013 included exercise estimates/behaviors and the following other significant estimates: (i) Preferred Stock: remaining term of 1.84 years, equivalent volatility of 165%, equivalent interest rate of 8%, equivalent credit-risk adjusted rate of 6.31% 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.

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 September 30, 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).

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 September 30, 2013 and December 31, 2012.

September 30, 2013
	Face		Carrying		Embedded Conversion		Common Stock
	Value		Value		Feature		Shares
	(in thousands)
Series C Preferred Stock	$	4,816	$	4,816	$	6,440	24,823,015
Series D Preferred Stock		348		348		465	1,794,330
Total	$	5,164	$	5,164	$	6,905	26,617,345

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

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 September 30, 2013 and December 31, 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.

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 Gain (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.

 

Gain (loss) from change in fair value of derivative liability – Series C and D Preferred Stock and debentures

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
	(in thousands)				(in thousands)
Series C Preferred Stock	$	(2,473)	$	918	$	(4,462)	$	(2,284)
Series D Preferred Stock		(178)		44		(322)		(1,302)
Debentures:
2006		31		74		15		(2,996)
2008		-		-		-		(1,350)
2009		-		-		-		(486)
2010		-		-		-		(34)
2011		-		-		-		(4,825)
2012		-		-		-		15
Gain (loss) from change in fair value of derivative liability	$	(2,620)	$	1,036	$	(4,769)	$	(13,262)

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.

Because these debentures are carried in their entirety at fair value, the value of the embedded conversion feature is embodied in those fair values. We estimate the fair value of the hybrid instrument as the present value of the cash flows of the instrument, using a risk-adjusted interest rate, enhanced by the value of the conversion option, valued using a Monte Carlo model. This method was considered by our management to be the most appropriate 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 September 30, 2013 included: (i) present value of future cash flows for the debentures using a risk adjusted interest rate of 9.50% or zero if the instrument is non-interest bearing, (ii) remaining term of 1.84 years, (iii) equivalent volatility of 165%, equivalent interest rate of 9.5% or zero for non-interest bearing debt, equivalent credit-risk adjusted rate of 6.31% and anti-dilution adjusted conversion prices ranging from $0.00018 - $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 September 30, 2013 and December 31, 2012.

September 30, 2013					Common
	Face		Fair		Stock
	Value		Value		Shares
	(in thousands)
Debentures:
2006	$	2,263	$	7,858	17,386,106
2007		1,150		3,001	6,707,442
2008		1,216		5,234	11,511,771
2009		172		876	1,919,461
2011		864		2,557	5,687,898
2012		612		1,786	3,974,950
2013		34,643		85,706	191,799,671
Total	$	40,920	$	107,018	238,987,299

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:

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

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
	(in thousands)				(in thousands)
2006	$	11,069	$	902	$	5,754	$	2,637
2007		19,420		1,994		13,929		1,005
2008		16,569		1,914		9,930		5,465
2009		2,672		477		1,391		912
2010		9,693		799		7,178		1,695
2011		635		155		42		666
2012		1,483		427		523		740
2013		(85,706)		-		(85,706)		-
		(24,165)		6,668		(46,959)		13,120
Less: Day-one loss from debenture financings		-		(315)		-		(1,162)
Gain (loss) from changes in fair value of hybrid instruments	$	(24,165 )	$	6,353	$	(46,959 )	$	11,958

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

		September 30, 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	$	33	0.00684	328,947	$	709
Warrants issued with debentures:
2008	2015	0.000100	238,079		86	0.00684	896,382		1,691
2010	2015	0.000100	81,350		30	0.00684	306,287		571
2011	2016	0.000100	58,246		23	0.00684	219,298		453
2012	2017	0.000100	34,947		12	0.00684	131,579		263
Total			499,990	$	184		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 September 30, 2013 included an expected life equal to the remaining term of the warrants, an expected dividend yield of zero, estimated volatility ranging from 175% to 188%, and risk-free rates of return ranging from 0.02% to 0.63%. 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 $.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.

Changes in the fair value of the warrants are reported as (Gain) loss 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 (loss) from change in fair value of derivative liability- warrants

	Three months ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
	(in thousands)				(in thousands)
Warrants issued with preferred stock:
Series D Preferred Stock	$	16	$	847	$	675	$	795
Warrants issued with debentures:
2007		-		492		-		1,511
2008		44		2,107		1,605		2,657
2010		15		718		543		901
2011		11		565		431		566
2012		6		168		249		(612)
Total	$	92	$	4,897	$	3,503	$	5,818

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.

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 nine months ended September 30, 2013:

	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		4,768		-		-		4,768
Warrant derivatives		-		(3,503)		-		(3,503)
Hybrid instruments		-		-		46,959		46,959
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, September 30, 2013	$	6,905	$	184	$	107,018	$	114,107

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.

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Subsequent Events (Details Textual) (Ya Global [Member])	9 Months Ended
	Sep. 30, 2013
Ya Global [Member]
Subsequent Event [Line Items]
Debenture Redemption Agreement, Description	On October 11, 2013, we entered into a Debenture Redemption Agreement with YA Global. Under the agreement, we have the option to redeem outstanding amounts under the six secured convertible debentures issued by us and currently held by YA Global at a purchase price equal to 75% of the value of the amount being redeemed. The agreement may be terminated by either party upon 90 days’ written notice.

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Financing (Details 3) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Debt Conversion [Line Items]
Debentures, Carrying Value	$ 0	$ 53
Preferred Stock [Member]
Debt Conversion [Line Items]
Preferred stock, Face Value	5,164	5,188
Preferred stock, Carrying Value	5,164	5,188
Preferred Stock, Accrued Interest		0
Preferred Stock, Embedded Conversion Feature	6,905	2,131
Common Stock Shares (in shares)	26,617,345	990,410
Series C Preferred Stock [Member]
Debt Conversion [Line Items]
Preferred stock, Face Value	4,816	4,840
Preferred stock, Carrying Value	4,816	4,840
Preferred Stock, Accrued Interest		0
Preferred Stock, Embedded Conversion Feature	6,440	1,988
Common Stock Shares (in shares)	24,823,015	923,953
Series D Preferred Stock [Member]
Debt Conversion [Line Items]
Preferred stock, Face Value	348	348
Preferred stock, Carrying Value	348	348
Preferred Stock, Accrued Interest		0
Preferred Stock, Embedded Conversion Feature	465	143
Common Stock Shares (in shares)	1,794,330	66,457
Debentures 2006 Series [Member]
Debt Conversion [Line Items]
Debentures, Face Value		53
Debentures, Carrying Value		53
Debentures, Accrued Interest		7
Debentures, Embedded Conversion Feature		$ 16
Debentures, Common Stock Shares (in shares)		11,871

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Financing (Details 7) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Debt Conversion [Line Items]
Warrants	499,990	1,882,493
Fair Value	$ 184	$ 3,687
Series D Preferred Stock [Member]
Debt Conversion [Line Items]
Expiration Year	2017
Anti-Dilution Adjusted Exercise Price	$ 0.000100	$ 0.00684
Warrants	87,368	328,947
Fair Value	33	709
Warrants Issued with Debentures 2008 [Member]
Debt Conversion [Line Items]
Expiration Year	2015
Anti-Dilution Adjusted Exercise Price	$ 0.000100	$ 0.00684
Warrants	238,079	896,382
Fair Value	86	1,691
Warrants Issued with Debentures 2010 [Member]
Debt Conversion [Line Items]
Expiration Year	2015
Anti-Dilution Adjusted Exercise Price	$ 0.000100	$ 0.00684
Warrants	81,350	306,287
Fair Value	30	571
Warrants Issued with Debentures 2011 [Member]
Debt Conversion [Line Items]
Expiration Year	2016
Anti-Dilution Adjusted Exercise Price	$ 0.000100	$ 0.00684
Warrants	58,246	219,298
Fair Value	23	453
Warrants Issued with Debentures 2012 [Member]
Debt Conversion [Line Items]
Expiration Year	2017
Anti-Dilution Adjusted Exercise Price	$ 0.000100	$ 0.00684
Warrants	34,947	131,579
Fair Value	$ 12	$ 263

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Stock-Based Compensation (Details 1) (USD $)	9 Months Ended
	Sep. 30, 2013
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number of Shares (in shares)	1,173
Options Outstanding, Weighted - Average Remaining Life (in years)	7 years 10 months 24 days
Options Outstanding, Weighted - Average Exercise Price (in dollars per share)	$ 0.017
Options Exercisable, Number of Shares (in shares)	903
Options Exercisable, Weighted - Average Exercise Price (in dollars per share)	$ 0.018
Stock Option Plan Exercise Range 0.008 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number of Shares (in shares)	200
Options Outstanding, Weighted - Average Remaining Life (in years)	9 years
Options Outstanding, Weighted - Average Exercise Price (in dollars per share)	$ 0.008
Options Exercisable, Number of Shares (in shares)	40
Options Exercisable, Weighted - Average Exercise Price (in dollars per share)	$ 0.008
Stock Option Plan Exercise Range 0.014 to 0.017 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number of Shares (in shares)	884
Options Outstanding, Weighted - Average Remaining Life (in years)	7 years 9 months 18 days
Options Outstanding, Weighted - Average Exercise Price (in dollars per share)	$ 0.015
Options Exercisable, Number of Shares (in shares)	774
Options Exercisable, Weighted - Average Exercise Price (in dollars per share)	$ 0.016
Stock Option Plan Exercise Range 0.05 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding, Number of Shares (in shares)	89
Options Outstanding, Weighted - Average Remaining Life (in years)	7 years 4 months 24 days
Options Outstanding, Weighted - Average Exercise Price (in dollars per share)	$ 0.047
Options Exercisable, Number of Shares (in shares)	89
Options Exercisable, Weighted - Average Exercise Price (in dollars per share)	$ 0.047

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	5,000,000,000	5,000,000,000
Common stock, shares issued	4,984,827,279	2,106,035,882
Common stock, shares outstanding	4,984,827,279	2,106,035,882
Treasury stock, shares	2,012	2,012
Series C Convertible Preferred Stock [Member]
Convertible preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized	27,000	27,000
Convertible preferred stock, shares issued	4,816	4,840
Convertible preferred stock, shares outstanding	4,816	4,840
Convertible preferred stock, liquidation value (in dollars)	$ 4,816	$ 4,480
Series D Convertible Preferred Stock [Member]
Convertible preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized	25,000	25,000
Convertible preferred stock, shares issued	3,481	3,481
Convertible preferred stock, shares outstanding	3,481	3,481
Convertible preferred stock, liquidation value (in dollars)	$ 348	$ 348

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General (Policies)

9 Months Ended

Sep. 30, 2013

General [Abstract]

Liquidity Disclosure [Policy Text Block]

Going Concern – We have historically incurred operating losses, and we may continue to generate negative cash flows as we implement our business plan. 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 accounting principles generally accepted in the United States of America (“US GAAP”), which contemplates our continuation as a going concern. Our net loss for the nine months ended September 30, 2013 and 2012 was $47.5 million and $21.9 million, respectively, including $48.2 million and $23.0 million, respectively, of net losses related to our financing instruments. Our operating income was $0.6 million for the nine months ended September 30, 2013, and our operating loss was $2.3 million for the nine months ended September 30, 2012.

Net cash used by operations during the nine months ended September 30, 2013 and 2012 was $0.5 million and $1.4 million, respectively. As of September 30, 2013, we have an accumulated deficit of $312.9 million. We also have a working capital deficit of $117.4 million, including $114.1 million in current liabilities for our derivative and debenture financing instruments.

As of September 30, 2013, we do not have sufficient authorized shares of common stock available for issuance to satisfy the conversion rights under certain outstanding convertible debenture and series of preferred stock. If the holders of such debentures and preferred stock request the conversion of such holdings to common stock, we would be unable to respond to the request which would result in an event of default under such instruments. Although we are making best efforts to pursue options to be able to honor the conversion rights of the debenture holders and preferred stock, we can provide no assurance that we will be successful with these efforts.

The items discussed above raise doubt about our ability to continue as a going concern.

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Condensed Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash Flows from Operating Activities:
Net income (loss)	$ (47,534)	$ (21,945)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	325	647
(Gain) loss on extinguishment of debt	(53)	27,479
Gain on derecognition of accrued expenses and purchase price guarantee	0	(8,300)
(Gain) loss from change in fair value of hybrid financial instruments	46,959	(11,958)
(Gain) loss from change in fair value of derivative liability - warrants	(3,503)	(5,818)
(Gain) loss from change in fair value of derivative liability - Series C and D preferred stock and debentures	4,769	13,262
Interest expense related to convertible debt	0	4,407
Stock-based compensation expense	1	15
Impairment loss on cash surrender value of life insurance policy	0	527
Changes in operating assets and liabilities:
Trade accounts receivable	(386)	107
Prepaid expenses and other assets	59	(26)
Accounts payable and accrued expenses	52	(243)
Deferred revenue and customer prepayments	(1,225)	469
Net cash used in operating activities	(536)	(1,377)
Cash Flows from Investing Activities:
Acquisition of property and equipment	0	(5)
Net cash used in investing activities	0	(5)
Cash Flows from Financing Activities:
Borrowing under short-term notes payable	110	110
Payments on short-term notes payable	(27)	0
Borrowing under convertible debt instruments	0	2,500
Net cash provided by financing activities	83	2,610
Effect of exchange rate changes on cash	(1)	18
Net change in cash and cash equivalents	(454)	1,246
Cash and cash equivalents, beginning of period	611	30
Cash and cash equivalents, end of period	157	1,276
Supplemental cash flow information:
Series C preferred stock converted to common stock	24	878
Series D preferred stock converted to common stock	0	2,342
Convertible debentures converted to common stock	4,233	13,825
Deemed dividend on Series C preferred stock issued	16	0
Deemed dividend on convertible debentures converted	$ 726	$ 0

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 157	$ 611
Trade accounts receivable	613	217
Prepaid expenses and other assets	132	120
Total current assets	902	948
Property and equipment, net	21	44
Goodwill	3,418	3,418
Proprietary software, net	0	99
Patents and other intangible assets, net	1,283	1,490
Other long term assets	0	40
Total assets	5,624	6,039
LIABILITIES AND SHAREHOLDERS' DEFICIT
Accounts payable	377	506
Accrued expenses	534	399
Deferred revenue and customer prepayments	2,509	3,735
Notes payable	83	50
Deferred tax liability	706	706
Derivative financial instruments - warrants	184	3,687
Derivative financial instruments - Series C and D preferred stock and debentures payable	6,905	2,147
Debentures payable - carried at amortized cost	0	53
Debentures payable - carried at fair value	107,018	64,292
Total current liabilities	118,316	75,575
Commitments and contingencies	0	0
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 September 30, 2013 and December 31, 2012, respectively	4,985	2,106
Additional paid in capital	190,946	188,814
Accumulated deficit	(312,906)	(264,630)
Accumulated other comprehensive loss	(102)	(235)
Treasury stock, at cost, 2,012 shares of common stock	(779)	(779)
Total shareholders' deficit	(117,856)	(74,724)
Total liabilities and shareholders' deficit	5,624	6,039
Series C Convertible Preferred Stock [Member]
LIABILITIES AND SHAREHOLDERS' DEFICIT
Preferred stock	4,816	4,840
Series D Convertible Preferred Stock [Member]
LIABILITIES AND SHAREHOLDERS' DEFICIT
Preferred stock	$ 348	$ 348

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Financing (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	$ (2,620)	$ 1,036	$ (4,769)	$ (13,262)
Series C Preferred Stock [Member]
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	(2,473)	918	(4,462)	(2,284)
Series D Preferred Stock [Member]
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	(178)	44	(322)	(1,302)
Debentures 2006 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	31	74	15	(2,996)
Debentures 2008 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	0	0	0	(1,350)
Debentures 2009 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	0	0	0	(486)
Debentures 2010 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	0	0	0	(34)
Debentures 2011 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	0	0	0	(4,825)
Debentures 2012 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	$ 0	$ 0	$ 0	$ 15

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Summary of Significant Accounting Policies (Details Textual) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended				6 Months Ended	9 Months Ended
	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Sep. 30, 2012	Jun. 30, 2013	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	513,342,555					513,342,555
General and Administrative Expense	$ 723			$ 313	$ 51	$ 2,245	$ 2,226
Net Income (Loss) Attributable to Parent	(26,200)			19,470	21,335	(47,534)	(21,945)
Earnings Per Share, Diluted	$ (0.005)			$ 0.004	$ 0.007	$ (0.013)	$ (0.020)
Deemed Dividends on Convertible Debentures		681			16
Net Income (Loss) Available to Common Stockholders, Basic	(26,245)	31,069		19,470	22,032	(48,276)	(21,945)
Accounts Payable, Current	377	163			163	377		506
Accrued Liabilities, Current	534	38			38	534		399
Accumulated Other Comprehensive Income (Loss), Net of Tax	102	99			99	102		235
Other Comprehensive Income (Loss), Net of Tax		223		22	334	133
Comprehensive Income (Loss), Net of Tax, Attributable to Parent	(26,200)	30,350		19,467	21,202	(47,401)	(21,963)
Effect of Exchange Rate on Cash			113		334
Net Cash Provided by (Used in) Operating Activities			547		541	(536)	(1,377)
Cash, Period Increase (Decrease)			$ 2,000		$ 0

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Geographic Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Segment Reporting, Revenue Reconciling Item [Line Items]
Total revenue	$ 1,602	$ 680	$ 3,871	$ 1,867
United States [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	1,602	598	3,806	1,759
Germany [Member]
Segment Reporting, Revenue Reconciling Item [Line Items]
Revenues	$ 0	$ 82	$ 65	$ 108

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Financing (Details Textual) (USD $) In Millions, except Share data, unless otherwise specified	9 Months Ended			9 Months Ended				9 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	May 25, 2012	Sep. 30, 2013 Maximum [Member]	Sep. 30, 2013 Minimum [Member]	Sep. 30, 2013 Debenture [Member]	Sep. 30, 2013 Bifurcated Embedded Derivative Instruments [Member]	Sep. 30, 2013 Debentures Transferred by Ya Global [Member]	Mar. 31, 2013 Ya Global [Member]	Sep. 30, 2013 Ya Global [Member]
Debt Conversion [Line Items]
Name of Accredited Investor	YA Global
Ownership Stock Issued on Conversation of Debt, Maximum	9.99%
Debt Instrument, Interest Rate, Stated Percentage	9.50%		9.50%
Debt Instrument, Maturity Date	Aug. 01, 2013							Jul. 29, 2008		Aug. 01, 2015
Credit Risk Adjusted Rate	6.31%
Fair Value Assumptions, Expected Volatility Rate	165.00%			188.00%	175.00%
Fair Value Assumptions, Risk Free Interest Rate, Minimum	8.00%				0.02%
Fair Value Assumptions, Risk Free Interest Rate, Maximum				0.63%
Antidilution Adjusted Conversion Price, Minimum						$ 0.00018
Antidilution Adjusted Conversion Price, Maximum						$ 0.00019
Embedded Convertible Preferred Stock Terms of Conversion	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 September 30, 2013 and December 31, 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.
Preferred Stock Remaining Term	1 year 10 months 2 days
Extinguishment of Debt, Gain (Loss), Income Tax		$ 27.5
Debt Instrument, Convertible, Conversion Price							$ 0.000194			$ 2.00
Debt Instrument Convertible Conversion Price percentage										90.00%
Debt Conversion, Description										125 days prior to the conversion.
Warrants Held by Investors									1,400,000,000
Warrants Cancelled by Investors									1,900,000,000
Remaining Warrants by Investors									500,000,000
Warrants Exercise Price	$ 0.0001								$ 0.0001
Decrease in Fair Value of Warrants									$ 1.6

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Stock-Based Compensation (Details) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares, Outstanding at December 31, 2012 (in shares)	1,340
Shares, Granted (in shares)	0
Shares, Exercised (in shares)	0
Shares, Forfeited (in shares)	(167)
Shares, Outstanding at September 30, 2013 (in shares)	1,173
Shares, Exercisable at September 30, 2013 (in shares)	903
Weighted-Average Exercise Price, Outstanding at December 31, 2012 (in dollars per share)	$ 0.017
Weighted-Average Exercise Price, Granted (in dollars per share)	$ 0
Weighted-Average Exercise Price, Exercised (in dollars per share)	$ 0
Weighted-Average Exercise Price, Forfeited (in dollars per share)	$ 0
Weighted-Average Exercise Price, Outstanding at September 30, 2013 (in dollars per share)	$ 0.017
Weighted-Average Exercise Price, Exercisable at September 30, 2013 (in dollars per share)	$ 0.018
Aggregate Intrinsic Value, Outstanding at September 30, 2013	$ 0
Aggregate Intrinsic Value, Exercisable at September 30, 2013	$ 0
Weighted-Average Contractual Life Remaining in Years, Outstanding at September 30, 2013	7 years 10 months 24 days
Weighted-Average Contractual Life Remaining in Years, Exercisable at September 30, 2013	7 years 9 months 18 days

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Subsequent Events

9 Months Ended

Sep. 30, 2013

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 8 – Subsequent Events

On October 11, 2013, we entered into a Debenture Redemption Agreement with YA Global. Under the agreement, we have the option to redeem outstanding amounts under the six secured convertible debentures issued by us and currently held by YA Global at a purchase price equal to 75% of the value of the amount being redeemed. The agreement may be terminated by either party upon 90 days’ written notice.

On October 25, 2013, we entered into an Amended and Restated Patent Security Agreement with YA Global. Under the agreement, a security interest in our IP Collateral as defined in the agreement was granted to YA Global in connection with our obligations to YA Global.

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Financing (Details 5) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Debt Conversion [Line Items]
Face Value	$ 40,920	$ 28,887
Fair Value	107,018	64,292
Common Stock Shares	238,987,299	22,696,138
Debentures 2006 Series [Member]
Debt Conversion [Line Items]
Face Value	2,263	6,180
Fair Value	7,858	14,758
Common Stock Shares	17,386,106	5,196,283
Debentures 2007 Series [Member]
Debt Conversion [Line Items]
Face Value	1,150	6,856
Fair Value	3,001	17,172
Common Stock Shares	6,707,442	6,098,480
Debentures 2008 Series [Member]
Debt Conversion [Line Items]
Face Value	1,216	6,468
Fair Value	5,234	15,492
Common Stock Shares	11,511,771	5,487,497
Debentures 2009 Series [Member]
Debt Conversion [Line Items]
Face Value	172	1,644
Fair Value	876	3,565
Common Stock Shares	1,919,461	1,243,390
Debentures 2010 Series [Member]
Debt Conversion [Line Items]
Face Value		3,806
Fair Value		7,178
Common Stock Shares		2,512,724
Debentures 2011 Series [Member]
Debt Conversion [Line Items]
Face Value	864	1,954
Fair Value	2,557	3,080
Common Stock Shares	5,687,898	1,084,237
Debentures 2012 Series [Member]
Debt Conversion [Line Items]
Face Value	612	1,979
Fair Value	1,786	3,047
Common Stock Shares	3,974,950	1,073,527
Debentures 2013 Series [Member]
Debt Conversion [Line Items]
Face Value	34,643
Fair Value	$ 85,706
Common Stock Shares	191,799,671

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2013

Earnings Per Share [Abstract]

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The components of basic and diluted income (loss) per share attributable to NeoMedia Technologies, Inc. common stock shareholders were as follows (in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Numerator:
Net income (loss) available to common shareholders	$	(26,245)	$	19,470	$	(48,276)	$	(21,945)
Effect of dilutive securities
Change in fair value of derivative liability    Series C and D preferred stock and    debentures		-		1,036		-		-
Change in fair value of derivative liability -     warrants		-		4,897		-		-
Change in fair value of hybrid financial     instruments		-		6,353		-		-
Interest expense on convertible debt		-		(10)		-		-
Numerator for diluted income (loss) per    common share	$	(26,245)	$	31,746	$	(48,276)	$	(21,945)
Denominator
Weighted average shares used to compute basic    income (loss) per common share		4,984,827,279		1,510,797,881		3,823,483,604		1,075,605,167
Effect of dilutive securities:
Derivative warrants		-		1,091,953,786		-		-
Convertible debentures		-		5,129,818,595		-		-
Convertible preferred stock		-		742,807,130		-		-
Denominator for diluted Income (loss) per    common share		4,984,827,279		8,475,377,392		3,823,483,604		1,075,605,167
Basic income (loss) per common share	$	(0.005)	$	0.013	$	(0.013)	$	(0.020)
Diluted income (loss) per common share	$	(0.005)	$	0.004	$	(0.013)	$	(0.020)

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Geographic Information

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 7 – Geographic Information

Revenue, classified by geographic location from which the revenue was originated, was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
United States	$	1,602	$	598	$	3,806	$	1,759
Germany		-		82		65		108
Total revenue	$	1,602	$	680	$	3,871	$	1,867

Approximately $78,000 and $137,000 of total assets were located in Germany as of September 30, 2013 and December 31, 2012, respectively. All other assets were located in the U.S.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Significant Accounting Policies [Text Block]

Note 2 – Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared without audit pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures made are adequate to make the information not misleading. We believe these statements include all adjustments, which are of a normal and recurring nature, considered necessary for a fair presentation of the financial statements. The unaudited condensed consolidated financial statements included herein should be read in conjunction with the financial statements and notes thereto included in our annual report on Form 10-K filed with the SEC on April 1, 2013.  The results of operations for the nine months ended September 30, 2013 are not necessarily indicative of the results to be expected for the full year.

Basis of Presentation – The condensed consolidated financial statements include the accounts of NeoMedia Technologies, Inc. and its wholly-owned subsidiary. We operate as one reportable segment. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates – The preparation of the condensed 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. Actual results could differ from those estimates. Changes in facts and circumstances may result in revised estimates, which are recorded in the period in which they become known.

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 included, among other things, the termination of the hardware business and 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 of the change in functional currency, translation gains and losses associated with the conversion of the NeoMedia Europe GmbH financial statements will be prospectively recorded in our results from operations effective July 1, 2013.

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 internally developed software.

We recognized revenue when: (a) persuasive evidence of the sales arrangement 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 (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 agreements, whereby continued performance or future obligations are considered inconsequential to the relevant license technology, are recognized as revenue upon delivery of the technology. We 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 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.

Revisions to 2013 Interim Reporting – In connection with the completion of our third quarter 2013 reporting, we identified certain errors associated with our first and second quarter 2013 interim reporting. We assessed the impact of these errors and concluded that the errors did not result in a material misstatement. To correct the errors, we have revised our nine months ended September 30, 2013 reporting as discussed below. Our assessment considered the guidance provided by Accounting Standards Codification (ASC) Topic 250, Accounting Changes and Error Corrections and ASC Topic 250-10-S99-1, Assessing Materiality. Based on our conclusion that the errors were not material individually or in aggregate to any of the prior reporting periods, we determined amendments to previously filed financial statement reports were not required in accordance with the applicable ASC guidance. We also concluded that the revisions applicable to prior periods should be reflected herein and will be reflected in future filings containing such information.

The condensed consolidated statements of operations for the six months ended June 30, 2013 included a clerical error resulting in an understatement of general and administrative expenses of approximately $51,000. The revised net loss for the six months ended June 30, 2013 was $21,335,000, and there was no material effect on the basic and fully diluted net loss per share of $0.007. The previously reported condensed consolidated statements of operations for the three months ended March 31, 2013 and June 30, 2013 were properly stated.

As discussed in Note 4 – Financing, we are limited to issuing shares of common stock in connection with preferred stock and debenture conversions at no less than par value. The methodology used to determine the number of common stock shares issued for debentures and preferred stock is based upon the market value received for the shares issued, and any short-fall between the par value of the shares issued and the market value of the shares is recorded as a deemed dividend. During the three and six months ended June 30, 2013, the conversion of debentures and Series C Preferred Stock resulted in deemed dividends of $681,000 and $16,000, respectively, and the deemed dividend amounts were not reflected in the net loss available to common shareholders. The revised net loss available to common shareholders reflecting the inclusion of the deemed dividends was $31,069,000 and $22,032,000 for the three and six months ended June 30, 2013, respectively. The revised net loss available to common shareholders for the six months ended June 30, 2013 includes the impact of the correction to the general and administrative expenses noted in the above paragraph.

The condensed consolidated balance sheet as of June 30, 2013 included certain errors in connection with our consolidation of NeoMedia Europe GmbH. As a result of the errors, accounts payable and accrued expenses were understated by $163,000 and $38,000, respectively, as of June 30, 2013. Additionally, the accumulated other comprehensive income (loss) reported within shareholders’ deficit reflected income of $99,000 but should have reflected a loss of $102,000. The condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2013 reflected other comprehensive losses of $223,000 and $334,000, respectively, but should have reflected other comprehensive gains of $22,000 and $133,000, respectively. The revised comprehensive losses for the three and six months ended June 30, 2013 were $30,350,000 and $21,202,000, respectively. The revised comprehensive loss for the six months ended June 30, 2013 includes the impact of the correction to the general and administrative expenses noted in the above paragraph.

The condensed consolidated statements of cash flows for the three months ended March 31, 2013 overstated net cash used in operating activities and effect of exchange rate changes on cash by approximately $113,000. The revised net cash used in operating activities was approximately $547,000 and the effect of exchange rate changes on cash was negative $2,000. The condensed consolidated statements of cash flows for the six months ended June 30, 2013 overstated net cash used in operating activities and effect of exchange rate changes on cash by approximately $334,000. The revised net cash used in operating activities was approximately $541,000 and the effect of exchange rate changes on cash was $0.

Basic and Diluted Net Income (Loss) Per Common Share – The components of basic and diluted income (loss) per share attributable to NeoMedia Technologies, Inc. common stock shareholders were as follows (in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Numerator:
Net income (loss) available to common shareholders	$	(26,245)	$	19,470	$	(48,276)	$	(21,945)
Effect of dilutive securities
Change in fair value of derivative liability    Series C and D preferred stock and    debentures		-		1,036		-		-
Change in fair value of derivative liability -     warrants		-		4,897		-		-
Change in fair value of hybrid financial     instruments		-		6,353		-		-
Interest expense on convertible debt		-		(10)		-		-
Numerator for diluted income (loss) per    common share	$	(26,245)	$	31,746	$	(48,276)	$	(21,945)
Denominator
Weighted average shares used to compute basic    income (loss) per common share		4,984,827,279		1,510,797,881		3,823,483,604		1,075,605,167
Effect of dilutive securities:
Derivative warrants		-		1,091,953,786		-		-
Convertible debentures		-		5,129,818,595		-		-
Convertible preferred stock		-		742,807,130		-		-
Denominator for diluted Income (loss) per    common share		4,984,827,279		8,475,377,392		3,823,483,604		1,075,605,167
Basic income (loss) per common share	$	(0.005)	$	0.013	$	(0.013)	$	(0.020)
Diluted income (loss) per common share	$	(0.005)	$	0.004	$	(0.013)	$	(0.020)

We excluded 513,342,555 dilutive securities from the calculation of diluted income (loss) per common share for the three months and nine months ended September 30, 2013 because inclusion of these securities would be antidilutive. 

Recent Accounting Pronouncements

In 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.

In March 2013, the FASB issued ASU No. 2013-05, Liabilities (Topic 830): Parent’s Accounting for Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. The ASU is effective beginning after December 15, 2013 and requires the release of any cumulative translation adjustment into net income upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in foreign entity. We do not anticipate that the accounting pronouncement will have a material impact on our consolidated financial statements in future periods.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The ASU is effective for periods beginning after December 15, 2013 and standardizes the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. We do not anticipate that the accounting pronouncement will have a material impact on our consolidated financial statements in future periods.

From time to time, 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.

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Financing (Details 8) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Debt Conversion [Line Items]
Warrant derivatives	$ 92	$ 4,897	$ 3,503	$ 5,818
Series D Preferred Stock [Member]
Debt Conversion [Line Items]
Warrant derivatives	16	847	675	795
Warrants with Debenture Attached Series 2007 [Member]
Debt Conversion [Line Items]
Warrant derivatives	0	492	0	1,511
Warrants with Debenture Attached Series 2008 [Member]
Debt Conversion [Line Items]
Warrant derivatives	44	2,107	1,605	2,657
Warrants with Debenture Attached Series 2010 [Member]
Debt Conversion [Line Items]
Warrant derivatives	15	718	543	901
Warrants with Debenture Attached Series 2011 [Member]
Debt Conversion [Line Items]
Warrant derivatives	11	565	431	566
Warrants with Debenture Attached Series 2012 [Member]
Debt Conversion [Line Items]
Warrant derivatives	$ 6	$ 168	$ 249	$ (612)

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

A summary of the transactions and status of our granted, vested and exercisable options during the nine months ended September 30, 2013 follows:

							Weighted-
							Average
			Weighted-				Contractual
			Average		Aggregate		Life
			Exercise		Intrinsic		Remaining
	Shares		Price		Value		in Years
	(in thousands)				(in thousands)
Outstanding at December 31, 2012		1,340	$	0.017	$	-
Granted		-		-		-
Exercised		-		-		-
Forfeited		(167)		-		-
Outstanding at September 30, 2013		1,173	$	0.017	$	-		7.9
Exercisable at September 30, 2013		903	$	0.018	$	-		7.8

Schedule of Unvested Restricted Stock Units Roll Forward [Table Text Block]

The following table summarizes information about our stock options outstanding at September 30, 2013:

Options Outstanding							Options Exercisable
			Weighted-
			Average		Weighted-				Weighted-
			Remaining		Average Exercise				Average
Exercise Prices	Number of Shares		Life		Price		Number of Shares		Exercise Price
	(in thousands)		(in years)				(in thousands)
$0.008		200		9.0	$	0.008		40	$	0.008
$0.014 - $0.017		884		7.8		0.015		774		0.016
$0.050		89		7.4		0.047		89		0.047
		1,173		7.9		0.017		903		0.018

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2013

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation – The condensed consolidated financial statements include the accounts of NeoMedia Technologies, Inc. and its wholly-owned subsidiary. We operate as one reportable segment. All significant intercompany accounts and transactions have been eliminated.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates – The preparation of the condensed 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. Actual results could differ from those estimates. Changes in facts and circumstances may result in revised estimates, which are recorded in the period in which they become known.

Foreign Currency Transactions and Translations Policy [Policy Text Block]

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 included, among other things, the termination of the hardware business and 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 of the change in functional currency, translation gains and losses associated with the conversion of the NeoMedia Europe GmbH financial statements will be prospectively recorded in our results from operations effective July 1, 2013.

Revenue Recognition, Policy [Policy Text Block]

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 internally developed software.

We recognized revenue when: (a) persuasive evidence of the sales arrangement 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 (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 agreements, whereby continued performance or future obligations are considered inconsequential to the relevant license technology, are recognized as revenue upon delivery of the technology. We 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 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.

Revisions to 2013 Interim Reporting [Policy Text Block]

Revisions to 2013 Interim Reporting – In connection with the completion of our third quarter 2013 reporting, we identified certain errors associated with our first and second quarter 2013 interim reporting. We assessed the impact of these errors and concluded that the errors did not result in a material misstatement. To correct the errors, we have revised our nine months ended September 30, 2013 reporting as discussed below. Our assessment considered the guidance provided by Accounting Standards Codification (ASC) Topic 250, Accounting Changes and Error Corrections and ASC Topic 250-10-S99-1, Assessing Materiality. Based on our conclusion that the errors were not material individually or in aggregate to any of the prior reporting periods, we determined amendments to previously filed financial statement reports were not required in accordance with the applicable ASC guidance. We also concluded that the revisions applicable to prior periods should be reflected herein and will be reflected in future filings containing such information.

The condensed consolidated statements of operations for the six months ended June 30, 2013 included a clerical error resulting in an understatement of general and administrative expenses of approximately $51,000. The revised net loss for the six months ended June 30, 2013 was $21,335,000, and there was no material effect on the basic and fully diluted net loss per share of $0.007. The previously reported condensed consolidated statements of operations for the three months ended March 31, 2013 and June 30, 2013 were properly stated.

As discussed in Note 4 – Financing, we are limited to issuing shares of common stock in connection with preferred stock and debenture conversions at no less than par value. The methodology used to determine the number of common stock shares issued for debentures and preferred stock is based upon the market value received for the shares issued, and any short-fall between the par value of the shares issued and the market value of the shares is recorded as a deemed dividend. During the three and six months ended June 30, 2013, the conversion of debentures and Series C Preferred Stock resulted in deemed dividends of $681,000 and $16,000, respectively, and the deemed dividend amounts were not reflected in the net loss available to common shareholders. The revised net loss available to common shareholders reflecting the inclusion of the deemed dividends was $31,069,000 and $22,032,000 for the three and six months ended June 30, 2013, respectively. The revised net loss available to common shareholders for the six months ended June 30, 2013 includes the impact of the correction to the general and administrative expenses noted in the above paragraph.

The condensed consolidated balance sheet as of June 30, 2013 included certain errors in connection with our consolidation of NeoMedia Europe GmbH. As a result of the errors, accounts payable and accrued expenses were understated by $163,000 and $38,000, respectively, as of June 30, 2013. Additionally, the accumulated other comprehensive income (loss) reported within shareholders’ deficit reflected income of $99,000 but should have reflected a loss of $102,000. The condensed consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2013 reflected other comprehensive losses of $223,000 and $334,000, respectively, but should have reflected other comprehensive gains of $22,000 and $133,000, respectively. The revised comprehensive losses for the three and six months ended June 30, 2013 were $30,350,000 and $21,202,000, respectively. The revised comprehensive loss for the six months ended June 30, 2013 includes the impact of the correction to the general and administrative expenses noted in the above paragraph.

The condensed consolidated statements of cash flows for the three months ended March 31, 2013 overstated net cash used in operating activities and effect of exchange rate changes on cash by approximately $113,000. The revised net cash used in operating activities was approximately $547,000 and the effect of exchange rate changes on cash was negative $2,000. The condensed consolidated statements of cash flows for the six months ended June 30, 2013 overstated net cash used in operating activities and effect of exchange rate changes on cash by approximately $334,000. The revised net cash used in operating activities was approximately $541,000 and the effect of exchange rate changes on cash was $0.

Earnings Per Share, Policy [Policy Text Block]

Basic and Diluted Net Income (Loss) Per Common Share – The components of basic and diluted income (loss) per share attributable to NeoMedia Technologies, Inc. common stock shareholders were as follows (in thousands, except share and per share data):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
Numerator:
Net income (loss) available to common shareholders	$	(26,245)	$	19,470	$	(48,276)	$	(21,945)
Effect of dilutive securities
Change in fair value of derivative liability    Series C and D preferred stock and    debentures		-		1,036		-		-
Change in fair value of derivative liability -     warrants		-		4,897		-		-
Change in fair value of hybrid financial     instruments		-		6,353		-		-
Interest expense on convertible debt		-		(10)		-		-
Numerator for diluted income (loss) per    common share	$	(26,245)	$	31,746	$	(48,276)	$	(21,945)
Denominator
Weighted average shares used to compute basic    income (loss) per common share		4,984,827,279		1,510,797,881		3,823,483,604		1,075,605,167
Effect of dilutive securities:
Derivative warrants		-		1,091,953,786		-		-
Convertible debentures		-		5,129,818,595		-		-
Convertible preferred stock		-		742,807,130		-		-
Denominator for diluted Income (loss) per    common share		4,984,827,279		8,475,377,392		3,823,483,604		1,075,605,167
Basic income (loss) per common share	$	(0.005)	$	0.013	$	(0.013)	$	(0.020)
Diluted income (loss) per common share	$	(0.005)	$	0.004	$	(0.013)	$	(0.020)

We excluded 513,342,555 dilutive securities from the calculation of diluted income (loss) per common share for the three months and nine months ended September 30, 2013 because inclusion of these securities would be antidilutive. 

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

In 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.

In March 2013, the FASB issued ASU No. 2013-05, Liabilities (Topic 830): Parent’s Accounting for Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity. The ASU is effective beginning after December 15, 2013 and requires the release of any cumulative translation adjustment into net income upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in foreign entity. We do not anticipate that the accounting pronouncement will have a material impact on our consolidated financial statements in future periods.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The ASU is effective for periods beginning after December 15, 2013 and standardizes the presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. We do not anticipate that the accounting pronouncement will have a material impact on our consolidated financial statements in future periods.

From time to time, 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.

XML

Summary of Significant Accounting Policies (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Jun. 30, 2013	Sep. 30, 2013	Sep. 30, 2012
Numerator:
Net income (loss) available to common shareholders	$ (26,200)	$ 19,470	$ 21,335	$ (47,534)	$ (21,945)
Effect of dilutive securities
Change in fair value of derivative liability Series C and D preferred stock and debentures	(2,620)	1,036		(4,769)	(13,262)
Change in fair value of derivative liability - warrants	92	4,897		3,503	5,818
Change in fair value of hybrid financial instruments	(24,165)	6,353		(46,959)	11,958
Interest expense on convertible debt	0	(10)		16	(4,407)
Denominator
Weighted average shares used to compute basic income (loss) per common share (in shares)	4,984,827,279	1,510,797,881		3,823,483,604	1,075,605,167
Effect of dilutive securities:
Denominator for diluted Income (loss) per common share (in shares)	4,984,827,279	8,475,377,392		3,823,483,604	1,075,605,167
Basic income (loss) per common share (in dollars per share)	$ (0.005)	$ 0.013		$ (0.013)	$ (0.020)
Diluted income (loss) per common share (in dollars per share)	$ (0.005)	$ 0.004	$ 0.007	$ (0.013)	$ (0.020)
Numerator [Member]
Numerator:
Net income (loss) available to common shareholders	(26,245)	19,470		(48,276)	(21,945)
Effect of dilutive securities
Change in fair value of derivative liability Series C and D preferred stock and debentures	0	1,036		0	0
Change in fair value of derivative liability - warrants	0	4,897		0	0
Change in fair value of hybrid financial instruments	0	6,353		0	0
Interest expense on convertible debt	0	(10)			0
Numerator for diluted income (loss) per common share	$ (26,245)	$ 31,746		$ (48,276)	$ (21,945)
Denominator [Member]
Denominator
Weighted average shares used to compute basic income (loss) per common share (in shares)	4,984,827,279	1,510,797,881		3,823,483,604	1,075,605,167
Effect of dilutive securities:
Derivative warrants (in shares)	0	1,091,953,786		0	0
Convertible debentures (in shares)	0	5,129,818,595		0	0
Convertible preferred stock (in shares)	0	742,807,130		0	0
Denominator for diluted Income (loss) per common share (in shares)	4,984,827,279	8,475,377,392		3,823,483,604	1,075,605,167
Basic income (loss) per common share (in dollars per share)	$ (0.005)	$ 0.013		$ (0.013)	$ (0.020)
Diluted income (loss) per common share (in dollars per share)	$ (0.005)	$ 0.004		$ (0.013)	$ (0.020)

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Geographic Information (Tables)

9 Months Ended

Sep. 30, 2013

Segment Reporting [Abstract]

Geographic And Segment Reporting [Table Text Block]

Revenue, classified by geographic location from which the revenue was originated, was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
United States	$	1,602	$	598	$	3,806	$	1,759
Germany		-		82		65		108
Total revenue	$	1,602	$	680	$	3,871	$	1,867

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2013	Oct. 28, 2013
Document Information [Line Items]
Entity Registrant Name	NEOMEDIA TECHNOLOGIES INC
Entity Central Index Key	0001022701
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	NEOM
Entity Common Stock, Shares Outstanding		4,984,827,279
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2013
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2013

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General (Details Textual) (USD $) Share data in Millions, unless otherwise specified	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2013	Mar. 31, 2013	Sep. 30, 2012	Jun. 30, 2013	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Net Income (Loss) Attributable to Parent	$ 26,200,000		$ (19,470,000)	$ (21,335,000)	$ 47,534,000	$ 21,945,000
Derivative Instruments, Gain (Loss) on Derivative, Net					48,200,000	23,000,000
Net Cash Provided by (Used in) Operating Activities		(547,000)		(541,000)	536,000	1,377,000
Accumulated Deficit	312,906,000				312,906,000		264,630,000
Working Capital Deficit	117,400,000				117,400,000
Working Capital Related to Financing Instruments	114,100,000				114,100,000
Debt Conversion, Converted Instrument, Shares Issued (in shares)	75				2,879
Operating Income (Loss)	$ 440,000		$ (579,000)		$ 622,000	$ (2,346,000)