U. S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                        ---------------------------------

                                  FORM 10-QSB

     (Mark One)

                [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997

                                       OR

                [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                         COMMISSION FILE NUMBER 0-21743

                           NEOMEDIA TECHNOLOGIES, INC.
        -----------------------------------------------------------------
        (Exact Name of Small Business Issuer as Specified In Its Charter)

         DELAWARE                                         36-3680347
 ------------------------------                       -------------------
(State or Other Jurisdiction of                        (I.R.S. Employer
Incorporation or Organization)                        Identification No.)

2201 SECOND STREET, SUITE 600, FORT MYERS, FLORIDA            33901
--------------------------------------------------          ----------
    (Address of Principal Executive Offices)                (Zip Code)

Issuer's Telephone Number (Including Area Code)  941-337-3434

         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]

         As of July 31, 1997, there were outstanding 5,381,701 shares of the
issuer's Common Stock and 3,130,938 warrants.


<PAGE>
<TABLE>
<CAPTION>

PART I -- FINANCIAL INFORMATION                    ITEM 1. FINANCIAL STATEMENTS


                  NEOMEDIA TECHNOLOGIES, INC. AND SUBSIDIARIES
                      UNAUDITED CONSOLIDATED BALANCE SHEETS

                                                                    JUNE 30,   DECEMBER
ASSETS                                                                1997     31, 1996
                                                                   ---------   --------
                                                                       (In thousands)
<S>                                                                <C>         <C> 
Current assets:
     Cash and cash equivalents .................................   $  2,403    $  4,159
     Trade accounts receivable, net of allowance for doubtful
         accounts of $124 and $216 .............................      6,425       4,983
     Amounts due from related parties ..........................          7         496
     Inventories ...............................................         67         105
     Prepaid expenses and other ................................        608         588
                                                                   --------    --------

         Total current assets ..................................      9,510      10,331
                                                                   --------    --------

Property and equipment, net of accumulated depreciation ........        548         278
Capitalized software costs, net of accumulated amortization ....      1,045         657
                                                                   --------    --------

     Total assets ..............................................   $ 11,103    $ 11,266
                                                                   ========    ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Accounts payable ..........................................   $  5,251    $  3,800
     Accrued expenses ..........................................      1,142       1,043
     Current portion of long-term debt .........................        264         262
     Other .....................................................        315         245
                                                                   --------    --------

         Total current liabilities .............................      6,972       5,350
                                                                   --------    --------

Long-term debt, net of current portion .........................        981       1,589
                                                                   --------    --------

         Total liabilities .....................................      7,953       6,939
                                                                   --------    --------
Shareholders' equity:
     Common stock, $.01 par value, 15,000,000 shares authorized,
         5,378,085 and 5,114,316 shares outstanding ............         54          51
     Additional paid-in capital ................................     10,120       8,801
     Accumulated deficit .......................................     (7,024)     (4,525)
                                                                   --------    --------

         Total shareholders' equity ............................      3,150       4,327
                                                                   --------    --------

     Total liabilities and shareholders' equity ................   $ 11,103    $ 11,266
                                                                   ========    ========
</TABLE>


    The accompanying unaudited notes are an integral part of these unaudited
                       consolidated financial statements.

                                       1


<PAGE>


                  NEOMEDIA TECHNOLOGIES, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS


                                                            SIX MONTHS
                                                           ENDED JUNE 30,
                                                    --------------------------
                                                        1997           1996
                                                    -----------    -----------
                                                        (Dollars in thousands,
                                                        except per share data)
NET SALES:
     License fees ...............................   $       335    $       460
     Software product resales ...................         1,834          2,059
     Technology equipment resales ...............         8,624          5,110
     Service fees ...............................         1,032          1,250
                                                    -----------    -----------
         Total net sales ........................        11,825          8,879
                                                    -----------    -----------
COST OF SALES:
     License fees ...............................           139            140
     Software product resales ...................         1,608          1,384
     Technology equipment resales ...............         7,496          4,416
     Service fees ...............................           915            927
     Amortization of capitalized software costs .           307            281
                                                    -----------    -----------
         Total cost of sales ....................        10,465          7,148
                                                    -----------    -----------

GROSS PROFIT ....................................         1,360          1,731

General and administrative expenses .............         1,583            802
Sales and marketing expenses ....................         1,859            973
Research and development costs ..................           410            123
                                                    -----------    -----------

Loss from operations ............................        (2,492)          (167)

Interest expense, net ...........................            52            216
                                                    -----------    -----------

LOSS BEFORE INCOME TAXES ........................        (2,544)          (383)

Benefit for income taxes ........................           (45)           (80)
                                                    -----------    -----------

NET LOSS ........................................   $    (2,499)   $      (303)
                                                    ===========    ===========
PER SHARE DATA:
     Net loss per share .........................   $     (0.40)   $      (.07)
                                                    ===========    ===========
     Weighted average number of common and common
          equivalent shares outstanding .........     6,209,597      4,071,373
                                                    ===========    ===========

    The accompanying unaudited notes are an integral part of these unaudited
                       consolidated financial statements.

                                       2

<PAGE>

                  NEOMEDIA TECHNOLOGIES, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

                                                           THREE MONTHS
                                                           ENDED JUNE 30,
                                                    --------------------------
                                                        1997           1996
                                                    -----------    -----------
                                                       (Dollars in thousands,
                                                       except per share data)
NET SALES:
     License fees ...............................   $       117    $       301
     Software product resales ...................         1,770            769
     Technology equipment resales ...............         4,929          2,210
     Service fees ...............................           454            503
                                                    -----------    -----------
         Total net sales ........................         7,270          3,783
                                                    -----------    -----------
COST OF SALES:
     License fees ...............................            77             92
     Software product resales ...................         1,559            537
     Technology equipment resales ...............         4,282          1,863
     Service fees ...............................           522            463
     Amortization of capitalized software costs .           163            142
                                                    -----------    -----------
         Total cost of sales ....................         6,603          3,097
                                                    -----------    -----------

GROSS PROFIT ....................................           667            686

General and administrative expenses .............           827            418
Sales and marketing expenses ....................         1,058            504
Research and development costs ..................           233             59
                                                    -----------    -----------

Loss from operations ............................        (1,451)          (295)

Interest expense, net ...........................            41            112
                                                    -----------    -----------

LOSS BEFORE INCOME TAXES ........................        (1,492)          (407)

Benefit for income taxes ........................          --              (63)
                                                    -----------    -----------

NET LOSS ........................................   $    (1,492)   $      (344)
                                                    ===========    ============
PER SHARE DATA:
     Net loss per share .........................   $     (0.24)   $      (.08)
                                                    ===========    ===========
     Weighted average number of common and common
          equivalent shares outstanding .........     6,229,229      4,071,373
                                                    ===========    ===========

    The accompanying unaudited notes are an integral part of these unaudited
                       consolidated financial statements.

                                       3

<PAGE>
<TABLE>
<CAPTION>

                  NEOMEDIA TECHNOLOGIES, INC. AND SUBSIDIARIES
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                SIX MONTHS
                                                                                               ENDED JUNE 30,
                                                                                            ------------------
                                                                                             1997        1996
                                                                                            -------    -------
                                                                                               (In thousands)
<S>                                                                                         <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ................................................................................   $(2,499)   $  (303)
Adjustments to reconcile net loss to net cash used in operating activities:
     Provision for doubtful accounts ....................................................        60       --
     Depreciation and amortization ......................................................       368        167
     Changes in operating assets and liabilities:
         Trade accounts receivable ......................................................    (1,502)      (795)
         Other current assets ...........................................................        35         34
         Accounts payable and accrued expenses ..........................................     1,550        884
         Other current liabilities ......................................................        70       (138)
                                                                                            -------    -------

         Net cash used in operating activities ..........................................    (1,918)      (151)
                                                                                            -------    -------

CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalization of software development costs and purchased software .....................      (713)       (26)
Acquisition of property and equipment ...................................................      (313)       (27)
                                                                                            -------    -------

         Net cash used in investing activities ..........................................    (1,026)       (53)
                                                                                            -------    -------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of units .....................................................     1,315       --
Exercise of stock options ...............................................................         7       --
Repayment of advance to shareholder .....................................................       472       --
Proceeds from advance to shareholder ....................................................      --         (472)
Borrowings under notes payable and long-term debt .......................................      --          250
Repayments on notes payable and long-term debt ..........................................      (134)       (92)
Borrowings from shareholders and related parties ........................................      --        1,123
Repayments to shareholders and related parties ..........................................      (472)      (283)
                                                                                            -------    -------

         Net cash provided by financing activities ......................................     1,188        526
                                                                                            -------    -------

NET INCREASE (DECREASE) IN CASH .........................................................    (1,756)       322
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD ..........................................     4,159         11
                                                                                            -------    -------

CASH AND CASH EQUIVALENTS, END OF PERIOD ................................................   $ 2,403    $   333
                                                                                            =======    =======

SUPPLEMENTAL CASH FLOW INFORMATION:
     Interest paid......................................................................$        90    $   149
     Income taxes paid ..................................................................      --           65
</TABLE>

    The accompanying unaudited notes are an integral part of these unaudited
                       consolidated financial statements.

                                        4


<PAGE>
<TABLE>
<CAPTION>

                  NEOMEDIA TECHNOLOGIES, INC. AND SUBSIDIARIES
            UNAUDITED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                                       ADDITIONAL    ACCUMU-     NUMBER
                                            COMMON      PAID-IN-     LATED         OF
                                             STOCK      CAPITAL      DEFICIT     SHARES
                                           ---------   ---------   ---------    ---------
                                                       (Dollars in thousands)
<S>                                        <C>         <C>         <C>          <C>
Balance, December 31, 1996 .............   $      51   $   8,801   $  (4,525)   5,114,316

Exercise of stock options ..............        --             7        --          8,769

Proceeds from issuance of 255,000 units,
     net of $215 of issuance costs .....           3       1,312        --        255,000

Net loss ...............................        --          --        (2,499)        --
                                           ---------   ---------   ---------    ---------

Balance, June 30, 1997 .................   $      54   $  10,120   $  (7,024)   5,378,085
                                           =========   =========   =========    =========
</TABLE>

    The accompanying unaudited notes are an integral part of these unaudited
                       consolidated financial statements.

                                        5

<PAGE>


                  NEOMEDIA TECHNOLOGIES, INC. AND SUBSIDIARIES
              UNAUDITED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND NATURE OF BUSINESS OPERATIONS

BASIS OF PRESENTATION

     NeoMedia Technologies, Inc. ("Technologies") was incorporated under the
laws of the state of Delaware in July, 1996, to acquire by merger Dev-Tech
Associates, Inc. ("Dev-Tech"), an Illinois corporation, which was incorporated
in December, 1989. On August 5, 1996, Technologies acquired all of the shares of
Dev-Tech in exchange for the issuance of shares of Technologies' common stock to
the shareholders of Dev-Tech. Dev-Tech Migration, Inc. ("DTM") was incorporated
in June, 1994, in Illinois. On November 20, 1996, DTM was merged into NeoMedia
Migration, Inc. ("Migration"), a Delaware corporation and a wholly owned
subsidiary of Technologies (the "Migration Merger"). Technologies and Migration,
since Migration's inception, have shared certain management and were controlled
by common shareholders. These transactions have been accounted for in a manner
similar to the pooling of interests method of accounting using historical book
values rather than fair market value as all entities involved were under common
control. Distribuidora Vallarta, S.P.A. ("DVSPA") is a wholly-owned subsidiary
of Migration and was incorporated in Guatemala in August, 1996, to employ
computer software developers and system integrators. Technologies, Migration and
DVSPA are collectively referred to as "NeoMedia" or the "Company." As these
transactions were completed as of December 31, 1996, the financial statements of
NeoMedia have been presented on a consolidated basis for all periods presented.
The financial position and results of NeoMedia as of and for the periods prior
to these mergers have been combined in a manner consistent with NeoMedia's
consolidation principles as of December 31, 1996. All significant intercompany
accounts and transactions have been eliminated in preparation of the
consolidated financial statements.

     The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB and do not include
all of the information and footnotes required by generally accepted accounting
principles for complete consolidated financial statements. In the opinion of
management, the consolidated financial statements reflect all adjustments which
are of a normal recurring nature and which are necessary to present fairly the
consolidated financial position of NeoMedia as of June 30, 1997 and December 31,
1996, and the results of operations for the six and three months ended June 30,
1997 and 1996, and cash flows for the six months ended June 30, 1997 and 1996.
The results of operations for the six and three months ended June 30, 1997 are
not necessarily indicative of the results which may be expected for the entire
fiscal year.

NATURE OF BUSINESS OPERATIONS

     NeoMedia operates in one business segment which is comprised of three
principal applications markets: (i) Intelligent Document Solutions, (ii)
Document Systems Solutions and (iii) Systems Transition Solutions.

     The INTELLIGENT DOCUMENT SOLUTIONS UNIT was established to assist clients
in linking printed material to electronic media. NeoMedia has developed its own
technology, and has rights to use the technology of others, to generate printed
documents which can be automatically "read" by machines, such as computers
equipped with scanners and appropriate software. These "machine readable"
documents incorporate printed codes which contain thousands of bytes of
information, including computer programs rendering them functionally equivalent
to a computer floppy disk with a limited capacity to hold information. These
codes are referred to in the industry as "high capacity symbologies" and
"multi-dimensional" or "two-dimensional" bar codes. NeoMedia refers to documents
that incorporate high capacity symbologies as "Intelligent Documents," and
currently provides software and services to support the application of this
technology.

                                       6


<PAGE>

     The DOCUMENTS SYSTEMS SOLUTIONS UNIT was established to assist clients in
definition, design, implementation and management of their document system
environments. These services include strategic consulting to define and optimize
enterprise wide documents strategies, as well as systems integration and
development to implement effective document generation, archive and management
systems. NeoMedia specializes in the technical areas of electronic forms
management, document production systems and intelligent document solutions
incorporating multi-dimensional bar code technologies. The document system
process provided by NeoMedia also includes electronic media alternatives such as
Internet and Intranet channels.

     The SYSTEMS TRANSITION SOLUTIONS UNIT was established to enable clients to
migrate applications on closed, proprietary ("legacy") systems to more cost
effective and extendable open systems platforms. NeoMedia has acquired and
developed a line of proprietary products and tools utilized in its migration
services. NeoMedia also provides strategic consulting, systems development,
systems engineering and support services in connection with its systems
transition solutions. In addition, in June, 1997, NeoMedia added a new set of
Year 2000 Millennium solutions tools for the IBM DOS/VSE environment that
automatically finds and converts two-digit date fields in both data and source
code.

     As part of the services provided in connection with system transition
solutions service engagements, NeoMedia acts as a reseller of purchased hardware
in connection with open systems development and migrations. NeoMedia maintains
relationships with a number of major companies under which NeoMedia sells third
party purchased hardware and software products of those companies. NeoMedia has
established several strategic alliances with third party software and hardware
vendors, leading consulting firms and major system integrators. These alliances
are integral to NeoMedia's business operations. NeoMedia principally markets and
distributes its products through distributors in the United States (although it
has distributors in Europe, Asia, the Middle East, Indonesia and Latin America),
and currently has U. S. offices located in Illinois, California, Minnesota, and
Florida.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

COMPUTATION OF EARNINGS PER SHARE

     The computation of earnings per share is based on the weighted average
number of common and common equivalent shares outstanding during the period.
Common stock equivalents consist of outstanding stock options which, pursuant to
Staff Accounting Bulletin No. 83 of the Securities and Exchange Commission, are
included in the weighted average shares as if they were outstanding for the
entire period to the extent granted within the twelve months preceding the
contemplated public offering date, using the treasury stock method until such
time as shares are issued. For the six and three months ended June 30, 1997 and
1996, the computation of the weighted average number of common shares and common
share equivalents outstanding was as follows:

                                   1997                   1996
                           ---------------------   ---------------------
                              SIX        THREE        SIX        THREE
                             MONTHS      MONTHS      MONTHS      MONTHS
                           ---------   ---------   ---------   ---------
Common stock ...........   5,351,814   5,375,842   3,133,378   3,133,378
Effect of stock options     857,783     853,387     937,995     937,995
                           ---------   ---------   ---------   ---------
Total ..................   6,209,597   6,229,229   4,071,373   4,071,373
                           =========   =========   =========   =========

     For the six and three months ended June 30, 1997 and 1996, information
regarding earnings per share computed on a historical basis under the provisions
of Accounting Principles Board Opinion No. 15, "Earnings per Share," was as
follows:

                                    1997                  1996
                           ---------------------   ---------------------
                              SIX        THREE        SIX       THREE
                             MONTHS      MONTHS      MONTHS     MONTHS
                          ---------    ---------   ---------   ---------
Net loss per share ...... $    (0.47)  $   (0.28)  $   (0.10)  $   (0.11)
                          ==========   =========   =========   =========
Weighted average common 
  shares outstanding ....  5,351,814   5,375,842   3,133,378   3,133,378
                          ==========   =========   =========   =========

                                       7


<PAGE>

     In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS
128"), which becomes effective for NeoMedia for the year ended December 31,
1997. FAS 128 replaces the presentation of primary earnings per share with a
presentation of basic earnings per share which excludes dilution and is computed
by dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted earnings per share
reflects the potential dilution that would occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
entity. Diluted earnings per share is computed similarly to fully diluted
earnings per share pursuant to Accounting Principles Board Opinion No. 15,
"Earnings Per Share." FAS 128 also requires dual presentation of basic and
diluted earnings per share on the face of the income statement for all entities
with complex capital structure and requires a reconciliation of the numerator
and denominator of the basic earnings per share computation to the numerator and
denominator of the diluted earnings per share computation. For the six and three
months ended June 30, 1997, basic and diluted earnings per share would have been
$(.47) and $(.28), respectively.

CONCENTRATIONS OF CREDIT RISK

     Financial instruments that potentially subject NeoMedia to concentrations
of credit risk consist primarily of trade accounts receivable with customers.
Credit risk is generally minimized as a result of the large number and diverse
nature of NeoMedia's customers which are located throughout the United States.
NeoMedia extends credit to its customers as determined on an individual basis
and has included an allowance for doubtful accounts of $124,000 and $216,000 in
its June 30, 1997 and December 31, 1996 consolidated balance sheets,
respectively. NeoMedia had net sales to one major customer in the
telecommunications industry of $3,982,000 and $2,016,000 during the six months
ended June 30, 1997 and 1996, respectively, resulting in trade accounts
receivable of $1,869,000 and $2,507,000 as of June 30, 1997 and December 31,
1996, respectively. Revenue generated from the remarketing of computer equipment
has accounted for a significant percentage of NeoMedia's revenue. Such sales
accounted for 72.9% and 57.5% of NeoMedia's revenue for the six months ended
June 30, 1997 and 1996, respectively.

3.   FINANCING AGREEMENTS

     Technologies entered into an agreement with a commercial finance company
that provides short-term financing for certain computer hardware and software
purchases. Under the agreement, there are generally no financing charges for
amounts paid within 30 or 45 days, depending on the vendor used to source the
product. Borrowings are collateralized by accounts receivable generated from the
sales of merchandise to NeoMedia's customers and are personally guaranteed by
certain shareholders of NeoMedia. As of June 30, 1997 and December 31, 1996,
amounts due under this financing agreement included in accounts payable were
$3,181,000 and $2,275,000, respectively.

4.   BENEFIT FOR INCOME TAXES

     The benefits for income taxes recorded during the six and three months
ended June 30, 1997 and 1996 represented the recovery of income taxes paid in
prior years from the carryback of operating losses.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AS COMPARED TO THE
SIX MONTHS ENDED JUNE 30, 1996

     GENERAL. Total net sales for the six months ended June 30, 1997 were $11.8
million, which represented a $2.9 million or 33%, increase from $8.9 million for
the six months ended June 30, 1996. This increase primarily resulted from a $3.5
million increase in equipment resales. Cost of sales for the six months ended
June 30, 1997 were $10.5

                                        8

<PAGE>


million, which represented a $3.3 million increase from $7.2 million for the
six months ended June 30, 1996. This increase primarily resulted from a $3.1
million increase in the cost of equipment resales.

     During the first quarter of 1996, NeoMedia decided to invest in the
infra-structure needed to manage current and expected future growth. The total
of general, administrative, sales, marketing, research and development expenses
increased $2.0 million to $3.9 million for the six months ended June 30, 1997
from $1.9 million during the six months ended June 30, 1996. This increase
primarily resulted from NeoMedia investing in the expansion of its
infra-structure by hiring management, sales and other personnel to develop,
market and sell new products. Using a portion of the proceeds from the Initial
Public Offering ("IPO"), NeoMedia intends to continue to expand its development,
sales and marketing positions to increase revenue in each of its three business
units: Document Systems Solutions Unit, Systems Transition Solutions Unit and
Intelligent Document Solutions Unit.

     The result of these activities was a net loss for the six months ended June
30, 1997 of $2.5 million as compared to a net loss of $303,000 during the six
months ended June 30, 1996.

     LICENSE FEES. License fees for the six months ended June 30, 1997 were
$335,000 compared to $460,000 for the six months ended June 30, 1996, a decrease
of $125,000 or 27.1%. This decrease resulted primarily from the decrease in
sales of existing software transition tools during the second quarter of 1997.
Cost of sales for license fees consisted primarily of fees paid to an
independent software developer for one of the existing software transition
tools. Cost of sales as a percentage of related sales was 41.4% during 1997
compared to 30.3% during 1996. This increase in the cost of sales as a
percentage of related sales was primarily due to the increased sales, as a
percentage of total sales, in the software transition tool where fees are paid
to an independent software developer.

     SOFTWARE RESALES. Software resales decreased by $225,000, or 11.0%, from
$2.1 million for the six months ended June 30,1996 to $1.8 million for the six
months ended June 30, 1997. This decrease primarily resulted from the
discontinuation at the end of 1996 of PRS software sales which contributed
$746,000 to sales for the six months ended June 30, 1996 and the $200,000
decrease in resales of UNIX client server administrative software, partially
offset with the $778,000 increase in resales of software for micro-mainframe
computers. Cost of sales as a percentage of related sales was 87.7% during 1997
compared to 67.2% during 1996. This increase in the cost of sales as a
percentage of related sales was primarily due to the discontinuation of PRS
software sales with its lower cost as a percentage of sales and the increase in
resales of software for micro-mainframe with its higher cost as a percentage of
sales.

     EQUIPMENT RESALES. Equipment resales increased by $3.5 million, or 68.8%,
to $8.6 million for the six months ended June 30, 1997, as compared to $5.1
million for the six months ended June 30, 1996. This increase primarily resulted
from equipment resales related to Sun Microsystems workstations and servers
which increased $3.4 million (primarily due to increased resales to NeoMedia's
largest customer -- see Note 2 of Unaudited Notes to Consolidated Financial
Statements - Concentrations of Credit Risk) and IBM Corporation equipment which
increased $591,000 (primarily due to IBM enhancing its line of 390
micro-mainframe computers to include the S390). These increases were partially
offset with a $500,000 one-time shipment of desktop printers to a major customer
in 1996. Cost of sales as a percentage of related sales was 86.9% during 1997,
compared to 86.4% during 1996.

     SERVICE FEES. NeoMedia's service fees decreased by $218,000, or 17.5% to
$1.0 million for the six months ended June 30, 1997, compared to $1.2 million
for the six months ended June 30, 1996. This decrease was primarily due to the
$472,000 decrease in services supplied in conjunction with the sales of existing
software transition tools, partially offset with $261,000 increase in consulting
fees for assisting companies to integrate printers. Cost of service fees as a
percentage of related sales increased to 88.7% during 1997 from 74.1% during
1996 primarily due to reduction in the utilization of NeoMedia's system
integrators.

     AMORTIZATION OF SOFTWARE. Amortization of software for the six months ended
June 30, 1997, as compared to the six months ended June 30, 1996, increased
$26,000 as a result of the amortization of software costs capitalized


                                       9

<PAGE>


during 1997 and 1996, and as a percentage of total net sales, decreased to 2.6%
during 1997 from 3.2% during 1996 due to the increase in net sales.

     GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
$781,000, or 97.5%, to $1.6 million for the six months ended June 30, 1997, from
$802,000 for the six months ended June 30, 1996. This increase was due mainly to
NeoMedia building its administrative infra-structure, including compensation and
related expenses and legal and professional fees, to manage current and expected
future growth.

     SALES AND MARKETING. A portion of the compensation to the sales and
marketing staff constitutes salary and is fixed in nature and the rest of this
compensation is directly related to sales volume. Sales and marketing expenses
increased $886,,000, or 90.8%, to $1.9 million for the six months ended June 30,
1997 from $973,000 for the six months ended June 30, 1996, as a result primarily
of hiring managers to direct current and expected future growth. NeoMedia
anticipates that sales and marketing costs will increase as NeoMedia grows.

     RESEARCH AND DEVELOPMENT. During the six months ended June 30, 1997,
NeoMedia charged to expense 3.5% of total net sales in research and development
expenses as compared to 1.4% during the six months ended June 30, 1996. This
percentage increase was due to an increase in the number of software developers
employed by NeoMedia to expand its products lines. NeoMedia currently intends to
continue to make significant investments in research and development.

     INTEREST EXPENSE, NET. Interest expense consists primarily of interest paid
to creditors as part of financed purchases, capitalized leases and NeoMedia's
asset-based collateralized line of credit. Interest expense decreased by
$164,000, or 75.9%, to $52,000 for the six months ended June 30, 1997 from
$216,000 for the six months ended June 30, 1996, due to the repayment of debt in
the fourth quarter of 1996 and interest income earned on the proceeds from the
IPO.

     BENEFIT FOR INCOME TAXES. The benefits for income taxes recorded during the
six months ended June 30, 1997 and 1996 represented the recovery of income taxes
paid in prior years from the carryback of operating losses.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997 AS COMPARED TO
THE THREE MONTHS ENDED JUNE 30, 1996.

     GENERAL. Total net sales for the three months ended June 30, 1997 were $7.3
million, which represented a $3.5 million, or 92%, increase from $3.8 million
for the three months ended June 30, 1996. This increase primarily resulted from
a $2.7 million increase in equipment resales and a $1.0 million increase in
software resales. Cost of sales for the three months ended June 30, 1997 were
$6.6 million, which represented a $3.5 million increase from $3.1 million for
the three months ended June 30, 1996. This increase primarily resulted from a
$2.4 million increase in the cost of equipment resales and a $1.0 million
increase in the cost of software resales.

     During the first quarter of 1996, NeoMedia decided to invest in the
infra-structure needed to manage current and expected future growth. The total
of general, administrative, sales, marketing, research and development expenses
increased $1.1 million to $2.1 million for the three months ended June 30, 1997
from $981,000 for the three months ended June 30, 1996. This increase primarily
resulted from NeoMedia's investing in the expansion of its infra-structure by
hiring management, sales and other personnel to develop, market and sell new
products.

     The result of these activities was a net loss for the three months ended
June 30, 1997 of $1.5 million as compared to a net loss of $344,000 during the
three months ended June 30, 1996.

     LICENSE FEES. License fees for the three months ended June 30, 1997 were
$117,000 compared to $301,000 for the three months ended June 30, 1996, a
decrease of $184,000 or 61.1%. This decrease resulted primarily from the
decrease in sales of existing software transition tools. Cost of sales for
license fees consisted primarily of fees paid


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<PAGE>


to an independent software developer for one of the existing software transition
tools. Cost of sales as a percentage of related sales was 65.4% during 1997
compared to 30.6% during 1996. This increase in the cost of sales as a
percentage of related sales was primarily due to the increased sales, as a
percentage of total sales, in the software transition tool where fees are paid
to an independent software developer.

     SOFTWARE RESALES. Software resales increased by $1.0 million, or 130.2%,
from $769,000 for the three months ended June 30, 1996 to $1.8 million for the
three months ended June 30, 1997. This increase resulted primarily from $1.3
million of resales of software for micro-mainframe computers while there were no
resales of such software during the same period in 1996. This increase was
partially offset with the discontinuation at the end of 1996 of PRS software
sales which contributed $155,000 to sales for the three months ended June 30,
1996 and the $162,000 decrease in resales of UNIX client server administrative
software. Cost of sales as a percentage of related sales was 88.1% during 1997
compared to 69.8% during 1996. This increase in the cost of sales as a
percentage of related sales was primarily due to the discontinuation of PRS
software sales with its lower cost as a percentage of sales and the increase in
resales of software for micro-mainframe with its higher cost as a percentage of
sales.

     EQUIPMENT RESALES. Equipment resales increased by $2.7 million, or 123.1%,
to $4.9 million for the three months ended June 30, 1997, as compared to $2.2
million for the three months ended June 30, 1996. This increase primarily
resulted from equipment resales related to Sun Microsystems work stations and
servers which increased $1.3 million (primarily due to increased resales to
NeoMedia's largest customer) and IBM Corporation equipment which increased $1.4
million (primarily due to IBM enhancing its line of 390 micro-mainframe
computers to include the S390). Cost of sales as a percentage of related sales
was 86.9% during 1997, compared to 84.3% during 1996.

     SERVICE FEES. NeoMedia's service fees consisting of sales from consulting,
education and postcontract support services decreased by $49,000, or 9.6%, to
$454,000 for the three months ended June 30, 1997, compared to $503,000 for the
three months ended June 30, 1996. This decrease primarily resulted from the
$109,000 decrease in services supplies in conjunction with the sales of existing
software transition tools, partially offset with $78,000 increase in consulting
fees for assisting companies to integrate printer. Cost of service fees as a
percentage of related sales increased to 115.0% during 1997 from 92.0% during
1996 primarily due to the reduction in the utilization of NeoMedia's system
integrators.

     AMORTIZATION OF SOFTWARE. Amortization of software for the three months
ended June 30, 1997, as compared to the three months ended June 30, 1996,
increased $21,000 as a result of the amortization of software costs capitalized
during 1997 and 1996, and, as a percentage of total net sales, decreased to
2.2% during 1997 from 3.7% during 1996 due to the increase in net sales.

     GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
$409,000, or 98.2%, to $827,000 for the three months ended June 30, 1997, from
$418,000 for the three months ended June 30, 1996. This increase was due mainly
to NeoMedia building its administrative infra-structure, including compensation
and related expenses and legal and professional fees, to manage current and
expected future growth.

     SALES AND MARKETING. Sales and marketing expenses have increased $554,000,
or 109.9%, to $1.1 million for the three months ended June 30, 1997 from
$504,000 for the three months ended June 30, 1996, as a result primarily of
hiring managers to direct current and expected future growth. NeoMedia
anticipates that sales and marketing costs will increase as NeoMedia grows.

     RESEARCH AND DEVELOPMENT. During the three months ended June 30, 1997,
NeoMedia charged to expense 3.2% of total net sales in research and development
expenses as compared to 1.6% during the three months ended June 30, 1996. This
percentage increase was due to an increase in the number of software developers
employed by NeoMedia to expand its product line. NeoMedia currently intends to
continue to make significant investments in research and development.

                                       11


<PAGE>


     INTEREST EXPENSE, NET. Interest expense decreased by $71,000, or 63.8%, to
$41,000 for the three months ended June 30, 1997 from $112,000 for the three
months ended June 30, 1996, due to the repayment of debt in the fourth quarter
of 1996 and interest income earned on the proceeds from the IPO.

     BENEFIT FOR INCOME TAXES. The benefit for income taxes recorded during the
three months ended June 30, 1996 represented the recovery of income taxes paid
in prior years from the carryback of operating losses. No benefit for income
taxes was recorded during the three months ended June 30, 1997.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, NeoMedia has financed its operation through shareholder
loans and borrowings from a commercial bank and under a line of credit. In
December, 1995 and in January, 1996, in several series of transactions between
affiliates, funds were loaned and borrowed pursuant to promissory notes bearing
interest at the rate of 8% per annum. In June, 1996, a shareholder lent
additional funds to NeoMedia. In October, 1996, this shareholder contributed
$738,000 of these notes to additional paid-in capital. In December, 1996 and
February, 1997, NeoMedia repaid in full the balance of all of these related
party loans. Also, in January, 1996, NeoMedia borrowed $250,000 from a
commercial bank bearing interest at the bank's prime rate plus 0.5%.

     During 1995, NeoMedia had available a line of credit with a commercial bank
that permitted borrowings up to the lesser of $2.0 million or 80% of eligible
accounts receivable, as defined in the financing agreement. The line of credit
had an interest rate equal to the bank's prime rate plus 1.0%. The line of
credit was collateralized by accounts receivable and inventories, and required
NeoMedia to maintain certain financial ratios. NeoMedia used this facility for
funding its operations during 1995 and through the closing of the IPO shortly
after which NeoMedia repaid in full the line of credit with its commercial bank.

     In November, 1996, NeoMedia completed its IPO receiving net proceeds of
$5.7 million. In January, 1997, NeoMedia closed the IPO's over-allotment and
received net proceeds of $1.3 million. As of June 30, 1997, NeoMedia's working
capital was $2.5 million which represented a $2.4 million decrease from December
31, 1996. NeoMedia is currently in discussions with a number of financial
institutions for a line of credit to replace the bank line repaid in November,
1996, and enhance the line of credit with a commercial finance company.

     Net cash used in operating activities for the six months ended June 30,
1997 and 1996, was $1.9 million and $151,000, respectively. During 1997, trade
accounts receivable increased $1.5 million, while accounts payable increased
$1.6 million. During 1996, trade accounts receivables increased $795,000, while
accounts payables increased $884,000.

     NeoMedia's net cash flow used in investing activities for the six months
ended June 30, 1997 and 1996, was $1.0 million and $53,000, respectively. Net
cash provided by financing activities for the six months ended June 30, 1997 and
1996, was $1.2 million and $526,000, respectively. During January 1997, NeoMedia
sold the over-allotment of its Initial Public Offering receiving net cash
proceeds of $1.3 million.


                                       12

<PAGE>


PART II -- OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

     The exhibits required by Item 601 of Regulation S-B to be filed herewith
are as follows:

     Articles of Incorporation, By-laws, instruments defining the rights of
holders, including indentures, and material contracts have heretofore been filed
with the Securities and Exchange Commission and are hereby incorporated by
reference to NeoMedia's Registration Statement and Exhibits thereto (SEC
registration number 333-5534), Form 10-KSB for the year ended December 31, 1996,
and Form 10-QSB for the three months ended March 31, 1997.

10.51    Letter Agreement by and between Dominick & Dominick, Incorporated and
         NeoMedia Technologies, Inc. Dated March 20, 1997
                                                              
10.52    Agreement for Implementation of Symbol Licensed Software Materials by
         and between Symbol Technologies, Inc. and NeoMedia Technologies, Inc.
         Dated April 29, 1997
                                                                
10.53    Master Reseller Agreement by and between United States Check Company,
         Inc. and NeoMedia Technologies, Inc. Dated June 16, 1997

(b) Reports on Form 8-K

     No reports on Form 8-K were filed during the three months ended June 30,
1997.


                                       13

<PAGE>


                                   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

Date AUGUST 1, 1997                By:  /s/ CHARLES W. FRITZ
                                      ------------------------------
                                   Charles W. Fritz, President, Chief Executive 
                                   Officer and Chairman of the Board

Date AUGUST 1, 1997                By:  /s/ CHARLES T. JENSEN
                                      ------------------------------
                                   Charles T. Jensen, Vice President, Chief 
                                   Financial Officer, Treasurer and Director

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<PAGE>


                                  EXHIBIT INDEX

SEQUENTIAL    EXHIBIT
PAGE NUMBER   NUMBER     DOCUMENT
-----------   ------     --------

16             10.51     Letter Agreement by and between Dominick & Dominick,
                         Incorporated and NeoMedia Technologies, Inc. Dated
                         March 20,  1997

20             10.52     Agreement for Implementation of Symbol Licensed 
                         Software Materials by and between Symbol Technologies,
                         Inc. and NeoMedia Technologies, Inc. Dated April 29,
                         1997

35             10.53     Master Reseller Agreement by and between United States
                         Check Company, Inc. and NeoMedia Technologies, Inc.
                         Dated June 16, 1997

45             27.1      Article 5 Financial Data Schedule for June 30, 1997


                                       15