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.