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 March 31, 2014

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 000-21743

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.)

1515 Walnut Street, Suite 100, 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

Shares outstanding of the Registrant’s common stock on April 25, 2014 was 4,984,827,279.

NeoMedia Technologies, Inc.

Form 10-Q

For the Quarterly Period Ended March 31, 2014

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	18
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	21
ITEM 4.	Controls and Procedures	21
PART II	Other Information	22
ITEM 1.	Legal Proceedings	22
ITEM 1A.	Risk Factors	22
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22
ITEM 3.	Defaults Upon Senior Securities	22
ITEM 4.	Mine Safety Disclosures	22
ITEM 5.	Other Information	22
ITEM 6.	Exhibits	23
Signatures		24

Page 2

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)

	March 31,			December 31,
	2014			2013
	(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents	$	266		$	267
Accounts receivable		386			295
Prepaid expenses and other current assets		88			107
Total current assets		740			669
Property and equipment, net		4			5
Goodwill		3,418			3,418
Patents and other intangible assets, net		1,144			1,213
Other long-term assets		20			-
Total assets	$	5,326		$	5,305
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	334		$	236
Accrued expenses		473			291
Deferred revenues and customer prepayments		1,971			2,252
Notes payable		28			56
Derivative financial instruments - warrants		247			684
Derivative financial instruments - Series C and D Convertible Preferred Stock and debentures payable		159			23,606
Debentures payable - carried at fair value		38,795			257,451
Total current liabilities		42,007			284,576
Commitments and contingencies		-			-
Series C convertible preferred stock, $0.01 par value, 27,000 shares authorized, 4,816 shares issued and outstanding and a liquidation value of $4,816 at March 31, 2014 and December 31, 2013		4,816			4,816
Series D convertible preferred stock, $0.01 par value, 25,000 shares authorized, 3,481 shares issued and outstanding with a liquidation value of $348 at March 31, 2014 and December 31, 2013		348			348
Shareholders’ deficit:
Common stock, $0.001 par value, 5,000,000,000 shares authorized, 4,984,827,279 shares issued and outstanding as of March 31, 2014 and December 31, 2013		4,985			4,985
Additional paid-in capital		190,946			190,946
Accumulated deficit		(236,895	)		(479,485	)
Accumulated other comprehensive loss		(102	)		(102	)
Treasury stock, at cost, 2,012 shares of common stock		(779	)		(779	)
Total shareholders’ deficit		(41,845	)		(284,435	)
Total liabilities and shareholders’ deficit	$	5,326		$	5,305

See accompanying notes.

Page 3

NeoMedia Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited)

(in thousands, except share and per share data)

	Three Months Ended March 31,
	2014		2013
			(revised)
Revenues	$	1,003	$	602
Cost of revenues		158		31
Gross profit		845		571
Sales and marketing expenses		15		61
General and administrative expenses		603		857
Research and development costs		177		212
Operating income (loss)		50		(559	)
Gain from change in fair value of hybrid financial instruments		218,656		6,774
Gain from change in fair value of derivative liability - warrants		437		3,122
Gain (loss) from change in fair value of derivative liability - Series C and D Convertible Preferred Stock and debentures		23,447		(299	)
Net income	$	242,590	$	9,038
Comprehensive income:
Net income	$	242,590	$	9,038
Foreign currency translation adjustment		-		111
Comprehensive income	$	242,590	$	9,149
Net income per common share, basic and diluted:
Basic	$	0.049	$	0.003
Fully diluted	$	0.001	$	0.000
Weighted average number of common shares:
Basic		4,984,827,279		2,789,315,439
Fully diluted		266,001,250,808		27,931,664,140

See accompanying notes. 

Page 4

NeoMedia Technologies, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Three Months Ended March 31,
	2014			2013
				(revised)
Cash Flows from Operating Activities:
Net income	$	242,590		$	9,038
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		70			179
Gain from change in fair value of hybrid financial instruments		(218,656	)		(6,774	)
Gain from change in fair value of derivative liability – warrants		(437	)		(3,122	)
(Gain) loss from change in fair value of derivative liability - Series C and D Convertible Preferred Stock and debentures		(23,447	)		299
Changes in operating assets and liabilities
Accounts receivable		(91	)		(59	)
Prepaid expenses and other assets		(1	)		175
Accounts payable and accrued expenses		280			105
Deferred revenues and customer prepayments		(281	)		(388	)
Net cash provided by (used in) operating activities		27			(547	)
Cash Flows from Investing Activities:
Net cash from investing activities		-			-
Cash Flows from Financing Activities:
Payments on short-term notes payable		(28	)		-
Net cash used in financing activities		(28	)		-
Effect of exchange rate changes on cash		-			(2	)
Net change in cash and cash equivalents		(1	)		(549	)
Cash and cash equivalents, beginning of period		267			611
Cash and cash equivalents, end of period	$	266		$	62
Supplemental cash flow information:
Convertible debentures converted to common stock	$	-		$	320

See accompanying notes.

Page 5

NeoMedia Technologies, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

March 31, 2014

(Unaudited)

Note 1 – General

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

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 March 17, 2014. The results of operations for the three months ended March 31, 2014 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 and its wholly-owned subsidiaries. We operate as one reportable segment. All intercompany accounts, transactions and profits have been eliminated in consolidation.  Certain prior period amounts in the condensed consolidated financial statements and notes thereto have been reclassified to conform to the current year's presentation.  

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

Change in Estimates – For the three month period ended March 31, 2014 fair value accounting of the derivative financial instruments and debentures payable, we reassessed the valuation techniques used to estimate the liability fair values. Based on the assessment, including discussions with the third-party valuation firm assisting us with the calculation, we determined that the valuation technique should be modified to consider the potentially dilutive impact on the stock price resulting from the issuance of additional shares of common stock upon the conversion of the instruments as well as the resulting value in comparison to our market capitalization. The change in estimate from the valuation technique modification had the following impact on the financial instruments as of and for the three months ended March 31, 2014 (in thousands):

	Decrease in liability		Gain from change in fair value
Derivative financial instrument - warrants	$	20	$	20
Derivative financial instrument - Series C and D Convertible Preferred Stock		23,278		23,278
Debentures payable - carried at fair value		219,136		219,136

Page 6

The modification of the valuation technique represents a change in accounting estimate as discussed in Accounting Standards Codification (“ASC”) Topic 250-10-45-17, Accounting Changes and Error Corrections. The impact from the modification in valuation technique has therefore been reflected in the period of change and will be reflected in future periods. See Note 3 – Financing for additional discussion.

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 condensed consolidated financial statements have been prepared in conformity with US GAAP, which contemplates our continuation as a going concern given fair value accounting related to our debentures. Our net income for the three months ended March 31, 2014 and 2013 was $242.6 million as compared to $9.0 million, respectively, including $242.5 million and $9.6 million, respectively, of net gains related to our financing instruments.

Net cash provided by operations during the three months ended March 31, 2014 was $27,000 as compared to net cash used in operations of $0.5 million during the three months ended March 31, 2013. As of March 31, 2014, we have an accumulated deficit of $236.9 million. We also have a working capital deficit of $41.3 million, including $39.2 million in current liabilities for our derivative and debenture financing instruments.

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. 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 shares of common stock outstanding. During 2013, there were 2,879 million shares of common stock issued for these conversions. We cannot predict if or when each holder may or may not elect to convert into shares of common stock.

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.

Revisions to 2013 Interim Reporting – In connection with the completion of our third quarter 2013 and first quarter 2014 reporting, we identified certain errors associated with our first 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 the three months ended March 31, 2013 reporting as discussed below. Our assessment considered the guidance provided by 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 and cash flows for the three months ended March 31, 2013 originally reported a loss from change in fair value of hybrid financial instruments of $299,000 but should have reflected a gain of $6,774,000. Additionally, the Company reported a gain from change in fair value of derivative liability – Series C and D Convertible Preferred Stock and debentures of $6,774,000 but should have reflected a loss of $299,000. The errors were due to clerical transposing of the amounts and have been revised herein to reflect the proper amounts. The foreign currency translation adjustment within comprehensive income (loss) originally reflected a $111,000 loss but should have reflected a $111,000 gain. The reporting has been revised herein to reflect the proper amounts. Additionally, the fully diluted net income per share was reflected as $0.003 but should have been $0.000. The reporting has been revised herein to reflect the proper amount.

Page 7

The condensed consolidated statements of cash flows for the three months ended March 31, 2013 overstated net cash used in operating activities and the 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 amounts have been revised herein to reflect the proper amounts.

Basic and Diluted Net Income Per Common Share – The components of basic and diluted income per share attributable to the Company’s common stock shareholders were as follows (in thousands, except share and per share data): 

	Three Months Ended
	March 31,
	2014			2013
				(revised)
Numerator:
Net income available to common shareholders	$	242,590		$	9,038
Effect of dilutive securities:
Hybrid financial instruments		(29,151	)		(6,774	)
Derivative liability - warrants		(40	)		-
Derivative liability - Series C and D Convertible Preferred Stock and debentures		(1,992	)		299
Numerator for diluted income per common share	$	211,407		$	2,563
Denominator:
Weighted average shares used to compute basic income per common share		4,984,827,279			2,789,315,439
Effect of dilutive securities:
Hybrid financial instruments		233,957,214,103			22,595,466,030
Derivative liability - warrants		440,652,725			-
Derivative liability - Series C and D preferred stock and debentures		26,618,556,701			2,546,882,671
Denominator for diluted income per common share		266,001,250,808			27,931,664,140
Basic income per common share	$	0.049		$	0.003
Diluted income per common share	$	0.001		$	0.000

We excluded approximately 1,173,000 and 1,883,833,000 dilutive securities from the calculation of diluted income per common share for the three months ended March 31, 2014 and 2013, respectively, because inclusion of these securities would be antidilutive. 

Recent Accounting Pronouncements – From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of recently issued standards that are not yet effective will not have a material impact on our results of operations and financial position.

Note 3 – Financing

At March 31, 2014, financial instruments arising from our financing transactions with YA Global Investments, L.P. (“YA Global”), an accredited investor, included shares of our Series C Convertible Preferred Stock issued in February 2006, Series D Convertible 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.

Page 8

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 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 Convertible 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 Convertible 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.

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

Page 9

The following table summarizes the significant terms of each of the debentures for which the entire hybrid instrument is recorded at fair value as of March 31, 2014:

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

We bifurcate the compound embedded derivatives related to the Series C and Series D Convertible 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 recorded within 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 instrument and the related derivative 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. The trading market price of our common stock (and the conversion price) has been less than its par value from time to time. 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 Convertible Preferred Stock		22		17		5		314,619
Series D Convertible Preferred Stock		25		22		3		245,162

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The outstanding principal and accrued interest for the debentures as of March 31, 2014 is reflected in the following table in addition to the principal and interest converted since inception and the number of shares of common stock issued upon conversion.

	Outstanding principal and accrued interest at March 31, 2014		Principal and accrued interest converted since inception		Common Shares issued
	(in thousands)
Debentures	$	43,468	$	11,747		4,403,415

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 Convertible 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 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.

Assumptions used in calculating the preferred share values as of March 31, 2014 included remaining equivalent term of 1.34 years, annualized volatility of 187%, stated dividend of 8%, equivalent credit-risk adjusted rate of 13.0% and conversion price of $0.000194. Equivalent amounts reflect the net results of multiple modeling simulations that the Monte Carlo Simulation methodology applies to underlying assumptions. We modified the valuation technique to consider the potentially dilutive impact on the stock price resulting from the issuance of additional common shares upon the conversion of the preferred shares and convertible debentures. Approximately $23.3 million of the gain from change in fair value of derivative liability – Series C and D Convertible Preferred Stock and debentures was attributable to the change in valuation technique for the three months ended March 31, 2014. The Company determined inclusion of the impact from potentially dilutive shares in the valuation technique to be a change in accounting estimate as discussed in ASC Topic 250-10-45-17, Accounting Changes and Error Corrections, and is therefore reflected in the period of change and will be reflected in future periods.

The following table reflects the face value of the instruments 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 March 31, 2014 and December 31, 2013.

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March 31, 2014
	Face		Carrying		Embedded Conversion		Common Stock
	Value		Value		Feature		Shares
	(in thousands)
Series C Convertible Preferred Stock	$	4,816	$	4,816	$	148		24,823,015
Series D Convertible Preferred Stock		348		348		11		1,794,330
Total	$	5,164	$	5,164	$	159		26,617,345

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

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

Changes in the fair value of derivative instrument liabilities related to the bifurcated embedded derivative features of the convertible instruments are reported as Gain (loss) from Change in Fair Value of Derivative Liability – Series C and Series D Convertible Preferred Stock and Debentures in the accompanying condensed consolidated statements of operations.

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

	Three months ended March 31,
	2014		2013
	(in thousands)
Series C Convertible Preferred Stock	$	21,867	$	(289	)
Series D Convertible Preferred Stock		1,580		(21	)
Debentures:
2006		-		11
Gain (loss) from change in fair value of derivative liability -  Series C and D Convertible Preferred Stock and debentures	$	23,447	$	(299	)

Page 12

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. 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.

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 March 31, 2014 included: (i) present value of future cash flows for the debentures using an effective market interest rate of 13.0%, (ii) remaining term of 1.34 years, (iii) annualized volatility of 187%, and (iv) anti-dilution adjusted conversion prices ranging from $0.00018 - $0.00019. We also modified the valuation technique to consider the potentially dilutive impact on the stock price from the issuance of common shares upon the conversion of the debentures. An approximately $219.1 million gain from change in fair value of hybrid financial instruments was attributable to the change in valuation technique for the three months ended March 31, 2014. The Company determined inclusion of the impact from potentially dilutive shares in the valuation technique to be a change in accounting estimate as discussed in ASC Topic 250-10-45-17, Accounting Changes and Error Corrections, and is therefore reflected in the period of change and will be reflected in future periods.

The following table reflects the face value of the financial instruments, the fair value of the hybrid financial instrument and the number of shares of common stock into which the instruments are convertible as of March 31, 2014 and December 31, 2013.

March 31, 2014					Common
	Face		Fair		Stock
	Value		Value		Shares
	(in thousands)
Debentures:
2006	$	1,962	$	2,041		12,285,288
2007		839		950		3,244,058
2008		2,047		1,898		11,689,415
2009		134		155		923,440
2011		852		866		5,226,562
2012		972		1,013		8,524,582
2013		34,211		31,872		192,394,516
Total	$	41,017	$	38,795		234,287,861

December 31, 2013					Common
	Face		Fair		Stock
	Value		Value		Shares
	(in thousands)
Debentures:
2006	$	1,962	$	13,512		12,285,288
2007		839		3,587		3,244,058
2008		2,047		12,825		11,689,415
2009		134		1,018		923,440
2011		852		5,745		5,226,562
2012		972		9,369		8,524,582
2013		34,211		211,395		192,394,516
Total	$	41,017	$	257,451		234,287,861

Page 13

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

Gain from change in fair value of hybrid financial instruments

	Three months ended March 31,
	2014		2013
	(in thousands)
2006	$	11,471	$	1,887
2007		2,637		2,329
2008		10,927		1,657
2009		863		(74	)
2010		-		623
2011		4,879		249
2012		8,356		103
2013		179,523		-
Gain from changes in fair value of hybrid instruments	$	218,656	$	6,774

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

			March 31, 2014						December 31, 2013
			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 Convertible Preferred Stock		2017		0.000100		87,368	$	44		0.000100		87,368	$	121
Warrants issued with debentures:
2008		2015		0.000100		238,079		117		0.000100		238,079		324
2010		2015		0.000100		81,340		40		0.000100		81,340		111
2011		2016		0.000100		58,256		29		0.000100		58,256		80
2012		2017		0.000100		34,947		17		0.000100		34,947		48
Total						499,990	$	247				499,990	$	684

Page 14

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 March 31, 2014 included an expected life equal to the remaining term of the warrants, an expected dividend yield of zero, estimated volatility ranging from 165% to 194%, and risk-free rates of return ranging from 0.14% to 1.04%. 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. The exercise price of the warrants is currently $0.0001, which was also estimated to be the exercise price for purposes of the valuation technique.  The anti-dilution provisions of the warrants allow for the fixed exercise price to be reset to the lowest price of any subsequently issued common share indexed instruments with a conversion price below the current exercise price of the warrant. However, the likelihood of the Company issuing additional equity below the current strike price was deemed impractical and as a result, the anti-dilutive protection was not factored into the calculation. We also modified the valuation technique to consider the potentially dilutive impact on the stock price from the issuance of shares of common stock upon the exercise of the warrants on the fair value estimate of the warrants. We estimated that the exercise of the warrants would result in 7.6% decline in the stock price and a corresponding decline in the fair value of the warrants of approximately $20,000 as compared to the fair value assuming no dilution. The Company determined inclusion of the impact from potentially dilutive shares in the valuation technique to be a change in accounting estimate as discussed in ASC Topic 250-10-45-17, Accounting Changes and Error Corrections, and is therefore reflected in the period of change and will be reflected in future periods.

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

Gain from change in fair value of derivative liability – warrants

	Three months ended March 31,
	2014		2013
	(in thousands)
Warrants issued with preferred stock:
Series D Convertible Preferred Stock	$	77	$	608
Warrants issued with debentures:
2008		207		1,424
2010		71		480
2011		51		387
2012		31		223
Gain from change in fair value of derivative liability – warrants	$	437	$	3,122

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 during the three months ended March 31, 2014 (in thousands):

	Compound
	Embedded			Warrant			Hybrid
	Derivatives			Derivatives			Instruments			Total
Beginning balance, December 31, 2013:	$	23,606		$	684		$	257,451		$	281,741
Fair value adjustments:
Compound embedded derivatives		(23,447	)		-			-			(23,447	)
Warrant derivatives		-			(437	)		-			(437	)
Hybrid instruments		-			-			(218,656	)		(218,656	)
Ending balance, March 31, 2014	$	159		$	247		$	38,795		$	39,201

Page 15

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 4 – Stock-Based Compensation

The status of our outstanding, vested and exercisable options during the three months ended March 31, 2014 is as follows:

							Weighted-
							Average
			Weighted-				Contractual
			Average		Aggregate		Life
			Exercise		Intrinsic		Remaining
	Shares		Price		Value		in Years
	(in thousands)				(in thousands)
Outstanding at December 31, 2013		1,173	$	0.017		-
Outstanding at March 31, 2014		1,173	$	0.017	$	-		7.5
Exercisable at March 31, 2014		972	$	0.018	$	-		7.3

The following table summarizes information about our stock options outstanding at March 31, 2014:

Options Outstanding							Options Exercisable
Exercise Prices	Number of Shares		Weighted- Average Remaining Life		Weighted- Average Exercise Price		Number of Shares		Weighted- Average Exercise Price
	(in thousands)		(in years)				(in thousands)
$0.008		200		8.5	$	0.008		65	$	0.008
$0.014 to $0.03		884		7.3		0.015		818		0.016
$0.050		89		6.9		0.047		89		0.047
		1,173		7.5	$	0.017		972	$	0.018

Note 5 – Accrued Liabilities

The following table summarized our accrued liabilities (in thousands):
	March 31,		December 31,
	2014		2013
Accrued operating expenses	$	112	$	112
Accrued payroll related expenses		134		65
Accrued legal fees		227		114
Total	$	473	$	291

Note 6 – Contingencies

Legal – 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.

Page 16

Other – On February 21, 2014, the Company received a correspondence (the “Delta Notice”) from Delta Capital Partners LLC (“Delta”), asserting a claim for certain amounts owed under a secured convertible debenture. The principal amount outstanding and conversion rights under such instrument had been assigned to Delta by YA Global (the “Assignment”), several years subsequent to the original issuance of the instrument by the Company to YA Global. The Company’s understanding is that pursuant to the terms of the Assignment, YA Global, as collateral agent, retained all rights in connection with the enforcement of any claims under Delta’s secured convertible debenture.  YA Global has indicated that it does not intend to assert any of the claims described by Delta in the Delta Notice.

Note 7 – Geographic Information

Revenue, classified by geographic location from which the revenue was originated, is as follows:

	Three Months  Ended March 31,
	2014		2013
	(in thousands)
United States	$	1,003	$	589
Germany		-		13
Total revenue	$	1,003	$	602

Approximately $64,000 and $142,000 of total assets were located in Germany as of March 31, 2014 and December 31, 2013, respectively. All other assets were located in the U.S.

Note 8 – Plan of Merger

On February 21, 2014, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Qode Services Corporation (“Qode”), a wholly owned subsidiary of the Company. Under the terms of the Merger Agreement, Qode will be merged into the Company and will cease to exist upon the completion of certain conditions.  The Company shall continue as the surviving corporation.

Under the terms of the Merger Agreement, the Company’s charter shall be amended to provide for an increase in the amount of common stock authorized shares, and each share of the Company’s common stock issued and outstanding immediately prior to merger shall continue to remain outstanding and remain unchanged, except that (i) the par value shall change from $0.001 per share to no par value per share, and (ii) each fifteen (15) shares of common stock issued and outstanding shall be combined and converted into one (1) share of common stock. Upon the consummation of the merger and reverse stock split effected thereunder, the amount of authorized shares of common stock shall be increased from 5 billion to 7.5 billion shares. 

The Company’s Board of Directors determined that the Merger Agreement was the only option available to avoid default after the holder of a majority of the outstanding secured convertible debentures communicated its intent to foreclose on all of the Company’s assets in the event that the Company’s share reserves were not sufficient to honor conversions under such instruments (a potential default thereunder). Further, the holder of the secured convertible debentures agreed to enter into amendments to the secured convertible debentures to decrease the aggregate amount of debt by $5.0 million if the Company resolved the issue.

The Company anticipates closing the merger on May 11, 2014.

Page 17

Note 9 – Subsequent Events

On April 25, 2014, the Company entered into a Reaffirmation and Ratification Agreement with YA Global. Under the terms of the agreement, YA Global agreed to reduce the outstanding principal for certain of the Consolidated Debentures by $5.0 million. The agreement also summarizes and affirms all principal amounts presently outstanding and owed by the Company to YA Global under all of the outstanding financing documents and debentures issued by the Company to YA (the “Financing Documents”). Pursuant to the agreement, the Company (i) ratified the terms of the Financing Documents and agreed that they remain in full force and effect, (ii) confirmed that the collateral rights granted to YA Global under the Financing Documents secure the obligations created thereunder, (iii) confirmed that the occurrence of an “event of default” under any of the Financing Documents would constitute an “event of default” under all of the Financing Documents, and (iv) agreed to execute and deliver to YA Global all such additional documents as reasonably required by YA Global to correct any document deficiencies, or to vest or perfect the Financing Documents and the collateral granted therein, and authorized YA Global to file any financing statements and take any other actions necessary to perfect YA Global’s security interests in any such collateral.

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

Overview

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

Our key focus areas are to: 1) maximize our patent portfolio through IP licensing monetization and enforcement; 2) provide service to enterprises, brands and retailers to maximize the reach of our barcode creation and reader solutions; and, 3) partner with key mobile marketing entities to expand the depth of our offering to provide full end-to-end solutions for our customers.

NeoMedia has been active in, and strives to be an innovator in, the mobile barcode field since the mid-1990s, and during that time has spearheaded the development of a robust IP portfolio. In September 2011, we announced an agreement with Global IP Law Group to help further monetize our patent portfolio, focusing on the US market. During the first quarter of 2014, we closed nine (9) new IP agreements bringing the total quantity of deals closed to approximately fifty (50).

On the product side of our business, our barcode management solutions include our barcode reader (NeoReader) as well as our barcode creation solutions (NeoSphere and QodeScan). Mobile barcodes continue to be an increasingly important activation element for brands and marketers and we continue to see growth in terms of new customer additions and traffic across our network.

We believe that NeoMedia remains strong and consistent in its approach to market and that we will continue to differentiate ourselves on the basis of our high quality product and service offerings, our responsive customer service and support organization, our customizable and full service solutions and our robust intellectual property portfolio.

NeoReader has experienced continued growth particularly in enterprise implementations.  NeoReader continues to be pre-installed on Sony Mobile devices and is available for download from the key “app stores” including Apple App Store™, Google Play™, Nokia Ovi Store, BlackBerry App World™, Windows® Marketplace, Facebook and Amazon.  Our barcode reader now has approximately 50+ million installations world-wide.  Our reader is offered to consumers free of charge, leveraging an ad supported model, and we anticipate the growth in consumer utilization will continue as barcodes continue to be utilized for a wide variety of vertical applications.  We also offer NeoReader SDK for enterprise opportunities.  Our research suggests that we are one of the few providers in the global ecosystem to offer Aztec code support, in addition to QR, Data Matrix, Code 39, PDF417 and a variety of 1D symbologies.

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

Page 18

Legal costs continue to be high for us.  The costs to maintain our public company status, our IP licensing initiatives, satisfy our investor obligations as well as participate in an unexpected arbitration catapulted our legal fees to approximately thirty percent (30%) of total operating expenses for us in 2013.  We expect the significant legal expenditures to continue in 2014. Unfortunately, this has meant that funds earmarked for sales and marketing investment were spent on legal fees.

Results of Operations

Income (Loss) from Operations

The following table sets forth certain data derived from our condensed consolidated statements of operations (in thousands):

	Three Months Ended March 31,
	2014		2013
Revenues	$	1,003	$	602
Cost of revenues		158		31
Gross profit		845		571
Sales and marketing expenses		15		61
General and administrative expenses		603		857
Research and development costs		177		212
Income (loss) from operations	$	50	$	(559	)

Revenues – Revenues for the three months ended March 31, 2014 and 2013 were $1,003,000 and $602,000, respectively, an increase of $401,000, or 67%. The increase in revenue was primarily attributable to an increase in the quantity of IP licensing agreements executed in the current quarter as compared to the same prior year quarter.

Cost of Revenues – Cost of revenues was $158,000 for the three months ended March 31, 2014 compared with $31,000 for the three months ended March 31, 2013, an increase of $127,000 or 410%. Cost of revenues primarily relate to third-party professional fees incurred in connection with the sale of our IP licenses. The increase in the costs are due to the corresponding increase in IP licensing revenues.

Sales and Marketing – Sales and marketing expenses were $15,000 compared to $61,000 for the three months ended March 31, 2014 and 2013, respectively, representing a decline of approximately $46,000 or 75%. The decline in costs was primarily due to less press and investor relations activities associated with cost reduction efforts.

General and Administrative – General and administrative expenses were $603,000 and $857,000 for the three months ended March 31, 2014 and 2013, respectively, reflecting a decrease of $254,000 or 30%. The decline in expenses was primarily due to lower general legal expenses as well as a decline in amortization expenses associated with certain intangible assets that became fully amortized in the prior year.

Research and Development – Research and development costs were $177,000 and $212,000 for the three months ended March 31, 2014 and 2013, respectively, reflecting a decrease of approximately $35,000, or 17%. Research and development expenses decreased due to cost containment efforts and were primarily focused on the research and development activities in Germany.

Page 19

Other Income (Expense)

The following table sets forth certain data derived from our condensed consolidated statements of operations (in thousands):

	Three Months  Ended March 31,
	2014		2013
			(revised)
Gain from change in fair value of hybrid financial instruments	$	218,656	$	6,774
Gain from change in fair value of derivative liability - warrants		437		3,122
Gain (loss) from change in fair value of derivative liability - Series C and D preferred stock and debentures		23,447		(299	)
Total other income	$	242,540	$	9,597

Gain from Change in Fair Value of Hybrid Financial Instruments – We record our debentures at fair value, in accordance with FASB ASC 815-15-25, 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 March 31, 2014 and 2013, the liability related to these hybrid instruments fluctuated, resulting in a gain of $218.7 million and $6.8 million, respectively. The gain for the three months ended March 31, 2014 was primarily due to a change in our valuation technique used to estimate the liability and resulted in an approximately $219.1 million gain. See the Change in Estimates discussion within Note 2 – Summary of Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements for additional description. The additional changes reflected in each of the three months ended March 31, 2014 and 2013 were due to the impact on the fair value determination of the hybrid financial instruments from fluctuations in our stock price as well as the accrued interest and present value of the face amount of the debentures.

Gain 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 March 31, 2014 and 2013, the liability related to the securities fluctuated resulting in a gain of $0.4 million and $3.1 million, respectively. The decrease during the three months ended March 31, 2014 was primarily the result of the decline in our stock price during the period, and the gain during the three months ended March 31, 2013 was primarily the result of the cancellation of approximately 1.5 billion warrants in February 2013.

Gain (loss) from Change in Fair Value of Derivative Liabilities – Series C and D Convertible Preferred Stock and Debentures – For our Series C and D Convertible Preferred Stock, and certain of our historical 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 March 31, 2014 and 2013, the liability related to these hybrid instruments fluctuated, resulting in a gain of $23.4 million as compared to a loss of $0.3 million, respectively. The gain for the three months ended March 31, 2014 was primarily due to a change in our valuation technique used to estimate the liability and resulted in approximately $23.3 million of the total gain. See the Change in Estimates discussion within Note 2 – Summary of Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements for additional description. The additional gain and loss for each of the three months ended March 31, 2014 and 2013, respectively, were primarily due to fluctuations in our stock price and the impact of those fluctuations on the fair value determination of the hybrid financial instruments.

Liquidity and Capital Resources

As of March 31, 2014, we had $266,000 in cash and cash equivalents compared with $267,000 as of December 31, 2013. Cash provided by operating activities was $27,000 for the three months ended March 31, 2014 compared with $547,000 used in operations for the three months ended March 31, 2013. The improvement in cash flows from operations is primarily due to improved operating results from higher revenues and reduced expenses.

Payments on short-term notes payable within cash flows from financing activities reflects disbursements for opportunistic low interest rate borrowings that occurred in 2013 in order to pay annual insurance premiums.

Page 20

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 on our business plan will be successful and that we will be able to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared in conformity with US GAAP, which contemplates our continuation as a going concern given fair value accounting related to our debentures. Our net income for the three months ended March 31, 2014 and 2013 was $242.6 million and $9.0 million, respectively, including $242.5 million and $9.6 million, respectively, of net gains related to our financing instruments.

Net cash provided by operations during the three months ended March 31, 2014 was $27,000 as compared to net cash used in operations of $0.5 million during the three months ended March 31, 2013. As of March 31, 2014, we have an accumulated deficit of $236.9 million. We also have a working capital deficit of $41.3 million, including $39.2 million in current liabilities for our derivative and debenture financing instruments.

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. 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 shares of common stock outstanding. During 2013, there were 2,879 million shares of common stock issued for these conversions. We cannot predict if or when each holder may or may not elect to convert into shares of common stock.

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.

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 for the year ended December 31, 2013, 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 for the year ended December 31, 2013, 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 Securities Exchange Act of 1934 (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 Exchange Act, are 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.

Page 21

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

Our management, including our CEO and CFO, does 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.

ITEM 1A. Risk Factors

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 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

Page 22

ITEM 6. Exhibits

(a) 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
10.1	Agreement and Plan of Merger dated February 21, 2014, by and between the Company and Qode Services Corporation	X

Page 23

10.2	Reaffirmation and Ratification Agreement dated April 25, 2014, by and between the Company and YA Global Investments, L.P.	X
31.1	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification by Chief Executive Officer pursuant Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	XBRL Instance Document	X
101.SCH	XBRL Taxonomy Extension Schema Document	X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	X

SIGNATURES

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:	April 30, 2014	/s/ Laura A. Marriott
		Laura A. Marriott Chief Executive Officer
	April 30, 2014	/s/ Colonel Barry S. Baer
		Colonel (Ret.) Barry S. Baer
		Chief Financial Officer and Principal Financial and Accounting Officer

Page 24

EX-10.1

MERGER AGREEMENT 

AGREEMENT AND PLAN OF MERGER

BETWEEN QODE SERVICES CORPORATION

(a Delaware corporation),

AND

NEOMEDIA TECHNOLOGIES, INC.

(a Delaware corporation) 

This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into as of February 21, 2014, between Qode Services Corporation, a Delaware corporation ("Subsidiary"), and Neomedia Technologies, Inc., a Delaware corporation ("Parent").

RECITALS

WHEREAS, Subsidiary is a corporation duly organized and existing under the laws of the State of Delaware;

WHEREAS, Parent is a corporation duly organized and existing under the laws of the State of Delaware; and

WHEREAS, the Board of Directors of Subsidiary and the Board of Directors of Parent deem it advisable to merge Subsidiary with and into Parent so that Parent is the surviving corporation on the terms provided herein (the "Merger");

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

ARTICLE I
MERGER

Section 1.1.          The Merger.

After satisfaction or, to the extent permitted hereunder, waiver of all conditions to the Merger, and subject to the applicable provisions of the General Corporation Law of the State of Delaware (the "DGCL"), Subsidiary will merge with and into Parent and Parent shall file a

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Certificate of Merger with the Secretary of State of the State of Delaware (the "Secretary of State") in accordance with the provisions of the DGCL and shall make all other filings or recordings required by Delaware law in connection with the Merger. The Merger shall become effective upon the filing of such Certificate of Merger with the Secretary of State or at such later time as may be provided for in such Certificate of Merger (the "Effective Time"). Upon the Effective Time, the separate corporate existence of Subsidiary shall cease and Parent shall be the surviving corporation (the "Surviving Corporation").

Section 1.2.          Conditions to the Merger.

The respective obligation of each party to effect the Merger is subject to the satisfaction or waiver (except as provided in this Agreement) of the following conditions:

(a)          This Agreement shall have been adopted by the sole stockholder of Subsidiary, in accordance with the requirements of the DGCL and the Certificate of Incorporation and Bylaws of Subsidiary; and

(b)          This Agreement shall have been adopted by holders of at least a majority of the outstanding voting power of Parent in accordance with the requirements of the DGCL and the Restated Certificate of Incorporation and Bylaws of Parent.

Section 1.3.          Transfer, Conveyance and Assumption.

At the Effective Time, Parent shall continue in existence as the Surviving Corporation and, without further transfer, succeed to and possess all rights, privileges, powers and franchises of Subsidiary, and all of the assets and property of whatever kind and character of the Subsidiary shall vest in Parent, as the Surviving Corporation, without further deed; thereafter, Parent, as the Surviving Corporation, shall be liable for all of the liabilities and obligations of Subsidiary, and any claim or judgment against Subsidiary may be enforced against Parent, as the Surviving Corporation, in accordance with Section 259 of the DGCL.

Section 1.4.          Certificate of Incorporation; Bylaws.

(a)          From and after the Effective Time, the Restated Certificate of Incorporation of Parent shall be the Restated Certificate of Incorporation of the Surviving Corporation provide that Article IV thereof shall be amended in its entirety as follows:

“The Company is authorized to issue two (2) classes of capital stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares of capital stock that the Company is authorized to issue is 7,525,000,000 shares. 7,500,000,000 shares shall be Common Stock, no par value per share, and 25,000,000 shares shall be Preferred Stock, par value $0.01 per share.

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The 25,000,000 shares of Preferred Stock may be issued in one or more series at such time or times and for such consideration as shall be authorized from time to time by the Board of Directors. The Board of Directors will be authorized to fix the designation of each series of Preferred Stock and the relative rights, preferences, limitations, qualifications, powers or restrictions thereof, including the number of shares comprising each series, the dividend rates, redemption rights, rights upon voluntary or involuntary liquidation, provisions with respect to a retirement or sinking fund, conversions rights, voting rights, if any, preemptive rights, other preferences, qualifications, limitations, restrictions and the special or relative rights of each series.

The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of the majority of the outstanding voting power of all shares of capital stock of the Company, without a separate class vote of the holders of the outstanding shares of Common Stock irrespective of Section 242(b)(2) of the General Corporation Law of the State of Delaware.

To the fullest extent permitted by law, the holders of Common Stock shall not be entitled to vote on any amendment to the terms of any outstanding series of Preferred Stock which solely affects the rights, powers, preferences, qualifications, powers or restrictions of such series of Preferred Stock.

Upon the filing and effectiveness pursuant to the General Corporation Law of the State of Delaware of this certificate (the “Effective Time”), each fifteen (15) shares of Common Stock issued and outstanding or held by the Company as treasury stock shall, automatically and without any action on the part of the holders thereof, be combined and converted into one (1) share of Common Stock of the Company. No fractional shares shall be issued and, in lieu of a fractional share of Common Stock to which any stockholder is entitled, such stockholder shall receive a cash payment in an amount equal to the product obtained by multiplying (a) the fraction to which the stockholder would otherwise be entitled by (b) the per share closing sales price of the Company’s Common Stock on the day immediately prior to the Effective Time, as reported on the OTC Markets Bulletin Board.”

(b)          From and after the Effective Time, the Bylaws of Parent shall be the Bylaws of the Surviving Corporation.

(c)          Directors and Officers of the Surviving Corporation. From and after the Effective Time, the directors and officers of Parent serving as directors or officers of Parent immediately prior to the Effective Time shall be the directors and officers of the Surviving Corporation.

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ARTICLE II
EFFECT ON STOCK

Section 2.1.          Effect on Stock.

(a)          Upon the Effective Time, by virtue of the Merger and without any action on the part of the holder of any outstanding share of common stock, par value $0.01 per share, of Subsidiary (the "Subsidiary Common Stock"), each share of Subsidiary Common Stock issued and outstanding immediately prior to the Effective Time (along with all shares of Subsidiary Capital Stock that are held by the Subsidiary in treasury or otherwise) shall be canceled and no consideration shall be issued in respect thereof.

(b)          Upon the Effective Time, by virtue of the Merger and without any action on the part of the holder of any outstanding share of common stock, par value $0.001 per share, of Parent (the "Parent Common Stock"), each share of Parent Common Stock issued and outstanding immediately prior to the Effective Time shall continue to remain outstanding as one share of Common Stock of the Surviving Corporation and remain unchanged, except that (i) the par value shall change from $0.001 per share to no par value per share, and (ii) each fifteen (15) shares of Common Stock issued and outstanding shall be combined and converted into one (1) share of Common Stock (the “Reverse Split”).

(c)          Upon the Effective Time, by virtue of the Merger and without any action on the part of the holder of any outstanding share of Series C Convertible Preferred Stock, par value $0.01 per share, of Parent (the "Parent Series C Preferred Stock"), each share of Parent Series C Preferred Stock issued and outstanding immediately prior to the Effective Time shall remain unchanged and continue to remain outstanding as one share of Parent Series C Preferred Stock of the Surviving Corporation. 

(d)          Upon the Effective Time, by virtue of the Merger and without any action on the part of the holder of any outstanding share of Series D Convertible Preferred Stock, par value $0.01 per share, of Parent (the "Parent Series D Preferred Stock"), each share of Parent Series D Preferred Stock issued and outstanding immediately prior to the Effective Time shall remain unchanged and continue to remain outstanding as one share of Parent Series D Preferred Stock of the Surviving Corporation. 

Section 2.2.          Shares of Dissenting Stockholders.

Notwithstanding anything in this Agreement to the contrary, any issued and outstanding shares of capital stock of Parent held by a person (a "Dissenting Stockholder") who shall not have voted or consented in writing to adopt this Agreement and who properly demands appraisal for such shares in accordance with Section 262 of the DGCL ( "Dissenting Shares") shall be converted into the right to receive such consideration as may be determined to be due to such Dissenting Stockholder pursuant to the DGCL, unless such holder fails to perfect or withdraws or otherwise loses his right to appraisal. If, after the Effective Time, such Dissenting Stockholder fails to perfect or withdraws or loses his right to appraisal, such Dissenting Stockholder's shares of capital stock of Parent shall no longer be considered Dissenting Shares for the purposes of this Agreement.

4

Section 2.3.          No Fractional Shares.

As a result of and in connection with the Reverse Split, no fractional shares shall be issued and, in lieu of a fractional share of Common Stock to which any stockholder is entitled, such stockholder shall receive a cash payment in an amount equal to the product obtained by multiplying (a) the fraction to which the stockholder would otherwise be entitled by (b) the per share closing sales price of the Company’s Common Stock on the day immediately prior to the Effective Time, as reported on the OTC Markets Bulletin Board.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

Section 3.1.          Representations and Warranties of Subsidiary.

Subsidiary hereby represents and warrants that it:

(a)          is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all the requisite power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted;

5

(b)          is duly qualified to do business as a foreign person, and is in good standing, in each jurisdiction where the character of its properties or the nature of its activities make such qualification necessary;

(c)          is not in violation of any provisions of its Certificate of Incorporation or Bylaws; and

(d)          has full corporate power and authority to execute and deliver this Agreement and, assuming the adoption of this Agreement by the sole stockholder of Subsidiary in accordance with the DGCL and the Certificate of Incorporation and Bylaws of Subsidiary, consummate the Merger and the other transactions contemplated by this Agreement.

Section 3.2.          Representations and Warranties of Parent.

Parent hereby represents and warrants that it:

(a)          is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all the requisite power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted;

(b)          is duly qualified to do business as a foreign person, and is in good standing, in each jurisdiction where the character of its properties or the nature of its activities make such qualification necessary;

(c)          is not in violation of any provisions of its Restated Certificate of Incorporation or Bylaws; and

(d)          has full corporate power and authority to execute and deliver this Agreement and, assuming the adoption of this Agreement by the stockholders of Parent in accordance with the DGCL and the Restated Certificate of Incorporation and Bylaws of Parent, consummate the Merger and the other transactions contemplated by this Agreement.

ARTICLE IV
TERMINATION

Section 4.1.          Termination.

At any time prior to the Effective Time, this Agreement may be terminated and the Merger abandoned for any reason whatsoever by the Board of Directors of Subsidiary or the Board of Directors of Parent, notwithstanding the adoption of this Agreement by the stockholders of Subsidiary or Parent.

ARTICLE V
FURTHER ASSURANCES

Section 5.1.          Further Assurances as to Subsidiary.

If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any further assignment, conveyance or assurance in law or any other acts are necessary or desirable to (i) vest, perfect or confirm in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of Subsidiary acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger, or (ii) otherwise carry out the purposes of this Agreement, Subsidiary and its proper officers shall be deemed to have granted to the Surviving Corporation an irrevocable power of attorney to execute and deliver all such proper deeds, assignments and assurances in law and to do all acts necessary or proper to vest, perfect or confirm title to and possession of such rights, properties or assets in the Surviving Corporation and otherwise carry out the purposes of this Agreement; and the officers and directors of the Surviving Corporation are fully authorized in the name of Subsidiary or otherwise to take any and all such action.

6

ARTICLE VI
MISCELLANEOUS

Section 6.1.          Amendment.

At any time prior to the Effective Time, this Agreement may be amended, modified or supplemented by the Board of Directors of Subsidiary and the Board of Directors of Parent, whether before or after the adoption of this Agreement by the stockholders of Subsidiary and Parent; provided, however, that after any such adoption, there shall not be made any amendment that by law requires the further approval by such stockholders of Subsidiary or Parent without such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of Subsidiary and Parent.

Section 6.2.          No Waivers.

No failure or delay by any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 6.3.          Assignment; Third Party Beneficiaries.

Neither this Agreement, nor any right, interest or obligation hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. This Agreement is not intended to confer any rights or benefits upon any person other than the parties hereto.

Section 6.4.          Governing Law.

This Agreement shall in all respects be interpreted by, and construed, interpreted and enforced in accordance with and pursuant to the laws of the State of Delaware.

Section 6.5.          Counterparts.

This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

Section 6.6.          Entire Agreement.

This Agreement and the documents referred to herein are intended by the parties as a final expression of their agreement with respect to the subject matter hereof, and are intended as a complete and exclusive statement of the terms and conditions of that agreement, and there are not other agreements or understandings, written or oral, among the parties, relating to the subject matter hereof. This Agreement supersedes all prior agreements and understandings, written or oral, among the parties with respect to the subject matter hereof.

[SIGNATURE PAGE FOLLOWS] 

7

IN WITNESS WHEREOF, the undersigned, intending to be legally bound hereby, have duly executed this Agreement as of the date first stated above. 

QODE SERVICES CORPORATION
By:	/s/ Laura A. Marriott
Name:  Laura A. Marriott
Title:  President and Chief Executive Officer
NEOMEDIA TECHNOLOGIES, INC.
By:	/s/ Laura A. Marriott
Name:  Laura A. Marriott
Title:  President and Chief Executive Officer

8

EX-10.2

REAFFIRMATION AND RATIFICATION AGREEMENT

This REAFFIRMATION AND RATIFICATION AGREEMENT, dated as of April 25, 2014 (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 Investor has agreed to reduce the outstanding debt owed to the Investor by $5,000,000.00, reducing the principal amounts of the outstanding Debentures (as hereinafter defined) as of April 1, 2014, 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 April 1, 2014, (i) it is liable to the Investor as follows (all amounts in USD) pursuant to these outstanding debentures (the “Debentures”):

Outstanding Debenture	Issue Date	Outstanding Principal (prior to Agreement)		Allocation of Reduced Debt			New Outstanding Principal Amount (April 1, 2014)
NEOM-42	7/1/13	$	4,536,923		-		$	4,536,923
NEOM-43	7/1/13	$	1,368,840	$	(232,635	)	$	1,136,205
NEOM-44	7/1/13	$	767,365	$	(767,365	)		-
NEOM-45	7/1/13	$	17,547,522		-		$	17,547,522
NEOM-46	7/1/13	$	6,132,262	$	(141,258	)	$	5,991,004
NEOM-47	7/1/13	$	3,858,742	$	(3,858,742	)		-
	TOTAL	$	34,211,654	$	(5,000,000	)	$	29,211,654

(ii) For all interest accruing from and after April 1, 2014 due under the 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 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.”

1

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.

Reaffirmation and Ratification

2. 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.

2

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.

(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 A. Marriott
Name:	Laura A. Marriott
Title:	Chief Executive Officer
INVESTOR:
YA GLOBAL INVESTMENTS, L.P.
By:	Yorkville Advisors, LLC
	its Investment Manager
By:	/s/ Mark Angelo
Name:	Mark Angelo
Title:	Managing Member

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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 March 31, 2014 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: April 30, 2014	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 March 31, 2014 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: April 30, 2014	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 March 31, 2014 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

April 30, 2014

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 March 31, 2014 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,

April 30, 2014

XML

Geographic Information (Details Textual) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Segment Reporting Information [Line Items]
Assets	$ 5,326	$ 5,305
GERMANY
Segment Reporting Information [Line Items]
Assets	$ 64	$ 142

XML

Financing (Details 9) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Fair value adjustments:
Compound embedded derivatives	$ 23,447	$ (299)
Warrant derivatives	437	3,122
Hybrid instruments	218,656	6,774
Hybrid Instrument [Member]
Fair value adjustments:
Hybrid instruments	219,100
Fair Value, Inputs, Level 3 [Member]
Statement [Line Items]
Beginning balance, December 31, 2013:	281,741
Fair value adjustments:
Compound embedded derivatives	(23,447)
Warrant derivatives	(437)
Hybrid instruments	(218,656)
Ending balance, March 31, 2014	39,201
Fair Value, Inputs, Level 3 [Member] | Embedded Derivative Financial Instruments [Member]
Statement [Line Items]
Beginning balance, December 31, 2013:	23,606
Fair value adjustments:
Compound embedded derivatives	(23,447)
Warrant derivatives	0
Hybrid instruments	0
Ending balance, March 31, 2014	159
Fair Value, Inputs, Level 3 [Member] | Warrant [Member]
Statement [Line Items]
Beginning balance, December 31, 2013:	684
Fair value adjustments:
Compound embedded derivatives	0
Warrant derivatives	(437)
Hybrid instruments	0
Ending balance, March 31, 2014	247
Fair Value, Inputs, Level 3 [Member] | Hybrid Instrument [Member]
Statement [Line Items]
Beginning balance, December 31, 2013:	257,451
Fair value adjustments:
Compound embedded derivatives	0
Warrant derivatives	0
Hybrid instruments	(218,656)
Ending balance, March 31, 2014	$ 38,795

XML

Financing (Details 1)	3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Debt Conversion [Line Items]
Common shares issued	4,984,827,279	4,984,827,279
Series C Convertible Preferred Stock [Member]
Debt Conversion [Line Items]
Preferred shares issued	4,816	4,816
Preferred shares converted	17,000
Preferred shares remaining	5,000
Common shares issued	314,619,000
Series D Convertible Preferred Stock [Member]
Debt Conversion [Line Items]
Preferred shares issued	3,481	3,481
Preferred shares converted	22,000
Preferred shares remaining	3,000
Common shares issued	245,162,000

XML

Accrued Liabilities (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Accrued Liabilities [Line Items]
Accrued operating expenses	$ 112	$ 112
Accrued payroll related expenses	134	65
Accrued legal fees	227	114
Total	$ 473	$ 291

XML

Stock-Based Compensation

3 Months Ended

Mar. 31, 2014

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 4 – Stock-Based Compensation

The status of our outstanding, vested and exercisable options during the three months ended March 31, 2014 is as follows:

						Weighted-
						Average
		Weighted-				Contractual
		Average		Aggregate		Life
		Exercise		Intrinsic		Remaining
	Shares	Price		Value		in Years
	(in thousands)			(in thousands)
Outstanding at December 31, 2013	1,173	$	0.017		-
Outstanding at March 31, 2014	1,173	$	0.017	$	-	7.5
Exercisable at March 31, 2014	972	$	0.018	$	-	7.3

The following table summarizes information about our stock options outstanding at March 31, 2014:

Options Outstanding					Options Exercisable
Exercise Prices	Number of Shares	Weighted-  Average  Remaining  Life	Weighted-  Average Exercise  Price		Number of Shares	Weighted-  Average  Exercise Price
	(in thousands)	(in years)			(in thousands)
$0.008	200	8.5	$	0.008	65	$	0.008
$0.014 to $0.03	884	7.3		0.015	818		0.016
$0.050	89	6.9		0.047	89		0.047
	1,173	7.5	$	0.017	972	$	0.018

XML

Financing (Details 5) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Debt Conversion [Line Items]
Debentures, Face Value	$ 41,017	$ 41,017
Debentures, Fair Value	38,795	257,451
Debentures, Common Stock Shares	234,287,861	234,287,861
Debentures 2006 Series [Member]
Debt Conversion [Line Items]
Debentures, Face Value	1,962	1,962
Debentures, Fair Value	2,041	13,512
Debentures, Common Stock Shares	12,285,288	12,285,288
Debentures 2007 Series [Member]
Debt Conversion [Line Items]
Debentures, Face Value	839	839
Debentures, Fair Value	950	3,587
Debentures, Common Stock Shares	3,244,058	3,244,058
Debentures 2008 Series [Member]
Debt Conversion [Line Items]
Debentures, Face Value	2,047	2,047
Debentures, Fair Value	1,898	12,825
Debentures, Common Stock Shares	11,689,415	11,689,415
Debentures 2009 Series [Member]
Debt Conversion [Line Items]
Debentures, Face Value	134	134
Debentures, Fair Value	155	1,018
Debentures, Common Stock Shares	923,440	923,440
Debentures 2011 Series [Member]
Debt Conversion [Line Items]
Debentures, Face Value	852	852
Debentures, Fair Value	866	5,745
Debentures, Common Stock Shares	5,226,562	5,226,562
Debentures 2012 Series [Member]
Debt Conversion [Line Items]
Debentures, Face Value	972	972
Debentures, Fair Value	1,013	9,369
Debentures, Common Stock Shares	8,524,582	8,524,582
Debentures 2013 Series [Member]
Debt Conversion [Line Items]
Debentures, Face Value	34,211	34,211
Debentures, Fair Value	31,872	211,395
Debentures, Common Stock Shares	$ 192,394,516	$ 192,394,516

XML

Financing (Details 4) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	$ 23,447	$ (299)
Series C Convertible Preferred Stock [Member]
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	21,867	(289)
Series D Convertible Preferred Stock [Member]
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	1,580	(21)
Debentures 2006 Series [Member]
Debt Conversion [Line Items]
Gain (loss) from change in fair value of derivative liability	$ 0	$ 11

XML

Financing (Details 6) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Debt Conversion [Line Items]
Gain from changes in fair value of hybrid instruments	$ 218,656	$ 6,774
Debentures 2006 Series [Member]
Debt Conversion [Line Items]
Gain from changes in fair value of hybrid instruments	11,471	1,887
Debentures 2007 Series [Member]
Debt Conversion [Line Items]
Gain from changes in fair value of hybrid instruments	2,637	2,329
Debentures 2008 Series [Member]
Debt Conversion [Line Items]
Gain from changes in fair value of hybrid instruments	10,927	1,657
Debentures 2009 Series [Member]
Debt Conversion [Line Items]
Gain from changes in fair value of hybrid instruments	863	(74)
Debentures 2010 Series [Member]
Debt Conversion [Line Items]
Gain from changes in fair value of hybrid instruments	0	623
Debentures 2011 Series [Member]
Debt Conversion [Line Items]
Gain from changes in fair value of hybrid instruments	4,879	249
Debentures 2012 Series [Member]
Debt Conversion [Line Items]
Gain from changes in fair value of hybrid instruments	8,356	103
Debentures 2013 Series [Member]
Debt Conversion [Line Items]
Gain from changes in fair value of hybrid instruments	$ 179,523	$ 0

XML

Financing (Details 7) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2014	Dec. 31, 2013
Debt Conversion [Line Items]
Warrants	499,990	499,990
Warrants, Fair Value	$ 247	$ 684
Warrants Issued With Debentures 2008 [Member]
Debt Conversion [Line Items]
Warrants, Expiration Year	2015	2015
Warrants, Anti-Dilution Adjusted Exercise Price	$ 0.000100	$ 0.000100
Warrants	238,079	238,079
Warrants, Fair Value	117	324
Warrants Issued With Debentures 2010 [Member]
Debt Conversion [Line Items]
Warrants, Expiration Year	2015	2015
Warrants, Anti-Dilution Adjusted Exercise Price	$ 0.000100	$ 0.000100
Warrants	81,340	81,340
Warrants, Fair Value	40	111
Warrants Issued With Debentures 2011 [Member]
Debt Conversion [Line Items]
Warrants, Expiration Year	2016	2016
Warrants, Anti-Dilution Adjusted Exercise Price	$ 0.000100	$ 0.000100
Warrants	58,256	58,256
Warrants, Fair Value	29	80
Warrants Issued With Debentures 2012 [Member]
Debt Conversion [Line Items]
Warrants, Expiration Year	2017	2017
Warrants, Anti-Dilution Adjusted Exercise Price	$ 0.000100	$ 0.000100
Warrants	34,947	34,947
Warrants, Fair Value	17	48
Series D Convertible Preferred Stock [Member]
Debt Conversion [Line Items]
Warrants, Expiration Year	2017	2017
Warrants, Anti-Dilution Adjusted Exercise Price	$ 0.000100	$ 0.000100
Warrants	87,368	87,368
Warrants, Fair Value	$ 44	$ 121

XML

Financing

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 3 – Financing

At March 31, 2014, financial instruments arising from our financing transactions with YA Global Investments, L.P. (“YA Global”), an accredited investor, included shares of our Series C Convertible Preferred Stock issued in February 2006, Series D Convertible 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 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 Convertible 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 Convertible 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.

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

The following table summarizes the significant terms of each of the debentures for which the entire hybrid instrument is recorded at fair value as of March 31, 2014:

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

We bifurcate the compound embedded derivatives related to the Series C and Series D Convertible 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 recorded within 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 instrument and the related derivative 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. The trading market price of our common stock (and the conversion price) has been less than its par value from time to time. 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 Convertible Preferred Stock		22		17		5		314,619
Series D Convertible Preferred Stock		25		22		3		245,162

The outstanding principal and accrued interest for the debentures as of March 31, 2014 is reflected in the following table in addition to the principal and interest converted since inception and the number of shares of common stock issued upon conversion.

	Outstanding  principal and  accrued interest  at March   31, 2014		Principal and  accrued interest  converted since  inception		Common  Shares  issued
	(in thousands)
Debentures	$	43,468	$	11,747		4,403,415

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 Convertible 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 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.

Assumptions used in calculating the preferred share values as of  March 31, 2014 included remaining equivalent term of 1.34 years, annualized volatility of 187%, stated dividend of 8%, equivalent credit-risk adjusted rate of 13.0% and conversion price of $0.000194. Equivalent amounts reflect the net results of multiple modeling simulations that the Monte Carlo Simulation methodology applies to underlying assumptions. We modified the valuation technique to consider the potentially dilutive impact on the stock price resulting from the issuance of additional common shares upon the conversion of the preferred shares and convertible debentures. Approximately $23.3 million of the gain from change in fair value of derivative liability – Series C and D Convertible Preferred Stock and debentures was attributable to the change in valuation technique for the three months ended March 31, 2014. The Company determined inclusion of the impact from potentially dilutive shares in the valuation technique to be a change in accounting estimate as discussed in ASC Topic 250-10-45-17, Accounting Changes and Error Corrections, and is therefore reflected in the period of change and will be reflected in future periods.

The following table reflects the face value of the instruments 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 March 31, 2014 and December 31, 2013.

March 31, 2014
	Face		Carrying		Embedded  Conversion		Common  Stock
	Value		Value		Feature		Shares
	(in thousands)
Series C Convertible Preferred Stock	$	4,816	$	4,816	$	148		24,823,015
Series D Convertible Preferred Stock		348		348		11		1,794,330
Total	$	5,164	$	5,164	$	159		26,617,345

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

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

Changes in the fair value of derivative instrument liabilities related to the bifurcated embedded derivative features of the convertible instruments are reported as Gain (loss) from Change in Fair Value of Derivative Liability – Series C and Series D Convertible Preferred Stock and Debentures in the accompanying condensed consolidated statements of operations.

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

	Three months ended  March 31,
	2014		2013
	(in thousands)
Series C Convertible Preferred Stock	$	21,867	$	(289)
Series D Convertible Preferred Stock		1,580		(21)
Debentures:
2006		-		11
Gain (loss) from change in fair value of derivative liability - Series C and D Convertible Preferred Stock and debentures	$	23,447	$	(299)

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. 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.

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 March 31, 2014 included: (i) present value of future cash flows for the debentures using an effective market interest rate of 13.0%, (ii) remaining term of 1.34 years, (iii) annualized volatility of 187%, and (iv)anti-dilution adjusted conversion prices ranging from $0.00018 - $0.00019. We also modified the valuation technique to consider the potentially dilutive impact on the stock price from the issuance of common shares upon the conversion of the debentures. An approximately $219.1 million  gain from change in fair value of hybrid financial instruments was attributable to the change in valuation technique for the three months ended March 31, 2014. The Company determined inclusion of the impact from potentially dilutive shares in the valuation technique to be a change in accounting estimate as discussed in ASC Topic 250-10-45-17, Accounting Changes and Error Corrections, and is therefore reflected in the period of change and will be reflected in future periods.

The following table reflects the face value of the financial instruments, the fair value of the hybrid financial instrument and the number of shares of common stock into which the instruments are convertible as of March 31, 2014 and December 31, 2013.

March 31, 2014					Common
	Face		Fair		Stock
	Value		Value		Shares
	(in thousands)
Debentures:
2006	$	1,962	$	2,041		12,285,288
2007		839		950		3,244,058
2008		2,047		1,898		11,689,415
2009		134		155		923,440
2011		852		866		5,226,562
2012		972		1,013		8,524,582
2013		34,211		31,872		192,394,516
Total	$	41,017	$	38,795		234,287,861

December 31, 2013					Common
	Face		Fair		Stock
	Value		Value		Shares
	(in thousands)
Debentures:
2006	$	1,962	$	13,512		12,285,288
2007		839		3,587		3,244,058
2008		2,047		12,825		11,689,415
2009		134		1,018		923,440
2011		852		5,745		5,226,562
2012		972		9,369		8,524,582
2013		34,211		211,395		192,394,516
Total	$	41,017	$	257,451		234,287,861

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

Gain from change in fair value of hybrid financial instruments

	Three months ended March 31,
	2014		2013
	(in thousands)
2006	$	11,471	$	1,887
2007		2,637		2,329
2008		10,927		1,657
2009		863		(74)
2010		-		623
2011		4,879		249
2012		8,356		103
2013		179,523		-
Gain from changes in fair value of hybrid instruments	$	218,656	$	6,774

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

			March 31, 2014						December 31, 2013
			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 Convertible Preferred Stock		2017		0.000100		87,368	$	44		0.000100		87,368	$	121
Warrants issued with debentures:
2008		2015		0.000100		238,079		117		0.000100		238,079		324
2010		2015		0.000100		81,340		40		0.000100		81,340		111
2011		2016		0.000100		58,256		29		0.000100		58,256		80
2012		2017		0.000100		34,947		17		0.000100		34,947		48
Total						499,990	$	247				499,990	$	684

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 March 31, 2014 included an expected life equal to the remaining term of the warrants, an expected dividend yield of zero, estimated volatility ranging from 165% to 194%, and risk-free rates of return ranging from 0.14% to 1.04%. 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. The exercise price of the warrants is currently $0.0001, which was also estimated to be the exercise price for purposes of the valuation technique.  The anti-dilution provisions of the warrants allow for the fixed exercise price to be reset to the lowest price of any subsequently issued common share indexed instruments with a conversion price below the current exercise price of the warrant. However, the likelihood of the Company issuing additional equity below the current strike price was deemed impractical and as a result, the anti-dilutive protection was not factored into the calculation. We also modified the valuation technique to consider the potentially dilutive impact on the stock price from the issuance of shares of common stock upon the exercise of the warrants on the fair value estimate of the warrants. We estimated that the exercise of the warrants would result in 7.6% decline in the stock price and a corresponding decline in the fair value of the warrants of approximately $20,000 as compared to the fair value assuming no dilution. The Company determined inclusion of the impact from potentially dilutive shares in the valuation technique to be a change in accounting estimate as discussed in ASC Topic 250-10-45-17, Accounting Changes and Error Corrections, and is therefore reflected in the period of change and will be reflected in future periods.

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

Gain from change in fair value of derivative liability – warrants

	Three months ended March 31,
	2014		2013
	(in thousands)
Warrants issued with preferred stock:
Series D Convertible Preferred Stock	$	77	$	608
Warrants issued with debentures:
2008		207		1,424
2010		71		480
2011		51		387
2012		31		223
Gain from change in fair value of derivative liability – warrants	$	437	$	3,122

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 during the three months ended March 31, 2014 (in thousands):

	Compound
	Embedded		Warrant		Hybrid
	Derivatives		Derivatives		Instruments		Total
Beginning balance, December 31, 2013:	$	23,606	$	684	$	257,451	$	281,741
Fair value adjustments:
Compound embedded derivatives		(23,447)		-		-		(23,447)
Warrant derivatives		-		(437)		-		(437)
Hybrid instruments		-		-		(218,656)		(218,656)
Ending balance, March 31, 2014	$	159	$	247	$	38,795	$	39,201

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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Financing (Details 8) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Debt Conversion [Line Items]
Gain from change in fair value of derivative liability - warrants	$ 437	$ 3,122
Series D Convertible Preferred Stock [Member]
Debt Conversion [Line Items]
Gain from change in fair value of derivative liability - warrants	77	608
Warrants With Debenture Attached Series 2008 [Member]
Debt Conversion [Line Items]
Gain from change in fair value of derivative liability - warrants	207	1,424
Warrants With Debenture Attached Series 2010 [Member]
Debt Conversion [Line Items]
Gain from change in fair value of derivative liability - warrants	71	480
Warrants With Debenture Attached Series 2011 [Member]
Debt Conversion [Line Items]
Gain from change in fair value of derivative liability - warrants	51	387
Warrants With Debenture Attached Series 2012 [Member]
Debt Conversion [Line Items]
Gain from change in fair value of derivative liability - warrants	$ 31	$ 223

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Plan of Merger (Details Textual) (USD $) In Millions, except Share data, unless otherwise specified			3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Plan of Merger [Member]	Mar. 31, 2014 Plan of Merger [Member] Maximum [Member]	Mar. 31, 2014 Plan of Merger [Member] Minimum [Member]
Plan of Merger [Line Items]
Common Stock, No Par Value			$ 0.001
Common Stock, Shares Authorized	5,000,000,000	5,000,000,000		7,500,000,000	5,000,000,000
Common Stock, Shares, Outstanding	4,984,827,279	4,984,827,279	1
Debt Instrument, Increase (Decrease), Net, Total			$ 5.0
Stockholders Equity Note, Stock Split, Conversion Ratio			15

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 266	$ 267
Accounts receivable	386	295
Prepaid expenses and other current assets	88	107
Total current assets	740	669
Property and equipment, net	4	5
Goodwill	3,418	3,418
Patents and other intangible assets, net	1,144	1,213
Other long-term assets	20	0
Total assets	5,326	5,305
Current liabilities:
Accounts payable	334	236
Accrued expenses	473	291
Deferred revenues and customer prepayments	1,971	2,252
Notes payable	28	56
Derivative financial instruments - warrants	247	684
Derivative financial instruments - Series C and D Convertible Preferred Stock and debentures payable	159	23,606
Debentures payable - carried at fair value	38,795	257,451
Total current liabilities	42,007	284,576
Commitments and contingencies
Preferred stock	5,164	5,164
Shareholders' deficit:
Common stock, $0.001 par value, 5,000,000,000 shares authorized, 4,984,827,279 shares issued and outstanding as of March 31, 2014 and December 31, 2013	4,985	4,985
Additional paid-in capital	190,946	190,946
Accumulated deficit	(236,895)	(479,485)
Accumulated other comprehensive loss	(102)	(102)
Treasury stock, at cost, 2,012 shares of common stock	(779)	(779)
Total shareholders' deficit	(41,845)	(284,435)
Total liabilities and shareholders' deficit	5,326	5,305
Series C Convertible Preferred Stock [Member]
Current liabilities:
Preferred stock	4,816	4,816
Series D Convertible Preferred Stock [Member]
Current liabilities:
Preferred stock	$ 348	$ 348

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General

3 Months Ended

Mar. 31, 2014

General [Abstract]

General [Text Block]

Note 1 – General

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

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Stock-Based Compensation (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options, Outstanding (in shares) December 31, 2013	1,173
Options, Outstanding (in shares) March 31, 2014	1,173
Options, Exercisable (in shares)	972
Weighted-Average Exercise Price, Outstanding (in dollars per share) December 31, 2013	$ 0.017
Weighted-Average Exercise Price, Outstanding (in dollars per share) March 31, 2014	$ 0.017
Weighted-Average Exercise Price, Exercisable (in dollars per share)	$ 0.018
Aggregate Intrinsic Value, Outstanding	$ 0
Aggregate Intrinsic Value, Exercisable	0
Weighted- Average Contractual Life Remaining in Years	7 years 6 months
Weighted-Average Contractual Life Remaining in Years, Exercisable	7 years 3 months 18 days
Aggregate Intrinsic Value, Outstanding	$ 0

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Summary of Significant Accounting Policies (Details 1) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Numerator:
Net income available to common shareholders	$ 242,590	$ 9,038
Effect of dilutive securities:
Hybrid financial instruments	218,656	6,774
Derivative liability - warrants	437	3,122
Derivative liability - Series C and D Convertible Preferred Stock and debentures	23,447	(299)
Denominator:
Weighted average shares used to compute basic income per common share (in shares)	4,984,827,279	2,789,315,439
Effect of dilutive securities:
Denominator for diluted income per common share (in shares)	266,001,250,808	27,931,664,140
Basic income per common share (in dollars per share)	$ 0.049	$ 0.003
Diluted income per common share (in dollars per share)	$ 0.001	$ 0.000
Numerator [Member]
Numerator:
Net income available to common shareholders	242,590	9,038
Effect of dilutive securities:
Hybrid financial instruments	(29,151)	(6,774)
Derivative liability - warrants	(40)	0
Derivative liability - Series C and D Convertible Preferred Stock and debentures	(1,992)	299
Numerator for diluted income per common share	$ 211,407	$ 2,563
Denominator [Member]
Denominator:
Weighted average shares used to compute basic income per common share (in shares)	4,984,827,279	2,789,315,439
Effect of dilutive securities:
Hybrid financial instruments (in shares)	233,957,214,103	22,595,466,030
Derivative liability - warrants (in shares)	440,652,725	0
Derivative liability - Series C and D preferred stock and debentures (in shares)	26,618,556,701	2,546,882,671
Denominator for diluted income per common share (in shares)	266,001,250,808	27,931,664,140
Basic income per common share (in dollars per share)	$ 0.049	$ 0.003
Diluted income per common share (in dollars per share)	$ 0.001	$ 0.000

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Stock-Based Compensation (Details 1) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Number of Shares (in shares)	1,173
Options Outstanding, Weighted - Average Remaining Life (in years)	7 years 6 months
Options Outstanding, Weighted - Average Exercise Price (in dollars per share)	$ 0.017
Options Exercisable, Number of Shares (in shares)	972
Options Exercisable, Weighted - Average Exercise Price (in dollars per share)	$ 0.018
Stock Option Plan Exercise Range 0.008 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Number of Shares (in shares)	200
Options Outstanding, Weighted - Average Remaining Life (in years)	8 years 6 months
Options Outstanding, Weighted - Average Exercise Price (in dollars per share)	$ 0.008
Options Exercisable, Number of Shares (in shares)	65
Options Exercisable, Weighted - Average Exercise Price (in dollars per share)	$ 0.008
Stock Option Plan Exercise Range 0.014 to 0.03 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Number of Shares (in shares)	884
Options Outstanding, Weighted - Average Remaining Life (in years)	7 years 3 months 18 days
Options Outstanding, Weighted - Average Exercise Price (in dollars per share)	$ 0.015
Options Exercisable, Number of Shares (in shares)	818
Options Exercisable, Weighted - Average Exercise Price (in dollars per share)	$ 0.016
Stock Option Plan Exercise Range 0.050 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options Outstanding, Number of Shares (in shares)	89
Options Outstanding, Weighted - Average Remaining Life (in years)	6 years 10 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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Financing (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Debt Conversion [Line Items]
Debt Instrument, Face Amount	$ 41,017
Debenture Issuance 2006 [Member]
Debt Conversion [Line Items]
Debt Instrument, Face Amount	1,962
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, Anti-Dilution Adjusted Price, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance One In 2007 [Member]
Debt Conversion [Line Items]
Debt Instrument, Face Amount	567
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, Anti-Dilution Adjusted Price, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance Two In 2007 [Member]
Debt Conversion [Line Items]
Debt Instrument, Face Amount	272
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, Anti-Dilution Adjusted Price, Percentage	95.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance One In 2008 [Member]
Debt Conversion [Line Items]
Debt Instrument, Face Amount	1,217
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, Anti-Dilution Adjusted Price, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance Two In 2008 [Member]
Debt Conversion [Line Items]
Debt Instrument, Face Amount	830
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, Anti-Dilution Adjusted Price, Percentage	95.00%
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]
Debt Instrument, Face Amount	134
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, Anti-Dilution Adjusted Price, 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]
Debt Instrument, Face Amount	852
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, Anti-Dilution Adjusted Price, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance One In 2012 [Member]
Debt Conversion [Line Items]
Debt Instrument, Face Amount	762
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, Anti-Dilution Adjusted Price, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance Two In 2012 [Member]
Debt Conversion [Line Items]
Debt Instrument, Face Amount	210
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, Anti-Dilution Adjusted Price, Percentage	95.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance One In 2013 [Member]
Debt Conversion [Line Items]
Debt Instrument, Face Amount	22,084
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, Anti-Dilution Adjusted Price, Percentage	90.00%
Conversion Price - Lower of Fixed Price or Percentage of VWAP for Look-back Period, Look-back Period	125 days
Debenture Issuance Two In 2013 [Member]
Debt Conversion [Line Items]
Debt Instrument, Face Amount	$ 12,127
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, Anti-Dilution Adjusted Price, 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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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2014

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 March 17, 2014. The results of operations for the three months ended March 31, 2014 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 and its wholly-owned subsidiaries. We operate as one reportable segment. All intercompany accounts, transactions and profits have been eliminated in consolidation.  Certain prior period amounts in the condensed consolidated financial statements and notes thereto have been reclassified to conform to the current year's presentation.  

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

Change in Estimates – For the three month period ended  March 31, 2014 fair value accounting of the derivative financial instruments and debentures payable, we reassessed the valuation techniques used to estimate the liability fair values. Based on the assessment, including discussions with the third-party valuation firm assisting us with the calculation, we determined that the valuation technique should be modified to consider the potentially dilutive impact on the stock price resulting from the issuance of additional shares of  common stock upon the conversion  of the instruments as well as the resulting value in comparison to our market capitalization. The change in estimate from the valuation technique modification had the following impact on the financial instruments as of and for the three months ended March 31, 2014 (in thousands):

	Decrease in  liability		Gain from change  in fair value
Derivative financial instrument - warrants	$	20	$	20
Derivative financial instrument - Series C and D Convertible Preferred Stock		23,278		23,278
Debentures payable - carried at fair value		219,136		219,136

The modification of the valuation technique represents a change in accounting estimate as discussed in Accounting Standards Codification (“ASC”)  Topic 250-10-45-17, Accounting Changes and Error Corrections. The impact from the modification in valuation technique has therefore been reflected in the period of change and will be reflected in future periods. See Note 3 – Financing for additional discussion.

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 condensed consolidated financial statements have been prepared in conformity with US GAAP, which contemplates our continuation as a going concern given fair value accounting related to our debentures. Our net income for the three months ended March 31, 2014 and 2013 was $242.6 million as compared to $9.0 million, respectively, including $242.5 million and $9.6 million, respectively, of net gains related to our financing instruments.

Net cash provided by operations during the three months ended March 31, 2014 was $27,000 as compared to net cash used in operations of $0.5 million during the three months ended March 31, 2013. As of March 31, 2014, we have an accumulated deficit of $236.9 million. We also have a working capital deficit of $41.3 million, including $39.2 million in current liabilities for our derivative and debenture financing instruments.

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. 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 shares of common stock outstanding. During 2013, there were 2,879 million shares of common stock issued for these conversions. We cannot predict if or when each holder may or may not elect to convert into shares of common stock.

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.

Revisions to 2013 Interim Reporting – In connection with the completion of our third quarter 2013 and first quarter 2014 reporting, we identified certain errors associated with our first 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 the three months ended March 31, 2013 reporting as discussed below. Our assessment considered the guidance provided by 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 and cash flows for the three months ended March 31, 2013 originally reported a loss from change in fair value of hybrid financial instruments of $299,000 but should have reflected a gain of $6,774,000. Additionally, the Company reported a gain from change in fair value of derivative liability – Series C and D Convertible Preferred Stock  and debentures of $6,774,000 but should have reflected a loss of $299,000. The errors were due to clerical transposing of the amounts and have been revised herein to reflect the proper amounts. The foreign currency translation adjustment within comprehensive income (loss) originally reflected a $111,000 loss but should have reflected a $111,000 gain. The reporting has been revised herein to reflect the proper amounts. Additionally, the fully diluted net income per share was reflected as $0.003 but should have been $0.000. The reporting has been revised herein to reflect the proper amount.

The condensed consolidated statements of cash flows for the three months ended March 31, 2013 overstated net cash used in operating activities and the 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 amounts have been revised herein to reflect the proper amounts.

Basic and Diluted Net Income Per Common Share – The components of basic and diluted income per share attributable to the Company’s common stock shareholders were as follows (in thousands, except share and per share data): 

	Three Months Ended
	March 31,
	2014		2013
			(revised)
Numerator:
Net income available to common shareholders	$	242,590	$	9,038
Effect of dilutive securities:
Hybrid financial instruments		(29,151)		(6,774)
Derivative liability - warrants		(40)		-
Derivative liability - Series C and D Convertible Preferred Stock and debentures		(1,992)		299
Numerator for diluted income per common share	$	211,407	$	2,563
Denominator:
Weighted average shares used to compute basic income per common share		4,984,827,279		2,789,315,439
Effect of dilutive securities:
Hybrid financial instruments		233,957,214,103		22,595,466,030
Derivative liability - warrants		440,652,725		-
Derivative liability - Series C and D preferred stock and debentures		26,618,556,701		2,546,882,671
Denominator for diluted income per common share		266,001,250,808		27,931,664,140
Basic income per common share	$	0.049	$	0.003
Diluted income per common share	$	0.001	$	0.000

We excluded approximately 1,173,000 and 1,883,833,000 dilutive securities from the calculation of diluted income per common share for the three months ended March 31, 2014 and 2013, respectively, because inclusion of these securities would be antidilutive. 

Recent Accounting Pronouncements  – From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of 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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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2014	Dec. 31, 2013
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	4,984,827,279
Common stock, shares outstanding	4,984,827,279	4,984,827,279
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	4,816
Convertible preferred stock, shares outstanding	4,816	4,816
Convertible preferred stock, liquidation value (in dollars)	$ 4,816	$ 4,816
Common stock, shares issued	314,619,000
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
Common stock, shares issued	245,162,000

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Financing (Tables)

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Significant Terms Debentures for Entire Hybrid Instrument [Table Text Block]

The following table summarizes the significant terms of each of the debentures for which the entire hybrid instrument is recorded at fair value as of March 31, 2014:

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

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 Convertible Preferred Stock		22		17		5		314,619
Series D Convertible 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 March 31, 2014 is reflected in the following table in addition to the principal and interest converted since inception and the number of shares of common stock issued upon conversion.

	Outstanding  principal and  accrued interest  at March   31, 2014		Principal and  accrued interest  converted since  inception		Common  Shares  issued
	(in thousands)
Debentures	$	43,468	$	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 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 March 31, 2014 and December 31, 2013.

March 31, 2014
	Face		Carrying		Embedded  Conversion		Common  Stock
	Value		Value		Feature		Shares
	(in thousands)
Series C Convertible Preferred Stock	$	4,816	$	4,816	$	148		24,823,015
Series D Convertible Preferred Stock		348		348		11		1,794,330
Total	$	5,164	$	5,164	$	159		26,617,345

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

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 Convertible Preferred Stock and debentures

	Three months ended  March 31,
	2014		2013
	(in thousands)
Series C Convertible Preferred Stock	$	21,867	$	(289)
Series D Convertible Preferred Stock		1,580		(21)
Debentures:
2006		-		11
Gain (loss) from change in fair value of derivative liability - Series C and D Convertible Preferred Stock and debentures	$	23,447	$	(299)

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 shares of common stock into which the instruments are convertible as of March 31, 2014 and December 31, 2013.

March 31, 2014					Common
	Face		Fair		Stock
	Value		Value		Shares
	(in thousands)
Debentures:
2006	$	1,962	$	2,041		12,285,288
2007		839		950		3,244,058
2008		2,047		1,898		11,689,415
2009		134		155		923,440
2011		852		866		5,226,562
2012		972		1,013		8,524,582
2013		34,211		31,872		192,394,516
Total	$	41,017	$	38,795		234,287,861

December 31, 2013					Common
	Face		Fair		Stock
	Value		Value		Shares
	(in thousands)
Debentures:
2006	$	1,962	$	13,512		12,285,288
2007		839		3,587		3,244,058
2008		2,047		12,825		11,689,415
2009		134		1,018		923,440
2011		852		5,745		5,226,562
2012		972		9,369		8,524,582
2013		34,211		211,395		192,394,516
Total	$	41,017	$	257,451		234,287,861

Schedule of Fair Value Hybrid Financial Instrument Disclosure [Table Text Block]

The changes in fair value of these hybrid financial instruments were as follows:

Gain from change in fair value of hybrid financial instruments

	Three months ended March 31,
	2014		2013
	(in thousands)
2006	$	11,471	$	1,887
2007		2,637		2,329
2008		10,927		1,657
2009		863		(74)
2010		-		623
2011		4,879		249
2012		8,356		103
2013		179,523		-
Gain from changes in fair value of hybrid instruments	$	218,656	$	6,774

Schedule of Warrants Embedded Warrants Fair Value Outstanding and Anti Diluative 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:

			March 31, 2014						December 31, 2013
			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 Convertible Preferred Stock		2017		0.000100		87,368	$	44		0.000100		87,368	$	121
Warrants issued with debentures:
2008		2015		0.000100		238,079		117		0.000100		238,079		324
2010		2015		0.000100		81,340		40		0.000100		81,340		111
2011		2016		0.000100		58,256		29		0.000100		58,256		80
2012		2017		0.000100		34,947		17		0.000100		34,947		48
Total						499,990	$	247				499,990	$	684

Schedule of Changes in Fair Value of Warrants [Table Text Block]

The changes in the fair value of the warrants were as follows:

Gain from change in fair value of derivative liability – warrants

	Three months ended March 31,
	2014		2013
	(in thousands)
Warrants issued with preferred stock:
Series D Convertible Preferred Stock	$	77	$	608
Warrants issued with debentures:
2008		207		1,424
2010		71		480
2011		51		387
2012		31		223
Gain from change in fair value of derivative liability – warrants	$	437	$	3,122

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 during the three months ended March 31, 2014 (in thousands):

	Compound
	Embedded		Warrant		Hybrid
	Derivatives		Derivatives		Instruments		Total
Beginning balance, December 31, 2013:	$	23,606	$	684	$	257,451	$	281,741
Fair value adjustments:
Compound embedded derivatives		(23,447)		-		-		(23,447)
Warrant derivatives		-		(437)		-		(437)
Hybrid instruments		-		-		(218,656)		(218,656)
Ending balance, March 31, 2014	$	159	$	247	$	38,795	$	39,201

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Document And Entity Information	3 Months Ended
	Mar. 31, 2014	Apr. 25, 2014
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	Mar. 31, 2014
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2014

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2014

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block]

The status of our outstanding, vested and exercisable options during the three months ended March 31, 2014 is as follows:

						Weighted-
						Average
		Weighted-				Contractual
		Average		Aggregate		Life
		Exercise		Intrinsic		Remaining
	Shares	Price		Value		in Years
	(in thousands)			(in thousands)
Outstanding at December 31, 2013	1,173	$	0.017		-
Outstanding at March 31, 2014	1,173	$	0.017	$	-	7.5
Exercisable at March 31, 2014	972	$	0.018	$	-	7.3

Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]

The following table summarizes information about our stock options outstanding at March 31, 2014:

Options Outstanding					Options Exercisable
Exercise Prices	Number of Shares	Weighted-  Average  Remaining  Life	Weighted-  Average Exercise  Price		Number of Shares	Weighted-  Average  Exercise Price
	(in thousands)	(in years)			(in thousands)
$0.008	200	8.5	$	0.008	65	$	0.008
$0.014 to $0.03	884	7.3		0.015	818		0.016
$0.050	89	6.9		0.047	89		0.047
	1,173	7.5	$	0.017	972	$	0.018

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Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues	$ 1,003	$ 602
Cost of revenues	158	31
Gross profit	845	571
Sales and marketing expenses	15	61
General and administrative expenses	603	857
Research and development costs	177	212
Operating income (loss)	50	(559)
Gain from change in fair value of hybrid financial instruments	218,656	6,774
Gain from change in fair value of derivative liability - warrants	437	3,122
Gain (loss) from change in fair value of derivative liability - Series C and D Convertible Preferred Stock and debentures	23,447	(299)
Net income	242,590	9,038
Comprehensive income:
Net income	242,590	9,038
Foreign currency translation adjustment	0	111
Comprehensive income	$ 242,590	$ 9,149
Net income per common share, basic and diluted:
Basic (in dollars per share)	$ 0.049	$ 0.003
Fully diluted (in dollars per share)	$ 0.001	$ 0.000
Weighted average number of common shares:
Basic (in shares)	4,984,827,279	2,789,315,439
Fully diluted (in shares)	266,001,250,808	27,931,664,140

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Geographic Information

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 7 – Geographic Information

Revenue, classified by geographic location from which the revenue was originated, is as follows:

	Three Months   Ended March 31,
	2014		2013
	(in thousands)
United States	$	1,003	$	589
Germany		-		13
Total revenue	$	1,003	$	602

Approximately $64,000 and $142,000 of total assets were located in Germany as of March 31, 2014 and December 31, 2013, respectively. All other assets were located in the U.S.

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Contingencies

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 6 – Contingencies

Legal – 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.

Other – On February 21, 2014, the Company received a correspondence (the “Delta Notice”) from Delta Capital Partners LLC (“Delta”), asserting a claim for certain amounts owed under a secured convertible debenture. The principal amount outstanding and conversion rights under such instrument had been assigned to Delta by YA Global (the “Assignment”), several years subsequent to the original issuance of the instrument by the Company to YA Global. The Company’s understanding is that pursuant to the terms of the Assignment, YA Global, as collateral agent, retained all rights in connection with the enforcement of any claims under Delta’s secured convertible debenture.  YA Global has indicated that it does not intend to assert any of the claims described by Delta in the Delta Notice.

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Summary of Significant Accounting Policies (Details Textual) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Summary of Significant Accounting Policies [Line Items]
Net Cash Used in Operations	$ 27,000	$ (547,000)
Accumulated deficit	(236,895,000)		(479,485,000)
Working Capital Deficit	41,300,000
Working Capital Deficit Related To Financing Instruments	39,200,000
Net income	242,590,000	9,038,000
Derivative Instruments Gain (Loss) On Derivative Net	242,500,000	9,600,000
Conversion of Stock, Shares Issued			2,879,000,000
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,173,000	1,883,833,000
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Gain (Loss) Arising During Period, Net of Tax		111,000
Effect of Exchange Rate on Cash		113,000
Cash, Period Increase (Decrease)		$ 2,000

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Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2014

Payables and Accruals [Abstract]

Schedule of Accrued Liabilities [Table Text Block]

The following table summarized our accrued liabilities (in thousands):
	March 31,		December 31,
	2014		2013
Accrued operating expenses	$	112	$	112
Accrued payroll related expenses		134		65
Accrued legal fees		227		114
Total	$	473	$	291

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation – The condensed consolidated financial statements include the accounts of NeoMedia and its wholly-owned subsidiaries. We operate as one reportable segment. All intercompany accounts, transactions and profits have been eliminated in consolidation.  Certain prior period amounts in the condensed consolidated financial statements and notes thereto have been reclassified to conform to the current year's presentation.  

Use of Estimates, Policy [Policy Text Block]

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

Fair Value of Financial Instruments, Policy [Policy Text Block]

Change in Estimates – For the three month period ended  March 31, 2014 fair value accounting of the derivative financial instruments and debentures payable, we reassessed the valuation techniques used to estimate the liability fair values. Based on the assessment, including discussions with the third-party valuation firm assisting us with the calculation, we determined that the valuation technique should be modified to consider the potentially dilutive impact on the stock price resulting from the issuance of additional shares of  common stock upon the conversion  of the instruments as well as the resulting value in comparison to our market capitalization. The change in estimate from the valuation technique modification had the following impact on the financial instruments as of and for the three months ended March 31, 2014 (in thousands):

	Decrease in  liability		Gain from change  in fair value
Derivative financial instrument - warrants	$	20	$	20
Derivative financial instrument - Series C and D Convertible Preferred Stock		23,278		23,278
Debentures payable - carried at fair value		219,136		219,136

The modification of the valuation technique represents a change in accounting estimate as discussed in Accounting Standards Codification (“ASC”)  Topic 250-10-45-17, Accounting Changes and Error Corrections. The impact from the modification in valuation technique has therefore been reflected in the period of change and will be reflected in future periods. See Note 3 – Financing for additional discussion.

Going Concern [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 condensed consolidated financial statements have been prepared in conformity with US GAAP, which contemplates our continuation as a going concern given fair value accounting related to our debentures. Our net income for the three months ended March 31, 2014 and 2013 was $242.6 million as compared to $9.0 million, respectively, including $242.5 million and $9.6 million, respectively, of net gains related to our financing instruments.

Net cash provided by operations during the three months ended March 31, 2014 was $27,000 as compared to net cash used in operations of $0.5 million during the three months ended March 31, 2013. As of March 31, 2014, we have an accumulated deficit of $236.9 million. We also have a working capital deficit of $41.3 million, including $39.2 million in current liabilities for our derivative and debenture financing instruments.

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. 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 shares of common stock outstanding. During 2013, there were 2,879 million shares of common stock issued for these conversions. We cannot predict if or when each holder may or may not elect to convert into shares of common stock.

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.

Revisions To 2013 Interim Reporting Policy [Policy Text Block]

Revisions to 2013 Interim Reporting – In connection with the completion of our third quarter 2013 and first quarter 2014 reporting, we identified certain errors associated with our first 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 the three months ended March 31, 2013 reporting as discussed below. Our assessment considered the guidance provided by 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 and cash flows for the three months ended March 31, 2013 originally reported a loss from change in fair value of hybrid financial instruments of $299,000 but should have reflected a gain of $6,774,000. Additionally, the Company reported a gain from change in fair value of derivative liability – Series C and D Convertible Preferred Stock  and debentures of $6,774,000 but should have reflected a loss of $299,000. The errors were due to clerical transposing of the amounts and have been revised herein to reflect the proper amounts. The foreign currency translation adjustment within comprehensive income (loss) originally reflected a $111,000 loss but should have reflected a $111,000 gain. The reporting has been revised herein to reflect the proper amounts. Additionally, the fully diluted net income per share was reflected as $0.003 but should have been $0.000. The reporting has been revised herein to reflect the proper amount.

The condensed consolidated statements of cash flows for the three months ended March 31, 2013 overstated net cash used in operating activities and the 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 amounts have been revised herein to reflect the proper amounts.

Earnings Per Share, Policy [Policy Text Block]

Basic and Diluted Net Income Per Common Share – The components of basic and diluted income per share attributable to the Company’s common stock shareholders were as follows (in thousands, except share and per share data): 

	Three Months Ended
	March 31,
	2014		2013
			(revised)
Numerator:
Net income available to common shareholders	$	242,590	$	9,038
Effect of dilutive securities:
Hybrid financial instruments		(29,151)		(6,774)
Derivative liability - warrants		(40)		-
Derivative liability - Series C and D Convertible Preferred Stock and debentures		(1,992)		299
Numerator for diluted income per common share	$	211,407	$	2,563
Denominator:
Weighted average shares used to compute basic income per common share		4,984,827,279		2,789,315,439
Effect of dilutive securities:
Hybrid financial instruments		233,957,214,103		22,595,466,030
Derivative liability - warrants		440,652,725		-
Derivative liability - Series C and D preferred stock and debentures		26,618,556,701		2,546,882,671
Denominator for diluted income per common share		266,001,250,808		27,931,664,140
Basic income per common share	$	0.049	$	0.003
Diluted income per common share	$	0.001	$	0.000

We excluded approximately 1,173,000 and 1,883,833,000 dilutive securities from the calculation of diluted income per common share for the three months ended March 31, 2014 and 2013, respectively, because inclusion of these securities would be antidilutive. 

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements  – From time to time, new accounting pronouncements are issued that we adopt as of the specified effective date. We believe that the impact of 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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Plan of Merger

3 Months Ended

Mar. 31, 2014

Plan of Merger [Abstract]

Plan of Merger [Text Block]

Note 8 – Plan of Merger

On February 21, 2014, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Qode Services Corporation (“Qode”), a wholly owned subsidiary of the Company. Under the terms of the Merger Agreement, Qode will be merged into the Company and will cease to exist upon the completion of certain conditions.  The Company shall continue as the surviving corporation.

Under the terms of the Merger Agreement, the Company’s charter shall be amended to provide for an increase in the amount of common stock authorized shares, and each share of the Company’s common stock issued and outstanding immediately prior to merger shall continue to remain outstanding and remain unchanged, except that (i) the par value shall change from $0.001 per share to no par value per share, and (ii) each fifteen (15) shares of common stock issued and outstanding shall be combined and converted into one (1) share of common stock. Upon the consummation of the merger and reverse stock split effected thereunder, the amount of authorized shares of common stock shall be increased from 5 billion to 7.5 billion shares. 

The Company’s Board of Directors determined that the Merger Agreement was the only option available to avoid default after the holder of a majority of the outstanding secured convertible debentures communicated its intent to foreclose on all of the Company’s assets in the event that the Company’s share reserves were not sufficient to honor conversions under such instruments (a potential default thereunder). Further, the holder of the secured convertible debentures agreed to enter into amendments to the secured convertible debentures to decrease the aggregate amount of debt by $5.0 million if the Company resolved the issue.

The Company anticipates closing the merger on May 11, 2014.

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Subsequent Events

3 Months Ended

Mar. 31, 2014

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 9 – Subsequent Events

On April 25, 2014, the Company entered into a Reaffirmation and Ratification Agreement with YA Global. Under the terms of the agreement, YA Global agreed to reduce the outstanding principal for certain of the Consolidated Debentures by $5.0 million. The agreement also summarizes and affirms all principal amounts presently outstanding and owed by the Company to YA Global under all of the outstanding financing documents and debentures issued by the Company to YA (the “Financing Documents”). Pursuant to the agreement, the Company (i) ratified the terms of the Financing Documents and agreed that they remain in full force and effect, (ii) confirmed that the collateral rights granted to YA Global under the Financing Documents secure the obligations created thereunder, (iii) confirmed that the occurrence of an “event of default” under any of the Financing Documents would constitute an “event of default” under all of the Financing Documents, and (iv) agreed to execute and deliver to YA Global all such additional documents as reasonably required by YA Global to correct any document deficiencies, or to vest or perfect the Financing Documents and the collateral granted therein, and authorized YA Global to file any financing statements and take any other actions necessary to perfect YA Global’s security interests in any such collateral.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

Schedule of Change in Accounting Estimate [Table Text Block]

The change in estimate from the valuation technique modification had the following impact on the financial instruments as of and for the three months ended March 31, 2014 (in thousands):

	Decrease in  liability		Gain from change  in fair value
Derivative financial instrument - warrants	$	20	$	20
Derivative financial instrument - Series C and D Convertible Preferred Stock		23,278		23,278
Debentures payable - carried at fair value		219,136		219,136

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

The components of basic and diluted income per share attributable to the Company’s common stock shareholders were as follows (in thousands, except share and per share data): 

	Three Months Ended
	March 31,
	2014		2013
			(revised)
Numerator:
Net income available to common shareholders	$	242,590	$	9,038
Effect of dilutive securities:
Hybrid financial instruments		(29,151)		(6,774)
Derivative liability - warrants		(40)		-
Derivative liability - Series C and D Convertible Preferred Stock and debentures		(1,992)		299
Numerator for diluted income per common share	$	211,407	$	2,563
Denominator:
Weighted average shares used to compute basic income per common share		4,984,827,279		2,789,315,439
Effect of dilutive securities:
Hybrid financial instruments		233,957,214,103		22,595,466,030
Derivative liability - warrants		440,652,725		-
Derivative liability - Series C and D preferred stock and debentures		26,618,556,701		2,546,882,671
Denominator for diluted income per common share		266,001,250,808		27,931,664,140
Basic income per common share	$	0.049	$	0.003
Diluted income per common share	$	0.001	$	0.000

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Financing (Details Textual) (USD $)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
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%
Debt Instrument, Maturity Date	Jul. 29, 2008
Embedded Derivative, Gain (Loss) On Embedded Derivative, Net	$ 23,447,000	$ (299,000)
Unrealized Gain (Loss) On Hybrid Instrument, Net	218,656,000	6,774,000
Embedded Derivative Financial Instruments [Member]
Debt Conversion [Line Items]
Fair Value Assumptions, Expected Volatility Rate	187.00%
Fair Value Assumptions Risk Free Interest Rate Minimum	8.00%
Fair Value Assumptions Equivalent Credit Risk Adjusted Rate	13.00%
Fair Value Assumptions, Expected Term	1 year 4 months 2 days
Hybrid Instrument [Member]
Debt Conversion [Line Items]
Fair Value Assumptions, Expected Volatility Rate	187.00%
Fair Value Inputs, Entity Credit Risk	13.00%
Unrealized Gain (Loss) On Hybrid Instrument, Net	219,100,000
Series C Convertible Preferred Stock [Member]
Debt Conversion [Line Items]
Embedded Derivative, Gain (Loss) On Embedded Derivative, Net	21,867,000	(289,000)
Series C Convertible Preferred Stock [Member] | Embedded Derivative Financial Instruments [Member]
Debt Conversion [Line Items]
Embedded Derivative, Gain (Loss) On Embedded Derivative, Net	23,300,000
Series D Convertible Preferred Stock [Member]
Debt Conversion [Line Items]
Embedded Derivative, Gain (Loss) On Embedded Derivative, Net	1,580,000	(21,000)
Series D Convertible Preferred Stock [Member] | Embedded Derivative Financial Instruments [Member]
Debt Conversion [Line Items]
Embedded Derivative, Gain (Loss) On Embedded Derivative, Net	23,300,000
Maximum [Member] | Hybrid Instrument [Member]
Debt Conversion [Line Items]
Antidilution Adjusted Conversion Price Maximum	$ 0.00019
Minimum [Member] | Hybrid Instrument [Member]
Debt Conversion [Line Items]
Antidilution Adjusted Conversion Price Minimum	$ 0.00018
Debenture [Member] | Embedded Derivative Financial Instruments [Member]
Debt Conversion [Line Items]
Embedded Derivative, Gain (Loss) On Embedded Derivative, Net	23,300,000
Warrant [Member]
Debt Conversion [Line Items]
Fair Value Assumptions Equivalent Credit Risk Adjusted Rate	7.60%
Remaining Warrants By Investors	20,000
Warrants Exercise Price	$ 0.0001
Warrant [Member] | Maximum [Member]
Debt Conversion [Line Items]
Fair Value Assumptions, Expected Volatility Rate	194.00%
Fair Value Assumptions Risk Free Interest Rate Maximum	1.04%
Warrant [Member] | Minimum [Member]
Debt Conversion [Line Items]
Fair Value Assumptions, Expected Volatility Rate	165.00%
Fair Value Assumptions Risk Free Interest Rate Minimum	0.14%
Bifurcated Embedded Derivative Instruments [Member] | Embedded Derivative Financial Instruments [Member]
Debt Conversion [Line Items]
Debt Instrument, Convertible, Conversion Price	$ 0.000194
Monte Carlo [Member] | Hybrid Instrument [Member]
Debt Conversion [Line Items]
Fair Value Assumptions, Expected Term	1 year 4 months 2 days
Ya Global [Member] | Warrant [Member]
Debt Conversion [Line Items]
Warrants Held By Investors		1,900,000,000
Warrants Cancelled By Investors		1,400,000,000
Remaining Warrants By Investors		500,000,000
Warrants Exercise Price		$ 0.0001
Decrease In Fair Value Of Warrants		$ 1,600,000

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Summary of Significant Accounting Policies (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Change in Accounting Estimate [Line Items]
Decrease in liability, Derivative financial instrument - warrants	$ 20
Decrease in liability, Derivative financial instrument - Series C and D Convertible Preferred Stock	23,278
Decrease in liability, Debentures payable - carried at fair value	219,136
Gain from change in fair value, Derivative financial instrument - warrants	20
Gain from change in fair value,Derivative financial instrument - Series C and D Convertible Preferred Stock	23,278
Gain from change in fair value, Debentures payable - carried at fair value	$ 219,136

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Financing (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Debt Conversion [Line Items]
Debentures, Outstanding principal and accrued interest	$ 43,468
Debentures, Principal and accrued interest converted since inception	$ 11,747
Common shares issued (in shares)	4,403,415

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Subsequent Events (Details Textual) (Subsequent Event [Member], Ya Global [Member], USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Subsequent Event [Member] | Ya Global [Member]
Subsequent Event [Line Items]
Debt Instrument, Increase (Decrease), Net, Total	$ 5.0

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash Flows from Operating Activities:
Net income	$ 242,590	$ 9,038
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	70	179
Gain from change in fair value of hybrid financial instruments	(218,656)	(6,774)
Gain from change in fair value of derivative liability - warrants	(437)	(3,122)
(Gain) loss from change in fair value of derivative liability - Series C and D Convertible Preferred Stock and debentures	(23,447)	299
Changes in operating assets and liabilities
Accounts receivable	(91)	(59)
Prepaid expenses and other assets	(1)	175
Accounts payable and accrued expenses	280	105
Deferred revenues and customer prepayments	(281)	(388)
Net cash provided by (used in) operating activities	27	(547)
Cash Flows from Investing Activities:
Net cash from investing activities	0	0
Cash Flows from Financing Activities:
Payments on short-term notes payable	(28)	0
Net cash used in financing activities	(28)	0
Effect of exchange rate changes on cash	0	(2)
Net change in cash and cash equivalents	(1)	(549)
Cash and cash equivalents, beginning of period	267	611
Cash and cash equivalents, end of period	266	62
Supplemental cash flow information:
Convertible debentures converted to common stock	$ 0	$ 320

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Accrued Liabilities

3 Months Ended

Mar. 31, 2014

Payables and Accruals [Abstract]

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

Note 5 – Accrued Liabilities

The following table summarized our accrued liabilities (in thousands):
	March 31,		December 31,
	2014		2013
Accrued operating expenses	$	112	$	112
Accrued payroll related expenses		134		65
Accrued legal fees		227		114
Total	$	473	$	291

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Financing (Details 3) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Debt Conversion [Line Items]
Preferred Stock, Face Value	$ 5,164	$ 5,164
Preferred Stock, Carrying Value	5,164	5,164
Preferred Stock, Embedded Conversion Feature	159	23,606
Preferred Stock, Common Stock Shares (in shares)	26,617,345	26,617,345
Series C Convertible Preferred Stock [Member]
Debt Conversion [Line Items]
Preferred Stock, Face Value	4,816	4,816
Preferred Stock, Carrying Value	4,816	4,816
Preferred Stock, Embedded Conversion Feature	148	22,015
Preferred Stock, Common Stock Shares (in shares)	24,823,015	24,823,015
Series D Convertible Preferred Stock [Member]
Debt Conversion [Line Items]
Preferred Stock, Face Value	348	348
Preferred Stock, Carrying Value	348	348
Preferred Stock, Embedded Conversion Feature	$ 11	$ 1,591
Preferred Stock, Common Stock Shares (in shares)	1,794,330	1,794,330

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Geographic Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Segment Reporting Information [Line Items]
Revenue	$ 1,003	$ 602
GERMANY
Segment Reporting Information [Line Items]
Revenue	0	13
UNITED STATES
Segment Reporting Information [Line Items]
Revenue	$ 1,003	$ 589

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Geographic Information (Tables)

3 Months Ended

Mar. 31, 2014

Segment Reporting [Abstract]

Geographic and Segment Reporting [Table Text Block]

Revenue, classified by geographic location from which the revenue was originated, is as follows:

	Three Months   Ended March 31,
	2014		2013
	(in thousands)
United States	$	1,003	$	589
Germany		-		13
Total revenue	$	1,003	$	602