UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-K



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 : For the Fiscal Year Ended December 31, 2012
|- | ----------------------------------------------------------------------------------------------------------------------------------



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



Commission File Number 000-21743



NeoMedia Technologies, Inc.

(Exact name of registrant as specified
in its charter)



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



100 West Arapahoe Avenue, Suite 9, Boulder,
CO 80302

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



303-546-7946

(Registrants’ telephone number, including
area code)



|Securities Registered Under Section 12(b) of the Exchange Act: | None                                    
|-------------------------------------------------------------- | ----------------------------------------
|Name of exchange on which registered:                          | None – Quoted on the OTC Markets (OTCQB)
|Securities registered pursuant to Section 12(g) of the Act:    | Common Stock, $0.001 par value per share



Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ̈Nox



Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act.    Yes ̈Nox



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 and (2) has been subject to such filing requirements for the past 90 days.

YesxNo ̈



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 during the preceding 12 months (or such shorter
period that the registrant was required to submit and post such files).  YesxNo ̈



Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will
not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. ̈



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 Companyx
|------------------------ | ------------------ | ---------------------- | --------------------------



Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ̈Nox



The aggregate market value of the common stock held by non-affiliates
of the registrant as of June 30, 2012, the last business day of the registrant’s most recently completed second fiscal quarter,
was $10,758,547, based on the closing sale price for the registrant’s common stock on that date. For purposes of determining
this number, all officers and directors of the registrant are considered to be affiliates of the registrant. This number is provided
only for the purpose of this report on Form 10-K and does not represent an admission by either the registrant or any such person
as to the status of such person.



The number of outstanding shares of the
registrant’s common stock on March 1, 2013 was 2,970,280,769.



Documents Incorporated By Reference - None


















NeoMedia Technologies, Inc.

INDEX



|           |                                                                                                               | Page
|---------- | ------------------------------------------------------------------------------------------------------------- | ----
|PART I     |                                                                                                               |     
|Item 1.    | Business.                                                                                                     | 3   
|Item 1A.   | Risk Factors.                                                                                                 | 7   
|Item 1B.   | Unresolved Staff Comments.                                                                                    | 10  
|Item 2.    | Properties.                                                                                                   | 10  
|Item 3.    | Legal Proceedings.                                                                                            | 10  
|Item 4.    | Mine Safety Disclosures.                                                                                      | 11  
|           |                                                                                                               |     
|PART II    |                                                                                                               |     
|Item 5.    | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. | 12  
|Item 6.    | Selected Financial Data.                                                                                      | 13  
|Item 7.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations.                        | 13  
|Item 7A.   | Quantitative and Qualitative Disclosures about Market Risk.                                                   | 22  
|Item 8.    | Financial Statements.                                                                                         | 23  
|Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.                         | 52  
|Item 9A.   | Controls and Procedures.                                                                                      | 52  
|Item 9B    | Other Items.                                                                                                  | 54  
|           |                                                                                                               |     
|PART III   |                                                                                                               |     
|Item 10.   | Directors, Executive Officers and Corporate Governance.                                                       | 55  
|Item 11.   | Executive Compensation.                                                                                       | 57  
|Item 12.   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.               | 61  
|Item 13.   | Certain Relationships and Related Transactions, and Director Independence.                                    | 63  
|Item 14.   | Principal Accountant Fees and Services.                                                                       | 63  
|           |                                                                                                               |     
|Part IV    |                                                                                                               |     
|Item 15.   | Exhibits and Financial Statement Schedules.                                                                   | 64  
|           |                                                                                                               |     
|SIGNATURES |                                                                                                               | 81  





Page 2







NeoMedia Technologies, Inc.



PART I



FORWARD-LOOKING
STATEMENTS



The
information in this Annual Report on Form 10-K contains “forward-looking statements” and information within the meaning
of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), which may be subject to the “safe harbor” created
by those sections. These forward-looking statements include, but are not limited to, statements concerning our strategy, future
operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The
words “anticipates,” “believes,” “estimates,” “expects,” “intends,”
“may,” “plans,” “projects,” “will,” “would” and similar expressions
are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not
place undue reliance on our forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties
that could cause our actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking
statements, including, without limitation, the risks set forth in Part I, Item 1A, “Risk Factors” in this Annual
Report on Form 10-K and in our other filings with the Securities and Exchange Commission (“SEC”). Except as required
by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons actual results could
differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the
future.



ITEM 1. Business



In this Annual Report on Form 10-K,
(this “Report”) unless otherwise indicated, the words “NeoMedia”, “Company” “we,”
“us,” and “our” refer to NeoMedia Technologies, Inc., a Delaware corporation, and all entities owned or
controlled by NeoMedia Technologies, Inc., except where it is made clear that the term only means the parent or a subsidiary company.
As of December 31, 2012, we had one active wholly-owned subsidiary: NeoMedia Europe GmbH, (“NeoMedia Europe”) incorporated
in Germany. In addition, there are several dormant subsidiaries which are listed in Exhibit 21 to this Report.



Overview



NeoMedia was founded in 1989 and is headquartered
in Boulder, Colorado. We have positioned ourselves to pioneer 2D mobile barcode technology and infrastructure solutions that enable
the mobile barcode ecosystem world-wide. NeoMedia strives to harness the power of the mobile phone in innovative ways with state-of-the-art
mobile barcode technology. With this technology, mobile phones with cameras become barcode scanners and this enables a range of
practical applications including mobile marketing, mobile commerce and advertising. In addition, we offer barcode management reader
solutions as well as intellectual property licensing.



NeoMedia has been involved in, and has
strived to be an innovator in, the mobile barcode field since the mid-1990s, and during that time has spearheaded the development
of a robust IP portfolio that encompasses many preferred mobile implementations. We believe that our extensive IP portfolio differentiates
us from the competition.



Products and Services



We provide a complete suite of mobile barcode
solutions to markets around the globe.



2D Core – Our 2D Core products
include NeoReader®, our barcode scanning application which is installed on mobile handsets, and NeoSphereTM, our barcode
management and infrastructure solution. We offer these services directly to clients as well as offer white label and Software Development
Kit (SDK) versions of these products for inclusion in larger enterprise solutions.



| | · | NeoReader – a barcode scanning application that transforms mobile phones into universal barcode readers, allowing users to scan all major barcode types, including QR, Datamatrix, Aztec, EAN, UPC, PDF417 and Code 128. Users simply launch the NeoReader application on their mobile device, scan the barcode and are quickly linked either directly or indirectly through a resolution server to specific content. From there, the consumer can access real-time product or service information, download content, send a SMS, make a phone call, or complete a mobile commerce transaction. There is also a SDK available for NeoReader that allows the integration of NeoReader functionality into enterprise implementations.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | NeoReader Enterprise – software solutions for commercial applications where mobile devices are utilized to manage products through manufacturing or distribution channels. These applications equip mobile devices to read 1D and 2D barcodes with their built-in camera. These solutions can be utilized as ideal tools for a variety of business applications including data collection, logistics, workforce management, and accessing information on the go.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 3







| | · | NeoSphere - a web-based system that supports barcode management and allows users (typically agencies and brands) to easily develop, launch and manage a mobile barcode campaign by delivering three critical components:
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | o | Barcode creation tools
| | - | ----------------------



| | o | Campaign management tools
| | - | -------------------------



| | o | Reporting and analytics
| | - | -----------------------



| |  | We believe that NeoSphere affords marketers the ability
to better monetize their traditional ads placement and boost marketing return-on-investment, providing the tools to effectively
manage and control their barcode-based marketing campaigns.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 4







Solutions – Our value-added
solutions enable a full end-to-end mobile solution allowing marketers and advertisers to deliver a highly targeted and personalized
consumer experience – from start to finish. These include:



| | · | Consulting Services – clients are able to leverage our expertise and deep knowledge of the mobile barcode market to enhance the effectiveness of their mobile campaigns.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Partner Solutions – we maintain partnerships with a variety of mobile marketing organizations that allow us to incorporate additional solutions into our existing portfolio, including:
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | o | Mobile websites – creation of mobile-optimized web pages to ensure a consistent consumer experience, making brand engagement easy and enjoyable.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



| | o | SMS – a short messaging service allowing clients to add a messaging call to action to their campaign that enables consumers to connect to marketers by sending a text message.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | o | Applications – creation of applications for iPhone and Android environments.                                                                                                  



IP Licensing – We have a robust
IP portfolio crossing many barcode implementations and are willing to license our patents to all in the ecosystem.



SALES AND MARKETING
RELATIONSHIPS



We have worked to establish a network of
direct salespeople as well as an indirect channel of resellers and business development personnel to market our products and services.
We are focusing our sales activities primarily in the United States and Europe and are expanding our business development activities,
through partnerships, to other markets.



Proprietary Technology



Many of the products we sell to our customers
rely on hardware and software technologies provided to us by third parties under license. Certain of our products and services
combine these third party technologies with technologies that are proprietary to us. Our proprietary technology may be protected
by patent law, copyright law, trade secret law and other forms of intellectual property protection. Our proprietary technology
includes technologies that enable us to automate a number of back-end functions and technologies that allow customers to order,
change and manage their accounts easily without technical expertise. Some of our proprietary technologies are unique and may not
legally be utilized by competitors without a license from us. Although we believe that our suite of proprietary technologies offers
customers significant benefits, we do not believe that our proprietary technologies are sufficient to deter competitors from providing
competing products and services.



Competition



We believe that we have positioned ourselves
to compete as one of the leaders in the mobile barcode ecosystem. Our research indicates that the mobile barcode space is highly
fragmented and there are a large number of providers offering similar solutions globally. As the mobile marketing industry matures,
we expect consolidation as industry leaders are firmly established. Moreover, we believe we are well positioned due to our intellectual
property, including many patents, on which our products and services are based. We expect that our intellectual property will serve
as a competitive advantage as this market matures.



Intellectual Property



We rely on a combination of laws (including
patent, copyright, trademark, service mark and trade secret laws) and contractual restrictions to establish and protect our proprietary
rights.  As of December 31, 2012, we owned a large number of patents (both awarded and pending) across both the NeoMedia Technologies
and NeoMedia Europe businesses.  Our patents include IP in a number of different patent families and cover core concepts behind
our technology for linking the physical world to the electronic world.



During 2012, we licensed our patents to
Kraft Foods, Mondelez International, Progressive Insurance, Microsoft, Paperlinks, 4GQR, SpyderLynk and CodeBroker. We are in discussions
with other companies with regard to the licensing of our patents and our technology platforms.  However, there can be no guarantee
that any of these discussions will result in future revenues.



We have an ongoing relationship with Global
IP Law Group (“Global IP”) for our intellectual property monetization and enforcement activities.  Global IP assists
us in seeking out potential licensees of our intellectual property portfolio, including any resulting litigation.



Page 5







We have entered into confidentiality and
other agreements with our employees and contractors, including agreements in which the employees and contractors assign their rights
in inventions to us.  We have also entered into nondisclosure agreements with our suppliers, distributors and some customers
in order to limit access to and disclosure of our proprietary information.  Nonetheless, neither the intellectual property
laws nor contractual arrangements, nor any of the other steps we have taken to protect our intellectual property, can ensure that
others will not use, or attempt to use, our technology or that others will not develop similar technologies.



We license, or lease from others, technologies
which may be used in our services.  We expect that we and our customers could be subject to third-party infringement claims
as the number of competitors grows.  Although we do not believe that our technologies or services infringe the proprietary
rights of any third parties, we cannot ensure that third parties will not assert claims against us in the future or that these
claims will not be successful.



Periodically, we may be made aware that
technology we have used in our operations may have infringed upon intellectual property rights held by others.  We will evaluate
all such claims and, if necessary and appropriate, seek to obtain licenses for the use of such technology.  If we or our suppliers
are unable to obtain licenses necessary to use intellectual property in our operations, we may be legally liable to the owner of
such intellectual property.  Moreover, even in those instances where we are justified in denying claims that we have infringed
upon the intellectual property rights of others, we may nonetheless be forced to defend or settle legal actions taken against us
relating to allegedly protected technology, and such legal actions may require us to expend substantial funds.  See “Item
1A Risk Factors – We may be unable to protect our intellectual property rights and may be liable for infringing the intellectual
property rights of others, which could have a material adverse effect on our business.”



Government
Regulation



Existing or future legislation could limit
the growth or use of the internet, mobile telecommunications and/or mobile advertising, which would curtail our revenue growth.
Statutes and regulations directly applicable to internet communications, mobile commerce and mobile advertising are becoming more
prevalent and we anticipate there will be activity to determine how new and existing laws governing intellectual property, privacy,
libel and taxation apply to mobile marketing and advertising.



Some of our proprietary technology allows
the storage of non-specific demographic data from users. On December 8, 2011, NeoMedia issued an updated Privacy Policy which can
be accessed from our website at http://www.neom.com/privacy. We also published a new End User License Agreement which we
believe is current with all best practices and guidelines in the United States and is located at http://www.neom.com/EULA.



Personnel



As of December 31, 2012, we had 14 personnel,
including 6 individuals in our office in Würsulen, Germany. We believe that our personnel relations are good. None of our
personnel are represented by a labor union or bound by a collective bargaining agreement.



Management
Changes



On July 19, 2011, the Board of Directors
of the Company (the “Board”) appointed Robert W. Thomson to serve as interim Chief Financial Officer and Corporate
Secretary of the Company. Mr. Thomson had previously served as the Company’s Corporate Controller. Mr. Thomson served as
the Company’s interim Chief Financial Officer and Corporate Secretary until January 2, 2012, at which time he resumed his
duties as Corporate Controller. Mr. Thompson left the Company on April 17, 2012



On January 3, 2012, the Board appointed
James A. Doran as Chief Financial Officer and Corporate Secretary. On February 8, 2012, Mr. Doran resigned from his position as
Chief Financial Officer and Corporate Secretary of the Company.



On January 31, 2012, the Company finalized
the removal process (that commenced on January 11, 2012) of Dr. Christian Steinborn from the position of Managing Director of NeoMedia
Europe. Ms. Laura Marriott, our Chief Executive Officer, was appointed as the Managing Director of NeoMedia Europe.



On February 10, 2012, Colonel (Ret.) Barry
S. Baer was appointed by the Board as Chief Financial Officer and Corporate Secretary of the Company.



On August 27, 2012, Jeff Huitt was appointed
as Chief Financial Officer by the Board and Colonel Baer continued as Corporate Secretary. On November 4, 2012, Colonel Baer was
appointed as Treasurer of the Company.





Page 6







Subsequent Event:



On March 26, 2013, the Board appointed
Colonel Baer as Chief Financial Officer with Mr. Huitt continuing to serve as Controller, in accordance with their existing agreements.





Board
of Director Changes



On March 2, 2011, Sarah Fay was appointed to the Board. James
J. Keil, a Director of NeoMedia since August 1996, retired from the Board after 15 years of service, effective June 30, 2011. On
October 1, 2011, Peter Mannetti was appointed to the Board.



Research
and Development



We have incurred $0.95 million and $1.6
million in research and development expenses during the years ended December 31, 2012 and 2011, respectively.



ITEM 1A. Risk Factors



You should carefully consider the following
factors and all other information contained in this Report before you make any investment decisions with respect to our securities.



Risks Related to Our
Business



We have incurred losses since inception
and could incur losses in the future, and we have a accumulated deficit and a working capital deficit.



We have incurred substantial operating
losses since inception, and may continue to incur losses. We must develop new client and customer relationships and substantially
increase our revenue derived from improved products and IP licensing. We have expended, and to the extent we have available financing,
we intend to continue to expend, resources to develop and improve our products and to market our products and services. A number
of factors could increase our operating expenses, such as: adapting infrastructure and administrative resources to accommodate
additional customers and future growth; developing products, distribution, marketing, and management for the broadest possible
market; broadening customer technical support capabilities; developing additional indirect distribution partners; and, incurring
legal fees and settlements associated with litigation and contingencies. To the extent that operating expenses are not offset by
increases in revenues, our operating losses will increase.



There can be no assurance that our continuing
efforts to execute our business plan will be successful but we believe that the organization is now of sufficient size to support
our operating plan. The accompanying consolidated financial statements have been prepared in conformity with accounting principles
generally accepted in the United States of America (“US GAAP”), which contemplate our continuation as a going concern.
For the years ended December 31, 2012 and 2011, we incurred losses from operations of $5.5 million and $5.3 million, respectively.
Net cash used by operations during the years ended December 31, 2012 and 2011 was $1.5 million and $4.5 million, respectively.
At December 31, 2012, we have an accumulated deficit of $264.6 million. We also have a working capital deficit of $74.7 million,
of which $70.2 million or 93% is related to our financing instruments, including $68.0 million related to the fair value
of warrants and those debentures that are recorded as hybrid financial instruments, and $2.2 million related to the amortized cost
carrying value of certain of our debentures and the fair value of the associated derivative liabilities. We currently do not have
sufficient cash, or commitments for financing to sustain our operations for the next twelve months. If our revenues are not to
plan and our operating expenses cannot be reduced to sustain our operations, we may require additional financing in order to execute
our operating plan; however, we believe that such additional financing will not be necessary. If additional financing is required,
we cannot predict whether this additional financing will be in the form of equity, debt, or another form and we may not be able
to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In the event that these financing
sources do not materialize, 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 circumstances would have
a material adverse effect on our business, prospects, financial condition and results of operations.



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



Page 7







Our management and Board may be unable
to execute their plans to grow our revenues and achieve profitability and positive cash flows, which could cause us to discontinue
our operations. We could fail to attract or retain key personnel which could have a material adverse effect on our business.



If our management and Board are unable
to attract and retain management and staff to maintain and execute our plans, then we may fail to grow our revenues, manage costs
and achieve profitability and positive cash flows, which may cause us to discontinue our operations.



All of our assets are pledged to secure
certain debt obligations, which if we fail to repay and/or otherwise satisfy, could result in foreclosure upon substantially all
of our assets.



The repayment of our convertible debentures,
issued to YA Global, is secured by substantially all of our assets. In the event we are unable to repay and/or otherwise satisfy
such secured convertible debentures, which mature on August 1, 2014, we could lose substantially all of our assets, which may adversely
affect our business.



Our future profitability depends on
the timely introduction of new products and the acceptance of these new products in the marketplace.



Rapid technological change and market development
are typical for the industries we serve. Our future revenue and profitability will depend in large part on timely development and
introduction of new products that address evolving market requirements. If we fail to effectively launch new and innovative products,
we may lose market share to our competitors. Any inability, for technological or other reasons, to successfully grow our product
portfolio could materially and adversely affect our business.



Existing shareholders will experience
significant dilution when certain investors, such as YA Global, convert their preferred stock to common stock, convert outstanding
convertible debentures to common stock, or when the investors exercise their warrants for common stock.



The issuance of shares of common stock
pursuant to the conversion of our Series C and D convertible preferred stock, and the conversion of convertible debentures to common
stock, or the exercise of warrants pursuant to our transactions with YA Global will have a dilutive impact on our shareholders.
As a result, our net earnings per share could decrease in future periods, and the market price of our common stock could decline.
In addition, the lower our stock price, the more shares of common stock we will have to issue for the conversion of preferred stock
or the convertible debentures. If our stock price is lower, then existing shareholders would experience greater dilution which
may result in a decrease in such shareholders’ stock value.



Our common stock is deemed to be “penny
stock” which may make it more difficult for investors to sell their shares due to suitability requirements.



Our common stock is deemed to be “penny
stock” as that term is defined in Rule 3a51-1 promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). Certain requirements regarding penny stocks may reduce the potential market for our common stock by
reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to
third parties or to otherwise dispose of them. This could cause our stock price to decline.



Broker-dealers dealing in penny stocks
are required to provide potential investors with a document disclosing the risks of penny stocks. Moreover, broker-dealers are
required to determine whether an investment in a penny stock is a suitable investment for a prospective investor.



The potential market for “penny stocks”
is further reduced by whether the Company can trade using the electronic trading system operated by the Depository Trust Company
(“DTC”). Currently, the company is experiencing a DTC “chill” which limits electronic trading.



The DTC placed a “chill”
on deposits of the Company’s common stock, which may negatively impact an investor’s ability to trade in our common
shares.



In November 2011, the DTC placed a “chill”
on deposits of our common stock. The “chill” does not affect our normal business operations. However, shareholders
with internet brokerage accounts with firms such as Scottrade, TD Ameritrade or E*Trade may not be able to trade in our common
shares through these internet brokers as usual. Because some shareholders may trade through these internet brokers which clear
and settle through the DTC, we believe the “chill” may contribute to limitations on the ability for investors to purchase
our shares. However, if an investor has an account with a full service broker, it will still typically clear and settle our stock
manually, and the investor can typically buy and sell our stock as freely as usual without any DTC imposed restrictions.



Due to the accounting treatment of the
convertible preferred stock, warrants and convertible debenture instruments issued by us, fluctuations in our stock price could
have a material impact on our results of operations.



During the years ended December 31, 2012
and 2011, we reported net losses of $19.4 million and $849,000 respectively. The net loss in 2012 resulted primarily from non-cash
losses arising from the extinguishment of debt resulting from modifications to the terms of certain convertible debentures. We
also recognized gains and losses to reflect the change in fair value from the revaluation of warrants and convertible debentures,
which are recorded at fair value, and the embedded conversion features in our Series C and D preferred stock, which features are
also carried at fair value. We adjust the carrying value of these derivative instruments to market at each balance sheet date.
As a result, we could experience significant fluctuations in our earnings in future periods from such gains or losses, based on
movements in our share price. As a result, our income from operations may be completely overshadowed by the impact of fluctuations
in the fair value of our financial instruments, resulting solely from changes in the price of our common stock. Therefore, our
financial statements are highly complex and may be difficult for all but the most financially sophisticated readers to comprehend.



Page 8







A majority of our assets are intangible
assets, which will have little or no value if our operations are not profitable.



At December 31, 2012, a majority of our
total assets were intangible assets, consisting primarily of rights related to our patents, other intellectual property, and goodwill
arising from the excess of the purchase price over the fair value of tangible assets acquired in our purchase of NeoMedia Europe.
If our results of operations do not return to profitability in the future, these assets will have little or no value, which could
lead to us recognizing impairment losses for such assets. This could materially adversely affect the value of our stock and the
ability of our shareholders to recoup their investments in our stock.



We review our amortizable intangible assets
for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. We test goodwill for
impairment annually or when events or changes in circumstances may warrant. We may be required to record a significant charge to
earnings in our financial statements during the period in which any impairment of our goodwill or amortizable intangible assets
is determined, resulting in a materially adverse impact on our results of operations.



We may not be able to compete effectively
in markets where our competitors have more resources, which could have a material adverse effect on our business.



Our market is highly competitive and characterized
by an increasing number of entrants that have introduced or developed products and services similar to those offered by us. We
believe that competition will continue to intensify and increase in the near future. Our target market is rapidly evolving and
is subject to continuous technological change. As a result, our competitors may be better positioned to address these developments
or may react more favorably to these changes, which could have a material adverse effect on our business, prospects, financial
condition, and results of operations.



We may be unable to protect our intellectual
property rights and may be liable for infringing the intellectual property rights of others, which could have a material adverse
effect on our business.



Our success is dependent upon our proprietary
technology, including patents and other intellectual property, and on the ability to protect proprietary technology and other intellectual
property rights. In addition, we must conduct our operations without infringing on the proprietary rights of third parties. We
also intend to rely upon unpatented trade secrets and the know-how and expertise of our employees, as well as our patents. To protect
our proprietary technology and other intellectual property, we rely primarily on a combination of the protections provided by applicable
patent, copyright, trademark, and trade secret laws as well as on confidentiality procedures and licensing arrangements. Although
we believe that we have taken appropriate steps to protect our unpatented proprietary rights, including requiring that our employees
and third parties who are granted access to our proprietary technology enter into confidentiality agreements, we can provide no
assurance that these measures will be sufficient to protect our rights against third parties. Others may independently develop
or otherwise acquire patented or unpatented technologies or products similar or superior to ours.



We are exposed to product liability
claims and an uninsured claim could have a material adverse effect on our business, prospects, financial condition, and results
of operations, as well as on the value of our stock.



Many of our projects are critical to the
operations of our clients’ businesses. Any failure in a client’s information system could result in a claim for substantial
damages against us, regardless of our responsibility for such failure. We could, therefore, be subject to claims in connection
with the products and services that we sell. Although we currently maintain product liability insurance, there can be no assurance
that we have contractually limited our liability for such claims adequately or at all, or that we would have sufficient resources
to satisfy any liability resulting from any such claim. The successful assertion of one or more large claims against us could have
a material adverse effect on our business.



We will not pay cash dividends and investors
may have to sell their shares in order to realize their investment, which may not be easy for investors to do.



We have not paid any cash dividends on
our common stock and do not intend to pay cash dividends in the foreseeable future. We intend to retain future earnings, if any,
for reinvestment in the development and marketing of our products and services. As a result, investors may have to sell their shares
of common stock to realize their investment. Investors may encounter difficulty selling their shares of common stock.



Page 9







Some provisions of our certificate of
incorporation and bylaws may deter takeover attempts, which may limit the opportunity of our shareholders to sell their shares
at a premium to the then-current market price.



Some of the provisions of our Certificate
of Incorporation and bylaws could make it more difficult for a third party to acquire us, even if doing so might be beneficial
to our shareholders by providing them with the opportunity to sell their shares at a premium to the then-current market price.
On December 10, 1999, our Board adopted a shareholders’ rights plan and declared a non-taxable dividend of the right to acquire
one-one hundredth of a share of our Series A Preferred Stock, par value $0.01 per share, on each outstanding share of our common
stock to shareholders of record on December 20, 1999 and each share of common stock issued thereafter until a pre-defined hostile
takeover date. The shareholder rights plan was adopted as an anti-takeover measure, commonly referred to as a “poison pill”.
The shareholder rights plan was designed to enable all shareholders not engaged in a hostile takeover attempt to receive fair and
equal treatment in any proposed takeover of us and to guard against partial or two-tiered tender offers, open market accumulations,
and other hostile tactics to gain control of us. The shareholders’ rights plan was not adopted in response to any effort
to acquire control of us at the time of adoption, however it may have the effect of rendering more difficult, delaying, discouraging,
preventing, or rendering more costly an acquisition of us or a change in control of us. Certain shareholders, who were our founders,
Charles W. Fritz, William E. Fritz and The Fritz Family Limited Partnership and their holdings, were exempted from the triggering
provisions of our “poison pill” plan, as a result of the fact that, as of the plan’s adoption, their holdings
might have otherwise triggered the “poison pill”.





In addition, our Certificate of Incorporation
authorizes our Board to designate and issue preferred stock, in one or more series, the terms of which may be determined at the
time of issuance by our Board, without further action by shareholders, and may include voting rights, including the right to vote
as a series on particular matters, preferences as to dividends and liquidation, conversion, redemption rights, and sinking fund
provisions.



Preferred stock may have a negative
impact on other stockholders or the pursuit of certain corporate actions.



We are authorized to issue a total of 25
million shares of preferred stock, par value $0.01 per share. The issuance of any preferred stock could have a material adverse
effect on the rights of holders of our common stock, and, therefore, could reduce the value of shares of our common stock. In addition,
specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets
to, a third party. The ability of our Board to issue preferred stock could have the effect of rendering more difficult, delaying,
discouraging, preventing, or rendering more costly an acquisition of us or a change in our control.



In the future, there could be government
regulations and legal uncertainties that could harm our business.



Any new legislation or regulation, the
application of laws and regulations from jurisdictions whose laws do not currently apply to our business, or the application of
existing laws and regulations to the internet and other online services, could have a material adverse effect on our business,
prospects, financial condition, and results of operations. The growth and development of the market for mobile commerce may prompt
calls for more stringent consumer protection laws to impose additional burdens on companies conducting business online. The adoption
of any additional laws or regulations may decrease the growth of the internet, mobile telecommunications or other mobile services,
which could, in turn, decrease the demand for our services and increase our cost of doing business, or otherwise have a material
adverse effect on our business, prospects, financial condition, and results of operations.



ITEM 1B. Unresolved Staff Comments



None.



ITEM 2. Properties



As of December 31, 2012, we lease
two office space facilities for our business purposes, our headquarters in Boulder, CO, and the property used for
NeoMedia Europe’s office in Würselen, Germany. The Boulder, CO lease is an annual lease, of 1,354 square feet,
expiring on March 31, 2013, with monthly payments of $1,354. We are currently in the process of renewing this lease. NeoMedia
Europe operates from a facility in Würselen, Germany, where approximately 209 square meters are leased under the terms
of a written lease which expires on March 31, 2014, with a monthly rent of $4,140.



ITEM 3. Legal Proceedings



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, it is the opinion of management that such current actions, including the resolution of the following
legal actions are unlikely to have an effect on our financial position or operating results.



Page 10







William Klawonn v. Y.A. Global Investments,
L.P. and NeoMedia Technologies, Inc. – On April 28, 2010, William Klawonn, a shareholder of NeoMedia, filed a derivative
action, in the United States District Court for the District of New Jersey, against YA Global and us claiming trading activities
that violated section 15 U.S.C. § 78p(b).  On July 8, 2010, an order was granted in the case stipulating that the plaintiff
had agreed that we have no liability in the action.  The order also stipulated that we will be considered a nominal party
to the action, and as such we remain subject to the discovery rights and obligations of the action. On December 6, 2010, an
order was granted in the case to dismiss for the plaintiff’s failure to state a valid claim for relief, without prejudice.
However the order also allowed the plaintiff 45 days to amend the complaint. On January 20, 2011, the plaintiff filed an amended
complaint. On February 4, 2011, a further order was granted in the case again stipulating that the plaintiff had agreed that we
have no liability in the action. The order also again stipulated that we will continue to be considered a nominal party to
the action, and as such we remain subject to the discovery rights and obligations of the action. On March 24, 2011, YA Global filed
a motion to dismiss the amended complaint and on May 9, 2011, plaintiff filed a memorandum of law in opposition to YA Global’s
motion to dismiss the amended complaint. On June 8, 2011, YA Global filed a reply memorandum of law in further support of its motion
to dismiss the amended complaint.   The Court heard oral argument on the motion on August 4, 2011. On August 10, 2011,
the Court issued an opinion and order granting the motion to dismiss as to some claims and denying it as to others.  We are
not able to predict with any certainty the outcome of this litigation, including the merits or value of the amended complaint.
There is no new status in this case to report.



SpyderLynk, LLC – On April 9, 2012, we filed
a complaint against SpyderLynk, LLC in the District Court for the District of Colorado. The complaint asserts infringement of two
NeoMedia patents related to our mobile barcode resolution technology. Specifically the complaint asserts infringement of U.S. Patent
No. 6,199,048, and U.S. Patent No. 8,131,597. The complaint seeks to enjoin SpyderLynk from using NeoMedia’s patented technology
and to recover damages caused by the infringement. On December 4, 2012, the two companies settled all pending litigation and NeoMedia
has granted SpyderLynk a non-exclusive patent license. NeoMedia and SpyderLynk terminated all pending litigation brought by NeoMedia
against SpyderLynk.



Baniak Pine & Gannon, LLC, Valauskas
& Pine LLC, and McDonnell Boehnen Hulbert & Berghoff LLP - On February 18, 2011, Baniak Pine & Gannon, LLC,
Valauskas & Pine LLC, and McDonnell Boehnen Hulbert & Berghoff LLP filed a complaint for injunctive and other relief against
us and a member of our Board of Directors, Mr. George G. O'Leary in The United States District Court For The Northern District
Of Illinois, Eastern Division. The complaint sought to recover certain legal fees related to the plaintiffs’ services to
us and other damages for tortious interference by Mr. O'Leary. On April 21, 2011, we filed a motion to dismiss Mr. O'Leary from
the lawsuit and on April 25, 2011, we filed an answer to the complaint. Our bylaws provide for the indemnification of our Board
against complaints such as this and we maintain directors' and officers' liability insurance.    On July 6, 2011, the
District Court dismissed the claims against Mr. O'Leary with prejudice. On October 18, 2011, the parties settled the matter
through a confidential settlement agreement, and filed a stipulation to dismiss the matter with prejudice. The District
Court will retain jurisdiction to enforce the settlement.





ITEM 4. Mine Safety Disclosures



N/A



Page 11







PART II



ITEM 5. Market for
Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities



Market
Information



Our common shares are quoted on the OTC
Markets-OTCQB under the symbol “NEOM.



The following table summarizes the high
and low bid information of the Company’s common stock for the periods indicated. All historical data below was obtained from
OTC Market Group, Inc.:



|               |  | High |        |  | Low |  
|-------------- |  | ---- | ------ |  | --- | -
|2012:          |  |      |        |  |     |  
|Fourth quarter |  | $    | 0.0062 |  |     | $
|Third quarter  |  | $    | 0.0137 |  |     | $
|Second quarter |  | $    | 0.0315 |  |     | $
|First quarter  |  | $    | 0.0560 |  |     | $
|2011:          |  |      |        |  |     |  
|Fourth quarter |  | $    | 0.0164 |  |     | $
|Third quarter  |  | $    | 0.0600 |  |     | $
|Second quarter |  | $    | 0.2070 |  |     | $
|First quarter  |  | $    | 0.1200 |  |     | $



The following table presents certain information
with respect to our equity compensation plans as of December 31, 2012:



|                                                            |  |               |           |  |                      |   |      | Number of      | 
|----------------------------------------------------------- |  | ------------- | --------- |  | -------------------- | - | ---- | -------------- | 
|                                                            |  |               |           |  |                      |   |      | securities     | 
|                                                            |  |               |           |  |                      |   |      | remaining      | 
|                                                            |  |               |           |  |                      |   |      | available for  | 
|                                                            |  | Number of     |           |  |                      |   |      | future         | 
|                                                            |  | securities    |           |  |                      |   |      | issuance under | 
|                                                            |  | to be issued  |           |  |                      |   |      | equity         | 
|                                                            |  | upon exercise |           |  |                      |   |      | compensation   | 
|                                                            |  | of            |           |  |                      |   |      | plans          | 
|                                                            |  | outstanding   |           |  | Weighted-average     |   |      | (excluding     | 
|                                                            |  | options,      |           |  | exercise price of    |   |      | securities     | 
|                                                            |  | warrants and  |           |  | outstanding options, |   |      | reflected in   | 
|                                                            |  | rights        |           |  | warrants and rights  |   |      | column (a))    | 
|Plan Category                                               |  | (a)           |           |  | (b)                  |   |      | (c)            | 
|Equity compensation plans  approved by security holders     |  |               | 1,340,000 |  |                      | $ | 0.02 |                | 
|                                                            |  |               |           |  |                      |   |      |                | 
|Equity compensation plans  not approved by security holders |  |               | -         |  |                      |   | -    |                | 
|                                                            |  |               |           |  |                      |   |      |                | 
|Total                                                       |  |               | 1,340,000 |  |                      | $ | 0.02 |                | 



We have five stock option plans –
the 2011 Stock Incentive Plan, the 2005 Stock Option Plan, the 2003 Stock Option Plan, the 2003 Stock Incentive Plan, and the 2002
Stock Option Plan. Options issued under these option plans may have a term of up to 10 years. Options may be granted with any vesting
schedule as approved by the Stock Option Committee and/or the Board, but generally the vesting periods range from immediate vesting
to 5 years. Common shares required to be issued on the exercise of stock options would be issued from our authorized and unissued
shares.



Performance
Graph



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



Recent
Sales of Unregistered Securities; Use of Proceeds from Registered Securities



The Company has had no sales of unregistered
securities during the quarter ended December 31, 2012



Page 12







Holders





On March 1, 2013, the closing price of
our common stock as quoted on the OTC Market was $0.0015 per share and there were 508 shareholders of record. The number of record
holders does not include beneficial owners of common stock whose shares are held in the names of banks, brokers, nominees or other
fiduciaries.



Dividends



We have not declared or paid any cash dividends
and do not foresee paying any cash dividends in the foreseeable future.



ITEM 6.    Selected Financial Data



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



ITEM 7. Management‘s Discussion and Analysis
of Financial Condition and Results of Operations



Introduction



The
following discussion and analysis should be read in conjunction with the Consolidated Financial Statements, and the Notes thereto
included in this Report. The information contained below includes statements of management’s beliefs, expectations, hopes,
goals and plans that, if not historical, are forward-looking statements subject to certain risks and uncertainties that could cause
actual results to differ materially from those anticipated in the forward-looking statements. For a discussion on forward-looking
statements, see the information set forth in the introductory note to this Report under the caption “Forward Looking Statements”,
which information is incorporated herein by reference.



Overview



NeoMedia has positioned itself to pioneer
2D mobile barcode technology and infrastructure solutions that enable the mobile barcode ecosystem world-wide. We believe that
our extensive intellectual property portfolio differentiates us from the competition. We strive to harness the power of mobile
devices in innovative ways with state-of-the-art mobile barcode technology. With this technology, mobile phones with cameras become
barcode scanners and this enables a range of practical applications including mobile marketing, advertising, mobile payments, mobile
couponing and more. We offer barcode management and reader solutions and IP licensing.



As companies of all sizes continue to recognize
the potential of mobile barcodes, we continue to focus our efforts to take part in this rapidly expanding marketplace. We are focusing
our sales and marketing activities primarily in the United States and Europe.



From a sales strategy perspective, we are
focused in two key areas: the first is the maximization of our patent portfolio through IP licensing through monetization and enforcement,
and the second is our two tiered sales approach on partnering with brands and agencies directly as well as partnering with key
mobile marketing organizations to maximize the reach of our barcode management and reader solutions.



NeoMedia has been active in, and strived
to be an innovator in, the mobile barcode field since the mid-1990s, and during that time has spearheaded the development of a
robust IP portfolio. In September 2011, we announced an agreement with Global IP Law Group to help further monetize our patent
portfolio and lead the licensing of our IP, focusing on the US market. We closed eight new licensing agreements in 2012, including
one with Microsoft. We remain hopeful that our IP licensing activities will generate new licensees in 2013 and beyond. We intend
to continue to vigorously pursue or defend, as applicable, claims affecting the business interests and intellectual property of
the Company including litigation activities, where appropriate. Thus far, we have successfully caused three companies in the
United States to cease and desist their mobile barcode operations that infringed upon our IP rights and have settled
one litigation.



Our barcode management and infrastructure
solution includes both our barcode reader (NeoReader) as well as our barcode infrastructure solutions (NeoSphere). Mobile barcodes
continue to be an increasingly important engagement tool for brands and marketers. Our platform has generated more than 79,000
mobile barcodes for use in campaigns worldwide and continues to climb. In 2012, we saw scan activity from 193 countries with the
top three countries for scanning traffic being the USA, Spain and Germany.



In 2012, we officially closed our hardware
operations and will no longer be pursuing the sales of EXIO2, XELIA and MSS products. We will, however, continue to support existing
customers who have these products and ongoing relationships with the company.



We continue to be faced with downward price
pressure in the market given the fragmented competitive environment for mobile barcode solutions as well as the ‘battle’
between free and fee based solutions. We believe that NeoMedia will continue to differentiate itself on the basis of its high quality
product and service offerings, customizable and full service solutions and our robust intellectual property portfolio. The sales
process for mobile barcodes is a consultative sales process and organizations are seeking an end-to-end solution, including mobile
websites, rich media, etc. Accordingly, we have extended our partner relationships to offer our customers a full service solution.
Given the consultative sale, the sales cycles tend to be longer and more resource intensive for the larger deals.



Page 13







We continue to promote an open and interoperable
approach to the market to empower the mobile ecosystem – and deploy a partial indirect (also called managed direct or DNS
prefixed) solution for our customers. 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 and a variety of 1D symbologies.



NeoReader has also experienced continued
growth in 2012 due to the continued growth of mobile barcode adoption. With pre-install agreements with Sony Mobile and Samsung
Electronics Italy, as well as from the key “app stores” including Apple App StoreTM, Google PlayTM, Nokia
Ovi Store, BlackBerry App WorldTM, Windows® Marketplace and Amazon, our reader now has over 34 million installations world-wide. 
Our reader is offered to consumers free of charge and we anticipate the growth in consumer utilization will continue and help encourage
brand adoption of mobile barcodes.  We also offer NeoReader Enterprise and SDK for enterprise opportunities and recently launched
an updated SDK offering which allows fast access to our tools for application developers.



In 2012, we completed our significant reduction
in operating expenses and the reductions have helped to contribute to the overall sustainability of the company. We are focusing
on continuing to grow the business and revenue and plan to continue to maintain self-sustainability with our aggressive 2013 business
plan and continued cost conservation activities.



Critical
Accounting Policies and Estimates



This discussion and analysis of financial
condition and results of operations has been prepared by our management based on our consolidated financial statements, which have
been prepared in accordance with US GAAP. The preparation of these financial statements requires management to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and related disclosure of contingent
assets and liabilities. On an ongoing basis, our management evaluates our critical accounting policies and estimates, including
those related to revenue recognition, valuation of accounts receivable, intangible assets, derivative liabilities and contingencies.
Estimates are based on historical experience and on various assumptions believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources. These judgments and estimates affect the reported amounts of assets and liabilities and the reported amounts
of revenue and expenses during the reporting periods.



We consider the following accounting policies
important in understanding our operating results and financial condition:



| | · | Intangible
Asset Valuation – The determination of the fair value of certain acquired assets is subjective in nature and often
involves the use of significant estimates and assumptions. Determining the fair values and useful lives of intangible assets especially
requires the exercise of judgment. Although there are a number of different generally accepted valuation methods to estimate the
value of intangible assets acquired, we primarily use the weighted-average probability method outlined in FASB ASC Topic 360,
Property, Plant, and Equipment. This method requires significant management judgment to forecast the future operating results
used in the analysis. In addition, other significant estimates are required such as residual growth rates and discount factors.
The estimates we have used are consistent with the plans and estimates that we use to manage our business, based on available
historical information and industry averages. The judgments made in determining the estimated useful lives assigned to each class
of assets acquired can also significantly affect our net operating results.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



FASB ASC 360 requires that a
long-lived asset should be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount
may not be recoverable. We follow the two-step process outlined in FASB ASC 360 for determining if an impairment charge should
be taken: (1) the expected undiscounted cash flows from a particular asset or asset group are compared with the carrying value;
if the expected undiscounted cash flows are greater than the carrying value, no impairment is recognized, but if the expected undiscounted
cash flows are less than the carrying value, then (2) an impairment charge is recognized for the difference between the carrying
value and the expected discounted cash flows. The assumptions used in developing expected cash flow estimates are similar to those
used in developing other information used by us for budgeting and other forecasting purposes. In instances where a range of potential
future cash flows is possible, we use a probability-weighted approach to weigh the likelihood of those possible outcomes. In such
instances, we use a discount rate equal to the yield on zero-coupon treasury instruments with a life equal to the expected life
of the assets being tested.



| | · | Goodwill – Goodwill represents the excess of the purchase price paid for NeoMedia Europe over the fair value of the identifiable net assets and liabilities acquired, based on an independent appraisal of the assets and liabilities acquired. Although there have been changes to the legal structure of NeoMedia Europe and how we conduct business, we believe the goodwill value remains. In accordance with FASB ASC 350, Intangibles - Goodwill and Other, goodwill is not amortized, but is tested for impairment, at least annually, by applying the recognition and measurement provisions of FASB ASC 350, which require that we compare the carrying amount of the asset to its fair value. If impairment of the carrying value based on the estimated fair value exists, we measure the impairment through the use of discounted cash flows. If the carrying amount exceeds fair value, an impairment loss is recognized.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 14







| | · | Derivative Financial Instruments – We generally do not use derivative financial instruments to hedge exposures to cash-flow risks or market-risks. However, certain financial instruments, such as warrants and the embedded conversion features of our convertible preferred stock and convertible debentures, which are indexed to our common stock, are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share settlement is not within our control. In such instances, net-cash settlement is assumed for financial accounting and reporting purposes, even when the terms of the underlying contracts do not provide for net-cash settlement. Derivative financial instruments are initially recorded, and continuously carried, at fair value.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Determining the fair value
of these complex derivative financial instruments involves judgment and the use of certain relevant assumptions including, but
not limited to, interest rate risk, credit risk, volatility and conversion/redemption privileges. The use of different assumptions
could have a material effect on the estimated fair value amounts.



For the majority of our convertible
debentures, we have elected not to separately account for the embedded conversion feature as a derivative instrument but to account
for the entire hybrid instrument at fair value in accordance with FASB ASC Topic 815, Derivatives and Hedging . For the
remaining convertible debentures and our convertible preferred stock, the underlying instruments are carried at amortized cost
and the embedded conversion feature is accounted for separately at fair value in accordance with FASB ASC 815-40-05 and FASB ASC
815-40-15.



Financial Instruments and
Concentrations of Credit Risk – Our financial instruments include cash and cash equivalents, accounts receivable,
accounts payable, accrued expenses, and other current liabilities. For these financial instruments, we believe the carrying values
approximate their fair values due to their short-term nature.



Certain of our convertible debentures
are recognized as hybrid financial instruments and are carried in their entirety at fair value in accordance with FASB ASC 815.
Our outstanding common stock warrants are accounted for as derivative liabilities and are also carried at fair value.



| | · | Revenue Recognition – We derive revenues from the following sources:  (1) license fees relating to intellectual property, and (2) software and service revenues related to mobile marketing barcode infrastructure management and development, barcode readers and internally developed software..
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | License revenues, including
                                                                                                                              intellectual property licenses, represent revenue from the licensing of our intellectual property. The basis for license fee
                                                                                                                              revenue recognition is substantially governed by FASB ASC 985-605, Software Revenue Recognition.License revenue is
                                                                                                                              recognized if persuasive evidence of an agreement exists, delivery has occurred, pricing is fixed and determinable, and
                                                                                                                              collectability is reasonably assured. We defer revenue related to license fees for which amounts have been invoiced and/or
                                                                                                                              collected in accordance with the payment terms of the licensing agreements, but for which the above criteria have not been
                                                                                                                              fully met. We recognize licensing revenue over the term of the licensing agreement, and we evaluate our
                                                                                                                              deferrals periodically for any potential adjustments.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Software and services revenues represent revenue from the licensing of our proprietary software applications and are recognized based on guidance provided in FASB ASC 985-605 Software Revenue Recognition.  We license our applications under non-exclusive and non-transferable license agreements. License revenue is recognized when persuasive evidence of an agreement exists, the price to the customer is fixed and determinable, delivery of the service has occurred and collectability is reasonably assured. In most cases, revenues are collected prior to services being offered and recognized over the duration of the contract and/or billing terms.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | We recognize tax billings related to our sales revenue at the time of invoicing. The customer is responsible for paying all associated taxes to us in connection with the sale as part of the terms and conditions of the sales invoice. Taxes on billings in connection with invoices are paid to the corresponding taxing authority directly by us and recovered from the customer upon payment of the customer invoice.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Valuation of Accounts Receivable – Judgment is required when we assess the likelihood of ultimate realization of recorded accounts receivable, including assessing the likelihood of collection and the credit worthiness of customers. If the financial condition of our customers were to deteriorate or their operating climate were to change, resulting in an impairment of either their ability or willingness to make payments, an increase in the allowance for doubtful accounts would be required. Similarly, a change in the payment behavior of customers generally may require an adjustment in the calculation of an appropriate allowance. Each month we assess the collectability of specific customer accounts, the aging of accounts receivable, our history of bad debts, and the general condition of the industry. If a major customer’s credit worthiness deteriorates, or our customers’ actual defaults exceed historical experience, our estimates could change and impact our reported results. At December 31, 2012, we concluded that an allowance for doubtful accounts was not required. At December 31, 2011, we concluded that an allowance of $19,000 for doubtful accounts was required. For the years ended December 31, 2012 and 2011, our bad debt expense was $457,000 and $19,000, respectively. The large bad debt in 2012 related to a large licensee going out of business in the United States during 2012.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 15







| | · | Stock-based Compensation – We record stock-based compensation in accordance with FASB ASC 718, Compensation-Stock Compensation, which requires measurement of all employee stock-based compensation awards using a fair-value method and the recording of such expense in the consolidated financial statements. We use the Black-Scholes-Merton option pricing model and recognize compensation cost on a straight-line basis over the vesting periods of the awards. Inherent in this model are assumptions related to expected stock-price volatility, forfeiture rates and option life, risk-free interest rate and dividend yield.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Although the risk-free interest
rate and dividend yield are less subjective assumptions, typically based on factual data derived from public sources, the expected
stock-price volatility, forfeiture rate and option life assumptions require a greater level of judgment which make them critical
accounting estimates. We use an expected stock-price volatility assumption that is based on historical volatilities of our stock,
and estimate the forfeiture rates and option life based on historical data of prior options. Because these assumptions are based
on historical information, actual future expenses may differ materially from the current estimates which are based on these assumptions.



| | · | Contingencies – We are subject to proceedings, lawsuits and other claims related to lawsuits and other regulatory proceedings that arise in the ordinary course of business. We are required to assess the likelihood of any adverse judgments or outcomes of these matters as well as potential ranges of possible losses. A determination of the amount of the loss accrual required, if any, for these contingencies, is made after careful analysis of each individual issue. We generally accrue attorney fees and interest in addition to an estimate of the expected liability. We consult with legal counsel and other experts when necessary to assess any contingencies. The required accrual may change in the future due to new developments in each matter or changes in approach such as a change in settlement strategy in dealing with these matters.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Income Tax Valuation Allowance – Deferred tax assets are reduced by a valuation allowance when, in the opinion of our management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. We recorded a 100% valuation allowance at December 31, 2012 and 2011.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Foreign Currency Translation – The U.S. dollar is the functional currency of our operations, except for our operations at NeoMedia Europe, which use the Euro as their functional currency. Foreign currency transaction gains and losses are reflected in income. Translation gains and losses arising from translating the financial statements of NeoMedia Europe into U.S. dollars for reporting purposes are included in “Accumulated other comprehensive income (loss).”
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 16







Results
of Continuing Operations



The following table sets forth certain
data derived from our consolidated statements of operations:



|                                                                                                              |  | (in thousands)          |        
|------------------------------------------------------------------------------------------------------------- |  | ----------------------- | -------
|                                                                                                              |  | Year Ended December 31, |        
|                                                                                                              |  | 2012                    |        
|                                                                                                              |  |                         |        
|Revenues                                                                                                      |  | $                       | 2,344  
|Cost of revenues                                                                                              |  |                         | 2,181  
|Impairment of inventory                                                                                       |  |                         | -      
|Gross profit                                                                                                  |  |                         | 163    
|                                                                                                              |  |                         |        
|Sales and marketing expenses                                                                                  |  |                         | 1,100  
|General and administrative expenses                                                                           |  |                         | 3,593  
|Research and development costs                                                                                |  |                         | 951    
|                                                                                                              |  |                         |        
|Operating Loss                                                                                                |  |                         | (5,481 
|                                                                                                              |  |                         |        
|Impairment loss on cash surrender value of life insurance policies                                            |  |                         | (527   
|Gain on de-recognition of accrued obligations                                                                 |  |                         | 8,300  
|Loss on extinguishment of debt                                                                                |  |                         | (27,479
|Gain from change in fair value of hybrid financial instruments                                                |  |                         | 11,926 
|Gain (loss) from change in fair value of derivative liability - warrants                                      |  |                         | 11,347 
|Gain (loss) from change in fair value of derivative liability - Series C and D preferred stock and debentures |  |                         | (13,035
|                                                                                                              |  |                         |        
|Interest expense related to convertible debt                                                                  |  |                         | (4,437 
|                                                                                                              |  |                         |        
|Net Loss                                                                                                      |  | $                       | (19,386
|                                                                                                              |  |                         |        
|Net income (loss) per share, basic and diluted:                                                               |  |                         |        
|Basic                                                                                                         |  | $                       | (0.02  
|Fully diluted                                                                                                 |  | $                       | (0.02  





Year
Ended December 31, 2012 Compared With the Year Ended December 31, 2011



Revenues. Revenues for 2012
and 2011, respectively, were $2.344 million and $2.267 million, an increase of $77,000, or 3.4%. The increase was due primarily
to an increase in IP Licensing and NeoReader SDK sales. We believe that our results regarding revenues for 2012 would have experienced
a greater increase from 2011 but for the effect of certain pending arbitration proceedings delaying our ability to presently include
certain revenues related and ancillary to such arbitration in our financial reporting. We anticipate that upon the resolution of
such arbitration proceedings, any such revenues will be reflected in our future financial statements.



Cost of Revenues. 
Cost of revenues was $2.18 million for 2012, compared with $1.19 million for 2011, an increase of $988,000. The majority of
the increase in cost of revenues is primarily because of the legal fees associated with the monetization of our patents.



Sales and Marketing. 
Our sales and marketing expenses were stable at $1.1 million for 2012, compared with $1.02 million for 2011. The slight increase
resulted from our efforts to increase our IP licensing as well 2D core sales efforts.



General and Administrative.
General and administrative expenses were $3.59 million for 2012, compared with $3.36 million for 2011, an increase of $230,000
or 6.8%. A majority of this increase is related to an increase in bad debt expense of approximately $438,000. Legal costs remain
a significant expense for us, as do the costs to maintain our public company standing.  We expect that with the changes to
organizational and corporate structure complete, legal expenses will be significantly reduced in 2013 as will payroll expenses,
as severance payments for departing employees were completed in January 2013.



Research and Development.
 In 2012, expenses for research and development were $0.95 million, compared with $1.6 million for 2011, a decrease
of $683,000 or 42%. Research and development decreased in 2012 resulting from certain cost reductions, but is expected to increase
in 2013 as we continue to develop our barcode ecosystem products.



Page 17











Loss from Operations.  In 2012,
our loss from operations was $5.481 million, compared with $5.314 million in 2011, an increase of $167,000 or 3%, reflecting the
increased cost of revenues and sales and marketing expenses, offset by reduced general and administrative and research and development
costs.



Impairment Loss on Cash Surrender Value of Life Insurance
Policies. The company previously had life insurance policies recorded at their cash surrender values of approximately
$653,000. In 2012, we surrendered one of the policies and received cash proceeds of approximately $126,000. The company’s
interest in the second policy, which was administered through a broker and had been assigned to the company under a separate agreement
with a third party, was disputed by the insurance company. As a result, the company was unable to collect the cash surrender value
of that policy from the insurance company and does not expect to be able to make any recovery from the third party. Accordingly,
the company recorded an impairment loss of $527,000.



Gain on De-recognition of Accrued Obligations.
The Company previously recorded an accrued purchase price obligation of $4,535,000 related to our 2006 acquisition of 12Snap,
which we disposed of in 2007, and accruals for disputed services and other expenses relating to its former operations and dating
from 2007 and prior, aggregating approximately $3,765,000.



In accordance with FASB ASC 405-20-40-1, a debtor shall de-recognize
a liability if and only if it has been extinguished. A liability shall be extinguished if either (a) the debtor pays the creditor
and is relieved of its obligation for the liability or (b) the debtor is legally released from being the primary obligor under
the liability, either judicially or by the creditor.



As of September 30, 2012, there had been no collection activity,
invoices, statements of account, court action or communications related to these obligations for a minimum of five years with
any of the affected parties or entities. Consequently, after reviewing the applicable state statutes of limitations, as provided
to the company by its legal counsel, the company concluded that these obligations are no longer legally enforceable due to the
applicable statutes of limitations for the collection of debt. Accordingly, the Company de-recognized these liabilities as of
September 30, 2012.

Loss
on Extinguishment of Debt.On May
25, 2012, the terms of debentures issued by us and held by YA Global were modified to extend the stated maturity dates from July
29, 2012 to August 1, 2013 and to revise the interest rates to 9.5% per year. Because the effect of these modifications exceeded
a significance threshold relative to cash flows prescribed by ASC 470-50, Debt Modifications and Extinguishments,
the modifications of the amounts due under these arrangements were accounted for as extinguishments, whereby the existing debentures
are considered to be retired and new debentures issued. The instruments were first adjusted to fair value as of May 25, 2012 using
the interest rate and maturity date prior to the amendment. The fair value of the instrument was then calculated using the modified
interest rate and maturity date to determine the fair value of the instrument subsequent to the amendment. The differences in
the fair values before and after the amendment were recorded as an extinguishment loss of approximately $27.5 million.



Gain (Loss) from Change in Fair
Value of Hybrid Financial Instruments. We carry certain of our convertible 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. In 2012, the liability related to these hybrid instruments decreased,
resulting in a gain of $11.9 million. In 2011, the liability related to these hybrid instruments also decreased, resulting in
a gain of $5.4 million.



Gain (Loss) from Change in Fair
Value of Derivative Liabilities - Warrants. We account for our outstanding common stock warrants which were issued in
connection with our preferred stock and our debentures, at fair value. In 2012, the liability related to warrants decreased, resulting
in a gain of $11.3 million. In 2011, the liability related to warrants increased, resulting in a loss of $12.2 million.



Gain (Loss) from Change in Fair
Value of Derivative Liabilities - Series C and D Preferred Stock and Debentures. For our Series C and D convertible preferred
stocks, and certain of our convertible debentures, we account for the embedded conversion feature separately as a derivative financial
instrument.  We carry these derivative financial instruments at fair value. In 2012, the liability related to the derivative
instruments embedded in the Series C and D preferred stock and these debentures, increased resulting in a loss of $13.0 million.
In 2011, the liability related to the derivative instruments embedded in the Series C and D preferred stock and these debentures
decreased, resulting in a gain of $15.7 million.



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



Page 18







Interest Expense related to Convertible
Debt. Interest expense related to debentures that are carried at amortized cost and which are not carried as hybrid financial
instruments at fair value was $4.4 million and $4.4 million in 2012 and 2011, respectively. On May 25, 2012, the terms of the
debentures held by YA Global were modified to extend the stated maturity dates to August 1, 2013 and reduce the interest rates
to 9.5% per year. Because the effect of the modifications exceeded a significance threshold relative to cash flows prescribed
by ASC 470-50, Debt Modifications and Extinguishments, the modifications of the amounts due under these arrangements were
accounted for as extinguishments, whereby the existing debentures are considered to be retired and new debentures issued. Following
the modification, the debentures are carried as hybrid instruments at fair value. As a result, from May 25, 2012, interest expense
related to these debentures is included as a component of the change in fair value of hybrid financial instruments, discussed
above, rather than being included in interest expense.



Net Loss. 
As a result of the above, we reported a net loss during 2012 of $19.4 million, an increase of $18.5 million compared with
a net loss during 2011 of $849,000. This increase in net loss resulted primarily from losses net of gains relating to our derivative instruments.



Liquidity



|                                          |  | Year Ended December 31, |       
|----------------------------------------- |  | ----------------------- | ------
|                                          |  | 2012                    |       
|                                          |  | (in thousands)          |       
|                                          |  |                         |       
|Cash and cash equivalents                 |  | $                       | 611   
|                                          |  |                         |       
|Net cash used in operating activities     |  | $                       | (1,536
|Net cash used in investing activities     |  |                         | 123   
|Net cash provided by financing activities |  |                         | 2,050 
|Effect of exchange rate changes on cash   |  |                         | (56   
|Net increase (decrease) in cash           |  | $                       | 581   



During 2012 and 2011, we funded our liquidity requirements
through our existing cash resources and borrowings under our convertible debentures with YA Global. As of December 31, 2012, we
had $611,000 in cash and cash equivalents, a material increase of $581,000 from the $30,000 balance as of December 31, 2011.



Going Concern



We have historically incurred net losses
from operations and we expect that we may continue to have negative cash flows as we implement our business plan. The accompanying
consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America (“US GAAP”), which contemplates our continuation as a going concern. For the years ended December
31, 2012 and 2011, we incurred operating losses of $5.5 million and $5.3 million, respectively. Net cash used by operations during
the years ended December 31, 2012 and 2011 was $1.5 million and $4.5 million, respectively. At December 31, 2012, we have an accumulated
deficit of $264.6 million. We also have a working capital deficit of $74.6 million, of which $70.2 million or almost 95% is related
to our financing instruments, including $68.0 million related to the fair value of warrants and those debentures that are recorded
as hybrid financial instruments, and $2.2 million related to the amortized cost carrying value of certain of our debentures and
the fair value of the associated derivative liabilities.



We currently do not have sufficient cash,
or commitments for financing to sustain our operations for the next twelve months. We are developing new client and customer relationships
and working to substantially increase our revenue from improved products and IP licensing. If our revenues are not to plan and
our operating expenses cannot be reduced to sustain our operations, we may require additional financing in order to execute our
operating plan; however, we believe that such additional financing will not be necessary. If additional financing is required,
we cannot predict whether this additional financing will be in the form of equity, debt, or another form and we may not be able
to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In the event that these financing
sources do not materialize, 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 circumstances would
have a material adverse effect on our business, prospects, financial condition and results of operations.



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



Page 19









Significant
Liquidity Events



Financing Provided By YA Global.In 2011 and 2012, all of our external financing has been provided by YA Global. In 2012, we received a gross total of
$2.65 million through issuance of a series of six convertible debentures and common stock warrants. The debentures bear interest
at 9.5% per annum and mature on August 1, 2014. We paid cash fees to them from the proceeds of the secured convertible debentures
and warrants of $150,000, resulting in net proceeds of $2.5 million. We also received two short-term loans from YA Global aggregating
$112,000 which were subsequently repaid; we also repaid in full the July 20, 2012 debenture of $450,000.



In 2011, we received a gross total of
$4.725 million in financing from YA Global through issuance of Series D preferred stock and a series of eleven convertible debentures
and common stock warrants. From the gross proceeds, we paid cash fees to them of $315,000, resulting in net proceeds of $4.41
million.



Since September 2012, we have not received
any additional financing from YA Global and we do not anticipate receiving additional financing during 2013. We believe our business
plan will provide adequate cash flow to meet our operational requirements during 2013. It also should be noted in the table below
that prior to January 1, 2011, 80% of the convertible debenture funding took place. Only 20% of the debenture based funding has
occurred since there was a major change in management just prior to the start of 2011.



The following table outlines the funding
that we have received from YA Global since 2006:



|Debenture Issuance 
Year |  | Original Face
 Amount |        |  | Current Interest
 Rate | 
|------------------------ |  | --------------------- | ------ |  | ---------------------- | 
|                         |  | (in thousands)        |        |  |                        | 
|2006                     |  | $                     | 7,500  |  |                        | 
|2007                     |  |                       | 9,234  |  |                        | 
|2008                     |  |                       | 6,468  |  |                        | 
|2009                     |  |                       | 2,275  |  |                        | 
|2010                     |  |                       | 3,881  |  |                        | 
|2011                     |  |                       | 4,725  |  |                        | 
|2012                     |  |                       | 2,650  |  |                        | 
|Total                    |  | $                     | 36,733 |  |                        | 



Page 20







Note that there was a reduction of 44%
from 2011 to 2012 in financing provided by YA Global.



Conversions of our preferred stock or
debentures into common stock have a positive effect on our future liquidity. During the year ended December 31, 2012, investors
converted 246 shares of Series C preferred stock, 10,469 shares of Series D preferred stock, and $5.1 million of principal and
accrued interest on the convertible debentures. These conversions have reduced the carrying value of the debentures and the associated
derivative financial instruments, the Series C and D preferred stock, and the Debentures payable carried at fair value.



Under our security agreements with YA
Global in connection with the convertible debentures, YA Global has a security interest in all of our assets. Additionally, we
cannot enter into any debt arrangements in which YA Global is not the lender, grant any security interest in any of our assets,
or grant any security below market price.





Subsequent Events



On February 4, 2013, we entered into a
Debenture Extension Agreement with YA Global to extend the maturity dates of the secured convertible debentures held by YA Global
to August 1, 2014. In addition to the extension of the maturity date, 1.4 billion of the 1.9 billion warrants held by YA Global
were cancelled. The exercise price of the remaining 499,990,063 warrants was reset to $0.0001.



Contractual
Obligations



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



Recently
Issued Accounting Standards



The following Accounting Standards Codification
Updates have been issued, or will become effective, after the end of the period covered by this discussion:



Recent Accounting Pronouncements- The following Accounting Standards Codification Updates have recently been issued:



|ASU No. 2012-01 |  | July 2012   |  | Health Care Entities (Topic
    954): Continuing Care Retirement Communities—Refundable Advance Fees                                                                                                                                                                                     
|--------------- |  | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |  |             |  |                                                                                                                                                                                                                                                                                          
|ASU No. 2012-02 |  | July 2012   |  | Intangibles-Goodwill and Other
(Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment                                                                                                                                                                                    
|                |  |             |  |                                                                                                                                                                                                                                                                                          
|ASU No. 2012-03 |  | August 2012 |  | Technical Amendments and Corrections
    to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 114, Technical Amendments Pursuant
    to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22  (SEC Update)



|ASU No. 2012-04 |  | October 2012 |  | Technical Corrections and
    Improvements
|--------------- |  | ------------ |  | ------------------------------------------



|ASU No. 2012-05 |  | October 2012 |  | Statement of Cash Flows
    (Topic 230): Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of
    Cash Flows (a consensus of the FASB Emerging Issues Task Force)
|--------------- |  | ------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ASU No. 2012-06 |  | October 2012 |  | Business Combinations (Topic
    805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted
    Acquisition of a Financial Institution (a consensus of the FASB Emerging Issues Task Force)
|--------------- |  | ------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ASU No. 2012-07 |  | October 2012 |  | Entertainment—Films
    (Topic 926): Accounting for Fair Value Information That Arises after the Measurement Date and Its Inclusion in the Impairment
    Analysis of Unamortized Film Costs (a consensus of the FASB Emerging Issues Task Force)
|--------------- |  | ------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ASU No. 2013-01 |  | January 2013 |  | Balance Sheet (Topic 210):
    Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities
|--------------- |  | ------------ |  | ----------------------------------------------------------------------------------------------------------



Page 21







|ASU No. 2013-02 |  | February 2013 |  | Comprehensive Income (Topic
    220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
|--------------- |  | ------------- |  | ---------------------------------------------------------------------------------------------------------------------



|ASU No. 2013-03 |  | February 2013 |  | Financial Instruments (Topic
    825): Clarifying the Scope and Applicability of a Particular Disclosure to Nonpublic Entities
|--------------- |  | ------------- |  | ------------------------------------------------------------------------------------------------------------------------------



|ASU No. 2013-04 |  | February 2013 |  | Liabilities
(Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation
Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force)                                                              
|--------------- |  | ------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |  |               |  |                                                                                                                                                                                                                                                                                            
|ASU No. 2013-05 |  | March 2013    |  | Foreign Currency Matters (Topic 830):
    Parent’s Accounting for the Cumulative Translation Adjustment upon De-recognition of Certain Subsidiaries or Groups
    of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the Emerging Issues Task Force)



To the extent appropriate, the guidance
in the above Accounting Standards Codification Updates is already reflected in our consolidated financial statements and management
does not anticipate that these accounting pronouncements will have any material future effect on our consolidated financial statements.



Off-Balance
Sheet Arrangements



We are not currently engaged in the use
of off-balance sheet derivative financial instruments to hedge or partially hedge interest rate exposure nor do we maintain any
other off-balance sheet arrangements for the purpose of credit enhancement, hedging transactions, or other financial or investment
purposes.



ITEM 7A. Quantitative and Qualitative Disclosures
About Market Risk



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



Page 22







ITEM 8.    Financial Statements



Index to Consolidated Financial Statements



|                                                                                                                |  | Page
|--------------------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                                |  |     
|Report of Independent
    Registered Public Accounting Firm                                                     |  | 24  
|                                                                                                                |  |     
|Consolidated
    Balance Sheets at December 31, 2012 and 2011                                                   |  | 25  
|                                                                                                                |  |     
|Consolidated
    Statements of Operations and Comprehensive Loss for the years ended December 31, 2012 and 2011 |  | 26  
|                                                                                                                |  |     
|Consolidated
    Statement of Shareholders’ Deficit for the years ended December 31, 2012 and 2011              |  | 27  
|                                                                                                                |  |     
|Consolidated
    Statements of Cash Flows for the years ended December 31, 2012 and 2011                        |  | 28  
|                                                                                                                |  |     
|Notes to Consolidated
    Financial Statements                                                                  |  | 29  



Page 23







REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM



To the Board of Directors and Shareholders
of NeoMedia Technologies, Inc.:



We have audited the accompanying consolidated
balance sheets of NeoMedia Technologies, Inc. (the “Company”), as of December 31, 2012 and 2011, and the related consolidated
statements of operations and comprehensive loss, shareholders’ deficit and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial
statements based on our audits.



We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements
referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2012 and
2011, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.



The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to such financial
statements, the Company has suffered recurring losses from operations, has significant working capital and shareholder deficits
and may have ongoing requirements for additional capital investment. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans in regard to these matters are described in Note 1. The consolidated
financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ Kingery & Crouse, P.A.

Certified Public Accountants

Tampa, FL

April 1, 2013



Page 24







NeoMedia Technologies, Inc. and Subsidiaries

Consolidated
Balance Sheets

(in thousands, except share
data)



|                                                                                                                                                                                                                      |  | December 31, |          |   | December 31, |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | - | ------------ | -
|                                                                                                                                                                                                                      |  | 2012         |          |   | 2011         |  
|ASSETS                                                                                                                                                                                                                |  |              |          |   |              |  
|                                                                                                                                                                                                                      |  |              |          |   |              |  
|Current assets:                                                                                                                                                                                                       |  |              |          |   |              |  
|Cash and cash equivalents                                                                                                                                                                                             |  | $            | 611      |   |              | $
|Trade accounts receivable, net of allowance of $0 and $19                                                                                                                                                             |  |              | 217      |   |              |  
|Prepaid expenses and other current assets                                                                                                                                                                             |  |              | 120      |   |              |  
|Total current assets                                                                                                                                                                                                  |  |              | 948      |   |              |  
|                                                                                                                                                                                                                      |  |              |          |   |              |  
|Property and equipment, net                                                                                                                                                                                           |  |              | 44       |   |              |  
|Goodwill                                                                                                                                                                                                              |  |              | 3,418    |   |              |  
|Proprietary software, net                                                                                                                                                                                             |  |              | 99       |   |              |  
|Patents and other intangible assets, net                                                                                                                                                                              |  |              | 1,490    |   |              |  
|Cash surrender value of life insurance policies                                                                                                                                                                       |  |              | -        |   |              |  
|Other long-term assets                                                                                                                                                                                                |  |              | 40       |   |              |  
|Total assets                                                                                                                                                                                                          |  | $            | 6,039    |   |              | $
|                                                                                                                                                                                                                      |  |              |          |   |              |  
|LIABILITIES AND SHAREHOLDERS’ DEFICIT                                                                                                                                                                                 |  |              |          |   |              |  
|Current liabilities:                                                                                                                                                                                                  |  |              |          |   |              |  
|Accounts payable                                                                                                                                                                                                      |  | $            | 506      |   |              | $
|Accrued expenses                                                                                                                                                                                                      |  |              | 399      |   |              |  
|Deferred revenues and customer prepayments                                                                                                                                                                            |  |              | 3,735    |   |              |  
|Note payable                                                                                                                                                                                                          |  |              | 50       |   |              |  
|Accrued purchase price guarantee                                                                                                                                                                                      |  |              | -        |   |              |  
|Other accrued expenses                                                                                                                                                                                                |  |              | -        |   |              |  
|Deferred tax liability                                                                                                                                                                                                |  |              | 706      |   |              |  
|Derivative financial instruments - warrants                                                                                                                                                                           |  |              | 3,687    |   |              |  
|Derivative financial instruments - Series C and D preferred stock and debentures payable                                                                                                                              |  |              | 2,147    |   |              |  
|Debentures payable - carried at amortized cost                                                                                                                                                                        |  |              | 53       |   |              |  
|Debentures payable - carried at fair value                                                                                                                                                                            |  |              | 64,292   |   |              |  
|Total current liabilities                                                                                                                                                                                             |  |              | 75,575   |   |              |  
|                                                                                                                                                                                                                      |  |              |          |   |              |  
|Commitments and contingencies (Note 10)                                                                                                                                                                               |  |              |          |   |              |  
|                                                                                                                                                                                                                      |  |              |          |   |              |  
|Series C convertible preferred stock, $0.01 par value, 27,000 shares authorized, 4,840 and 5,086 shares issued and outstanding, liquidation value of $4,840 and $5,086 as of December 31, 2012 and 2011, respectively |  |              | 4,840    |   |              |  
|Series D convertible preferred stock, $0.01 par value, 25,000 shares authorized, 3,481 and 13,950 shares issued and outstanding, liquidation value of $348and $1,395 as of December 31, 2012 and 2011, respectively   |  |              | 348      |   |              |  
|                                                                                                                                                                                                                      |  |              |          |   |              |  
|Shareholders’ deficit:                                                                                                                                                                                                |  |              |          |   |              |  
|Common stock, $0.001 par value, 5,000,000,000 shares authorized, 2,106,035,882and 541,999,246 shares issued and outstanding as of December 31, 2012 and 2011, respectively                                            |  |              | 2,106    |   |              |  
|Additional paid in capital                                                                                                                                                                                            |  |              | 188,814  |   |              |  
|Accumulated deficit                                                                                                                                                                                                   |  |              | (264,630 | ) |              |  
|Accumulated other comprehensive loss                                                                                                                                                                                  |  |              | (235     | ) |              |  
|Treasury stock, at cost, 2,012 shares of common stock                                                                                                                                                                 |  |              | (779     | ) |              |  
|Total shareholders’ deficit                                                                                                                                                                                           |  |              | (74,724  | ) |              |  
|Total liabilities and shareholders’ deficit                                                                                                                                                                           |  | $            | 6,039    |   |              | $



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





Page 25







NeoMedia Technologies,
Inc. and Subsidiaries

Consolidated Statements
of Operations and Comprehensive Loss

(in thousands, except share and per share data)



|                                                                                                              |  | Year Ended December 31, |              
|------------------------------------------------------------------------------------------------------------- |  | ----------------------- | -------------
|                                                                                                              |  | 2012                    |              
|                                                                                                              |  |                         |              
|Revenues                                                                                                      |  | $                       | 2,344        
|Cost of revenues                                                                                              |  |                         | 2,181        
|Impairment of inventory                                                                                       |  |                         | -            
|Gross profit                                                                                                  |  |                         | 163          
|                                                                                                              |  |                         |              
|Operating expenses                                                                                            |  |                         |              
|Sales and marketing expenses                                                                                  |  |                         | 1,100        
|General and administrative expenses                                                                           |  |                         | 3,593        
|Research and development costs                                                                                |  |                         | 951          
|Total operating expenses                                                                                      |  |                         | 5,644        
|                                                                                                              |  |                         |              
|Loss from operations before other income (expense)                                                            |  |                         | (5,481       
|                                                                                                              |  |                         |              
|Other income (expense)                                                                                        |  |                         |              
|Impairment loss on cash surrender value of life insurance policy                                              |  |                         | (527         
|Gain on derecognition of accrued expenses and purchase price guarantee                                        |  |                         | 8,300        
|Loss on extinguishment of debt                                                                                |  |                         | (27,479      
|Gain from change in fair value of hybrid financial instruments                                                |  |                         | 11,926       
|Gain (loss) from change in fair value of derivative liability - warrants                                      |  |                         | 11,347       
|Gain (loss) from change in fair value of derivative liability - Series C and D preferred stock and debentures |  |                         | (13,035      
|Interest expense                                                                                              |  |                         | (4,437       
|Total other income (expense)                                                                                  |  |                         | (13,905      
|                                                                                                              |  |                         |              
|Net loss                                                                                                      |  | $                       | (19,386      
|                                                                                                              |  |                         |              
|Dividends on convertible preferred stock                                                                      |  |                         | -            
|                                                                                                              |  |                         |              
|Net loss attributable to common shareholders                                                                  |  | $                       | (19,386      
|Comprehensive loss:                                                                                           |  |                         |              
|Net loss                                                                                                      |  | $                       | (19,386      
|Other comprehensive loss item                                                                                 |  |                         |              
|Foreign currency translation adjustment                                                                       |  |                         | (56          
|                                                                                                              |  |                         |              
|Comprehensive loss                                                                                            |  | $                       | (19,442      
|                                                                                                              |  |                         |              
|Net loss per share, basic and diluted:                                                                        |  |                         |              
|Basic                                                                                                         |  | $                       | (0.02        
|Fully diluted                                                                                                 |  | $                       | (0.02        
|                                                                                                              |  |                         |              
|Weighted average number of common shares:                                                                     |  |                         |              
|Basic                                                                                                         |  |                         | 1,276,601,569
|Fully diluted                                                                                                 |  |                         | 1,276,601,569



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





Page 26









NeoMedia Technologies, Inc. and Subsidiaries`

Consolidated Statements of Shareholders’
Equity (Deficit)

(In thousands, except share data)



|                                                                          |  | Common
    Stock |               |  |        |   |       |                    |  |   |             |  |  | Treasury
    Stock |          |   |        |  
|------------------------------------------------------------------------- |  | ---------------- | ------------- |  | ------ | - | ----- | ------------------ |  | - | ----------- |  |  | ------------------ | -------- | - | ------ | -
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  | Accumulated        |          |   |        |  
|                                                                          |  |                  |               |  |        |   |       | Additional Paid–in |  |   | Accumulated |  |  | OtherComprehensive |          |   |        |  
|                                                                          |  | Shares           |               |  | Amount |   |       | Capital            |  |   | Deficit     |  |  | Deficit            |          |   | Shares |  
|Balance, December 31, 2010                                                |  |                  | 25,678,978    |  |        | $ | 26    |                    |  | $ | 153,974     |  |  | $                  | (244,395 | ) |        | $
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Shares issued for acquisition of patent rights                            |  |                  | 5,000,000     |  |        |   | 5     |                    |  |   | 345         |  |  |                    | -        |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Shares issued upon conversions of Series C preferred
    stock            |  |                  | 223,611,975   |  |        |   | 223   |                    |  |   | 9,651       |  |  |                    | -        |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Shares issued upon conversions of Series D preferred
    stock            |  |                  | 102,704,877   |  |        |   | 103   |                    |  |   | 1,848       |  |  |                    | -        |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Shares issued upon conversions of convertible
    debentures              |  |                  | 184,988,281   |  |        |   | 185   |                    |  |   | 4,122       |  |  |                    | -        |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Stock-based compensation expense                                          |  |                  | -             |  |        |   | -     |                    |  |   | 66          |  |  |                    | -        |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Comprehensive income (loss) – foreign currency
    translation adjustment |  |                  | -             |  |        |   | -     |                    |  |   | -           |  |  |                    | -        |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Net loss                                                                  |  |                  | -             |  |        |   | -     |                    |  |   | -           |  |  |                    | (849     | ) |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Balance, December 31, 2011                                                |  |                  | 541,984,111   |  |        |   | 542   |                    |  |   | 170,006     |  |  |                    | (245,244 | ) |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Shares issued upon conversions of Series C preferred
    stock            |  |                  | 34,168,248    |  |        |   | 34    |                    |  |   | 844         |  |  |                    | -        |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Shares issued upon conversions of Series D preferred
    stock            |  |                  | 142,457,436   |  |        |   | 143   |                    |  |   | 2,199       |  |  |                    | -        |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Shares issued upon conversions of convertible
    debentures              |  |                  | 1,387,426,087 |  |        |   | 1,387 |                    |  |   | 15,751      |  |  |                    | -        |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Stock-based compensation expense                                          |  |                  | -             |  |        |   | -     |                    |  |   | 14          |  |  |                    | -        |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Comprehensive income (loss) – foreign currency
    translation adjustment |  |                  | -             |  |        |   | -     |                    |  |   | -           |  |  |                    | -        |   |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Net loss                                                                  |  |                  | -             |  |        |   | -     |                    |  |   | -           |  |  |                    | (19,386  | ) |        |  
|                                                                          |  |                  |               |  |        |   |       |                    |  |   |             |  |  |                    |          |   |        |  
|Balance, December 31, 2012                                                |  |                  | 2,106,035,882 |  |        | $ | 2,106 |                    |  | $ | 188,814     |  |  | $                  | (264,630 | ) |        | $



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





Page 27







NeoMedia Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands)



|                                                                                                              |  | Year Ended December 31, |        
|------------------------------------------------------------------------------------------------------------- |  | ----------------------- | -------
|                                                                                                              |  | 2012                    |        
|Cash Flows from Operating Activities:                                                                         |  |                         |        
|Net loss                                                                                                      |  | $                       | (19,386
|Adjustments to reconcile net loss to net cash used in operating activities:                                   |  |                         |        
|Depreciation and amortization                                                                                 |  |                         | 972    
|Loss on extinguishment of debt                                                                                |  |                         | 27,479 
|Gain on derecognition of accrued expenses and purchase price guarantee                                        |  |                         | (8,300 
|Gain from change in fair value of hybrid financial instruments                                                |  |                         | (11,926
|(Gain) loss from change in fair value of derivative liability - warrants                                      |  |                         | (11,347
|(Gain) loss from change in fair value of derivative liability - Series C and D preferred stock and debentures |  |                         | 13,035 
|Stock-based compensation expense                                                                              |  |                         | 14     
|Bad debt expense                                                                                              |  |                         | 457    
|Interest expense added to liabilities                                                                         |  |                         | 4,406  
|Impairment loss on cash surrender value of life insurance policy                                              |  |                         | 527    
|Changes in operating assets and liabilities                                                                   |  |                         |        
|Decrease (increase) in trade accounts receivable                                                              |  |                         | -      
|Decrease in inventories                                                                                       |  |                         | -      
|Decrease in prepaid expenses and other assets                                                                 |  |                         | 63     
|Decrease in value of life insurance policies                                                                  |  |                         | -      
|Increase in accounts payable and accrued liabilities                                                          |  |                         | 555    
|Increase in deferred revenue and other current liabilities                                                    |  |                         | 1,915  
|Net cash used in operating activities                                                                         |  |                         | (1,536 
|                                                                                                              |  |                         |        
|Cash Flows from Investing Activities:                                                                         |  |                         |        
|Acquisition of property and equipment                                                                         |  |                         | (3     
|Proceeds received from life insurance policy                                                                  |  |                         | 126    
|Net cash provided by (used in) investing activities                                                           |  |                         | 123    
|                                                                                                              |  |                         |        
|Cash Flows from Financing Activities:                                                                         |  |                         |        
|Repayment of convertible debt instruments                                                                     |  |                         | (450   
|Borrowings under convertible debentures                                                                       |  |                         | 2,500  
|Net cash provided by financing activities                                                                     |  |                         | 2,050  
|                                                                                                              |  |                         |        
|Effect of exchange rate changes on cash                                                                       |  |                         | (56    
|                                                                                                              |  |                         |        
|Net change in cash and cash equivalents                                                                       |  |                         | 581    
|                                                                                                              |  |                         |        
|Cash and cash equivalents, beginning of year                                                                  |  |                         | 30     
|Cash and cash equivalents, end of year                                                                        |  | $                       | 611    
|                                                                                                              |  |                         |        
|Supplemental cash flow information:                                                                           |  |                         |        
|Interest paid during the period                                                                               |  | $                       | 31     
|Series C preferred stock converted to common stock                                                            |  | $                       | 878    
|Series D preferred stock converted to common stock                                                            |  | $                       | 2,342  
|Convertible debentures converted to common stock                                                              |  | $                       | 17,138 
|Shares issued for acquisition of patent rights                                                                |  | $                       | -      



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





Page 28







NeoMedia Technologies, Inc.

Notes to Consolidated Financial Statements



Note 1 - General



Business – NeoMedia
Technologies, Inc., a Delaware corporation, was founded in 1989 and is headquartered in Boulder, Colorado. We have pioneered 2D
mobile barcode technology and infrastructure solutions that enable the mobile barcode ecosystem world-wide. NeoMedia strives to
harness the power of the mobile phone in innovative ways with state-of-the-art mobile barcode technology. With this technology,
mobile phones with cameras become barcode scanners and this enables a range of practical applications including mobile marketing,
mobile commerce and advertising. In addition, we offer barcode management reader solutions as well as intellectual property licensing.



NeoMedia has been involved in, and has
strived to be an innovator in, the mobile barcode field since the mid-1990s, and during that time has spearheaded the development
of a robust IP portfolio that encompasses many preferred mobile implementations. We believe that our extensive IP portfolio differentiates
us from the competition.



Note 2 - Summary of Significant Accounting
Policies

The accompanying audited consolidated
financial statements have been prepared in accordance with US GAAP for financial information and Rule 8.03 of Regulation S-X.
In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair
presentation have been included.



Basis of Presentation –
The consolidated financial statements include the accounts of NeoMedia Technologies, Inc. and our wholly-owned subsidiaries (collectively
“we”, “us” or “our”),. We operate as one reportable segment. All significant intercompany
accounts and transactions have been eliminated.



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.



Going Concern–We have historically incurred net losses from operations and we expect that we will continue to have negative cash flows
as we implement our business plan. There can be no assurance that our continuing efforts to execute our business plan will be
successful and that we will be able to continue as a going concern. The accompanying consolidated financial statements have been
prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”),
which contemplate our continuation as a going concern. For the years ended December 31, 2012 and 2011, we incurred operating
losses of $5.5 million and $5.3 million, respectively. Net cash used by operations during the years ended December 31, 2012 and
2011 was $1.5 million and $4.5 million, respectively. At December 31, 2012, we have an accumulated deficit of $264.6 million.
We also have a working capital deficit of $74.7 million, of which $70.2 million or 93% is related to our financing instruments,
including $68.0 million related to the fair value of warrants and those debentures that are recorded as hybrid financial instruments,
and $2.2 million related to the amortized cost carrying value of certain of our debentures and the fair value of the associated
derivative liabilities.



We currently do not have sufficient cash,
or commitments for financing to sustain our operations for the next twelve months. Our plan is to develop new client and customer
relationships and substantially increase our revenue derived from improved products and IP licensing. If our revenues are not
to plan and our operating expenses cannot be reduced to sustain our operations, we may require additional financing in order to
execute our operating plan; however, we believe that such additional financing will not be necessary. If additional financing
is required, we cannot predict whether this additional financing will be in the form of equity, debt, or another form and we may
not be able to obtain the necessary additional capital on a timely basis, on acceptable terms, or at all. In the event that these
financing sources do not materialize, 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 circumstances
would have a material adverse effect on our business, prospects, financial condition and results of operations.



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



Stock-Based Compensation -
FASB ASC 718, Stock Compensation, requires that all stock-based compensation be recognized as an expense in the financial
statements and that such cost be measured at the grant date fair value of the award.  We account for modifications of the
terms of existing option grants as exchanges of the existing equity instruments for new instruments.  The fair value of the
modified option at the grant date is compared with the value at that date of the original option immediately before its terms
are modified.  Any excess fair value of the modified option over the original option is recognized as additional compensation
expense.



Revenue Recognition –
We derive revenues from the following sources:  (1) license fees relating to intellectual property, and (2) software
and service revenues related to mobile marketing barcode infrastructure management and development, barcode readers and internally
developed software. The revenues are recognized as follows:



Page 29







| | · | License revenues,
    including     intellectual property licenses, represent revenue from the licensing of our intellectual property. The basis
    for license fee revenue recognition is substantially governed by FASB ASC 985-605, Software     Revenue Recognition.License
    revenue is recognized if persuasive evidence of an agreement exists, delivery has occurred,     pricing is fixed and
    determinable, and collectability is reasonably assured. We defer revenue related to license fees for     which amounts have
    been invoiced and/or collected in accordance with the payment terms of the licensing agreements, but for     which the above
    criteria have not been fully met. We recognize licensing revenue over the term of the licensing agreement,     and we
    evaluate our deferrals periodically for any potential adjustments.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Software and services revenues represent revenue
    from the licensing of our proprietary software applications and is recognized based on guidance provided in FASB
    ASC 985-605 Software Revenue Recognition. We license our applications under non-exclusive and non-transferable
    license agreements. License revenue is recognized when persuasive evidence of an agreement exists, the price to the customer
    is fixed and determinable, delivery of the software and/or services have occurred and collectability of the sales price is
    reasonably assured. In most cases, cash is collected prior to services being offered and recognized over the duration of the
    contract and/or billing terms.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Basic and Diluted Loss Per Share– Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted
average number of shares of common stock outstanding during the period. During the years ended December 31, 2012 and 2011, we
reported a net loss per share and basic and diluted loss per share were equivalent. We excluded all outstanding stock options,
warrants and convertible instruments from the calculation of diluted net loss per share because these securities were anti-dilutive.



The following is a reconciliation of the
numerator and denominator of the basic and diluted net loss per share calculations for each period:



|                                                                                                                                                 |  | Year Ended December 31, |              
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | -------------
|                                                                                                                                                 |  | 2012                    |              
|                                                                                                                                                 |  |                         |              
|Numerator: Share - loss available to common stockholders                                                                                         |  |                         |              
|Net loss                                                                                                                                         |  | $                       | (19,386      
|Adjustments to reconcile net income to loss applicable to common stockholders:                                                                   |  |                         |              
|                                                                                                                                                 |  |                         | -            
|Numerator for basic earnings per share - loss available to common stockholders                                                                   |  |                         | (19,386      
|                                                                                                                                                 |  |                         |              
|Effect of dilutive securities:                                                                                                                   |  |                         |              
|Adjustment for change in fair value of derivative liability Series C and D preferred stock and debentures                                        |  |                         | -            
|Adjustment for change in fair value of derivative liability- warrants                                                                            |  |                         | -            
|Adjustment for change in fair value of hybrid financial instruments                                                                              |  |                         | -            
|Adjustment for loss on extinguishment of debt                                                                                                    |  |                         | -            
|Adjustment for interest expense related to convertible debt                                                                                      |  |                         | -            
|                                                                                                                                                 |  |                         | -            
|Numerator for diluted earnings per share- loss available to common stockholders after assumed conversions of debentures and exercise of warrants |  | $                       | (19,386      
|                                                                                                                                                 |  |                         |              
|Denominator for diluted earnings per share- adjusted weighted average shares after assumed conversions and exercise of options:                  |  |                         |              
|Weighted average shares used to compute basic EPS                                                                                                |  |                         | 1,276,601,569
|Effect of dilutive securities:                                                                                                                   |  |                         |              
|Convertible debentures                                                                                                                           |  |                         | -            
|Convertible preferred stock                                                                                                                      |  |                         | -            
|Dilutive potential common shares                                                                                                                 |  |                         | -            
|                                                                                                                                                 |  |                         |              
|Denominator for diluted earnings per share-adjusted weighted average shares and assumed conversions                                              |  |                         | 1,276,601,569
|                                                                                                                                                 |  |                         |              
|Basic loss per share                                                                                                                             |  | $                       | (0.02        
|Diluted loss per share                                                                                                                           |  | $                       | (0.02        



Page 30







The following outstanding stock options,
warrants, convertible debt and convertible preferred securities for the years ended December 31, 2012 and 2011 are anti-dilutive
and therefore have been excluded from dilutive earnings per share:



|                            |  | Year Ended December 31, |               
|--------------------------- |  | ----------------------- | --------------
|                            |  | 2012                    |               
|Stock options               |  |                         | 1,340,000     
|Warrants                    |  |                         | 1,882,492,690 
|Convertible debt            |  |                         | 22,696,138,542
|Convertible preferred stock |  |                         | 990,409,508   
|                            |  |                         | 25,570,380,740



Comprehensive Loss –
We report comprehensive loss in accordance with FASB ASC 220, Comprehensive Income. This statement requires the disclosure
of accumulated other comprehensive income or loss (excluding net income or loss) as a separate component of shareholders’
deficit.. Comprehensive loss reported in our financial statements represents foreign currency translation losses on intercompany
balances which are deemed to be of a long-term investment nature.



Fair-valued Financial Instruments– Fair value measurement requirements are embodied in certain accounting standards applied in the preparation of
our financial statements. The most significant application is in connection with our Convertible Preferred Stock, Convertible
Debentures and Warrants, where we determine the fair value of certain hybrid instruments carried at fair value, and certain derivative
liabilities which are recorded at fair value under FASB ASC 815, Derivatives and Hedging. See below and Note 4 for further
information regarding the accounting treatment of these financing instruments.



Derivative Financial Instruments– We generally do not use derivative financial instruments to hedge exposures to cash-flow risks or market-risks
that may affect the fair values of our financial instruments. However, certain financial instruments, such as warrants and the
embedded conversion features of our convertible preferred stock and convertible debentures, which are indexed to our common stock,
are classified as liabilities when either (a) the holder possesses rights to net-cash settlement or (b) physical or net-share
settlement is not within our control. In such instances, net-cash settlement is assumed for financial accounting and reporting
purposes, even when the terms of the underlying contracts do not provide for net-cash settlement. Derivative financial instruments
are initially recorded, and continuously carried, at fair value.



Determining the fair value of these complex
derivative financial instruments involves judgment and the use of certain relevant assumptions including, but not limited to,
interest rate risk, credit risk, and equivalent volatility and conversion/redemption privileges. The use of different assumptions
could have a material effect on the estimated fair value amounts.



For the majority of our convertible debentures,
we have elected not to separately account for the embedded conversion feature as a derivative instrument but to account for the
entire hybrid instrument at fair value in accordance with FASB ASC 815, Derivatives and Hedging.For the remaining convertible
debentures and our convertible preferred stock, the underlying instruments are carried at amortized cost and the embedded conversion
feature is accounted for separately at fair value in accordance with FASB ASC 815-40-05 and FASB ASC 815-40-15.



Financial Instruments and Concentration
of Credit Risk – We believe the carrying values of our financial instruments consisting of cash and cash equivalents,
accounts receivable, accounts payable, accrued expenses, derivative financial instruments, other current liabilities, convertible
preferred stock, and convertible debenture financings approximate their fair values due to their short-term nature, or because
they are carried at fair value.



Our cash balances in the United States periodically exceed
federally insured limits. We have not experienced any losses in such accounts. Our cash balances in our NeoMedia Europe location
are also maintained in financial institutions that provide deposit guarantees and are governed by local public law. Our policies
limit the concentration of accounts receivable credit exposure by requiring the majority of customers to prepay their renewal
licenses prior to initiating services.



Accounts Receivable –
We report accounts receivable at net realizable value. Our terms of sale provide the basis for when accounts become delinquent
or past due. We provide an allowance for doubtful accounts equal to the estimated uncollectible amounts, based on historical collection
experience and a review of the current status of accounts receivable.  We do not require collateral and to the extent credit
is granted to our customers, all open accounts receivable beyond 90 days are evaluated for recovery (at which time they are generally
charged off and sent to a collections agency, unless we believe that collection remains reasonably assured).



Goodwill –Goodwill
represents the excess of the purchase price paid for NeoMedia Europe over the fair value of the identifiable net assets and liabilities
acquired, based on an independent appraisal of the assets and liabilities acquired. Although there have been changes to the legal
structure and how we conduct business, we believe the goodwill value remains. In accordance with FASB ASC 350, Intangibles
- Goodwill and Other, goodwill is not amortized, but is tested for impairment, annually, as described below, by applying the
recognition and measurement provisions of FASB ASC 350, which require that we compare the carrying amount of the asset to its
fair value. If impairment of the carrying value based on the estimated fair value exists, we measure the impairment through the
use of discounted cash flows. If the carrying amount exceeds fair value, an impairment loss is recognized.



Page 31







Intangible Assets –
Intangible assets consist of patents, customer contracts, copyrighted material, acquired software products, and brand names. Intangible
assets acquired as part of a business combination are accounted for in accordance with FASB ASC 805, Business Combinations,
and are recognized apart from goodwill if the intangible asset arises from contractual or other legal rights or the asset is capable
of being separated from the acquired enterprise. Intangible assets are reviewed for impairment by applying the recognition and
measurement provisions of FASB ASC 350, which require that we compare the carrying amount of the intangible asset to its fair
value. If the carrying amount exceeds fair value, an impairment loss is recognized. Intangible assets are amortized, using the
straight-line method, over the estimate of their period of benefit of five to seventeen years as follows:



|Capitalized patents        |  |  | 5 - 17 years | 
|-------------------------- |  |  | ------------ | 
|Customer contracts         |  |  | 5 years      | 
|Copyrighted materials      |  |  | 5 years      | 
|Acquired software products |  |  | 7 years      | 
|Brand names                |  |  | 10 years     | 



Evaluation of Long-Lived Assets– We periodically perform impairment tests on each of our long-lived assets, including goodwill and other intangible
assets, including capitalized patent costs, customer contracts, copyrighted materials, brand names, and capitalized and purchased
software costs. In doing so, we evaluate the carrying value of each intangible asset with respect to several factors, including
historical revenue generated from each intangible asset, application of the assets in our current business plan, and projected
cash flow to be derived from the asset.



The determination of the fair value of
certain acquired assets and liabilities is subjective in nature and often involves the use of significant estimates and assumptions.
Determining the fair values and useful lives of intangible assets especially requires the exercise of judgment. Where practicable,
we will obtain an independent valuation of intangible assets, and place reliance on such valuation. Then on an ongoing basis,
we use the weighted-average probability method outlined in FASB ASC 360, Property, Plant, and Equipment, to estimate the
fair value. This method requires significant management judgment to forecast the future operating results used in the analysis.
In addition, other significant estimates are required such as residual growth rates and discount factors. The estimates we have
used are consistent with the plans and estimates that we use to manage our business, based on available historical information
and industry averages. The judgments made in determining the estimated useful lives assigned to each class of assets acquired
can also significantly affect our net operating results.



According to FASB ASC 360, a long-lived
asset should be tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not
be recoverable. We follow the two-step process outlined in FASB ASC 360 for determining if an impairment charge should be taken:
(1) the expected undiscounted cash flows from a particular asset or asset group are compared with the carrying value; if the expected
undiscounted cash flows are greater than the carrying value, no impairment is recognized, but if the expected undiscounted cash
flows are less than the carrying value, then (2) an impairment charge is taken for the difference between the carrying value and
the expected discounted cash flows. The assumptions used in developing expected cash flow estimates are similar to those used
in developing other information used by us for budgeting and other forecasting purposes. In instances where a range of potential
future cash flows is possible, we use a probability-weighted approach to weigh the likelihood of those possible outcomes. For
purposes of discounting cash flows, we use a discount rate equal to the yield on a zero-coupon US Treasury instrument with a life
equal to the expected life of the intangible asset or asset group being tested.



As of December 31, 2012, we do not believe
any of our long-lived assets are impaired.



Property, and Equipment
– Property and equipment, including software, are stated at cost less accumulated depreciation and amortization. Depreciation
is provided under the straight-line method over the estimated useful lives of the assets, as follows:



|Furniture and fixtures |  |  | 3 - 7 years | 
|---------------------- |  |  | ----------- | 
|Equipment              |  |  | 2 - 5 years | 



Research and Development
– Costs associated with the planning and design phase of software development, including coding and testing activities,
and related overhead, necessary to establish technological feasibility of our internally-developed software products, are classified
as research and development and expensed as incurred.



Stock-Based Compensation -
FASB ASC 718, Stock Compensation, requires that all stock-based compensation be recognized as an expense in the financial
statements and that such cost be measured at the grant date fair value of the award.



We record the grant date fair value of
stock-based compensation awards as an expense over the vesting period of the related stock options. In order to determine the
fair value of the stock options on the date of grant, we use the Black-Scholes-Merton option-pricing model. Inherent in this model
are assumptions related to expected stock-price volatility, forfeiture and option life, risk-free interest rate and dividend yield.
Although the risk-free interest rates and dividend yield are less subjective assumptions, typically based on factual data derived
from public sources, the expected stock-price volatility, forfeiture rate and option life assumptions require a greater level
of judgment.



Page 32







We account for modifications of the terms
of existing option grants as exchanges of the existing equity instruments for new instruments.  The fair value of the modified
option at the grant date is compared with the value at that date of the original option immediately before its terms are modified. 
Any excess fair value of the modified option over the original option is recognized as additional compensation expense.



We use an expected stock-price volatility
assumption that is based on historical volatilities of our common stock and we estimate the forfeiture rate and option life based
on historical data related to prior option grants.



Income Taxes – We
account for income taxes under the provisions of FASB ASC 740, Accounting for Income Taxes, which requires recognition
of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between
the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the difference
is expected to reverse. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be realized. We have recorded a 100% valuation allowance
as of December 31, 2012 and 2011.



Translation of Foreign Currency– The U.S. dollar is the functional currency of our operations, except for our operations at NeoMedia Europe, which
use the Euro as their functional currency. Foreign currency transaction gains and losses are reflected in income. Translation
gains and losses arising from translating the financial statements of NeoMedia Europe into U.S. dollars for reporting purposes
are included in “Accumulated other comprehensive income (loss).”



Recent
Accounting Pronouncements - The following Accounting Standards Codification Updates have been issued, or will become effective,
after the end of the period covered by this discussion:



|ASU No. 2012-01 |  | July 2012   |  | Health Care Entities (Topic
    954): Continuing Care Retirement Communities—Refundable Advance Fees                                                                                                                                                                                     
|--------------- |  | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                |  |             |  |                                                                                                                                                                                                                                                                                          
|ASU No. 2012-02 |  | July 2012   |  | Intangibles-Goodwill and Other
(Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment                                                                                                                                                                                    
|                |  |             |  |                                                                                                                                                                                                                                                                                          
|ASU No. 2012-03 |  | August 2012 |  | Technical Amendments and Corrections
    to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 114, Technical Amendments Pursuant
    to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22  (SEC Update)



|ASU No. 2012-04 |  | October 2012 |  | Technical Corrections and Improvements
|--------------- |  | ------------ |  | --------------------------------------



|ASU No. 2012-05 |  | October 2012 |  | Statement of Cash Flows
    (Topic 230): Not-for-Profit Entities: Classification of the Sale Proceeds of Donated Financial Assets in the Statement of
    Cash Flows (a consensus of the FASB Emerging Issues Task Force)
|--------------- |  | ------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ASU No. 2012-06 |  | October 2012 |  | Business Combinations (Topic
    805): Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted
    Acquisition of a Financial Institution (a consensus of the FASB Emerging Issues Task Force)
|--------------- |  | ------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ASU No. 2012-07 |  | October 2012 |  | Entertainment—Films
    (Topic 926): Accounting for Fair Value Information That Arises after the Measurement Date and Its Inclusion in the Impairment
    Analysis of Unamortized Film Costs (a consensus of the FASB Emerging Issues Task Force)
|--------------- |  | ------------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ASU No. 2013-01 |  | January 2013 |  | Balance Sheet (Topic 210):
    Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities
|--------------- |  | ------------ |  | ----------------------------------------------------------------------------------------------------------



|ASU No. 2013-02 |  | February 2013 |  | Comprehensive Income (Topic
    220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income
|--------------- |  | ------------- |  | ---------------------------------------------------------------------------------------------------------------------



Page 33







|ASU No. 2013-03 |  | February 2013 |  | Financial Instruments (Topic
    825): Clarifying the Scope and Applicability of a Particular Disclosure to Nonpublic Entities
|--------------- |  | ------------- |  | ------------------------------------------------------------------------------------------------------------------------------



|ASU No. 2013-04 |  | February 2013 |  | Liabilities (Topic 405):
    Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed
    at the Reporting Date (a consensus of the FASB Emerging Issues Task Force)
|--------------- |  | ------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|ASU No. 2013-05 |  | March 2013 |  | Foreign Currency Matters
    (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon De-recognition of Certain Subsidiaries
    or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the Emerging Issues Task
    Force)
|--------------- |  | ---------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



To the extent appropriate, the guidance
in the above Accounting Standards Codification Updates is already reflected in our consolidated financial statements and management
does not anticipate that these accounting pronouncements will have any future effect on our consolidated financial statements.



Note 3 - Capital Stock



Common Stock - Holders of
common stock are entitled to one vote for each share held of record on each matter submitted to a vote of shareholders. Holders
of our common stock do not have a cumulative voting right, which means that the holders of more than one half of our outstanding
shares of common stock, subject to the rights of the holders of preferred stock, can elect all of our directors, if they choose
to do so. In this event, the holders of the remaining shares of common stock would not be able to elect any directors. Subject
to the prior rights of any class or series of preferred stock which may from time to time be outstanding, if any, holders of common
stock are entitled to receive ratably, dividends when, as, and if declared by our Board of Directors out of funds legally available
for that purpose and, upon our liquidation, dissolution, or winding up, are entitled to share ratably in all assets remaining
after payment of liabilities and payment of accrued dividends and liquidation preferences on the preferred stock, if any. Holders
of common stock have no preemptive rights and have no rights to convert their common stock into any other securities. The outstanding
common stock is duly authorized and validly issued, fully-paid, and non-assessable. Except as otherwise required by Delaware law,
and subject to the rights of the holders of preferred stock, all stockholder action is taken by the vote of a majority of the
outstanding shares of common stock present at a meeting of shareholders at which a quorum consisting of a majority of the outstanding
shares of common stock is present in person or by proxy. Shares repurchased are held as treasury shares and used for general corporate
purposes including, but not limited to, satisfying obligations under our employee benefit plans. Treasury stock is recorded at
cost.



Preferred Stock - We are
authorized to issue 25 million shares of preferred stock, par value $0.01 per share. We may issue preferred stock in one or more
series and having the rights, privileges, and limitations, including voting rights, conversion rights, liquidation preferences,
dividend rights and preferences and redemption rights, as may from time to time be determined by our Board of Directors. Preferred
stock may be issued in the future in connection with acquisitions, financings, or other matters, as our Board of Directors deems
appropriate. In the event that we determine to issue any shares of preferred stock, a certificate of designation containing the
rights, privileges, and limitations of this series of preferred stock will be filed with the Secretary of State of the State of
Delaware. The effect of this preferred stock designation power is that our Board of Directors alone, subject to Federal securities
laws, applicable blue sky laws, and Delaware law, may be able to authorize the issuance of preferred stock which could have the
effect of delaying, deferring, or preventing a change in control of our company without further action by our shareholders, and
may adversely affect the voting and other rights of the holders of our common stock. The issuance of preferred stock with voting
and conversion rights may also adversely affect the voting power of the holders of our common stock, including the loss of voting
control to others.



Series A Preferred Stock -
During December 1999, our Board of Directors approved a Certificate of Resolutions Designating Rights and Preferences of Preferred
Stock, filed with the Secretary of State of the State of Delaware on December 20, 1999. By this approval and filing, 200,000 shares
of Series A Preferred Stock were designated. Series A Preferred has the following rights:



| | · | The right to receive mandatory
    cash dividends equal to the greater of $0.001 per share or 100 times the amount of all dividends (cash or non-cash, other
    than dividends of shares of common stock) paid to holders of the common stock, which dividend is payable 30 days after the
    conclusion of each calendar quarter and immediately following the declaration of a dividend on common stock;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | One hundred votes per share
    of Series A Preferred on each matter submitted to a vote of our shareholders ;
| | - | --------------------------------------------------------------------------------------------------------------



| | · | The right to elect two
    directors at any meeting at which directors are to be elected, and to fill any vacancy on our Board of Directors previously
    filled by a director appointed by the Series A Preferred holders;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The right to receive an
    amount, in preference to the holders of common stock, equal to the amount per share payable to holders of common stock, plus
    all accrued and unpaid dividends, and following payment of 1/100th of the liquidation preference to the holders of each share
    of common stock, an additional amount per share equal to 100 times the per share amount paid to the holders of common stock;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





Page 34











| | · | The right to exchange each share of Series
A Preferred for 100 times the consideration received per share of common stock in connection with any merger, consolidation, combination
or other transaction in which shares of common stock are exchanged for or converted into cash, securities or other property; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The right to be redeemed in accordance
with our shareholder rights plan.
| | - | ------------------------------------------------------------------------



While accrued mandatory dividends are unpaid,
we may not declare or pay dividends or distributions on, or redeem, repurchase or reacquire, shares of any class or series of junior
or parity stock.



The Series A Preferred was created in connection
with our shareholders rights plan. As of December 31, 2012 and 2011, there were no shares of Series A Preferred outstanding.



Series A Convertible Preferred Stock
- On June 19, 2001, our Board of Directors approved a Certificate of Designations to create 500,000 shares of a Class of
Series A Convertible Preferred Stock, which was filed with the Secretary of State of the State of Delaware on June 20, 2001. By
this approval and filing, 47,511 shares were designated as Series A Convertible Preferred Stock and remain to be issued. Our Series
A Convertible Preferred Stock, par value $0.01 per share, has the following rights:



| | · | Series A Convertible Preferred was convertible
into shares of common stock at a one-to-one ratio, which was proportionally adjusted to a one-to-one hundred ratio pursuant to
a reverse stock split in 2011, and which is subject to proportional adjustment in the event of further stock splits or combinations,
and dividends or distributions of shares of common stock. At the option of the holder, shares are subject to automatic conversion
as determined in each agreement relating to the purchase of shares of Series A Convertible Preferred;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Each share of Series A Convertible Preferred
is entitled to receive a liquidation preference equal to the original purchase price of such share in the event of liquidation,
dissolution, or winding up;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Upon merger or consolidation, or the sale,
lease or other conveyance of all or substantially all of our assets, shares of Series A Convertible Preferred are automatically
convertible into the number of shares of stock or other securities or property (including cash) to which the common stock into
which it is convertible would have been entitled; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Shares of Series A Convertible Preferred
are entitled to one vote per share of such stock, and vote together with holders of common stock.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



As of December 31, 2012 and 2011, there
were no shares of Series A Convertible Preferred outstanding.



Series B Convertible Redeemable Preferred
Stock - On January 16, 2002, our Board of Directors approved a Certificate of Designation, Preferences, Rights and Limitations
of Series B 12% Convertible Redeemable Preferred Stock, which was filed with the Secretary of State of the State of Delaware on
February 28, 2002. By this approval and filing, 100,000 shares were designated as Series B 12% Convertible Redeemable Preferred
Stock. Our Series B 12% Convertible Redeemable Preferred Stock, par value $0.01 per share, has the following rights:



| | · | Series B Preferred shares accrue dividends
at a rate of 12% per annum, or $1.20 per share, between the date of issuance and the first anniversary of issuance;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Series B Preferred is redeemable to the
maximum extent permitted by law (based on funds legally available for redemption) at a price per share of $15.00, plus accrued
dividends (a total of $16.20 per share) on the first anniversary of issuance;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Series B Preferred receive proceeds of
$12.00 per share upon our liquidation, dissolution or winding up;
| | - | --------------------------------------------------------------------------------------------------------



| | · | To the extent not redeemed on the first
anniversary of issuance, Series B Preferred is automatically convertible into the then existing general class of common stock on
the first anniversary of issuance at a price equal to $16.20 divided by the greater of $20.00 or the lowest publicly-sold share
price during the 90 day period preceding the conversion date, but in no event more than 19.9% of our outstanding capital stock
as of the date immediately prior to conversion.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Upon merger or consolidation, or the sale,
lease or other conveyance of all or substantially all of our assets, shares of Series B Preferred are automatically convertible
into the number of shares of stock or other securities or property (including cash) to which the common stock into which it is
convertible would have been entitled; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Shares of Series B Preferred are entitled
to one vote per share and vote with common stock, except where the proposed action would adversely affect the Series B Preferred
or where the non-waivable provisions of applicable law mandate that the Series B Preferred vote separately, in which case Series
B Preferred vote separately as a class, with one vote per share.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 35







As of December 31, 2012 and 2011, there
were no shares of Series B Convertible Redeemable Preferred Stock outstanding.



Series C Convertible Preferred Stock
- On February 22, 2006, we filed with the Secretary of State of the State of Delaware a Certificate of Designation of Series
C Convertible Preferred Stock (“Series C preferred stock”) and on January 6, 2011 filed an Amendment to the Certificate.
By the approval and filing, 27,000 shares were designated as Series C preferred stock. Our Series C preferred stock, par value
$0.01 per share, as amended on January 5, 2011, has the following rights:



| | · | Series C preferred shares are entitled
to dividends at a rate of 8% per annum, if, as and when declared by the Board of Directors. As of December 31, 2012 and 2011, accumulated
undeclared unpaid dividends were $4.4 million and $3.9 million, respectively.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Series C preferred shares receive proceeds
of $1,000 per share upon our liquidation, dissolution or winding up;
| | - | ---------------------------------------------------------------------------------------------------------------



| | · | Each share of Series C preferred stock
is convertible, at the option of the holder, into shares of our common stock at the lesser of (i) $50.00 or (ii)
97% of the lowest closing bid price of our common stock for the 125 trading days immediately preceding the date of conversion;
and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Series C preferred shares have voting
rights on an as-converted basis with the common stock.
| | - | --------------------------------------------------------------------------------------------



As of December 31, 2012 and 2011, there
were 4,840 and 5,086 shares of Series C preferred stock issued and outstanding, respectively. The holders of our outstanding shares
of Series C preferred stock are limited by the certificate of designation and by the contractual provisions of the related Securities
Purchase Agreements under which Series C preferred stock was issued and other related transaction documents from beneficial control
of more than 9.99% of our voting securities. Therefore, unless the holder waives this limitation upon 61 days’ notice to
us, the holders of our Series C preferred stock may not exercise all the voting rights otherwise described in the certificate of
designation of these securities (see Note 4).



Series D Convertible Preferred Stock
- On January 5, 2010, we filed with the Secretary of State of the State of Delaware a Certificate of Designation of Series
D preferred stock. On January 7, 2010, we filed an amendment with the Secretary of State of the State of Delaware to include certain
registration rights in connection with the Series D preferred stock. By the approval and filing, 25,000 shares were designated
as Series D preferred stock. On January 5, 2010, we issued 25,000 shares of Series D preferred stock to YA Global for gross proceeds
of $2,500,000. Our Series D preferred stock, par value $0.01 per share, has the following rights:



| | · | Series D preferred shares are entitled
to dividends at a rate of 8% per annum, if, as and when declared by the Board of Directors. As of December 31, 2012 and December
31, 2011 respectively, accumulated undeclared unpaid dividends were $425,000 and $225,000.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Series D preferred shares receive proceeds
of $100 per share upon our liquidation, dissolution or winding up;
| | - | -------------------------------------------------------------------------------------------------------------



| | · | Each share of Series D preferred stock
is convertible, at the option of the holder, into shares of our common stock at the lesser of (i) $2.00 or (ii)
97% of the lowest closing bid price of our common stock for the 125 trading days immediately preceding the date of conversion;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Series D preferred shares have voting
rights on an as-converted basis with the common stock; and.
| | - | -------------------------------------------------------------------------------------------------



As of December 31, 2012 and 2011, 3,481
and 13,950 shares of Series D preferred stock were issued and outstanding.



Poison Pill - On December
10, 1999, our Board of Directors adopted a shareholder rights plan and declared a non-taxable dividend of the right to acquire
one-one hundredth of a share of our Series A Preferred Stock, par value $0.01 per share, for each outstanding share of our common
stock to shareholders of record on December 20, 1999 and each share of common stock issued thereafter until a pre-defined hostile
takeover date. The shareholder rights plan was adopted as an anti-takeover measure, commonly referred to as a “poison pill”.
The shareholder rights plan was designed to enable all shareholders not engaged in a hostile takeover attempt to receive fair and
equal treatment in any proposed takeover of us and to guard against partial or two-tiered tender offers, open market accumulations,
and other hostile tactics to gain control of us. The shareholder rights plan was not adopted in response to any effort to acquire
control of us at the time of adoption. This shareholder rights plan may have the effect of rendering more difficult, delaying,
discouraging, preventing, or rendering more costly an acquisition of us or a change in control of us. Certain shareholders, who
were our founders, Charles W. Fritz, William E. Fritz and The Fritz Family Limited Partnership and their holdings, were exempted
from the triggering provisions of our “poison pill” plan, as a result of the fact that, as of the plan’s adoption,
their holdings might have otherwise triggered the “poison pill”.



In addition, our Certificate of Incorporation
authorizes our Board of Directors to designate and issue our preferred stock, in one or more series, the terms of which may be
determined at the time of issuance by our Board of Directors, without further action by shareholders, and may include voting rights,
including the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion, redemption
rights, and sinking fund provisions.



Page 36







We are authorized to issue a total of 25
million shares of Preferred Stock, par value $0.01 per share. The issuance of any preferred stock could have a material adverse
effect on the rights of holders of our common stock, and, therefore, could reduce the value of shares of our common stock. In addition,
specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets
to, a third party. The ability of our Board of Directors to issue preferred stock could have the effect of rendering more difficult,
delaying, discouraging, preventing, or rendering more costly an acquisition of us or a change in our control.



Note 4 – Financing



At December 31, 2012, financial instruments
arising from our financing transactions with YA Global, an accredited investor, included shares of our Series C preferred stock
issued in February 2006, Series D preferred stock issued in January 2010, a series of secured convertible debentures issued between
August 2006 and July 2012 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 -The
underlying agreements for each of the debentures are very similar in form, except in regard to the interest rate, conversion prices,
and the number of warrants that were issued in conjunction with each of the debentures. The 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 which have been executed in connection with each of the 2010, 2011 and 2012 financings.



All debentures with YA Global contain provisions
for acceleration of principal and interest upon default. Certain debentures also contain default interest rates and conversion
prices, as reflected in the table below.



We evaluated the financing transactions
in accordance with FASB ASC 815, Derivatives and Hedging, and determined that the conversion features of the Series C and
Series D preferred stock and the 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 FASB ASC 815-15-25-4,
Recognition of Embedded Derivatives, the instruments may be carried in their entirety at fair value.



At inception, we elected to bifurcate the
embedded derivatives related to the Series C and Series D preferred stock and certain debentures, while electing the fair value
option for the March 2007, August 2007, April 2008, May 2008 and April 2012 Debentures. FASB 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 May 25, 2012, the terms of the debentures
held by YA Global were modified to extend the stated maturity dates to August 1, 2013 and reduce the interest rates to 9.5% per
year, with interest being payable on the maturity date in cash or, provided certain equity conditions are satisfied, in shares
of our Common Stock at the applicable conversion price. As discussed below, in February 2013, the maturity dates of the debentures
held by YA Global was further extended to August 2014. Because the effect of the modifications in 2012 exceeded a significance
threshold relative to cash flows prescribed by ASC 470-50, Debt Modifications and Extinguishments, the modifications of
the amounts due under these arrangements were accounted for as extinguishments, whereby the existing debentures were considered
to be retired and new debentures issued. The existing instruments were first adjusted to fair value as of May 25, 2012 using the
interest rate and maturity date prior to the amendment. The fair value of the new instruments was then calculated using the modified
interest rate and maturity date to determine the fair value of the instrument subsequent to the amendment. The differences in the
fair values before and after the amendment were recorded as an extinguishment loss of approximately $27.5 million in the accompanying
2012 statements of operations. Although the maturity date of the debentures held by YA Global has been extended to August 2014,
the liabilities related to the debentures continue to be reflected as current liabilities in the accompanying 2012 consolidated
balance sheet because we do not have sufficient authorized shares to permit conversion and, accordingly, could be required to settle
the liabilities in cash.



Page 37







As of the date of the modification, we
have elected to carry all modified debentures at the fair value of the hybrid instrument with changes in the fair value of the
debentures charged or credited to income each period.



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 December 31, 2012:



|                  |  |        |                                                                                                                          |  |          |  |     |          |  |  | Conversion
    Price – Lower of Fixed Price or Percentage of VWAP for Look-back Period |  |  |               |            |  |   |  
|----------------- |  | ------ | ------------------------------------------------------------------------------------------------------------------------ |  | -------- |  | --- | -------- |  |  | -------------------------------------------------------------------------------------- |  |  | ------------- | ---------- |  | - | -
|                  |  |        |                                                                                                                          |  |          |  |     | Default  |  |  |                                                                                        |  |  | Anti-Dilution |            |  |   |  
|Debenture         |  | Face   |                                                                                                                          |  | Interest |  |     | Interest |  |  | Fixed                                                                                  |  |  | Adjusted      |            |  |   |  
|Issuance
    Year |  | Amount |                                                                                                                          |  | Rate     |  |     | Rate     |  |  | Price                                                                                  |  |  | Price         |            |  | % |  
|                  |  |        | (in
                                                                                                          thousands) |  |          |  |     |          |  |  |                                                                                        |  |  |               |            |  |   |  
|2006              |  | $      | 6,180                                                                                                                    |  |          |  | 9.5 | %        |  |  | n/a                                                                                    |  |  | $             | 2.00       |  |   | $
|2007              |  |        | 6,856                                                                                                                    |  |          |  | 9.5 | %        |  |  | n/a                                                                                    |  |  | $             | 2.00       |  |   | $
|2008              |  |        | 6,468                                                                                                                    |  |          |  | 9.5 | %        |  |  | 20%-24%                                                                                |  |  | $             | 1.00-$2.00 |  |   | $
|2009              |  |        | 1,644                                                                                                                    |  |          |  | 9.5 | %        |  |  | 20%                                                                                    |  |  | $             | 2.00       |  |   | $
|2010              |  |        | 3,806                                                                                                                    |  |          |  | 9.5 | %        |  |  | 20%                                                                                    |  |  | $             | 0.10-$0.30 |  |   | $
|2011              |  |        | 1,954                                                                                                                    |  |          |  | 9.5 | %        |  |  | 20%                                                                                    |  |  | $             | 0.10       |  |   | $
|2012              |  |        | 1,979                                                                                                                    |  |          |  | 9.5 | %        |  |  | 20%                                                                                    |  |  | $             | 0.10       |  |   | $
|Total             |  | $      | 28,887                                                                                                                   |  |          |  |     |          |  |  |                                                                                        |  |  |               |            |  |   |  



At December 31, 2012, $25,717 of the face
value of debentures was held by YA Global and $3,170 was held by other investors.



For the portion of the debentures held
by investors other than YA Global (which debentures were not modified on May 25, 2012) and for the Series C and Series D preferred
stock, the election to carry the instruments at fair value in their entirety is not available. Accordingly, we continue to bifurcate
the compound embedded derivatives related to the Series C and Series D preferred stock and these debentures and carry these financial
instruments as liabilities in the accompanying balance sheet. Significant components of the compound embedded derivative include
(i) the embedded conversion feature, (ii) down-round anti-dilution protection features and (iii) default, non-delivery and buy-in
puts, all of which were combined into one compound instrument that is carried at fair value as a derivative liability. Changes
in the fair value of the compound derivative liability are charged or credited to income each period.



The table below summarizes the significant
terms of the debentures that are carried at their amortized cost and for which the compound embedded derivative is bifurcated and
accounted for as a derivative liability as of December 31, 2012:



|                  |  |                |    |  |                   |  |      | Conversion
    Price – Lower of Fixed Price or Percentage of VWAP for Look-back Period | 
|----------------- |  | -------------- | -- |  | ----------------- |  | ---- | -------------------------------------------------------------------------------------- | 
|                  |  |                |    |  |                   |  |      |                                                                                        | 
|Debenture         |  | Face           |    |  |                   |  |      | Fixed                                                                                  | 
|Issuance
    Year |  | Amount         |    |  | Interest
    Rate |  |      | Price                                                                                  | 
|                  |  | (in thousands) |    |  |                   |  |      |                                                                                        | 
|2006              |  | $              | 53 |  |                   |  | 10.0 | %                                                                                      | 



Conversions and Repayments–Our preferred
stock and convertible debentures are convertible into shares of our common stock. Upon conversion of any of the convertible financial
instruments in which the compound embedded derivative is bifurcated, the carrying amount of the debt, including any unamortized
premium or discount, and the related derivative instrument liability are credited to the capital accounts upon conversion to reflect
the stock issued and no gain or loss is recognized. For instruments that are recorded in their entirety at the fair value of the
hybrid instrument, the fair value of the hybrid instrument converted is credited to the capital accounts upon conversion to reflect
the stock issued and no gain or loss is recognized.



Page 38







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 |  |    | Preferred |  |  | Common | 
|------------------------ |  | ---------------- | -- |  | --------- |  | -- | --------- |  |  | ------ | 
|                         |  | Preferred shares |    |  | shares    |  |    | shares    |  |  | shares | 
|                         |  | issued           |    |  | converted |  |    | remaining |  |  | issued | 
|                         |  | (in thousands)   |   
|                         |  |                  |    |  |           |  |    |           |  |  |        | 
|Series C preferred stock |  |                  | 22 |  |           |  | 17 |           |  |  | 5      | 
|Series D preferred stock |  |                  | 25 |  |           |  | 22 |           |  |  | 3      | 



During the fourth quarter of 2012, we repaid
$450,000 in outstanding principal and approximately $31,000 in accrued interest which resulted in a decrease of approximately $694,000
in the overall fair value of the hybrid instruments.



The outstanding principal and accrued interest
for the debentures as of December 31, 2012 is reflected in the following table in addition to the principal and interest converted
since inception and the number of common shares issued upon conversion.



|           |  | Outstanding         |        |  | Principal and    |   |       |        | 
|---------- |  | ------------------- | ------ |  | ---------------- | - | ----- | ------ | 
|           |  | principal and       |        |  | accrued interest |   |       | Common | 
|           |  | accrued interest at |        |  | converted since  |   |       | shares | 
|           |  | December 31, 2012   |        |  | inception        |   |       | issued | 
|           |  | (in thousands)      |       
|           |  |                     |        |  |                  |   |       |        | 
|Debentures |  | $                   | 42,959 |  |                  | $ | 9,155 |        | 



Warrants -YA Global holds
warrants to purchase shares of our common stock that were issued in connection with the convertible debentures and the Series C
and Series D preferred stock. The warrants are exercisable at a fixed exercise price which, from time to time, has been reduced
due to anti-dilution provisions when the Company has 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 FASB 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.



2012 Financing Transactions
– During 2012, we entered into Agreements to issue and sell six debentures to YA Global in the aggregate principal amount
of $2,650,000. The debentures are convertible, at the option of the holder, at a conversion price equal to the lesser of (i) $0.10
or (ii) 95% of the lowest closing bid price of our common stock for the 60 trading days preceding the date of conversion. Except
for the June 1, 2012 and July 20, 2012 debentures, at inception, all the debentures had an interest rate of 14% per year and had
a maturity date of July 29, 2012. Subsequent to the May 25, 2012 modification, all the debentures bear interest at 9.5% and mature
on August 1, 2013. We have the right to redeem a portion or all amounts outstanding under the debentures at a redemption premium
of 10%, plus accrued interest. We also issued warrants to YA Global in conjunction with the debentures. The warrants were issued
with an initial fixed exercise price of $0.15 per share; however, as a result of the anti-dilution protection in these warrants,
the issuance of subsequent debentures for a lower price resets the fixed exercise price of the warrants to the lower price and
adjusts the number of warrant shares issuable. All warrants issued during 2012 have a term of five years.



The following table provides a summary
of the allocation of the components of the new debentures and warrants issued during the year ended December 31, 2012. The hybrid
debt instruments were valued using a Monte Carlo Simulation valuation method and the warrants were valued using a binomial lattice
option valuation method. Significant assumptions used to value the hybrid debt instruments and warrants as of inception of the
financings are also provided in the table below.



Page 39









|                                      |  | January 11,    |          |   | February 6, |   |          | March 26, |  |   | April 26, |   |  | June 1,  |          |   | July 20, |  
|------------------------------------- |  | -------------- | -------- | - | ----------- | - | -------- | --------- |  | - | --------- | - |  | -------- | -------- | - | -------- | -
|                                      |  | 2012           |          |   | 2012        |   |          | 2012      |  |   | 2012      |   |  | 2012     |          |   | 2012     |  
|                                      |  | issuance       |          |   | issuance    |   |          | issuance  |  |   | issuance  |   |  | issuance |          |   | issuance |  
|                                      |  | (in thousands) |         
|                                      |  |                |          |   |             |   |          |           |  |   |           |   |  |          |          |   |          |  
|Gross proceeds                        |  | $              | 400      |   |             | $ | 450      |           |  | $ | 450       |   |  | $        | 450      |   |          | $
|Structuring and due diligence fee     |  |                | (25      | ) |             |   | (25      | )         |  |   | (25       | ) |  |          | (25      | ) |          |  
|                                      |  | $              | 375      |   |             | $ | 425      |           |  | $ | 425       |   |  | $        | 425      |   |          | $
|                                      |  |                |          |   |             |   |          |           |  |   |           |   |  |          |          |   |          |  
|Hybrid instrument                     |  |                | (289     | ) |             |   | (176     | )         |  |   | (287      | ) |  | $        | (878     | ) |          | $
|Derivative warrants                   |  |                | (13      | ) |             |   | (9       | )         |  |   | (42       | ) |  |          | (11      | ) |          |  
|Day one derivative loss               |  |                | -        |   |             |   | -        |           |  |   | -         |   |  |          | 464      |   |          |  
|                                      |  |                | (302     | ) |             |   | (185     | )         |  |   | (329      | ) |  | $        | (425     | ) |          | $
|                                      |  |                |          |   |             |   |          |           |  |   |           |   |  |          |          |   |          |  
|Warrant shares issued (in thousands)  |  |                | 1,000    |   |             |   | 1,000    |           |  |   | 1,000     |   |  |          | 1,000    |   |          |  
|                                      |  |                |          |   |             |   |          |           |  |   |           |   |  |          |          |   |          |  
|Initial exercise price of warrants    |  | $              | 0.1500   |   |             | $ | 0.1500   |           |  | $ | 0.1500    |   |  | $        | 0.1500   |   |          | $
|                                      |  |                |          |   |             |   |          |           |  |   |           |   |  |          |          |   |          |  
|Warrant valuation inputs:             |  |                |          |   |             |   |          |           |  |   |           |   |  |          |          |   |          |  
|Anti-dilution adjusted exercise price |  | $              | 0.0135   |   |             | $ | 0.0090   |           |  | $ | 0.0418    |   |  | $        | 0.0117   |   |          | $
|Expected life                         |  |                | 5 years  |   |             |   | 5 years  |           |  |   | 5 years   |   |  |          | 5 years  |   |          |  
|Estimated volatility                  |  |                | 274      | % |             |   | 254      | %         |  |   | 243       | % |  |          | 178      | % |          |  
|Risk free rate of return              |  |                | 0.32     | % |             |   | 0.33     | %         |  |   | 0.48      | % |  |          | 0.36     | % |          |  
|Dividend yield                        |  |                | —        |   |             |   | —        |           |  |   | —         |   |  |          | —        |   |          |  
|                                      |  |                |          |   |             |   |          |           |  |   |           |   |  |          |          |   |          |  
|Hybrid instrument valuation inputs:   |  |                |          |   |             |   |          |           |  |   |           |   |  |          |          |   |          |  
|Conversion price                      |  | $              | 0.009975 |   |             | $ | 0.009425 |           |  | $ | 0.030772  |   |  | $        | 0.007125 |   |          | $
|Equivalent volatility                 |  |                | 170      | % |             |   | 166      | %         |  |   | 170       | % |  |          | 247      | % |          |  
|Equivalent interest risk              |  |                | 14.00    | % |             |   | 14.00    | %         |  |   | 14.00     | % |  |          | 14.00    | % |          |  
|Equivalent credit risk                |  |                | 7.37     | % |             |   | 7.37     | %         |  |   | 7.19      | % |  |          | 7.20     | % |          |  



Fair value disclosures



Bifurcated Embedded Derivative Instruments
– Series C and Series D preferred stock and Convertible Debentures held by investors other than YA Global - For financings
in which the embedded derivative instruments are bifurcated and recorded separately, the compound embedded derivative instruments
are valued using a Monte Carlo Simulation methodology because that model embodies certain relevant assumptions (including, but
not limited to, interest rate risk, credit risk, and conversion/redemption privileges) that are necessary to value these complex
derivatives.



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



The assumptions included in the calculations
are highly subjective and subject to interpretation. Assumptions used as of December 31, 2012 included exercise estimates/behaviors
and the following other significant estimates: (i) Preferred Stock: remaining term of 0.58 years, equivalent volatility of 91%,
equivalent interest rate of 8%, equivalent credit-risk adjusted rate of 6.9% and anti-dilution adjusted conversion price of $0.002037,
(ii) Convertible Debentures: Anti-dilution adjusted conversion price of $0.001995. Equivalent amounts reflect the net results of
multiple modeling simulations that the Monte Carlo Simulation methodology applies to underlying assumptions.



Page 40







Due to the variability of the conversion
prices, fluctuations in the trading market price of our common stock may result in significant variations to the calculated conversion
price. For each debenture, we analyze the ratio of the conversion price (as calculated based on the percentage of VWAP for the
appropriate look-back period) to the trading market price for a period of time equal to the term of the debenture to determine
the average ratio for the term of the note. Each quarter, the ratio in effect on the date of the valuation is compared with the
average ratio over the term of the debenture to determine if the calculated conversion price is representative of past trends or
if it is considered unrepresentative due to a large fluctuation in the Common Stock price over a short period of time. If the calculated
conversion price results in a ratio that deviates significantly from the average ratio over the term of the agreement, the average
ratio of the conversion price to the trading market price is then multiplied by the current trading market price to determine the
variable conversion price for use in the fair value calculations. This variable conversion price is then compared with the fixed
conversion price and, as required by the terms of the debentures, the lower of the two amounts is used as the conversion price
in the Monte Carlo Simulation model used for valuation purposes. On December 31, 2012, the fixed conversion price for each of the
debentures was equal to or higher than the calculated variable conversion price. Accordingly, the variable conversion price was
used in the Monte Carlo Simulation model. This analysis is performed each quarter to determine if the calculated conversion price
is reasonable for purposes of determining the fair value of the embedded conversion features (for instruments recorded under FASB
ASC 815-15-25-1) or the fair value of the hybrid instrument (for instruments recorded under FASB ASC 815-15-25-4).



The following table reflects the face value
of the instruments, their amortized carrying value and the fair value of the separately-recognized compound embedded derivative,
as well the number of common shares into which the instruments are convertible as of December 31, 2012 and 2011.



|December 31, 2012        |  |                |       |  |          |   |       |          |  |   | Embedded   |  |  | Common |      
|------------------------ |  | -------------- | ----- |  | -------- | - | ----- | -------- |  | - | ---------- |  |  | ------ | -----
|                         |  | Face           |       |  | Carrying |   |       | Accrued  |  |   | Conversion |  |  | Stock  |      
|                         |  | Value          |       |  | Value    |   |       | Interest |  |   | Feature    |  |  | Shares |      
|                         |  | (in thousands) |      
|                         |  |                |       |  |          |   |       |          |  |   |            |  |  |        |      
|Series C preferred stock |  | $              | 4,840 |  |          | $ | 4,840 |          |  | $ | -          |  |  | $      | 1,988
|Series D preferred stock |  | $              | 348   |  |          | $ | 348   |          |  | $ | -          |  |  |        | 143  
|                         |  |                |       |  |          |   |       |          |  |   |            |  |  |        |      
|Debentures:              |  |                |       |  |          |   |       |          |  |   |            |  |  |        |      
|2006                     |  | $              | 53    |  |          | $ | 53    |          |  | $ | 7          |  |  |        | 16   
|Total                    |  | $              | 53    |  |          | $ | 53    |          |  | $ | 7          |  |  | $      | 2,147



|December 31, 2011        |  |                |        |  |          |   |        |          |  |   | Embedded   |  |  | Common |      
|------------------------ |  | -------------- | ------ |  | -------- | - | ------ | -------- |  | - | ---------- |  |  | ------ | -----
|                         |  | Face           |        |  | Carrying |   |        | Accrued  |  |   | Conversion |  |  | Stock  |      
|                         |  | Value          |        |  | Value    |   |        | Interest |  |   | Feature    |  |  | Shares |      
|                         |  | (in thousands) |       
|                         |  |                |        |  |          |   |        |          |  |   |            |  |  |        |      
|Series C preferred stock |  | $              | 5,086  |  |          | $ | 5,086  |          |  | $ | -          |  |  | $      | 554  
|Series D preferred stock |  | $              | 1,395  |  |          | $ | 1,395  |          |  | $ | -          |  |  |        | 152  
|                         |  |                |        |  |          |   |        |          |  |   |            |  |  |        |      
|Debentures:              |  |                |        |  |          |   |        |          |  |   |            |  |  |        |      
|2006                     |  | $              | 7,061  |  |          | $ | 7,061  |          |  | $ | 3,550      |  |  |        | 1,554
|2008                     |  |                | 4,788  |  |          |   | 4,788  |          |  |   | 2,226      |  |  |        | 932  
|2009                     |  |                | 1,983  |  |          |   | 1,965  |          |  |   | 736        |  |  |        | 370  
|2010                     |  |                | 3,881  |  |          |   | 1,426  |          |  |   | 770        |  |  |        | 2,692
|2011                     |  |                | 4,725  |  |          |   | 1,077  |          |  |   | 376        |  |  |        | 2,917
|Total                    |  | $              | 22,438 |  |          | $ | 16,317 |          |  | $ | 7,658      |  |  | $      | 9,171



The terms of the embedded conversion features
in the convertible instruments presented above provide for variable conversion rates that are indexed to our quoted common stock
price. As a result, the number of indexed shares is subject to continuous fluctuation. For presentation purposes, the number of
shares of common stock into which the embedded conversion feature of the Series C and Series D preferred stock was convertible
as of December 31, 2012 and 2011 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. The number of shares of common stock
into which the embedded conversion feature in the convertible debentures was convertible as of December 31, 2012 and 2011 was calculated
as the face value of each instrument divided by the variable conversion price using the appropriate look-back period.



As discussed above, on May 25, 2012, the
terms of the debentures held by YA Global were modified to extend the stated maturity dates to August 1, 2013 and those debentures
are now accounted for as hybrid instruments and are carried in their entirety at fair value. The debentures outstanding at December
31, 2012 of $53,000 shown above represent a portion of the debentures issued to YA Global which had previously been transferred
by YA Global to other parties. These debentures were not modified and continued to mature on July 29, 2012. At December 31, 2012
the debentures had not yet been converted or repaid.



Page 41







Changes in the fair value of derivative
instrument liabilities related to the bifurcated embedded derivative features of convertible instruments not carried at fair value
are reported as “Gain (loss) from change in fair value of derivative liability – Series C and Series D preferred stock
and debentures” in the accompanying consolidated statements of operations.



|                                                              |  | Year ended December 31, |        
|------------------------------------------------------------- |  | ----------------------- | -------
|                                                              |  | 2012                    |        
|                                                              |  | (in thousands)          |        
|Series C preferred stock                                      |  | $                       | (2,066 
|Series D preferred stock                                      |  |                         | (1,286 
|                                                              |  |                         |        
|Debentures:                                                   |  |                         |        
|2006                                                          |  |                         | (3,005 
|2008                                                          |  |                         | (1,350 
|2009                                                          |  |                         | (484   
|2010                                                          |  |                         | (34    
|2011                                                          |  |                         | (4,825 
|2012                                                          |  |                         | 15     
|                                                              |  |                         | (13,035
|Less: Day-one loss from debenture financings                  |  |                         | -      
|Gain (loss) from change in fair value of derivative liability |  | $                       | (13,035



Hybrid Financial Instruments Carried at
Fair Value –- Since inception, the March 2007, August 2007, April 2008, May 2008 and April 2012 convertible debentures have
been recorded in their entirety at fair value as hybrid instruments in accordance with FASB 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.



Because these debentures are carried in
their entirety at fair value, the value of the embedded conversion feature is embodied in those fair values. At inception, the
March 2007, August 2007, April 2008 and May 2008 debentures were valued using the common stock equivalent approach. For the April
26, 2012 debenture and, effective May 25, 2012 for all other debentures, the Company changed its method of estimating the fair
value of the hybrid instrument to consider 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 December 31, 2012 included: (i)
present value of future cash flows for the debenture using a risk adjusted interest rate of 6.91%, (ii) remaining term of 0.58
years, (iii) equivalent volatility of 91%, equivalent interest rate of 9.5%, equivalent credit-risk adjusted rate of 6.91% and
anti-dilution adjusted conversion prices ranging from $0.00189 - $0.00523.



The following table reflects the face value
of the financial instruments, the fair value of the hybrid financial instrument and the number of common shares into which the
instruments are convertible as of December 31, 2012 and 2011.



|December 31, 2012 |  |                |        |  |       |   |        | Common | 
|----------------- |  | -------------- | ------ |  | ----- | - | ------ | ------ | 
|                  |  | Face           |        |  | Fair  |   |        | Stock  | 
|                  |  | Value          |        |  | Value |   |        | Shares | 
|                  |  | (in thousands) |       
|Debentures:       |  |                |        |  |       |   |        |        | 
|2006              |  | $              | 6,180  |  |       | $ | 14,758 |        | 
|2007              |  |                | 6,856  |  |       |   | 17,172 |        | 
|2008              |  |                | 6,468  |  |       |   | 15,492 |        | 
|2009              |  |                | 1,644  |  |       |   | 3,565  |        | 
|2010              |  |                | 3,806  |  |       |   | 7,178  |        | 
|2011              |  |                | 1,954  |  |       |   | 3,080  |        | 
|2012              |  |                | 1,979  |  |       |   | 3,047  |        | 
|Total             |  | $              | 28,887 |  |       | $ | 64,292 |        | 



Page 42







Changes in the fair value of convertible
instruments that are carried in their entirety at fair value are reported as “Gain (loss) from change in fair value of hybrid
financial instruments” in the accompanying consolidated statements of operations. The changes in fair value of these hybrid
financial instruments were as follows:



|                                                             |  | Year ended December 31, |       
|------------------------------------------------------------ |  | ----------------------- | ------
|                                                             |  | 2012                    |       
|                                                             |  | (in thousands)          |       
|                                                             |  |                         |       
|2006                                                         |  | $                       | 2,680 
|2007                                                         |  |                         | 798   
|2008                                                         |  |                         | 5,433 
|2009                                                         |  |                         | 708   
|2010                                                         |  |                         | 1,858 
|2011                                                         |  |                         | 840   
|2012                                                         |  |                         | 771   
|                                                             |  |                         | 13,088
|                                                             |  |                         |       
|Less: Day-one loss from debenture financings                 |  |                         | (1,162
|                                                             |  |                         |       
|Gain (loss) from changes in fair value of hybrid instruments |  | $                       | 11,926



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



|                                      |  |            |  | December
    31, 2012 |          |  | December
    31, 2011 | 
|------------------------------------- |  | ---------- |  | --------------------- | -------- |  | --------------------- | 
|                                      |  |            |  | Anti-Dilution         |          |  |                       | 
|                                      |  |            |  | Adjusted              |          |  |                       | 
|                                      |  | Expiration |  | Exercise              |          |  |                       | 
|                                      |  | Year       |  | Price                 |          |  | Warrants              | 
|                                      |  |            |  |                       |          |  | (in thousands)        | 
|Warrants issued with preferred stock: |  |            |  |                       |          |  |                       | 
|Series D preferred stock              |  | 2017       |  |                       | 0.006840 |  |                       | 
|                                      |  |            |  |                       |          |  |                       | 
|Warrants issued with debentures:      |  |            |  |                       |          |  |                       | 
|2007                                  |  | 2012       |  |                       | 0.006840 |  |                       | 
|2008                                  |  | 2015       |  |                       | 0.006840 |  |                       | 
|2010                                  |  | 2015       |  |                       | 0.006840 |  |                       | 
|2011                                  |  | 2016       |  |                       | 0.006840 |  |                       | 
|2012                                  |  | 2017       |  |                       | 0.006840 |  |                       | 
|Total                                 |  |            |  |                       |          |  |                       | 



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 December 31, 2012 included an expected life equal
to the remaining term of the warrants, an expected dividend yield of zero, estimated volatility ranging from 83% to 181%, and risk-free
rates of return of 0.05% to 0.72%. For the risk-free rates of return, we use the published yields on zero-coupon Treasury Securities
with maturities consistent with the remaining term of the warrants and volatility is based upon our expected Common Stock price
volatility over the remaining term of the warrants. As a result of the anti-dilution provisions, the fixed exercise price of the
warrants has been reset equal to the lowest price of any subsequently issued common share indexed instruments with a conversion
price below the previously stated exercise price of the warrant.



Page 43







Changes in the fair value of the warrants
are reported as "(Gain) loss from change in fair value of derivative liability - warrants" in the accompanying consolidated
statements of operations. The changes in the fair value of the warrants were as follows:



|                                      |  | Year ended December 31 |       
|------------------------------------- |  | ---------------------- | ------
|                                      |  | 2012                   |       
|                                      |  | (in thousands)         |       
|Warrants issued with preferred stock: |  |                        |       
|Series C preferred stock              |  | $                      | -     
|Series D preferred stock              |  |                        | 1,826 
|                                      |  |                        |       
|Warrants issued with debentures:      |  |                        |       
|2006                                  |  |                        | -     
|2007                                  |  |                        | 1,510 
|2008                                  |  |                        | 5,185 
|2010                                  |  |                        | 1,764 
|2011                                  |  |                        | 1,233 
|2012                                  |  |                        | (171  
|Total                                 |  | $                      | 11,347



Reconciliation of changes in fair value
–Assets and liabilities measured at fair value are classified in their entirety based on the lowest level
of input that is significant to their fair value measurement. Our derivative financial instruments that are measured at fair value
on a recurring basis are all measured at fair value using Level 3 inputs. Level 3 inputs are unobservable inputs that are supported
by little or no market activity and that are significant to the fair value of the assets or liabilities.



The following represents a reconciliation
of the changes in fair value of financial instruments measured at fair value using Level 3 inputs and changes in the fair value
of hybrid instruments carried at fair value during the year ended December 31, 2012:



|                                                                    |  | Compound    |         |   |             |   |         |             |  |   |         |  
|------------------------------------------------------------------- |  | ----------- | ------- | - | ----------- | - | ------- | ----------- |  | - | ------- | -
|                                                                    |  | Embedded    |         |   | Warrant     |   |         | Hybrid      |  |   |         |  
|                                                                    |  | Derivatives |         |   | Derivatives |   |         | Instruments |  |   | Total   |  
|                                                                    |  |             |         |   |             |   |         |             |  |   |         |  
|Beginning balance, December 31, 2011:                               |  | $           | 9,171   |   |             | $ | 14,942  |             |  | $ | 16,458  |  
|                                                                    |  |             |         |   |             |   |         |             |  |   |         |  
|Issuances:                                                          |  |             |         |   |             |   |         |             |  |   |         |  
|January 11, 2012                                                    |  |             | 289     |   |             |   | 13      |             |  |   | -       |  
|February 6, 2012                                                    |  |             | 176     |   |             |   | 9       |             |  |   | -       |  
|March 26, 2012                                                      |  |             | 287     |   |             |   | 42      |             |  |   | -       |  
|April 26, 2012                                                      |  |             | -       |   |             |   | 11      |             |  |   | 878     |  
|June 1, 2012                                                        |  |             | -       |   |             |   | 9       |             |  |   | 799     |  
|July 20, 2012                                                       |  |             |         |   |             |   | 8       |             |  |   | 732     |  
|                                                                    |  |             |         |   |             |   |         |             |  |   |         |  
|Fair value adjustments:                                             |  |             |         |   |             |   |         |             |  |   |         |  
|Compound embedded derivatives                                       |  |             | 13,035  |   |             |   | -       |             |  |   | -       |  
|Warrant derivatives                                                 |  |             | -       |   |             |   | (11,347 | )           |  |   | -       |  
|Hybrid instruments                                                  |  |             | -       |   |             |   | -       |             |  |   | (11,926 | )
|                                                                    |  |             |         |   |             |   |         |             |  |   |         |  
|Change to fair value option related to compound embedded derivative |  |             | (29,656 | ) |             |   | -       |             |  |   | 29,656  |  
|                                                                    |  |             |         |   |             |   |         |             |  |   |         |  
|Change to fair value option related to debenture carrying value     |  |             | -       |   |             |   | -       |             |  |   | 26,809  |  
|                                                                    |  |             |         |   |             |   |         |             |  |   |         |  
|Day-one loss from derivative financings                             |  |             | -       |   |             |   | -       |             |  |   | (1,162  | )
|                                                                    |  |             |         |   |             |   |         |             |  |   |         |  
|Extinguished                                                        |  |             | 17,787  |   |             |   | -       |             |  |   | 9,692   |  
|                                                                    |  |             |         |   |             |   |         |             |  |   |         |  
|Repayments                                                          |  |             |         |   |             |   |         |             |  |   |         |  
|June 1, 2012 financing                                              |  |             | -       |   |             |   | -       |             |  |   | (28     | )
|July 20, 2012 financing                                             |  |             | -       |   |             |   | -       |             |  |   | (666    | )
|                                                                    |  |             |         |   |             |   |         |             |  |   |         |  
|Conversions:                                                        |  |             |         |   |             |   |         |             |  |   |         |  
|Series C preferred stock                                            |  |             | (632    | ) |             |   | -       |             |  |   | -       |  
|Series D preferred stock                                            |  |             | (1,294  | ) |             |   | -       |             |  |   | -       |  
|August 24, 2006 financing                                           |  |             | (740    | ) |             |   | -       |             |  |   | (926    | )
|December 29, 2006 financing                                         |  |             | (176    | ) |             |   | -       |             |  |   | (677    | )
|March 27, 2007 financing                                            |  |             | -       |   |             |   | -       |             |  |   | (1,047  | )
|August 24, 2007 financing                                           |  |             | -       |   |             |   | -       |             |  |   | (831    | )
|October 28, 2008 financing                                          |  |             | -       |   |             |   | -       |             |  |   | (383    | )
|May 1, 2009 financing                                               |  |             | (21     | ) |             |   | -       |             |  |   | -       |  
|July 15, 2009 financing                                             |  |             | -       |   |             |   | -       |             |  |   | (637    | )
|December 15, 2010 financing                                         |  |             | -       |   |             |   | -       |             |  |   | (215    | )
|January 10, 2011 financing                                          |  |             | -       |   |             |   | -       |             |  |   | (267    | )
|February 8, 2011 financing                                          |  |             | -       |   |             |   | -       |             |  |   | (180    | )
|March 11, 2011 financing                                            |  |             | -       |   |             |   | -       |             |  |   | (788    | )
|April 13, 2011 financing                                            |  |             | (226    | ) |             |   | -       |             |  |   | (210    | )
|May 31, 2011 financing                                              |  |             | (885    | ) |             |   | -       |             |  |   | -       |  
|June 28, 2011  financing                                            |  |             | (413    | ) |             |   | -       |             |  |   | (53     | )
|July 13, 2011 financing                                             |  |             | (1,656  | ) |             |   | -       |             |  |   | -       |  
|August 15, 2011 financing                                           |  |             | (1,441  | ) |             |   | -       |             |  |   | -       |  
|September 15, 2011 financing                                        |  |             | (1,458  | ) |             |   | -       |             |  |   | -       |  
|October 25, 2011 financing                                          |  |             | -       |   |             |   | -       |             |  |   | (141    | )
|December 8, 2011 financing                                          |  |             | -       |   |             |   | -       |             |  |   | (209    | )
|January 11, 2012 financing                                          |  |             | -       |   |             |   | -       |             |  |   | (386    | )
|March 26, 2012 financing                                            |  |             | -       |   |             |   | -       |             |  |   | -       |  
|Ending balance, December 31, 2012                                   |  | $           | 2,147   |   |             | $ | 3,687   |             |  | $ | 64,292  |  



Page 44







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.



Subsequent events



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.
In addition, effective February 1, 2013, 1.4 billion of the 1.9 billion warrants held by YA Global were cancelled. The exercise
price of the remaining 499,990,063 warrants was reduced to $0.0001 per share.



Subsequent to December 31, 2012, holders
of convertible debentures have converted $1,445,978 of principal and accrued interest on those debentures into 864,244,887 shares
of our common stock.



Note 5 - Goodwill and Other Intangible Assets



At December 31, 2012 and 2011, we had goodwill
of $3.4 million, representing the excess of the purchase price paid for NeoMedia Europe over the fair value of the identifiable
net assets and liabilities acquired, based on an independent appraisal of the assets and liabilities acquired.



The following table summarizes other intangible
assets:



|                                                        |  |                   |       |   |             |   |       | Total Intangibles | 
|------------------------------------------------------- |  | ----------------- | ----- | - | ----------- | - | ----- | ----------------- | 
|                                                        |  | Patents and Other |       |   | Proprietary |   |       | and Proprietary   | 
|                                                        |  | Intangibles       |       |   | Software    |   |       | Software          | 
|                                                        |  | (in thousands)    |      
|December 31, 2010                                       |  | $                 | 2,048 |   |             | $ | 1,414 |                   | 
|                                                        |  |                   |       |   |             |   |       |                   | 
|Additions                                               |  |                   | -     |   |             |   | -     |                   | 
|Amortization                                            |  |                   | (284  | ) |             |   | (657  | )                 | 
|December 31, 2011                                       |  |                   | 1,764 |   |             |   | 757   |                   | 
|                                                        |  |                   |       |   |             |   |       |                   | 
|Additions                                               |  |                   | -     |   |             |   | -     |                   | 
|Amortization                                            |  |                   | (275  | ) |             |   | (657  | )                 | 
|December 31, 2012                                       |  | $                 | 1,489 |   |             | $ | 100   |                   | 
|                                                        |  |                   |       |   |             |   |       |                   | 
|Weighted-average remaining amortization period in years |  |                   | 5.3   |   |             |   | 0.1   |                   | 



Page 45







As of December 31, 2012, we estimate future
amortization expense of intangible assets to be (in thousands):



|2013                              |  | $ | 378   | 
|--------------------------------- |  | - | ----- | 
|2014                              |  |   | 259   | 
|2015                              |  |   | 244   | 
|2016                              |  |   | 216   | 
|2017 and thereafter               |  |   | 492   | 
|Total future amortization expense |  | $ | 1,589 | 



Note 6 – Accrued Liabilities



The following table summarizes our accrued
liabilities of December 31, 2012 and 2011:



|                                 |  | As of December 31, |    
|-------------------------------- |  | ------------------ | ---
|                                 |  | 2012               |    
|                                 |  | (in thousands)     |    
|                                 |  |                    |    
|Accrued operating expenses       |  | $                  | 374
|Accrued payroll related expenses |  |                    | 6  
|Accrued interest                 |  |                    | 19 
|Total                            |  | $                  | 399



Gain on De-recognition of Accrued Obligations. We previously
recorded an accrued purchase price obligation of $4,535,000 related to our 2006 acquisition of 12Snap, which we disposed of in
2007, and accruals for disputed services and other expenses relating to its former operations and dating from 2007 and prior, aggregating
approximately $3,765,000.



In accordance with FASB ASC 405-20-40-1, a debtor shall de-recognize
a liability if and only if it has been extinguished. A liability shall be extinguished if either (a) the debtor pays the creditor
and is relieved of its obligation for the liability or (b) the debtor is legally released from being the primary obligor under
the liability, either judicially or by the creditor.



As of September 30, 2012, there had been no collection activity,
invoices, statements of account, court action or communications related to these obligations for a minimum of five years with any
of the affected parties or entities. Consequently, after reviewing the applicable state statutes of limitation, as provided to
us by our legal counsel, we concluded that these obligations are no longer legally enforceable due to the applicable statute of
limitations for the collection of debt. Accordingly we de-recognized these liabilities as of September 30, 2012.



Accrued interest: On May 25, 2012, the terms of the debentures
held by YA Global were modified to extend the stated maturity dates to August 1, 2013 and reduce the interest rates to 9.5% per
year. Because the effect of the modifications exceeded a significance threshold relative to cash flows prescribed by FASB ASC 470-50,
Debt Modifications and Extinguishments, the modifications of the amounts due under these arrangements were accounted for as extinguishments,
whereby the existing debentures were considered to be retired and new debentures issued. Following the modification, the debentures
are carried as hybrid instruments at fair value. As a result, at dates subsequent to May 25, 2012, accrued interest related to
these debentures is included as a component of the change in fair value of hybrid financial instruments, rather than being included
in accrued interest expense.



Note 7 - Comprehensive Loss



Comprehensive loss consists of net loss
and other gains and losses affecting shareholders’ investment that, under accounting principles generally accepted in the
United States, are excluded from net loss. At December 31, 2012 and 2011, comprehensive loss represents foreign currency translation
losses on intercompany balances with, and our investment in, NeoMedia Europe, which are deemed to be of a long-term investment
nature.



Page 46







Note 8 - Income Taxes



As of December 31, 2012 and 2011, the types
of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts which gave rise
to deferred taxes, and their tax effects were as follows:



|                                                        |  | As of December 31, |        
|------------------------------------------------------- |  | ------------------ | -------
|                                                        |  | 2012               |        
|                                                        |  | (in thousands)     |        
|                                                        |  |                    |        
|Net operating loss carry forwards (NOL)                 |  | $                  | 63,714 
|Capital loss                                            |  |                    | 3,515  
|Write-off of long-lived assets                          |  |                    | 526    
|Amortization of intangibles                             |  |                    | (670   
|Stock-based compensation                                |  |                    | 2,596  
|Capitalized software development costs and fixed assets |  |                    | 136    
|Deferred revenue                                        |  |                    | 1,568  
|Alternative minimum tax credit carry forward            |  |                    | 43     
|Inventory reserve                                       |  |                    | -      
|Accruals                                                |  |                    | 2,554  
|Impairment loss                                         |  |                    | 2,752  
|Derivative gain/loss                                    |  |                    | 24,073 
|Interest expense                                        |  |                    | 4,437  
|Total deferred tax assets                               |  |                    | 90,546 
|Valuation allowance                                     |  |                    | (90,546
|Net deferred tax asset                                  |  | $                  | -      



Due to the uncertainty of the utilization
and recoverability of the loss carry-forwards and other deferred tax assets, we have provided a valuation allowance for the deferred
tax assets, as it is more likely than not that the deferred tax assets will not be realizable.



For the years ended December 31, 2012 and
2011, the income tax benefit differed from the amount computed by applying the statutory federal rate of 34% as follows:



|                                            |  | Year Ended December 31, |       
|------------------------------------------- |  | ----------------------- | ------
|                                            |  | 2012                    |       
|                                            |  | (in thousands)          |       
|Expense/(benefit) at federal statutory rate |  | $                       | (6,610
|State income taxes, net of federal benefit  |  |                         | (753  
|Permanent and other difference, net         |  |                         | 2,803 
|Effects of change in state rates            |  |                         | -     
|Increase in valuation allowance             |  | $                       | (4,560



As of December 31, 2012, we had net operating
loss carry forwards for federal tax purposes totaling approximately $165 million, which may be used to offset future taxable
income and which, if unused, expire between 2013 and 2032, and a capital loss carry-forward of $9.3 million. As a result of certain
of our equity activities, we anticipate that the annual usage of our pre-1998 net operating loss carry forwards may be further
restricted pursuant to the provisions of Section 382 of the Internal Revenue Code.



In addition to the above, our subsidiary
NeoMedia Europe, had foreign operations and is not included in our consolidated income tax balances above. NeoMedia Europe did
not have income tax expense during the years ended December 31, 2012 and 2011.



NeoMedia Europe has net operating loss
carry forwards that are estimated to be $11.4 million and $9.9 million as of December 31, 2012 and 2011, respectively. Due to the
uncertainty of the utilization and recoverability of the loss carry forwards, we have reserved for the deferred tax assets through
a valuation allowance, as it is more likely than not that the deferred tax assets will not be realizable.



We follow the guidance in FASB ASC Topic
740 Accounting for Uncertainty in Income Taxes. We have not taken any uncertain tax positions on any of our open income
tax returns filed through the period ended December 31, 2012. Our methods of accounting are based on established income tax principles
in the Internal Revenue Code and are properly calculated and reflected within our income tax returns. In addition, we have filed
income tax returns in all applicable jurisdictions in which we had material nexus warranting an income tax return filing.



We re-assess the validity of our conclusions
regarding uncertain tax positions on a quarterly basis to determine if facts or circumstances have arisen that might cause us to
change our judgment regarding the likelihood of a tax position’s sustainability under audit. We have determined that there
were no uncertain tax positions for the years ended December 31, 2012 and 2011. Due to the carry forward of NOL’s, Federal
and state income tax returns are subject to audit for varying periods beginning in 1992.



Page 47







Note 9 - Transactions with Related Parties



Mr. George O’Leary

In October 2010, we entered into an ongoing
consulting agreement with SKS Consulting of South Florida Corp. (“SKS”). In October 2011, we renewed the 2010 consulting
agreement with SKS, whereby we continued to pay $1,500 per day as needed for services rendered by Mr. O’Leary, as our acting
Chief Operating Officer. Mr. O’Leary was also issued a stock option grant of 100,000 options, of which 25% vested immediately
and 75% vests over eighteen months. Mr. O’Leary also serves as a member of the Board of Directors and is also the Chairman
of our Audit Committee. In addition to his compensation as a member of our Board, Mr. O’Leary was compensated as our acting
Chief Operating Officer under the 2011 consulting agreement, for which he received $75,750.



In January 2012, Mr. O’Leary’s
October 2011 agreement was modified, whereby his number of days required by the Company was reduced and his daily rate was increased
to $1,600 per day. The modified agreement also provides for additional compensation bonus of $15,000 on the occurrence of certain
significant events. Mr. O’Leary received $20,650 in 2012 under the consulting agreement.



Ms. Laura A. Marriott

Ms. Marriott serves as our Chairperson
of the Board of Directors and Chief Executive Officer. In October 2011, we renewed the October 2010 consulting agreement with Ms.
Marriott, whereby we paid $30,000 per month for her services as our Chief Executive Officer. In connection with her October 2011
agreement, Ms. Marriott was also granted 250,000 stock options, of which 25% vested immediately and 75% vests over eighteen months.
Further, Ms. Marriott is eligible for a bonus of up to $25,000 per quarter based on agreed upon performance measurements as approved
by the Board of Directors.



In January 2012, Ms. Marriott’s October
2011 agreement was modified, whereby we pay her up to $35,000 per month for serving as our CEO. The modified agreement also provides
for additional annual compensation bonus of up to $100,000 based upon agreed upon performance measurements as determined and approved
by the Board. Under this agreement, we paid Ms. Marriott $410,400 in 2012.



Mr. Barry S. Baer

On February 20, 2012, we entered into a
six month consulting agreement with Baer Partners LLC, whereby we pay an hourly rate, not to exceed $20,000 per month without prior
approval, as needed for services rendered by Colonel Barry S. Baer as our Corporate Secretary/Treasurer. The agreement contains
provisions for extensions by mutual consent and has been extended. Colonel Baer received $52,469 in 2012 under the provisions of
his agreement with the Company.



Mr. Jeff Huitt

In August 2012, we entered into a mutually
renewable six month consulting agreement with Mr. Huitt to serve as our Chief Financial Officer at an annual compensation amount
of $140,000. Mr. Huitt received $48,619 in 2012



Subsequent Event:



On March 26, 2013, the Board appointed
Colonel Baer as Chief Financial Officer with Mr. Huitt continuing to serve as Controller, in accordance with their existing agreements.



Note 10 - Commitments and Contingencies



We are party to various commitments and
contingencies, including:



| | · | Operating leases for office facilities;
these leases provide for minimum rents and generally include options to renew for additional periods.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------



| | · | Consulting agreements that carry payment
obligations into future years;
| | - | -----------------------------------------------------------------------



| | · | Various payment arrangements with our
vendors that call for fixed payments;
| | - | ---------------------------------------------------------------------------



| | · | Convertible debentures with outstanding
face amounts and accrued interest of $43.0 million.
| | - | -------------------------------------------------------------------------------------------



The following table sets forth the future
minimum payments due under the above commitments:



|                                 |  | 2013 |     |  | 2014 |   |        | 2015 |  |   | 2016 |  |  | Total |    
|-------------------------------- |  | ---- | --- |  | ---- | - | ------ | ---- |  | - | ---- |  |  | ----- | ---
|                                 |  |      |     |  |      |   |        |      |  |   |      |  |  |       |    
|Operating leases                 |  | $    | 52  |  |      | $ | 27     |      |  | $ | -    |  |  | $     | -  
|Vendor and consulting agreements |  |      | 396 |  |      |   | 385    |      |  |   | 385  |  |  |       | 385
|Convertible debentures           |  |      | -   |  |      |   | 42,959 |      |  |   | -    |  |  |       | -  
|Total                            |  | $    | 448 |  |      | $ | 43,371 |      |  | $ | 385  |  |  | $     | 385



Page 48







Legal
Proceedings



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, it is the opinion of management that such current actions, including the resolution of the following
legal actions, are unlikely to have a material adverse effect on our financial position or operating results.



William Klawonn v. Y.A. Global Investments,
L.P. and NeoMedia Technologies, Inc. – On April 28, 2010, William Klawonn, a shareholder of NeoMedia, filed a derivative
action, in the United States District Court for the District of New Jersey, against YA Global and us claiming trading activities
that violated section 15 U.S.C. § 78p(b).  On July 8, 2010, an order was granted in the case stipulating that the plaintiff
had agreed that we have no liability in the action.  The order also stipulated that we will be considered a nominal party
to the action, and as such we remain subject to the discovery rights and obligations of the action. On December 6, 2010, an
order was granted in the case to dismiss for the plaintiff’s failure to state a valid claim for relief, without prejudice.
However the order also allowed the plaintiff 45 days to amend the complaint. On January 20, 2011, the plaintiff filed an amended
complaint. On February 4, 2011, a further order was granted in the case again stipulating that the plaintiff had agreed that we
have no liability in the action. The order also again stipulated that we will continue to be considered a nominal party to
the action, and as such we remain subject to the discovery rights and obligations of the action. On March 24, 2011, YA Global filed
a motion to dismiss the amended complaint and on May 9, 2011, plaintiff filed a memorandum of law in opposition to YA Global’s
motion to dismiss the amended complaint. On June 8, 2011, YA Global filed a reply memorandum of law in further support of its motion
to dismiss the amended complaint.   The Court heard oral argument on the motion on August 4, 2011. On August 10, 2011,
the Court issued an opinion and order granting the motion to dismiss as to some claims and denying it as to others.  We are
not able to predict with any certainty the outcome of this litigation, including the merits or value of the amended complaint.
There is no new status on this case to report.



SpyderLynk, LLC – On April 9, 2012, we filed
a complaint against SpyderLynk, LLC in the District Court for the District of Colorado. The complaint asserts infringement of two
NeoMedia patents related to our mobile barcode resolution technology. Specifically the complaint asserts infringement of U.S. Patent
No. 6,199,048, and U.S. Patent No. 8,131,597. The complaint seeks to enjoin SpyderLynk from using NeoMedia’s patented technology
and to recover damages caused by the infringement. On December 4, 2012, the two companies settled all pending litigation and NeoMedia
has granted SpyderLynk a non-exclusive patent license. NeoMedia and SpyderLynk terminated all pending litigation brought by NeoMedia
against SpyderLynk.



Baniak Pine & Gannon, LLC, Valauskas
& Pine LLC, and McDonnell Boehnen Hulbert & Berghoff LLP - On February 18, 2011, Baniak Pine & Gannon, LLC,
Valauskas & Pine LLC, and McDonnell Boehnen Hulbert & Berghoff LLP filed a complaint for injunctive and other relief against
us and a member of our Board of Directors, Mr. George G. O'Leary in The United States District Court For The Northern District
Of Illinois, Eastern Division. The complaint sought to recover certain legal fees related to the plaintiffs’ services to
us and other damages for tortious interference by Mr. O'Leary. On April 21, 2011, we filed a motion to dismiss Mr. O'Leary from
the lawsuit and on April 25, 2011, we filed an answer to the complaint. Our bylaws provide for the indemnification of our Directors
against complaints such as this and we maintain directors' and officers' liability insurance.    On July 6, 2011, the
District Court dismissed the claims against Mr. O'Leary with prejudice. On October 18, 2011, the parties settled the matter
through a confidential settlement agreement, and filed a stipulation to dismiss the matter with prejudice. The District
Court will retain jurisdiction to enforce the settlement.



Note 11 – Stock-Based Compensation



We have five stock option plans, as summarized
below. Options issued under these plans have a term of 10 years. The plans allow for exercise prices of options issued under the
Option Plans to be set at amounts less than the fair market value per share of our common stock on the date of grant. Options may
be granted with any vesting schedule as approved by the stock option committee of our Board of Directors, but generally the vesting
periods range from immediate vesting to 5 years. Common shares required to be issued on the exercise of stock options would be
issued from our authorized and unissued shares.



|                          |  |                    |  |                 |           |  | Shares Available For | 
|------------------------- |  | ------------------ |  | --------------- | --------- |  | -------------------- | 
|                          |  |                    |  | Shares Reserved |           |  | Issuance at          | 
|Plan                      |  | Date Adopted       |  | For Issuance    |           |  | December 31, 2012    | 
|                          |  |                    |  |                 |           |  |                      | 
|2011 Stock Incentive Plan |  | April 7, 2011      |  |                 | 2,000,000 |  |                      | 
|2005 Stock Option Plan    |  | December 16, 2005  |  |                 | 600,000   |  |                      | 
|2003 Stock Option Plan    |  | September 24, 2003 |  |                 | 1,500,000 |  |                      | 
|2003 Stock Incentive Plan |  | October 31, 2003   |  |                 | 300,000   |  |                      | 
|2002 Stock Option Plan    |  | June 6, 2002       |  |                 | 100,000   |  |                      | 
|                          |  |                    |  |                 |           |  |                      | 



Page 49







We have not registered the 600,000 shares
underlying the options in the 2005 Plan, and as a result, subject to their registration, all 600,000 options remain available for
issuance.



The 2003 Stock Incentive Plan provides
for up to 300,000 non-qualified options to be issued to pay compensation and other expenses related to employees, former employees,
consultants, and non-employee directors. No shares were issued during 2012 and 2011 under the 2003 Stock Incentive Plan.



The 2002 Stock Option Plan provides for
up to 100,000 non-qualified options to be issued to pay compensation and other expenses related to employees, former employees,
consultants, and non-employee directors. No options were issued during 2012 and 2011 under the 2002 Stock Option Plan.



On April 7, 2011, the Board approved the
2011 Stock Incentive Plan (the “2011 Plan”) and on April 22, 2011, we filed a registration statement on Form S-8 to
register the shares of our common stock, $0.001 par value, underlying the Plan.



On April 7, 2011, the Board approved and
issued option agreements with two employees and a contractor for a total of 210,000 shares of our common stock from our 2003 Stock
Option Plan at an exercise price of $0.017 per share. The grants to employees vest in equal annual installments over a four year
period. The grant to the contractor vests over the term of the contract.



The Board also approved the cancellation
and re-issuance of most, but not all, outstanding options previously issued to our directors and employees under the 2003 Stock
Option Plan and 2003 Stock Incentive Plan. Those options with exercise prices of $1.00 or greater were cancelled and replaced with
an equivalent number of options at an exercise price of $0.017. The impact to our statement of operations from this transaction
was not material.



Further, on April 7, 2011, the Board approved
and issued option agreements with three members of our Board for a total of 300,000 shares of our common stock from our 2011 Stock
Incentive Plan at an exercise price of $0.017 per share. Two of the three grantees’ options vest in equal monthly installments
over an 18 month period, and the third grantee’s options vested on the date of the grant. On April 7, 2011, we cancelled
422,503 vested and non-vested stock options held by 17 employees, directors, officers and consultants, and granted 500,105 replacement
stock options to employees, directors, officers and consultants under the 2011 Plan, at an exercise price of $0.017 per share.
The replacement options were issued to most, but not all, employees whose exercise prices were $1.00 or greater.



On October 3, 2011, the Board approved
and issued option agreements with three members of our Board for a total of 450,000 shares of our common stock from our 2011 Stock
Incentive Plan at an exercise price of $0.014 per share. Two of the three grantees’ options vest over three years from the
grant date, and the third grantees’ options vest in equal monthly installments over an 18 month period from the date of the
grant.



On April 2, 2012 and April 25, 2012, the
Board approved and issued two option agreements for a total of 25,000 shares and 50,000 shares, respectively, of our common stock
from our 2011 Stock Incentive Plan at an exercise price of $0.03 per share and $0.01 per share, respectively. These grantees’
options were to vest over four years from the grant date. However, both grantees were terminated and the options forfeited upon
their departure.



On July 23, 2012, the Board approved the
issuance, under our 2011 Stock Incentive Plan, of four option agreements (each for 25,000 shares of our common stock) to each member
of the Board of Directors, at an exercise price of $0.008 per share. Each of these grantees’ options vested on the grant
date.



On August 27, 2012, our Chief Financial
Officer received a stock option grant of 100,000 shares from our 2011 Stock Incentive Plan at an exercise price of $0.008 per share.
The options vest over four years from the date of grant.



On November 10, 2012 our Secretary Treasurer
received a stock option grant of 100,000 shares from our 2011 Stock Incentive Plan at an exercise price of $.008 per share. The
options vest over four years from the date of the grant.



The fair value of stock-based awards was
estimated using the Black-Scholes-Merton model with the following weighted-average assumptions:



A summary of the transactions during the
years ended December 31, 2012 and 2011 with respect to our stock option plans follows:



|                         |  | Year Ended December 31,
|------------------------ |  | -----------------------
|                         |  | 2012                   
|Volatility               |  | 156%-169%              
|Expected dividends       |  | -                      
|Expected term (in years) |  | 5.79                   
|Risk-free rate           |  | 2.7%-2.89%             



Page 50







A summary of the transactions during the
year ended December 31, 2012 with respect to our stock option plans follows:



|                                 |  |                |       |   |           |   |      |                |  |   | Weighted-   | 
|-------------------------------- |  | -------------- | ----- | - | --------- | - | ---- | -------------- |  | - | ----------- | 
|                                 |  |                |       |   |           |   |      |                |  |   | Average     | 
|                                 |  |                |       |   | Weighted- |   |      |                |  |   | Contractual | 
|                                 |  |                |       |   | Average   |   |      | Aggregate      |  |   | Life        | 
|                                 |  |                |       |   | Exercise  |   |      | Intrinsic      |  |   | Remaining   | 
|                                 |  | Shares         |       |   | Price     |   |      | Value          |  |   | in Years    | 
|                                 |  | (in thousands) |       |   |           |   |      | (in thousands) |  |   |             | 
|Outstanding at January 1, 2011   |  |                | 1,127 |   |           | $ | 0.02 |                |  |   |             | 
|Granted                          |  |                | 375   |   |           | $ | 0.01 |                |  |   |             | 
|Exercised                        |  |                | -     |   |           | $ | -    |                |  |   |             | 
|Forfeited                        |  |                | (162  | ) |           | $ | 0.03 |                |  |   |             | 
|Outstanding at December 31, 2012 |  |                | 1,340 |   |           | $ | 0.02 |                |  | $ | -           | 
|Exercisable at December 31, 2012 |  |                | 627   |   |           | $ | 0.02 |                |  | $ | -           | 



A summary of the status of our non-vested options as of December
31, 2012, and changes during such year is presented below:



|                               |  |                |      |   | Weighted   |  
|------------------------------ |  | -------------- | ---- | - | ---------- | -
|                               |  |                |      |   | Average    |  
|                               |  |                |      |   | Grant Date |  
|Nonvested Shares               |  | Shares         |      |   | Fair Value |  
|                               |  | (in thousands) |      |   |            |  
|Nonvested at December 31, 2011 |  |                | 657  |   |            | $
|Granted                        |  |                | 375  |   |            | $
|Vested                         |  |                | (157 | ) |            | $
|Forfeited                      |  |                | (162 | ) |            | $
|Nonvested at December 31, 2012 |  |                | 713  |   |            | $



Total stock-based compensation expense
is attributable to the granting of stock options and the remaining requisite service periods of stock options previously granted.
Compensation expense attributable to stock-based compensation for the years ended December 31, 2012 and 2011 was $14,000 and $66,000,
respectively As of December 31, 2012, the total unrecognized compensation cost related to non-vested stock options was $38,000
net of expected forfeitures and the related weighted-average period over which it is expected to be recognized is approximately
2.0 years.



The following table summarizes information
about our stock options outstanding as of December 31, 2012:



|Options Outstanding |                  |  | Options Exercisable | 
|------------------- | ---------------- |  | ------------------- | 
|                    |                  |  |                     | 
|Exercise Prices     |                  |  | Number of Shares    | 
|                    |                  |  | (in thousands)      | 
|                    |                  |  |                     | 
|                    | $0.008           |  |                     | 
|                    | $0.010           |  |                     | 
|                    | $0.014 to $0.017 |  |                     | 
|                    | $0.050           |  |                     | 
|                    | $0.140           |  |                     | 
|                    |                  |  |                     | 





Page 51









Subsequent Events



On February 4, 2013, the Board of Directors
voted to extend Mr. J.J. Keil’s 131,025 options until April 7, 2016.



Note 12- Geographical
and Customer Information



As of December 31, 2012, we were structured
and evaluated by our Board of Directors and management as one business unit. Consolidated net revenues and net income (loss)
from operations for the years ended December 31, 2012 and 2011 and as of December 31, 2012 and 2011 by geographic area, were as
follows (in thousands):



|                   |  | Year Ended December 31, |        
|------------------ |  | ----------------------- | -------
|                   |  | 2012                    |        
|                   |  |                         |        
|Revenue:           |  |                         |        
|United States      |  | $                       | 2,099  
|Europe             |  |                         | 245    
|Total              |  | $                       | 2,344  
|                   |  |                         |        
|Net income (loss): |  |                         |        
|United States      |  | $                       | (17,816
|Europe             |  |                         | (1,570 
|Total              |  | $                       | (19,386



|                     |  |   |       |  |  |   | As
                                                                                                                 of December 31, | 
|-------------------- |  | - | ----- |  |  | - | ----------------------------------------------------------------------------------------------------------------------------------- | 
|                     |  |   | 2012  |  |  |   | 2011                                                                                                                                | 
|Identifiable assets: |  |   |       |  |  |   |                                                                                                                                     | 
|United States        |  | $ | 5,902 |  |  | $ | 6,998                                                                                                                               | 
|Europe               |  |   | 137   |  |  |   | 602                                                                                                                                 | 
|Total                |  | $ | 6,039 |  |  | $ | 7,600                                                                                                                               | 



For the year ended December 31, 2012, three customers accounted
for 17%, 13% and 7% of our revenue. For the year ended December 31, 2011, three customers accounted for 23%, 17% and 15% of our
revenue. No other customers accounted for more than 10% of revenue for the years ended December 31, 2012 and 2011.



ITEM 9.    Changes in and Disagreements
with Accountants on Accounting and Financial Disclosures



None.



Item 9A. Controls and Procedures



| | (a) | Evaluation of Disclosure
                                                                        Controls and Procedures
| | --- | ------------------------------------------------------------------------------------------------------------------------



We
maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act, which
are designed to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange
Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and
(ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate
to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance that the objectives of the
controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of
fraud, if any, within a company have been detected. Our management, with the participation of our Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered
by this report. Based on that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that, because of the material weaknesses in internal control over financial reporting
discussed in Management’s Report on Internal Control Over Financial Reporting below, our disclosure controls and procedures
were not effective, at a reasonable assurance level, as of December 31, 2012. As a result of these procedures, we believe our
Consolidated Financial Statements included in this report present fairly, in all material respects, our financial condition, results
of operations and cash flows for the periods presented.



Page 52







(b)
Management’s Report on Internal Control Over Financial Reporting



Management is responsible for
establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is
a process designed 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. Our internal control over financial
reporting includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately
and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that
our receipts and expenditures are being made only in accordance with authorizations of our management and Directors; and provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that
could have a material effect on the financial statements.



Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.



A material weakness is a deficiency,
or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that
a material misstatement of our annual or interim Consolidated Financial Statements will not be prevented or detected on a timely
basis.



Management evaluated our internal
control over financial reporting as of December 31, 2012. Management’s evaluation also included assessing the effectiveness
of internal controls over financial reporting at NeoMedia Europe. In making this assessment, management used the criteria established
inInternal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). As a result of this assessment and based on the criteria in the COSO framework, management has concluded that, as of December
31, 2012, our internal control over financial reporting was not effective at a reasonable assurance level due to the existence
of the following material weaknesses:



1. The Company did not maintain an effective control environment
at the entity level. Specifically, the Company identified the following material weaknesses in its control environment:



| | · | Senior
                                                                                                             management did not
                                                                                                             establish and maintain
                                                                                                             a proper tone as
                                                                                                             to internal control
                                                                                                             over financial reporting.
                                                                                                             Specifically, senior
                                                                                                             management was unable,
                                                                                                             due to time and resource
                                                                                                             constraints, to promptly
                                                                                                             address control weaknesses
                                                                                                             brought to their
                                                                                                             attention throughout
                                                                                                             this and the previous
                                                                                                             year’s audit;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The
                                                                                                             external auditors
                                                                                                             identified several
                                                                                                             material accounting
                                                                                                             adjustments to the
                                                                                                             Company’s financial
                                                                                                             statements that were
                                                                                                             a direct result of
                                                                                                             the combination of
                                                                                                             the weaknesses previously
                                                                                                             cited regarding the
                                                                                                             lack of review of
                                                                                                             the financial statements.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



2. The Company did not maintain effective controls to ensure
that management oversight and review procedures were properly performed, and the following material weaknesses were noted:



| | · | The
                                                                                                             Company did not maintain
                                                                                                             effective controls
                                                                                                             over the recording
                                                                                                             of recurring and
                                                                                                             non-recurring journal
                                                                                                             entries. Specifically,
                                                                                                             controls over the
                                                                                                             supervisory review
                                                                                                             and approval of journal
                                                                                                             entries for the recording
                                                                                                             of these financial
                                                                                                             transactions failed,
                                                                                                             resulting in adjustments
                                                                                                             to the financial
                                                                                                             statements.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | .The
                                                                                                                               Company
                                                                                                                               did
                                                                                                                               not
                                                                                                                               maintain
                                                                                                                               adequate
                                                                                                                               controls
                                                                                                                               over
                                                                                                                               the
                                                                                                                               accuracy,
                                                                                                                               presentation
                                                                                                                               and
                                                                                                                               disclosure
                                                                                                                               in
                                                                                                                               recording
                                                                                                                               revenue.
                                                                                                                               Specifically,
                                                                                                                               controls
                                                                                                                               were
                                                                                                                               not
                                                                                                                               designed
                                                                                                                               and
                                                                                                                               in
                                                                                                                               place
                                                                                                                               to
                                                                                                                               ensure
                                                                                                                               that
                                                                                                                               revenue
                                                                                                                               transactions
                                                                                                                               were
                                                                                                                               analyzed
                                                                                                                               for
                                                                                                                               appropriate
                                                                                                                               presentation
                                                                                                                               and
                                                                                                                               disclosure
                                                                                                                               for
                                                                                                                               recognition
                                                                                                                               of
                                                                                                                               revenue
                                                                                                                               on
                                                                                                                               a
                                                                                                                               gross
                                                                                                                               or
                                                                                                                               net
                                                                                                                               basis.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The
                                                                                                             Company did not maintain
                                                                                                             sufficient controls
                                                                                                             over Excel spreadsheets
                                                                                                             used to compile and
                                                                                                             produce financial
                                                                                                             statements.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 53







(c)
Remediation of Material Weaknesses



We have commenced efforts to
address the material weaknesses in our internal control over financial reporting and the ineffectiveness of our disclosure controls
and procedures as of December 31, 2012. The above material weaknesses will not be considered remediated until new controls over
financial reporting are operating effectively for an adequate period of time.



(d) Changes in Internal
Control over Financial Reporting



Other than the remediation
addressed in C above, there have been no changes in our internal control over financial reporting that occurred during the year
ended December 31, 2012 that have materially affected, or are reasonably likely to materially effect, our internal control over
financial reporting.



Item 9B. Other Items.



None.



Page 54







PART III



ITEM 10. Directors, Executive Officers
and Corporate Governance



Directors
and Executive Officers



Set forth below are the names of our Directors
and officers, their business experience during the last five years, their ages and all positions and offices that they hold with
us as of the date of this Report.



|Name              |  | Age |  | Position                                       
|----------------- |  | --- |  | -----------------------------------------------
|                  |  |     |  |                                                
|Laura A. Marriott |  | 43  |  | Chief Executive Officer and Chairperson        
|                  |  |     |  |                                                
|Barry S Baer      |  | 69  |  | Secretary/Treasurer and Chief Financial Officer
|                  |  |     |  |                                                
|George G. O'Leary |  | 50  |  | Chief Operating Officer and Director           
|                  |  |     |  |                                                
|Peter Mannetti    |  | 63  |  | Director                                       
|                  |  |     |  |                                                
|Sarah Fay         |  | 50  |  | Director                                       



Family Relationships



There are no family relationships by and
between or among the Directors or other officers. None of our Directors and officers are directors or executive officers of any
company that files reports with the SEC except as set forth in the “Biographies of Officers and Directors” section
below.



Election of Directors and Officers



Each Director holds office until his or her successor is duly
elected and qualified or until his or her earlier resignation or removal. Our officers are duly appointed and removed from office
pursuant to the authority and action of the Board.



Biographies of Officers and Directors



Laura A. Marriott. Ms. Marriott
was named to our Board of Directors in January 2009 and became our Chief Executive Officer and Chairperson of our Board of Directors
on October 8, 2010. Ms. Marriott had previously served as President of the Mobile Marketing Association (MMA) since July
15, 2005 and prior to that, served as Director of Marketing for Intrado, Inc. from April 1, 2003 through July 14, 2005. During
her tenure at MMA, the MMA membership experienced substantial growth, established global headquarters and regional chapters throughout
the world, and developed guidelines for the industry. In 2011, she was named one of the industry’s Top 10 Women in Wireless
by FierceMarkets. Ms. Marriott has more than twenty years of experience in the high-tech industry in the areas of business
development, product management and marketing.



George G. O’Leary.
Mr. O’Leary was named our Chief Operating Officer on October 19, 2010. Mr. O’Leary has been a Director of NeoMedia
since February 2007, and is currently the President of SKS Consulting of South Florida Corp. He is also a member of the board
of directors of Protection Plus Security Corporation, where he is currently Chairman and acting CFO. Prior to assuming his duties
with the Company, Mr. O’Leary was a board member and a consultant to NeoGenomics, Inc. (NASDAQ -”NEO”) and was
acting Chief Operating Officer from October 2004 to April 2005. Prior to becoming a director of NeoGenomics, Inc., Mr. O’Leary
was the President and CFO of Jet Partners, LLC from 2002 to 2004. From 1996 to 2000, Mr. O’Leary was CEO and President of
Communication Resources Incorporated.



Sarah Fay. Sarah Fay has
been a Director of NeoMedia since March 1, 2011. Ms. Fay has served in several capacities, including Chief Executive Officer of
Aegis Media North America, from 2008 until May 11, 2009, and prior to that led Aegis’ brands Carat Interactive from 2000
to 2004, and Isobar from 2004 to 2008. Ms. Fay currently serves as Chairman of the Board of Governors of DMG Group, a privately
held event management organization serving the digital marketing industry, as well as a board member for five privately held businesses,
and as an advisory board member for three privately held businesses, all providing services in the mobile/digital marketing, advertising
and technology industries.



Page 55







Peter Mannetti. Peter Mannetti
has been a Director since October 1, 2011. Mr. Mannetti is a Managing Partner at iSherpa Capital, LLC, joining the firm in 2001.
Mr. Mannetti previously founded and built Qwest Wireless from the ground up into a $1 billion company with over one million subscribers.
As the Chief Executive Officer of the firm, he won national and international awards for his leadership in developing innovative
wireless products. Prior to joining Qwest, Mr. Mannetti was a Vice President at BellSouth Mobile Data and held various management
positions during his 18-year tenure at General Electric. Mr. Mannetti sits on a number of boards and advisory boards and is also
very active in the education and non-profit sectors.



Barry S Baer. Colonel Baer
joined the Company as Chief Financial Officer and Secretary on February 13, 2012. He has had an extensive career in financial
management and has served as the CFO for a number of public and privately held companies including and Ecotality, Inc. (ECTY)
(from 2006 – 2010). He is currently serving as Assistant Treasurer of Ecotality, Inc. In addition, Colonel Baer has served
as CFO at a number of manufacturing corporations, including Max Katz Bag Company (2006 until present).



Legal Proceedings



Unless otherwise indicated, to the knowledge
of the Company after reasonable inquiry, no current Director or executive officer of the Company during the past ten years, has
(i) been convicted in a criminal proceeding (excluding traffic violations or other minor offenses), (ii) been a party to any judicial
or administrative proceeding (except for any matters that were dismissed without sanction or settlement) that resulted in a judgment,
decree or final order enjoining the person from future violations of, or prohibiting activities subject to, U.S. federal or state
securities laws, or a finding of any violation of U.S. federal or state securities laws, (iii) filed a petition under federal
bankruptcy laws or any state insolvency laws or has had a receiver appointed for the person’s property or (iv) been subject
to any judgment, decree or final order enjoining, suspending or otherwise limiting for more than 60 days, the person from engaging
in any type of business practice, acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity
pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission,
or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or
as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company,
or engaging in or continuing any conduct or practice in connection with such activity or engaging in any activity in connection
with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws
or Federal commodities laws, (v) been found by a court of competent jurisdiction in a civil action or by the Commission to have
violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been
subsequently reversed, suspended, or vacated, (vi) been found by a court of competent jurisdiction in a civil action or by the
Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding
by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated, (vii) been the subject of,
or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed,
suspended or vacated, relating to an alleged violation of: (a) any Federal or State securities or commodities law or regulation,
(b) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary
or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist
order, or removal or prohibition order, or (c) any law or regulation prohibiting mail or wire fraud or fraud in connection with
any business entity, or (viii) been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended
or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any
registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange,
association, entity or organization that has disciplinary authority over its members or persons associated with a member.



Promoters and Control Persons



None.



CORPORATE GOVERNANCE



Committees of our Board



Our Board has an Audit Committee and a
Compensation Committee (collectively, the “Standing Committees”). There is not a standing Nominating Committee, and
there have been no material changes to the procedures by which security holders may recommend nominees to the Company’s
Board during the period covered by this Annual Report. From 2012 to the present, each of the Standing Committees had four persons,
such persons being independent Directors Ms. Sarah Fay (since March 2011) and Mr. Peter Mannetti (since October 2011), and Directors
Ms. Laura Marriott and Mr. George G. O’Leary. Former independent Director James J. Keil served on each of the Standing Committees
until his retirement on June 30, 2011.



Audit Committee –
The Audit Committee provides assistance to our Board in fulfilling its oversight responsibilities relating to our consolidated
financial statements and financial reporting process and internal controls in consultation with our independent registered public
accountants and external consultants. The Audit Committee is also responsible for ensuring that the independent registered public
accountants submit a formal written statement to us regarding relationships and services which may affect the auditors’
objectivity and independence. Mr. O’Leary is designated as a financial expert and Audit Committee Chairperson.



Page 56







Compensation Committee –The Compensation Committee is responsible for recommending compensation and benefits for our executive officers to our Board
and for administering our Incentive Plan for our management. The Compensation Committee also has responsibility for administering
our stock option plans.



Executive Committee - The
Board may, subject to its oversight and ratification, delegate such authority to the Executive Committee to permit the Executive
Committee to conduct meetings and exercise its authority in the management of the routine business affairs of the Company, during
the periods between meetings of the Board. The Executive Committee consists of the Chairperson and two other Directors. The Executive
committee was not active during 2012 and to date.



Governance Committee –The Board may elect members to a Governance Committee. However, during 2012, the Governance Committee was not active.



Section
16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Exchange Act requires
our officers and Directors, and persons who own more than ten percent of a registered class of our equity securities, to file
reports of ownership and changes in ownership with the SEC. Officers, Directors and greater than ten percent shareholders are
required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.



Based solely on a review of the copies
of such forms furnished to us, we believe that during the year ended December 31, 2012, all such reports were filed in a timely
manner.



Code
of Ethics



We have adopted a Code of Ethics, as required
by the rules of the SEC, which is attached hereto by reference as Exhibit 14.1. This code of ethics applies to all of our Directors,
officers and employees. The code of ethics, and any amendments to, or waivers from, the code of ethics, is available in print,
at no charge, to any shareholder who requests such information.



ITEM 11. Executive Compensation



Summary Compensation Table



The following table sets forth, for the
last two completed fiscal years ended December 31, 2012 and 2011 respectively, the cash compensation paid by the Company, as well
as certain other compensation paid with respect to those years:





|                               |  |      |      |  |        |   |         |       |  |   | Option |     |  | Other        |       |  |       |  
|------------------------------ |  | ---- | ---- |  | ------ | - | ------- | ----- |  | - | ------ | --- |  | ------------ | ----- |  | ----- | -
|Name and                       |  |      |      |  | Salary |   |         | Bonus |  |   | Awards |     |  | Compensation |       |  | Total |  
|Principal Position             |  | Year |      |  | ($)    |   |         | ($)   |  |   | ($)    |     |  | ($)          |       |  | ($)   |  
|                               |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|Laura A. Marriott              |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|Chief Executive Officer        |  |      | 2012 |  |        | $ | -       |       |  | $ | 60,000 | (1) |  | $            | 86    |  |       | $
|                               |  |      | 2011 |  |        | $ | -       |       |  | $ | -      |     |  | $            | 2,412 |  |       | $
|                               |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|Jeff Huitt                     |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|Former Chief Financial Officer |  |      | 2012 |  |        | $ | -       |       |  | $ | -      |     |  | $            | 344   |  |       | $
|                               |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|Barry S Baer                   |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|CFO, Secretary, Treasurer      |  |      | 2012 |  |        | $ | -       |       |  | $ | -      |     |  | $            | 344   |  |       | $
|                               |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|Michael W. Zima                |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|Former Chief Financial Officer |  |      | 2011 |  |        | $ | 83,689  |       |  | $ | -      |     |  | $            | 536   |  |       | $
|                               |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|George G. O'Leary              |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|Chief Operating Officer        |  |      | 2012 |  |        | $ | -       |       |  | $ | 15,000 | (2) |  | $            | 86    |  |       | $
|                               |  |      | 2011 |  |        | $ | -       |       |  | $ | -      |     |  | $            | 1,542 |  |       | $
|                               |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|Christian Steinborn            |  |      |      |  |        |   |         |       |  |   |        |     |  |              |       |  |       |  
|Former Chief Executive         |  |      | 2012 |  |        | $ | 86,680  |       |  | $ | -      |     |  | $            | -     |  |       | $
|Officer of NeoMedia Europe     |  |      | 2011 |  |        | $ | 245,075 |       |  | $ | -      |     |  | $            | 412   |  |       | $



1– 2011 bonus paid in
2012.

2 – 2011 bonus paid in
2012.





Page 57











Narrative Disclosure to Summary Compensation
Table



All amounts presented for the value of
Option Awards represent the aggregate grant date fair value computed in accordance with FASB ASC 718.



Laura A. Marriott –
Ms. Marriott became our Chief Executive Officer and Chairperson of our Board on October 8, 2010. Prior to that she was a member
of our Board. During 2012 Ms. Marriott provided services to us under a per-diem consulting agreement for her services to us as
our Chief Executive Officer. The information presented in the Summary Compensation Table includes her aggregate compensation for
all the services she provided. Ms. Marriott received Directors fees of $40,500 and consulting fees of $410,400, both of which
are reported under the heading of All Other Compensation. Ms. Marriott was granted a bonus for her performance in 2011 which was
paid in 2012.



Michael W. Zima –
Mr. Zima was our Chief Financial Officer from September 17, 2008 until July 19, 2011. His employment was not governed by an employment
agreement. Mr. Zima’s annual salary in 2011 was $140,000. Mr. Zima received a grant of options to purchase our common stock.
All Other Compensation for Mr. Zima includes amounts related to his participation in our employee benefit plans.



George G. O’Leary –Mr. O’Leary became our Chief Operating Officer and continued as a member of our Board on October 8, 2010. Prior
to that, Mr. O’Leary served as a member of our Board. During 2012, Mr. O’Leary also provided services to us under
a per-diem consulting agreement for his services to us as our Chief Operating Officer and for other general consulting services.
The information presented in the Summary Compensation Table includes his compensation for all the services he provided in the
aggregate. Mr. O’Leary received Directors fees of $43,000 and consulting fees of $20,650, both of which are reported under
the heading of All Other Compensation. Mr. O’Leary was granted a bonus for his performance in 2011 which was paid in 2012.



Dr. Christian Steinborn
– Dr. Steinborn served as the Chief Executive Officer of our subsidiary, NeoMedia Europe GmbH until January 31, 2012. His
employment was governed by an employment agreement which set his annual salary at €160,000 Euros. Dr. Steinborn has received
several stock option grants during his employment and his tenure as an officer. All Other Compensation for Dr. Steinborn includes
the annual value of his company provided automobile.



Barry S Baer –Colonel Baer served as Chief Financial Officer from February 2012 until August 2012 and subsequently as Secretary/Treasurer.
All other compensation reflects the payments received under the terms of his agreement with the company. In addition Colonel Baer
received a stock option grant in November 2012.



Jeff Huitt–Mr.
Huitt served as Chief Financial Officer since August 2012. All other compensation reflects the payments received under the terms
of his agreement with the company. In addition Mr. Huitt received a stock option grant in August 2012.



Outstanding Equity Awards at Year-End



The following table contains information
concerning unexercised options and stock that has not vested as of December 31, 2012 with respect to the executive officers named
in the Summary Compensation Table:



Page 58









|Option Awards                    
|---------------------------------
|                                 
|                                 
|                                 
|                                 
|                                 
|Name                             
|                                 
|Laura A. Marriott                
|Chief Executive Officer          
|                                 
|                                 
|                                 
|                                 
|Barry S Baer                     
|CFO/Secretary, Treasurer         
|                                 
|Jeff Huitt                       
|Former Chief Financial Officer   
|                                 
|George G. O'Leary                
|Chief Operating Officer          
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|                                 
|Christian Steinborn              
|Former Chief Executive Officer of
|NeoMedia Europe                  
|                                 



(1)Ms. Marriott’s option grant on January 1, 2009 vests over a 4 year period, with 25% vesting on each subsequent anniversary
date of the grant. Option grants were repriced on April 7, 2011.



(2) Ms. Marriott’s
option grant on April 29, 2009 vested in 12 equal monthly installments beginning on May 29, 2009 and was completely vested on
April 29, 2010. Option grants were repriced on April 7, 2011.



Page 59







(3)Ms. Marriott’s option grant on April 7, 2011 vests in 18 equal monthly installments beginning on May 7, 2011.



(4)Ms. Marriott’s option grant on October 3, 2011 vests in equal installments beginning on January 1, 2012 through October
1, 2014.



(5)Ms. Marriott’s option grant on July 23, 2012 vested on grant date.



(6)Colonel Baer’s option grant on November 10, 2012, vests over a 4 year period, with 25% vesting on each subsequent
anniversary date of the grant.



(7)Mr. Huitt’s option grant on August 27, 2012, vests over a 4 year period, with 25% vesting on each subsequent anniversary
date of the grant.



(8)Mr. O’Leary’s option grants on July 20, 2007 vested in their entirety on July 20, 2007. Mr. O’Leary’s
options were repriced on April 7, 2011.



(9)Mr. O’Leary’s option grants on July 20, 2007 vested in their entirety on July 20, 2007. Mr. O’Leary’s
options were repriced on April 7, 2011.



(10)Mr. O’Leary’s option grant on October 3, 2007 vested in its entirety on October 3, 2007. Mr. O’Leary’s
options were repriced on April 7, 2011.



(11)Mr. O’Leary’s option grant on January 21, 2008 vested in its entirety on January 21, 2008. Mr. O’Leary’s
options were repriced on April 7, 2011.



(12)Mr. O’Leary’s option grant on April 17, 2008 vested in its entirety on April 17, 2008. Mr. O’Leary’s
options were repriced on April 7, 2011.



(13)Mr. O’Leary’s option grant on April 29, 2009 vested in 12 equal monthly installments beginning on May 29, 2009
and was completely vested on April 29, 2010. Mr. O’Leary’s options were repriced on April 7, 2011.



(14)Mr. O’Leary’ option grant on April 7, 2011vests in 18 equal monthly installments beginning on May 7, 2011.



(15)Mr. O’Leary’ option grant on October 3, 2012 vests in equal installments beginning on January 1, 2012 through
October 1 2014.



(16)Mr. O’Leary’s option grant on July 23, 2012 vested on grant date.



(17)Dr. Steinborn’s option grant on December 23, 2006 vested over a 3 year period, with 25% vesting on the grant date
and 25% on each subsequent anniversary date of the grant. Dr. Steinborn’s options were repriced on April 7, 2011. Dr. Steinborn’s
options were forfeited upon his termination on January 10, 2012.



(18)Dr. Steinborn’s option grant on December 20, 2007 vests over a 4 year period, with 25% vesting on each subsequent
anniversary date of the grant. Dr. Steinborn’s options were repriced on April 7, 2011. Dr. Steinborn’s options were
forfeited upon his termination on January 10, 2012.



(19)Dr. Steinborn’s incentive option agreement dated February 16, 2007 originally provided for up to 20,000 options to
purchase our shares. Each year 25% of the original incentive option plan could be earned and vested based on the achievement of
goals as determined by the Compensation Committee. It was determined that the first 25% increment of this plan, for options to
purchase 5,000 shares, were earned and vested. It was determined that the second 25% increment of this plan was not earned. It
was determined that the third 25% increment of this plan, for options to purchase 5,000 shares, were earned and vested. The vesting
of the fourth 25% increment of this plan, for options to purchase 5,000 shares, was yet to be determined as of December 31, 2010.
The exercise price of each portion of the options earned under this plan is established at the date it is earned. Dr. Steinborn’s
options were repriced on April 7, 2011. Dr. Steinborn’s options were forfeited upon his termination on January 10, 2012.



(20)Dr. Steinborn’s option grant on April 29, 2009 vested in 12 equal monthly installments beginning on May 29, 2009 and
was completely vested on April 29, 2010. Dr. Steinborn’s options were repriced on April 7, 2011. Dr. Steinborn’s options
were forfeited upon his termination on January 10, 2012.



Page 60







Additional
Narrative Disclosure



Retirement Benefits



We offer a defined contribution plan to
our United States employees in accordance with Section 401(K) of the Internal Revenue Code. Under the provisions of this plan,
eligible employees may defer a portion of their pre-tax compensation into the plan. However, we do not make any matching contributions
to the plan.



Change
in Control Agreements



In connection with funding negotiations
between us and YA Global, and effective May 10, 2012, all Directors and certain employees of the Company, including Ms. Marriott,
Mr. O’Leary, and Colonel Baer were granted accelerated vesting of all time-vesting options and all earned incentive options
to purchase shares of our common stock and payment provisions, upon a change in control of the Company



Director Compensation



The following table sets forth certain
information related to compensation paid to our Directors for the year ended December 31, 2012:



|                  |  | Fees      |        |  |        |   |   |        |  |   |              |  |  |       |        
|----------------- |  | --------- | ------ |  | ------ | - | - | ------ |  | - | ------------ |  |  | ----- | -------
|                  |  | Earned or |        |  | (a)    |   |   | (b)    |  |   | All          |  |  |       |        
|                  |  | Paid in   |        |  | Stock  |   |   | Option |  |   | Other        |  |  |       |        
|                  |  | Cash      |        |  | Awards |   |   | Awards |  |   | Compensation |  |  | Total |        
|Name              |  | ($)       |        |  | ($)    |   |   | ($)    |  |   | ($)          |  |  | ($)   |        
|                  |  |           |        |  |        |   |   |        |  |   |              |  |  |       |        
|Laura A. Marriott |  | $         | 40,500 |  |        | $ | - |        |  | $ | 86           |  |  | $     | 470,400
|                  |  |           |        |  |        |   |   |        |  |   |              |  |  |       |        
|George G. O'Leary |  | $         | 43,000 |  |        | $ | - |        |  | $ | 86           |  |  | $     | 35,650 
|                  |  |           |        |  |        |   |   |        |  |   |              |  |  |       |        
|Sarah Fay         |  | $         | 43,250 |  |        | $ | - |        |  | $ | 86           |  |  | $     | -      
|                  |  |           |        |  |        |   |   |        |  |   |              |  |  |       |        
|Peter Mannetti    |  | $         | 43,750 |  |        | $ | - |        |  | $ | 86           |  |  | $     | -      



Narrative to Director Compensation
Table



Our Directors are compensated through
a combination of cash and stock options. Cash compensation amounts payable to the Directors are payable on an annual basis.



Compensation Plan from January 1 2012
to June 30, 2012

| | · | $7,500
                                                                                                                 /quarter plus
                                                                                                                 Board resolution
                                                                                                                 fees for both
                                                                                                                 independent members
                                                                                                                 of the Board
                                                                                                                 as well as Mr.
                                                                                                                 O’Leary.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Compensation Plan from July 1 to December
31, 2012

| | · | $10,000/
                                                                                                                 quarter for each
                                                                                                                 member of the
                                                                                                                 Board.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of January 1, 2013, the Board compensation
changes to $12,500/quarter for both independent Board members as well as Mr. O’Leary and is expected to increase again in
2014.



Grants of Plan-based Awards



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



ITEM 12. Security Ownership of Certain
Beneficial Owners and Management



The following table sets forth certain
information regarding beneficial ownership of our common stock as of March, 2013: (i) by each of our Directors, (ii) by each of
the named executive officers, (iii) by all of our executive officers and Directors as a group, and (iv) by each person or entity
known by us to beneficially own more than 5% of any class of our outstanding shares. As of March 1, 2013, there were 2,970,280,769
shares of our common stock outstanding:



Page 61









|                                                     |  |              |               |  |                 |  |      | Series C Convertible
    Preferred Stock |  |  | Series D Convertible
    Preferred Stock | 
|---------------------------------------------------- |  | ------------ | ------------- |  | --------------- |  | ---- | ---------------------------------------- |  |  | ---------------------------------------- | 
|                                                     |  | Common Stock |               |  |                 |  |      |                                          |  |  |                                          | 
|                                                     |  | Beneficial   |               |  | Percent 
    of |  |      | Beneficial                               |  |  | Percent
    of                           | 
|Name and
    Address of Beneficial Owner             |  | Ownership(1) |               |  | Class
    (1)   |  |      | Ownership(1)                             |  |  | Class
    (1)                            | 
|                                                     |  |              |               |  |                 |  |      |                                          |  |  |                                          | 
|Directors and Named
    Executive Officers           |  |              |               |  |                 |  |      |                                          |  |  |                                          | 
|Laura A. Marriott (2)
    (3)                        |  |              | 318,442       |  |                 |  | *    |                                          |  |  | -                                        | 
|Barry S Baer (2)                                     |  |              | -             |  |                 |  | *    |                                          |  |  | -                                        | 
|George G. O'Leary (2) (5)                            |  |              | 320,660       |  |                 |  | *    |                                          |  |  | -                                        | 
|Sarah Fay(2) (6)                                     |  |              | 108,333       |  |                 |  | *    |                                          |  |  | -                                        | 
|Peter Mannetti (2) (7)                               |  |              | 69,444        |  |                 |  | *    |                                          |  |  | -                                        | 
|Officers and Directors as a Group
    (6 Persons)(8) |  |              | 816,879       |  |                 |  | *    |                                          |  |  | -                                        | 
|                                                     |  |              |               |  |                 |  |      |                                          |  |  |                                          | 
|Other Beneficial
    Owners                          |  |              |               |  |                 |  |      |                                          |  |  |                                          | 
|YA Global Investments, LP (9)                        |  |              | 301,976,571   |  |                 |  | 10.2 | %                                        |  |  | 85                                       | 
|Total                                                |  |              | 301,976,571   |  |                 |  | 10.2 | %                                        |  |  | 85                                       | 
|                                                     |  |              |               |  |                 |  |      |                                          |  |  |                                          | 
|Shares outstanding                                   |  |              | 2,970,280,769 |  |                 |  |      |                                          |  |  | 85                                       | 



* Indicates
less than 1%.



(1)Applicable percentage of ownership is based on 2,970,280,769 shares of common stock outstanding as of March 1, 2013. Percentage
ownership is determined based on shares owned together with securities exercisable or convertible into shares of common stock
within 60 days of March 1, 2013 for each shareholder. Beneficial ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to securities.  Shares of common stock subject to securities
exercisable or convertible into shares of common stock that are currently exercisable, or exercisable within 60 days of March
1, 2013, are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage
of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other
person.  Our common stock, Series C preferred stock and Series D preferred stock are our only issued and outstanding
classes of securities eligible to vote. However, due to contractual restrictions, the Series C preferred stock and Series D preferred
stock are currently not eligible to vote.



(2)Address of the referenced individual is c/o NeoMedia Technologies, Inc., 100 West Arapahoe Avenue, Suite 9, Boulder, CO.,
80302.



(3)Laura Marriott is Chief Executive Officer and Chairperson of our Board. Ownership includes shares of common stock issuable
upon exercise of stock options that are exercisable within 60 days of March, 2013.



(4)Barry S Baer is our CFO, Corporate Secretary and Treasurer.



(5)George G. O'Leary is our Chief Operating Officer and a member of our Board. Ownership includes 10,220 shares owned by SKS
Consulting of South Florida Corp, a company that Mr. O'Leary currently serves as President and shares of common stock issuable
upon exercise of stock options that are exercisable within 60 days of March 1, 2013.



(6)Sarah Fay is a member of our Board. Ownership includes shares of common stock issuable upon exercise of stock options that
are exercisable within 60 days of March 1, 2013.



7)Peter Mannetti is a member of our Board. Ownership includes shares of common stock issuable upon exercise of stock options
that are exercisable within 60 days of April March 1, 2013.



(8)Includes an aggregate of 737,215 options to purchase shares of common stock which will have vested within 60 days of March
1, 2013



Page 62







(9)The
address of YA Global Investments, L.P. (“YA Global”) is 101 Hudson Street, Suite 3700, Jersey City, NJ 07302. The
information presented herein is based on information provided by YA Global and based on the records of the Company.
Ownership includes 3,395 shares of Series D preferred stock owned by YA Global; 61 shares of Series C preferred stock
owned by a related entity, Yorkville Advisors GP, LLC; 1,005,025 shares of Common Stock and; 1,005,025 shares of Common Stock
owned by Mr. David Gonzalez, an officer of YA Global; 1,005,025 shares of Common Stock and 24 shares of Series C preferred
stock owned by Mr. Gerald Eicke, an officer of YA Global. Our Series C preferred stock and Series D preferred stock are
entitled to vote on an as-converted basis with holders of our Common Stock with respect to the amount of Common Shares
receivable upon conversion of such preferred stock. However the holders of our Series C preferred stock and Series D
preferred stock are subject to contractual limitations in regards to their beneficial ownership, including their ability to
exercise their voting rights, to the extent that they cannot exceed 9.99% combined beneficial ownership. If such holders were
to declare us in default or if they issue a notice waiving the 9.99% limitation, upon 61 days’ notice, and comply with
the SEC’s beneficial ownership reporting requirements for affiliates, they would be able to vote their Series C
preferred stock and Series D preferred stock on an as-converted basis. Based upon the 9.99% limitation, YA Global may
exercise up to  297,028,077 of the 499,990,063 warrants they hold in conjunction with the convertible debentures they
hold.



ITEM 13. Certain Relationships and
Related Transactions, and Director Independence



Related Party Transactions



Beginning in December 2006, we entered
into a consulting agreement with SKS Consulting of South Florida Corp. (“SKS”), whereby we paid SKS for services rendered
by one of our Directors, Mr. George O’Leary. Payments under this agreement and subsequent amendments thereto in the form
of cash, shares of our common stock and stock options are described in Item 11 above. Beginning in April, 2010, we entered into
a consulting agreement with one of our Directors, Ms. Laura Marriott, whereby we paid her for services. Payments under this agreement
and subsequent amendments thereto, are described in Item 11 above.



Director Independence



As of the date of filing of this Report,
our non-executive Directors Mr. Mannetti and Ms. Fay, are independent Directors. Ms. Marriott, as our Chief Executive Officer
and Chairperson of the Board, and Mr. O’Leary as Chief Operating Officer and Director, are not independent.



ITEM 14. Principal Accountant Fees
and Services



Audit Fees, Audit-Related Fees, Tax
Fees and Other Fees



The aggregate fees billed by our independent
auditors, Kingery & Crouse, P.A., for the audit of our annual consolidated financial statements for the years ended December
31, 2012 and 2011 and for the review of our quarterly financial statements during 2012 and 2011 were $119,390 and $98,000 respectively.
Our auditors did not provide any tax compliance or planning services or any services other than those described above.



Audit Committee Pre-approval



The Audit Committee of our Board approves
all non-audit services provided by our primary accountants.



Page 63







PART IV



ITEM
15. Exhibits and Financial Statement Schedules



(a) Financial Statements and Schedules



The financial statements are set forth
under Item 8 of this Report. Financial statement schedules have been omitted because they are either not required, not applicable,
or the information is otherwise included.



| | (b) | Exhibits
| | --- | --------



|ExhibitNumber |  | Description                                                                                                                                             |  | FiledHerewith |  | Form |  | Exhibit |  | FilingDate
|------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- |  | ---- |  | ------- |  | ----------
|              |  |                                                                                                                                                         |  |               |  |      |  |         |  |           
|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  |  | 3.2     |  | 1/11/2010 



Page 64







|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
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|4.1   |  | 2011 Stock Incentive Plan effective
    April 7, 2011                                                                                                                                                                                                                                                                                                                                         |  |  |  | S-8 |  | 4.1  |  | 4/22/2011
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.3  |  | Definitive Sale and Purchase Agreement
    between the Company and Gavitec                                                                                                                                                                                                                                                                                                                    |  |  |  | 8-K |  | 16.1 |  | 2/21/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.4  |  | Definitive Sale and Purchase Agreement
    between the Company and Sponge                                                                                                                                                                                                                                                                                                                     |  |  |  | 8-K |  | 16.1 |  | 2/22/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.5  |  | Investment Agreement, dated February
    17, 2006 between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.1 |  | 2/21/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.6  |  | Investor Registration Rights Agreement,
    dated February 17, 2006 between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                      |  |  |  | 8-K |  | 10.2 |  | 2/21/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.7  |  | Irrevocable Transfer Agent Instruction,
    dated February 17, 2006, by and among the Company, Cornell Capital Partners, LP and American Stock Transfer & Trust
    Co.                                                                                                                                                                                                                       |  |  |  | 8-K |  | 10.3 |  | 2/21/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.8  |  | “A” Warrant, dated February
    17, 2006                                                                                                                                                                                                                                                                                                                                                      |  |  |  | 8-K |  | 10.4 |  | 2/21/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.9  |  | “B” Warrant, dated February
    17, 2006                                                                                                                                                                                                                                                                                                                                                      |  |  |  | 8-K |  | 10.5 |  | 2/21/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.10 |  | “C” Warrant, dated February
    17, 2006                                                                                                                                                                                                                                                                                                                                                      |  |  |  | 8-K |  | 10.6 |  | 2/21/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.11 |  | Assignment Agreement, dated February
    17, 2006 by the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                                             |  |  |  | 8-K |  | 10.7 |  | 2/21/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.12 |  | Assignment of Common Stock, dated February
    17, 2006 between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                                  |  |  |  | 8-K |  | 10.8 |  | 2/21/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.13 |  | Securities Purchase Agreement, dated
    August 24, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                                |  |  |  | 8-K |  | 10.1 |  | 8/30/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.14 |  | Investor Registration Rights Agreement,
    dated August 24, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                       |  |  |  | 8-K |  | 10.2 |  | 8/30/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.15 |  | Pledge and Security Agreement, dated
    August 24, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                                |  |  |  | 8-K |  | 10.3 |  | 8/30/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.16 |  | Secured Convertible Debenture CCP-1,
    dated August 24, 2006, issued by the Company to Cornell Capital Partners, LP (amended by the Amendment filed at Exhibit 10.6
    to the Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
    10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.4 |  | 8/30/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.17 |  | Irrevocable Transfer Agent Instructions,
    dated August 24, 2006, by and among the Company, Cornell Capital Partners, LP and American Stock Transfer & Trust Co.                                                                                                                                                                                                                            |  |  |  | 8-K |  | 10.5 |  | 8/30/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                               |  |  |  |     |  |      |  |          
|10.18 |  | “A” Warrant, dated August
    24, 2006                                                                                                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.6 |  | 8/30/2006



Page 65







|10.19 |  | “B” Warrant,
    dated August 24, 2006                                                                                                                                                                                                                                                                                                                                                          |  |  |  | 8-K |  | 10.7  |  | 8/30/2006 
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | --- |  | ----- |  | ----------
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.20 |  | “C” Warrant, dated August
    24, 2006                                                                                                                                                                                                                                                                                                                                                          |  |  |  | 8-K |  | 10.8  |  | 8/30/2006 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.21 |  | “D” Warrant, dated August
    24, 2006                                                                                                                                                                                                                                                                                                                                                          |  |  |  | 8-K |  | 10.9  |  | 8/30/2006 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.22 |  | Amendment to Warrant No. CCP-002, dated
    August 24, 2006,  between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                              |  |  |  | 8-K |  | 10.10 |  | 8/30/2006 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.23 |  | Amendment to “A” Warrant
    No. CCP-001,  dated August 24, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                          |  |  |  | 8-K |  | 10.11 |  | 8/30/2006 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.24 |  | Amendment to “B” Warrant
    No. CCP-002, dated August 24, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                           |  |  |  | 8-K |  | 10.12 |  | 8/30/2006 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.25 |  | Amendment to “C” Warrant
    No. CCP-003,  dated August 24, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                          |  |  |  | 8-K |  | 10.13 |  | 8/30/2006 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.26 |  | Definitive Share Purchase and Settlement
    Agreement between the Company and Sponge, dated November 14, 2006                                                                                                                                                                                                                                                                                  |  |  |  | 8-K |  | 16.1  |  | 11/20/2006
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.27 |  | Securities Purchase Agreement, dated
    December 29, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                                |  |  |  | 8-K |  | 10.1  |  | 1/8/2007  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.28 |  | Investor Registration Rights Agreement,
    dated December 29, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                       |  |  |  | 8-K |  | 10.2  |  | 1/8/2007  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.29 |  | Secured Convertible Debenture CCP-2,
    dated December 29, 2006, issued by the Company to Cornell Capital Partners, LP (amended by the Amendment filed at Exhibit
    10.7 to the Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
    10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.3  |  | 1/8/2007  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.30 |  | Irrevocable Transfer Agent Instructions,
    dated December 29, 2006, by and among the Company, Cornell Capital Partners, LP and American Stock Transfer & Trust Co.                                                                                                                                                                                                                            |  |  |  | 8-K |  | 10.4  |  | 1/8/2007  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.31 |  | “A” Warrant, dated December
    29, 2006                                                                                                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.5  |  | 1/8/2007  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.32 |  | Amendment to Warrant No. CCP-002, dated
    December 29, 2006,  between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                            |  |  |  | 8-K |  | 10.6  |  | 1/8/2007  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.33 |  | Amendment to “A” Warrant
    No. CCP-001,  dated December 29, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.7  |  | 1/8/2007  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.34 |  | Amendment to “B” Warrant
    No. CCP-002, dated December 29, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                         |  |  |  | 8-K |  | 10.8  |  | 1/8/2007  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.35 |  | Amendment to “C” Warrant
    No. CCP-003,  dated December 29, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.9  |  | 1/8/2007  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |           
|10.36 |  | Amendment to “A” Warrant
    No. CCP-001,  dated December 29, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.10 |  | 1/8/2007  



Page 66







|10.37 |  | Amendment to “B”
    Warrant No. CCP-001,  dated December 29, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.11 |  | 1/8/2007 
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | --- |  | ----- |  | ---------
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.38 |  | Amendment to “C” Warrant
    No. CCP-001,  dated December 29, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.12 |  | 1/8/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.39 |  | Securities Purchase Agreement, dated
    December 29, 2006, between the Company and Cornell Capital Partners, LP                                                                                                                                                                                                                                                                                |  |  |  | 8-K |  | 10.1  |  | 1/8/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.40 |  | Amendment Agreement I to the Sale and
    Purchase Agreement between the Company and certain former shareholders of Gavitec AG, dated February 17, 2006                                                                                                                                                                                                                                         |  |  |  | 8-K |  | 10.1  |  | 1/29/2007
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.41 |  | Consulting Agreement between the Company
    and SKS Consulting of South Florida Corp.                                                                                                                                                                                                                                                                                                          |  |  |  | 8-K |  | 10.1  |  | 2/6/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.42 |  | Securities Purchase Agreement between
    the Company and Cornell Capital Partners LP, dated March 27, 2007                                                                                                                                                                                                                                                                                     |  |  |  | 8-K |  | 10.1  |  | 4/3/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.43 |  | Investor Registration Rights Agreement
    between the Company and Cornell Capital Partners LP, dated March 27, 2007                                                                                                                                                                                                                                                                            |  |  |  | 8-K |  | 10.2  |  | 4/3/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.44 |  | Secured Convertible Debenture NEOM
    4-1, issued by the Company to Cornell Capital Partners, LP, dated March 27, 2007 (amended by the Amendment filed at Exhibit
    10.8 to the Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
    10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.3  |  | 4/3/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.45 |  | Irrevocable Transfer Agent Instructions,
    by and among the Company, Cornell Capital Partners, LP and Worldwide Stock Transfer, dated March 27, 2007                                                                                                                                                                                                                                          |  |  |  | 8-K |  | 10.4  |  | 4/3/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.46 |  | Warrant, issued by the Company to Cornell
    Capital Partners, LP, dated March 27, 2007                                                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.5  |  | 4/3/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.47 |  | Master Amendment Agreement, by and
    between the Company and Cornell Capital Partners, LP, dated March 27, 2007                                                                                                                                                                                                                                                                               |  |  |  | 8-K |  | 10.6  |  | 4/3/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.48 |  | Security Agreement, by and between
    the Company and Cornell Capital Partners, LP, dated on or about August 24, 2006                                                                                                                                                                                                                                                                          |  |  |  | 8-K |  | 10.7  |  | 4/3/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.49 |  | Security Agreement, by and between
    the Company and Cornell Capital Partners, LP, dated March 27,2007                                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.8  |  | 4/3/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.50 |  | Security Agreement (Patent), by and
    between the Company and Cornell Capital Partners, LP, dated March 27, 2007                                                                                                                                                                                                                                                                              |  |  |  | 8-K |  | 10.9  |  | 4/3/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.51 |  | Pledge Shares Escrow Agreement, by
    and between the Company and Cornell Capital Partners, dated March 27, 2007                                                                                                                                                                                                                                                                               |  |  |  | 8-K |  | 10.1  |  | 4/3/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.52 |  | Securities Purchase Agreement dated
    August 24, 2007, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                                                                                                             |  |  |  | 8-K |  | 10.1  |  | 8/30/2007
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |     |  |       |  |          
|10.53 |  | Registration Rights Agreement, by and
    between the Company and YA Global Investments, L.P., dated August 24, 2007                                                                                                                                                                                                                                                                            |  |  |  | 8-K |  | 10.2  |  | 8/30/2007



Page 67







|10.54 |  | Secured Convertible Debenture
    NEOM 1-1, issued by the Company to YA Global Investments, LP, dated August 24, 2007 (amended by the Amendment filed at Exhibit
    10.9 to the Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
    10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)  |  |  |  | 8-K |  | 10.3 |  | 8/30/2007 
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | --- |  | ---- |  | ----------
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.55 |  | Irrevocable Transfer Agent Instructions,
    by and among the Company, YA Global Investments, L.P. and Worldwide Stock Transfer, LLC, dated August 24, 2007                                                                                                                                                                                                                                    |  |  |  | 8-K |  | 10.4 |  | 8/30/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.56 |  | Warrant issued by the Company to YA
    Global Investments, L.P., dated August 24, 2007                                                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.5 |  | 8/30/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.57 |  | Repricing Agreement, by and between
    the Company and YA Global Investments, L.P., dated August 24, 2007                                                                                                                                                                                                                                                                                     |  |  |  | 8-K |  | 10.6 |  | 8/30/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.58 |  | Security Agreement, by and between
    the Company and YA Global Investments, L.P., dated August 24, 2007                                                                                                                                                                                                                                                                                      |  |  |  | 8-K |  | 10.7 |  | 8/30/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.59 |  | Security Agreement (Patent),
    by and between the Company and YA Global Investments, L.P., dated August 24, 2007                                                                                                                                                                                                                                                                             |  |  |  | 8-K |  | 10.8 |  | 8/30/2007 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.60 |  | Secured Convertible Debenture NEOM
    2008-1, dated April 11, 2008, issued by the Company to YA Global Investments, L.P. (amended by the Amendment filed at Exhibit
    10.10 to Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
    10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.1 |  | 4/17/2008 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.61 |  | Secured Convertible Debenture NEOM
    2008-2, dated May 16, 2008, issued by the Company to YA Global Investments, L.P. (amended by the Amendment filed at Exhibit
    10.11 to Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
    10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)   |  |  |  | 8-K |  | 10.1 |  | 5/22/2008 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.62 |  | Warrant, dated May 16, 2008, issued
    by the Company to YA Global Investments, L.P.                                                                                                                                                                                                                                                                                                          |  |  |  | 8-K |  | 10.2 |  | 5/22/2008 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.63 |  | Secured Convertible Debenture NEOM
    2008-3, dated May 30, 2008, issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.12
    to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits 10.1 to
    the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)                 |  |  |  | 8-K |  | 10.1 |  | 06/05/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.64 |  | Warrant, dated May 30, 2008, issued
    by the Company to YA Global Investments, L.P.                                                                                                                                                                                                                                                                                                          |  |  |  | 8-K |  | 10.2 |  | 06/05/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.65 |  | Severance Agreement and Release, dated
    June 3, 2008, by and between the Company and William Hoffman                                                                                                                                                                                                                                                                                        |  |  |  | 8-K |  | 10.5 |  | 06/05/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.66 |  | Employment Agreement, dated June 10,
    2008, by and between the Company and Iain McCready                                                                                                                                                                                                                                                                                                    |  |  |  | 8-K |  | 10.1 |  | 06/16/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                |  |  |  |     |  |      |  |           
|10.67 |  | Secured Convertible Debenture NEOM
    2008-4, dated July 10, 2008, issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.13
    to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits 10.1 to
    the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)                |  |  |  | 8-K |  | 10.1 |  | 07/16/2008



Page 68







|10.68 |  | Securities Purchase Agreement,
    dated July 29, 2008, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                                                                                                     |  |  |  | 8-K |  | 10.1  |  | 08/04/2008
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | --- |  | ----- |  | ----------
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.69 |  | Secured Convertible Debenture NEOM
    9-1, dated July 29, 2008, issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.14
    to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits 10.1 to
    the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)           |  |  |  | 8-K |  | 10.2  |  | 08/04/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.70 |  | Security Agreement, dated July 29,
    2008, by and among the Company, each of the Company’s subsidiaries made a party thereto and YA Global Investments, L.P.                                                                                                                                                                                                                         |  |  |  | 8-K |  | 10.3  |  | 08/04/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.71 |  | Patent Security Agreement, dated July
    29, 2008, by and among the Company, each of the Company’s subsidiaries made a party thereto and YA Global Investments,
    L.P.                                                                                                                                                                                                              |  |  |  | 8-K |  | 10.4  |  | 08/04/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.72 |  | Warrant 9-1A, dated July 29, 2008,
    issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                                                                                                                            |  |  |  | 8-K |  | 10.5  |  | 08/04/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.73 |  | Warrant 9-1B, dated July 29, 2008,
    issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.20 to Company’s 8-K filed
    with the SEC on January 11, 2010)                                                                                                                                                                                  |  |  |  | 8-K |  | 10.6  |  | 08/04/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.74 |  | Warrant 9-1C, dated July 29, 2008,
    issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.21 to Company’s 8-K filed
    with the SEC on January 11, 2010)                                                                                                                                                                                  |  |  |  | 8-K |  | 10.7  |  | 08/04/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.75 |  | Warrant 9-1D, dated July 29, 2008,
    issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.22 to Company’s 8-K filed
    with the SEC on January 11, 2010)                                                                                                                                                                                  |  |  |  | 8-K |  | 10.8  |  | 08/04/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.76 |  | Escrow Agreement, dated July 29, 2008,
    by and among the Company, YA Global Investments, L.P., Yorkville Advisors, LLC and David Gonzalez, Esq.                                                                                                                                                                                                                                     |  |  |  | 8-K |  | 10.9  |  | 08/04/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.77 |  | Irrevocable Transfer Agent Instructions,
    dated July 29, 2008, by and among the Company, the Investor, David Gonzalez, Esq. and Worldwide Stock Transfer, LLC                                                                                                                                                                                                                       |  |  |  | 8-K |  | 10.10 |  | 08/04/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.78 |  | Letter Agreement, dated September 24,
    2008, by and among the Company and YA Global Investments, L.P.                                                                                                                                                                                                                                                                               |  |  |  | 8-K |  | 10.1  |  | 10/01/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.79 |  | Second Secured Convertible Debenture
    NEOM 9-2, dated October 28, 2008, issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit
    10.15 to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits
    10.1 to the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.3  |  | 11/03/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.80 |  | Revised Exhibit A to Escrow Agreement,
    dated October 28, 2008                                                                                                                                                                                                                                                                                                                      |  |  |  | 8-K |  | 10.12 |  | 11/03/2008
|      |  |                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |     |  |       |  |           
|10.81 |  | Letter Agreement, dated March 27, 2009, by and between the Company
    and YA Global Investments, L.P.                                                                                                                                                                                                                                                                                 |  |  |  | 8-K |  | 10.13 |  | 04/13/2009



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|10.82 |  | Amendment Agreement, dated April 6, 2009, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                                                                                                                                       |  |  |  | 8-K  |  | 10.14  |  | 04/13/2009
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | ---- |  | ------ |  | ----------
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |      |  |        |  |           
|10.83 |  | Third Secured Convertible Debenture (first closing), dated April 6, 2009, issued by the Company to YA Global Investments, L.P. (amended by Amendment filed at Exhibit 10.16 to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)                              |  |  |  | 8-K  |  | 10.15  |  | 04/13/2009
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |      |  |        |  |           
|10.84 |  | Waiver, effective as of December 31, 2008, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                                                                                                                                      |  |  |  | 8-K  |  | 10.16  |  | 04/13/2009
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |      |  |        |  |           
|10.85 |  | Fourth Secured Convertible Debenture NEOM 9-4 (second amended third closing), dated May 1, 2009, issued by the Company to YA Global Investments, L.P.  (amended by Amendment filed at Exhibit 10.16 to Company’s 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)      |  |  |  | 8-K  |  | 10.15  |  | 05/07/2009
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |      |  |        |  |           
|10.86 |  | Agreement, dated June 5, 2009 (Additional Agreement), by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                                                                                                                           |  |  |  | 8-K  |  | 10.16  |  | 6/5/2009  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |      |  |        |  |           
|10.87 |  | Fifth Convertible Debenture NEOM 9-5 (Additional Agreement closing), dated June 5, 2009, issued by the Company to YA Global Investments, L.P. (amended by the Amendment filed at Exhibit 10.17 to Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K  |  | 10.17  |  | 6/5/2009  
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |      |  |        |  |           
|10.88 |  | Agreement, dated July 15, 2009 (Second Additional Agreement), by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                                                                                                                   |  |  |  | 8-K  |  | 10.18  |  | 7/21/2009 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |      |  |        |  |           
|10.89 |  | Sixth Convertible Debenture NEOM 9-6 dated July 15, 2009, (Second Additional Debenture), issued by the Company to YA Global Investments, L.P. (amended by the Amendment filed at Exhibit 10.18 to Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K  |  | 10.19  |  | 7/21/2009 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |      |  |        |  |           
|10.90 |  | Asset Purchase and Sale Agreement, dated July 17, 2009, by and between the Company and Silver Bay Software, LLC.                                                                                                                                                                                                                                                                                           |  |  |  | 8-K  |  | 10.2   |  | 7/21/2009 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |      |  |        |  |           
|10.91 |  | Asset Purchase and Sale Agreement, dated July 17, 2009, by and between the Company and Mr. Greg Lindholm.                                                                                                                                                                                                                                                                                                  |  |  |  | 8-K  |  | 10.21  |  | 7/21/2009 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |      |  |        |  |           
|10.92 |  | Non-Exclusive License Agreement between the Company and Mobile Tag, Inc. dated July 28, 2009                                                                                                                                                                                                                                                                                                               |  |  |  | 8-K  |  | 10.1   |  | 7/30/2009 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                            |  |  |  |      |  |        |  |           
|10.93 |  | Agreement dated August 14, 2009 (Third Additional Agreement) by and between the Company and Y.A. Global Investments, L.P.                                                                                                                                                                                                                                                                                  |  |  |  | 10-Q |  | 10.124 |  | 8/14/2009 





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|10.94  |  | Seventh Convertible Debenture NEOM 9-7 dated August 14, 2009 (Fifth Additional Debenture) issued by the Company to Y.A. Global Investments, L.P. (amended by Amendment filed at Exhibit 10.19 to Company’s Form 8-K filed with the SEC on January 11, 2010, and Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 10-Q |  | 10.125 |  | 8/14/2009 
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | ---- |  | ------ |  | ----------
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.95  |  | Non-exclusive License Agreement with exclusive right to sub-license provision between Company and Neustar, Inc. dated October 2, 2009                                                                                                                                                                                                                                                                     |  |  |  | 8-K  |  | 10.1   |  | 10/6/2009 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.96  |  | License and Support Services Agreement to use the Licensed Platform between the Company and Brand Extension Mobile Solutions, S.A., a Madrid (Spain) corporation (“BEMS"), dated October 7, 2009                                                                                                                                                                                                          |  |  |  | 8-K  |  | 10.1   |  | 10/13/2009
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.97  |  | Settlement Agreement and License Agreement between the Company and Scanbuy, Inc., dated October 16, 2009                                                                                                                                                                                                                                                                                                  |  |  |  | 8-K  |  | 10.1   |  | 10/20/2009
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.98  |  | Investment Agreement between Company and YA Global dated January 5, 2010.                                                                                                                                                                                                                                                                                                                                 |  |  |  | 8-K  |  | 10.1   |  | 1/11/2010 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.99  |  | Irrevocable Transfer Agent Instructions letter issued by Company to WorldWide Stock Transfer, LLC dated January 5, 2010                                                                                                                                                                                                                                                                                   |  |  |  | 8-K  |  | 10.2   |  | 1/11/2010 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.100 |  | Monitoring Fee Escrow Agreement between the Company and YA Global, Yorkville Advisors LLC and David Gonzalez, Esq. dated January 5, 2010                                                                                                                                                                                                                                                                  |  |  |  | 8-K  |  | 10.3   |  | 1/11/2010 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.101 |  | Investor Registration Rights Agreement between Company and YA Global dated January 5, 2010                                                                                                                                                                                                                                                                                                                |  |  |  | 8-K  |  | 10.4   |  | 1/11/2010 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.102 |  | Warrant dated January 5, 2010                                                                                                                                                                                                                                                                                                                                                                             |  |  |  | 8-K  |  | 10.5   |  | 1/11/2010 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.103 |  | Amendment to the August 24, 2006 Secured Convertible Debenture No. CCP-1 between the Company and YA Global dated January 5, 2010                                                                                                                                                                                                                                                                          |  |  |  | 8-K  |  | 10.6   |  | 1/11/2010 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.104 |  | Amendment to the December 29, 2006 Secured Convertible Debenture No. CCP-2 between the Company and YA Global dated January 5, 2010                                                                                                                                                                                                                                                                        |  |  |  | 8-K  |  | 10.7   |  | 1/11/2010 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.105 |  | Amendment to the March 27, 2007 Secured Convertible Debenture No. NEOM-4-1 between the Company and YA Global dated January 5, 2010                                                                                                                                                                                                                                                                        |  |  |  | 8-K  |  | 10.8   |  | 1/11/2010 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.106 |  | Amendment to the August 24, 2007 Secured Convertible Debenture No. NEOM-1-1 between the Company and YA Global dated January 5, 2010                                                                                                                                                                                                                                                                       |  |  |  | 8-K  |  | 10.9   |  | 1/11/2010 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.107 |  | Amendment to the April 11, 2008 Secured Convertible Debenture No. NEO-2008-1 between the Company and YA Global dated January 5, 2010                                                                                                                                                                                                                                                                      |  |  |  | 8-K  |  | 10.10  |  | 1/11/2010 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.108 |  | Amendment to the May 16, 2008 Secured Convertible Debenture No. NEO-2008-2 between the Company and YA Global dated January 5, 2010                                                                                                                                                                                                                                                                        |  |  |  | 8-K  |  | 10.11  |  | 1/11/2010 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                           |  |  |  |      |  |        |  |           
|10.109 |  | Amendment to the May 29, 2008 Secured Convertible Debenture No. NEO-2008-3 between the Company and YA Global dated January 5, 2010                                                                                                                                                                                                                                                                        |  |  |  | 8-K  |  | 10.12  |  | 1/11/2010 





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|10.110 |  | Amendment to the July 10, 2008 Secured Convertible Debenture No. NEO-2008-4 between the Company and YA Global dated January 5, 2010  |  |  |  | 8-K |  | 10.13 |  | 1/11/2010
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | --- |  | ----- |  | ---------
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.111 |  | Amendment to the July 29, 2008 Secured Convertible Debenture No. NEOM-9-1 between the Company and YA Global dated January 5, 2010    |  |  |  | 8-K |  | 10.14 |  | 1/11/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.112 |  | Amendment to the October 28, 2008 Secured Convertible Debenture No. NEOM-9-2 between the Company and YA Global dated January 5, 2010 |  |  |  | 8-K |  | 10.15 |  | 1/11/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.113 |  | Amendment to the May 1, 2009 Secured Convertible Debenture No. NEOM-9-4 between the Company and YA Global dated January 5, 2010      |  |  |  | 8-K |  | 10.16 |  | 1/11/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.114 |  | Amendment to the June 5, 2009 Secured Convertible Debenture No. NEOM-9-5 between the Company and YA Global dated January 5, 2010     |  |  |  | 8-K |  | 10.17 |  | 1/11/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.115 |  | Amendment to the July 15, 2009 Secured Convertible Debenture No. NEOM-9-6 between the Company and YA Global dated January 5, 2010    |  |  |  | 8-K |  | 10.18 |  | 1/11/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.116 |  | Amendment to the August 14, 2009 Secured Convertible Debenture No. NEOM-9-7 between the Company and YA Global dated January 5, 2010  |  |  |  | 8-K |  | 10.19 |  | 1/11/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.117 |  | Amendment to the July 29, 2008 Warrant NEOM-9-1B between the Company and YA Global dated January 5, 2010                             |  |  |  | 8-K |  | 10.20 |  | 1/11/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.118 |  | Amendment to the July 29, 2008 Warrant NEOM-9-1C between the Company and YA Global dated January 5, 2010                             |  |  |  | 8-K |  | 10.21 |  | 1/11/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.119 |  | Amendment to the July 29, 2008 Warrant NEOM-9-1D between the Company and YA Global dated January 5, 2010                             |  |  |  | 8-K |  | 10.22 |  | 1/11/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.120 |  | First Amendment to Employment Agreement dated June 10, 2008 by and between the Company and Iain A. McCready                          |  |  |  | 8-K |  | 10.2  |  | 1/20/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.121 |  | Amended and Restated License Agreement dated January 22, 2010 with NeuStar, Inc.                                                     |  |  |  | 8-K |  | 10.1  |  | 1/28/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.122 |  | Neu Star Mobile Codes Pilot Program Agreement dated February 12, 2010                                                                |  |  |  | 8-K |  | 10.1  |  | 2/16/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.123 |  | First Amendment to Investment Agreement between Company and  YA Global dated March 5, 2010                                           |  |  |  | 8-K |  | 10.1  |  | 3/11/2010
|       |  |                                                                                                                                      |  |  |  |     |  |       |  |          
|10.124 |  | Securities Purchase Agreement, dated May 27, 2010, by and between the Company and YA Global Investments, L.P.                        |  |  |  | 8-K |  | 10.1  |  | 6/3/2010 





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|10.125 |  | Secured Convertible Debenture NEOM 10-1, dated May 27, 2010,  issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)            |  |  |  | 8-K |  | 10.2 |  | 6/3/2010 
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | --- |  | ---- |  | ---------
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.126 |  | Warrant No. 0510, dated May 27, 2010, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                             |  |  |  | 8-K |  | 10.3 |  | 6/3/2010 
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.127 |  | Global Warrant Amendment, dated May 28, 2010, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                               |  |  |  | 8-K |  | 10.4 |  | 6/3/2010 
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.128 |  | Ratification Agreement, dated May 27, 2010, by and among the Company, each of the Company’s subsidiaries made a party thereto and YA Global Investments, L.P.                                                                                                                          |  |  |  | 8-K |  | 10.7 |  | 6/3/2010 
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.129 |  | Irrevocable Transfer Agent Instructions, dated May 27, 2010, by and among the Company, the Investor, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                            |  |  |  | 8-K |  | 10.1 |  | 6/3/2010 
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.130 |  | Agreement, dated August 13, 2010, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                           |  |  |  | 8-K |  | 10.1 |  | 8/19/2010
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.131 |  | Secured Convertible Debenture, No. NEOM-10-2, dated August 13, 2010,  issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)    |  |  |  | 8-K |  | 10.2 |  | 8/19/2010
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.132 |  | Warrant, No. NEOM-0810, dated August 13, 2010, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                    |  |  |  | 8-K |  | 10.3 |  | 8/19/2010
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.133 |  | Agreement on the Pledge of Intellectual Property Rights as Collateral, dated August 13, 2010, by and between the Company’s wholly-owned subsidiary the Company Europe AG, and YA Global Investments, L.P.                                                                              |  |  |  | 8-K |  | 10.6 |  | 8/19/2010
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.134 |  | Second Ratification Agreement, dated August 13, 2010, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                               |  |  |  | 8-K |  | 10.7 |  | 8/19/2010
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.135 |  | Irrevocable Transfer Agent Instructions, dated August 13, 2010, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                            |  |  |  | 8-K |  | 10.8 |  | 8/19/2010
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.136 |  | Security Transfer of Moveable Assets, dated August 13, 2010, by and between the Company’s wholly-owned subsidiary, NeoMedia Europe AG, and YA Global Investments, L.P.                                                                                                                 |  |  |  | 8-K |  | 10.9 |  | 8/19/2010
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.137 |  | Agreement, dated September 29, 2010, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                        |  |  |  | 8-K |  | 10.1 |  | 10/1/2010
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.138 |  | Secured Convertible Debenture, No. NEOM-10-3, dated September 29, 2010,  issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.2 |  | 10/1/2010
|       |  |                                                                                                                                                                                                                                                                                        |  |  |  |     |  |      |  |          
|10.139 |  | Warrant, No. NEOM-0910, dated September 29, 2010, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                 |  |  |  | 8-K |  | 10.3 |  | 10/1/2010





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|10.140 |  | Third Ratification Agreement, dated September 29, 2010, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                            |  |  |  | 8-K |  | 10.6 |  | 10/1/2010 
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | --- |  | ---- |  | ----------
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.141 |  | Irrevocable Transfer Agent Instructions, dated September 29, 2010, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                        |  |  |  | 8-K |  | 10.7 |  | 10/1/2010 
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.142 |  | Compromise Agreement dated October 19, 2010, by and between the Company and Iain A. McCready                                                                                                                                                                                          |  |  |  | 8-K |  | 10.1 |  | 10/20/2010
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.143 |  | Agreement, dated October 28, 2010, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                         |  |  |  | 8-K |  | 10.1 |  | 11/3/2010 
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.144 |  | Secured Convertible Debenture, No. NEOM-10-4, dated October 28, 2010,  issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)  |  |  |  | 8-K |  | 10.2 |  | 11/3/2010 
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.145 |  | Warrant, No. NEOM-1010, dated October 28, 2010, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                  |  |  |  | 8-K |  | 10.3 |  | 11/3/2010 
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.146 |  | Fourth Ratification Agreement, dated September 29, 2010, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                           |  |  |  | 8-K |  | 10.6 |  | 11/3/2010 
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.147 |  | Irrevocable Transfer Agent Instructions, dated October 28, 2010, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                          |  |  |  | 8-K |  | 10.7 |  | 11/3/2010 
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.148 |  | Confidential Settlement Agreement, dated December 14, 2010, by and between the Company and Rothschild Trust Holdings, LLC and BP BL Section 3.4, LLC                                                                                                                                  |  |  |  | 8-K |  | 10.1 |  | 12/15/2010
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.149 |  | Agreement, dated December 15, 2010, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                        |  |  |  | 8-K |  | 10.1 |  | 12/21/2010
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.150 |  | Secured Convertible Debenture, No. NEOM-10-5, dated December 15, 2010,  issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.2 |  | 12/21/2010
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.151 |  | Warrant, No. NEOM-1010, dated December 15, 2010, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                 |  |  |  | 8-K |  | 10.3 |  | 12/21/2010
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.152 |  | Fifth Ratification Agreement, dated December 15, 2010, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                             |  |  |  | 8-K |  | 10.6 |  | 12/21/2010
|       |  |                                                                                                                                                                                                                                                                                       |  |  |  |     |  |      |  |           
|10.153 |  | Irrevocable Transfer Agent Instructions, dated December 15, 2010, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                         |  |  |  | 8-K |  | 10.7 |  | 12/21/2010





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|10.154 |  | Confidential License Agreement, dated December 21, 2010, by and between the Company and eBay Inc.                                                                                                                                                                                    |  |  |  | 8-K |  | 10.1 |  | 12/22/2010
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | --- |  | ---- |  | ----------
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.155 |  | Agreement, dated January 10, 2011, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                        |  |  |  | 8-K |  | 10.1 |  | 1/14/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.156 |  | Secured Convertible Debenture, No. NEOM-11-1, dated January 10, 2011,  issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.2 |  | 1/14/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.157 |  | Warrant, No. NEOM-0111, dated January 10, 2011, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                 |  |  |  | 8-K |  | 10.3 |  | 1/14/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.158 |  | Sixth Ratification Agreement, dated January 10, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                             |  |  |  | 8-K |  | 10.6 |  | 1/14/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.159 |  | Irrevocable Transfer Agent Instructions, dated January 10, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                         |  |  |  | 8-K |  | 10.7 |  | 1/14/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.160 |  | Agreement, dated February 8, 2011, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                        |  |  |  | 8-K |  | 10.1 |  | 2/11/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.161 |  | Secured Convertible Debenture, No. NEOM-11-2, dated February 8, 2011,  issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.2 |  | 2/11/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.162 |  | Warrant, No. NEOM-0211, dated February 8, 2011, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                 |  |  |  | 8-K |  | 10.3 |  | 2/11/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.163 |  | Seventh Ratification Agreement, dated February 8, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                           |  |  |  | 8-K |  | 10.6 |  | 2/11/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.164 |  | Irrevocable Transfer Agent Instructions, dated February 8, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                         |  |  |  | 8-K |  | 10.7 |  | 2/11/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.165 |  | Confidential License Agreement, dated December 21, 2010, by and between the Company and eBay Inc.                                                                                                                                                                                    |  |  |  | 8-K |  | 10.1 |  | 2/22/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.166 |  | Agreement, dated March 11, 2011, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                          |  |  |  | 8-K |  | 10.1 |  | 3/17/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.167 |  | Secured Convertible Debenture, No. NEOM-11-3, dated March 11, 2011,  issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)   |  |  |  | 8-K |  | 10.2 |  | 3/17/2011 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.168 |  | Warrant, No. NEOM-0311, dated March 11, 2011, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                   |  |  |  | 8-K |  | 10.3 |  | 3/17/2011 





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|10.169 |  | Eighth Ratification Agreement, dated March 11, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                            |  |  |  | 8-K |  | 10.6 |  | 3/17/2011
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | --- |  | ---- |  | ---------
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.170 |  | Irrevocable Transfer Agent Instructions, dated March 11, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                         |  |  |  | 8-K |  | 10.7 |  | 3/17/2011
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.171 |  | Agreement, dated April 13, 2011, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                        |  |  |  | 8-K |  | 10.1 |  | 4/19/2011
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.172 |  | Secured Convertible Debenture, No. NEOM-11-4, dated April 13, 2011,  issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.2 |  | 4/19/2011
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.173 |  | Warrant, No. NEOM-0411, dated April 13, 2011, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                 |  |  |  | 8-K |  | 10.3 |  | 4/19/2011
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.174 |  | Ninth Ratification Agreement, dated April 13, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                             |  |  |  | 8-K |  | 10.6 |  | 4/19/2011
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.175 |  | Irrevocable Transfer Agent Instructions, dated April 13, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                         |  |  |  | 8-K |  | 10.7 |  | 4/19/2011
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.176 |  | Agreement, dated May 31, 2011, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                          |  |  |  | 8-K |  | 10.1 |  | 6/3/2011 
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.177 |  | Secured Convertible Debenture, No. NEOM-11-5, dated May 31, 2011,  issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)   |  |  |  | 8-K |  | 10.2 |  | 6/3/2011 
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.178 |  | Warrant, No. NEOM-0511, dated May 31, 2011, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                   |  |  |  | 8-K |  | 10.3 |  | 6/3/2011 
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.179 |  | Ratification Agreement, dated May 31, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                                     |  |  |  | 8-K |  | 10.6 |  | 6/3/2011 
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.180 |  | Irrevocable Transfer Agent Instructions, dated May 31, 2011, by and among the Company, YA Global Investments, L.P., David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                         |  |  |  | 8-K |  | 10.7 |  | 6/3/2011 
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.181 |  | Agreement, dated June 28, 2011, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                         |  |  |  | 8-K |  | 10.1 |  | 7/1/2011 
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.182 |  | Secured Convertible Debenture, No. NEOM-11-6, dated June 28, 2011,  issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)  |  |  |  | 8-K |  | 10.2 |  | 7/1/2011 
|       |  |                                                                                                                                                                                                                                                                                    |  |  |  |     |  |      |  |          
|10.183 |  | Warrant, No. NEOM-0611, dated June 28, 2011, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                  |  |  |  | 8-K |  | 10.3 |  | 7/1/2011 





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|10.184 |  | Eleventh Ratification Agreement, dated June 28, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                            |  |  |  | 8-K |  | 10.6 |  | 7/1/2011  
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | --- |  | ---- |  | ----------
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.185 |  | Irrevocable Transfer Agent Instructions, dated June 28, 2011, by and among the Company, YA Global Investments, L.P., David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                         |  |  |  | 8-K |  | 10.7 |  | 7/1/2011  
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.186 |  | Secured Convertible Debenture, No. NEOM-11-7, dated July 13, 2011,  issued by the Company to YA Global Investments, L.P.                                                                                                                                                            |  |  |  | 8-K |  | 10.1 |  | 7/19/2011 
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.187 |  | Secured Convertible Debenture, No. NEOM-11-8, dated August 12, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on May 29, 2012 and February 8, 2013)    |  |  |  | 8-K |  | 10.1 |  | 8/18/2011 
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.188 |  | Agreement, dated September 15, 2011, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                     |  |  |  | 8-K |  | 10.1 |  | 9/21/2011 
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.189 |  | Secured Convertible Debenture, No. NEOM-11-9, dated September 15, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreement filed at Exhibit 10.1 to the Company’s Form 8-K filed with the SEC on May 29, 2012 and February 8, 2013)  |  |  |  | 8-K |  | 10.2 |  | 9/21/2011 
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.190 |  | Warrant, No. NEOM-0911, dated September 15, 2011, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                              |  |  |  | 8-K |  | 10.3 |  | 9/21/201  
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.191 |  | Twelfth Ratification Agreement, dated September 15, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                        |  |  |  | 8-K |  | 10.6 |  | 9/21/2011 
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.192 |  | Irrevocable Transfer Agent Instructions, dated September 15, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                      |  |  |  | 8-K |  | 10.7 |  | 9/21/2011 
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.193 |  | Agreement, dated October 25, 2011, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                       |  |  |  | 8-K |  | 10.1 |  | 10/28/2011
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.194 |  | Secured Convertible Debenture, No. NEOM-11-10, dated October 25, 2011, issued by the Company to YA Global Investments, L.P (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.2 |  | 10/28/2011
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.195 |  | Warrant, No. NEOM-1011, dated October 25, 2011, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                |  |  |  | 8-K |  | 10.3 |  | 10/28/2011
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.196 |  | Thirteenth Ratification Agreement, dated October 25, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                       |  |  |  | 8-K |  | 10.6 |  | 10/28/2011
|       |  |                                                                                                                                                                                                                                                                                     |  |  |  |     |  |      |  |           
|10.197 |  | Irrevocable Transfer Agent Instructions, dated October 25, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                        |  |  |  | 8-K |  | 10.7 |  | 10/28/2011





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|10.198 |  | Agreement, dated December 8, 2011, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                        |  |  |  | 8-K |  | 10.1 |  | 12/14/2011
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  | --- |  | ---- |  | ----------
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.199 |  | Secured Convertible Debenture, No. NEOM-11-11, dated December 8, 2011, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.2 |  | 12/14/2011
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.200 |  | Warrant, No. NEOM-1211, dated December 8, 2011, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                 |  |  |  | 8-K |  | 10.3 |  | 12/14/2011
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.201 |  | Fourteenth Ratification Agreement, dated December 8, 2011, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                        |  |  |  | 8-K |  | 10.6 |  | 12/14/2011
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.202 |  | Irrevocable Transfer Agent Instructions, dated December 8, 2011, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                         |  |  |  | 8-K |  | 10.7 |  | 12/14/2011
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.203 |  | Agreement, dated January 11, 2012, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                        |  |  |  | 8-K |  | 10.1 |  | 1/18/2012 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.204 |  | Secured Convertible Debenture, No. NEOM-12-1, dated January 11, 2012, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)  |  |  |  | 8-K |  | 10.2 |  | 1/18/2012 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.205 |  | Warrant, No. NEOM-0112, dated January 11, 2012, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                 |  |  |  | 8-K |  | 10.3 |  | 1/18/2012 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.206 |  | Fifteenth Ratification Agreement, dated January 11, 2012, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                         |  |  |  | 8-K |  | 10.6 |  | 1/18/2012 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.207 |  | Irrevocable Transfer Agent Instructions, dated January 11, 2012, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                         |  |  |  | 8-K |  | 10.7 |  | 1/18/2012 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.208 |  | Agreement, dated February 6, 2012, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                        |  |  |  | 8-K |  | 10.1 |  | 2/10/2012 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.209 |  | Secured Convertible Debenture, No. NEOM-12-2, dated February 6, 2012, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013)  |  |  |  | 8-K |  | 10.2 |  | 2/10/2012 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.210 |  | Warrant, No. NEOM-0212, dated February 6, 2012, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                 |  |  |  | 8-K |  | 10.3 |  | 2/10/2012 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.211 |  | Sixteenth Ratification Agreement, dated February 9, 2012, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                         |  |  |  | 8-K |  | 10.6 |  | 2/10/2012 
|       |  |                                                                                                                                                                                                                                                                                      |  |  |  |     |  |      |  |           
|10.212 |  | Irrevocable Transfer Agent Instructions, dated February 6, 2012, by and among the Company, the Buyer, David Gonzalez, Esq. and WorldWide Stock Transfer, LLC                                                                                                                         |  |  |  | 8-K |  | 10.7 |  | 2/10/2012 





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|10.213 |  | Agreement, dated March 26, 2012, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                       |  |  |  | 8-K |  | 10.1 |  | 3/27/2012
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  | --- |  | ---- |  | ---------
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.214 |  | Secured Convertible Debenture, No. NEOM-12-3, dated March 26, 2012, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.2 |  | 3/27/2012
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.215 |  | Warrant, No. NEOM-0312, dated March 26, 2012, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                |  |  |  | 8-K |  | 10.3 |  | 3/27/2012
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.216 |  | Seventeenth Ratification Agreement, dated March 26, 2012, by and among the Company, each of the Company’s subsidiaries made a party thereto, and YA Global Investments, L.P.                                                                                                      |  |  |  | 8-K |  | 10.6 |  | 3/27/2012
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.217 |  | Irrevocable Transfer Agent Instructions, dated March 26, 2012, by and among the Company, the Buyer, David Gonzalez, Esq. and Worldwide Stock Transfer, LLC                                                                                                                        |  |  |  | 8-K |  | 10.7 |  | 3/27/2012
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.218 |  | Agreement, dated April 26, 2012, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                       |  |  |  | 8-K |  | 10.1 |  | 5/1/2012 
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.219 |  | Secured Convertible Debenture, No. NEOM 12-4, dated April 26, 2012, issued by the Company to YA Global Investments, L.P. (as amended by Debenture Extension Agreements filed at Exhibits 10.1 to the Company’s Form 8-Ks filed with the SEC on May 29, 2012 and February 8, 2013) |  |  |  | 8-K |  | 10.2 |  | 5/1/2012 
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.220 |  | Warrant, No. NEOM-0412, dated April 26, 2012, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                |  |  |  | 8-K |  | 10.3 |  | 5/1/2012 
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.221 |  | Eighteenth Ratification Agreement, dated April 26, 2012, by and among the Company, each of the Company’s subsidiaries and YA Global Investments, L.P.                                                                                                                             |  |  |  | 8-K |  | 10.6 |  | 5/1/2012 
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.222 |  | Irrevocable Transfer Agent Instructions dated April 26, 2012, by and between the Company, the Buyer, David Gonzalez, Esq. and Worldwide Stock Transfer LLC                                                                                                                        |  |  |  | 8-K |  | 10.7 |  | 5/1/2012 
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.223 |  | Debenture Extension Agreement dated May 25, 2012, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                      |  |  |  | 8-K |  | 10.1 |  | 5/29/2012
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.224 |  | Agreement, dated June 1, 2012, by and between the Company and YA Global Investments, L.P.                                                                                                                                                                                         |  |  |  | 8-K |  | 10.1 |  | 6/7/2012 
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.225 |  | Secured Convertible Debenture, No. NEOM 12-5, dated June 1, 2012, issued by the Company to YA Global Investments, L.P. (as amended by the Debenture Extension Agreement Filed February 8, 2013 with the Sec as Exhibit 10.1)                                                      |  |  |  | 8-K |  | 10.2 |  | 6/7/2012 
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.226 |  | Warrant No. NEOM-0512 dated June 1, 2012, issued by the Company to YA Global Investments, L.P.                                                                                                                                                                                    |  |  |  | 8-K |  | 10.3 |  | 6/7/2012 
|       |  |                                                                                                                                                                                                                                                                                   |  |  |  |     |  |      |  |          
|10.227 |  | Nineteenth Ratification Agreement, dated June 1, 2012, by and among the company, each of the Company’s subsidiaries and YA Global Investments, L.P.                                                                                                                               |  |  |  | 8-K |  | 10.6 |  | 6/7/2012 





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|10.228 |  | Irrevocable Transfer Agent Instructions dated June 1, 2012, by and between the Company, the Buyer, David Gonzalez, Esq. and Worldwide Stock Transfer LLC                                                                      |  |   |  | 8-K  |  | 10.7 |  | 6/7/2012 
|------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - |  | ---- |  | ---- |  | ---------
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|10.229 |  | Agreement dated July 20, 2012, by and between the Company and YA Global Investments, L.P.                                                                                                                                     |  |   |  | 8-K  |  | 10.1 |  | 7/27/2012
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|10.230 |  | Secured Convertible Debenture, No. NEOM 12-6, dated July 20, 2012, issued by the Company to YA Global Investments, L.P. (as amended by the Debenture Extension Agreement Filed February 8, 2013 with the Sec as Exhibit 10.1) |  |   |  | 8-K  |  | 10.2 |  | 7/27/2012
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|10.231 |  | Warrant, No. NEOM-0612 dated July 20, 2012, issued by the Company to YA Global Investments, L.P.                                                                                                                              |  |   |  | 8-K  |  | 10.3 |  | 7/27/2012
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|10.232 |  | Twentieth Ratification Agreement, dated July 20, 2012, by and among the Company, each of the Company’s subsidiaries and YA Global Investments, L.P.                                                                           |  |   |  | 8-K  |  | 10.6 |  | 7/27/2012
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|10.233 |  | Irrevocable Transfer Agent Instructions dated July 20,2012, by and between the Company, the Buyer, David Gonzalez, Esq. and Worldwide Stock Transfer LLC                                                                      |  |   |  | 8-K  |  | 10.7 |  | 7/27/2012
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|10.234 |  | Confidential Patent License Agreement dated August 20, 2012, by and between the Company and Microsoft Corporation                                                                                                             |  |   |  | 8-K  |  | 10.1 |  | 8/24/2012
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|10.235 |  | General Services Agreement dated August 27, 2012, by and between the Company and Jeff Huitt                                                                                                                                   |  |   |  | 8-K  |  | 10.1 |  | 8/28/2012
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|10.236 |  | Debenture Extension Agreement dated February 4, 2013, by and between the Company and YA Global Investments, L.P.                                                                                                              |  |   |  | 8-K  |  | 10.1 |  | 2/8/2013 
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|14     |  | Code of Professional Ethics                                                                                                                                                                                                   |  |   |  | 10-K |  | 14.1 |  | 4/3/2007 
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|21     |  | Subsidiaries of the Registrant                                                                                                                                                                                                |  | X |  |      |  |      |  |          
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|23.1   |  | Consent of Kingery & Crouse, P.A.                                                                                                                                                                                             |  | X |  |      |  |      |  |          
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|31.1   |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                            |  | X |  |      |  |      |  |          
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|31.2   |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                            |  | X |  |      |  |      |  |          
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|32.1   |  | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                            |  | X |  |      |  |      |  |          
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|32.2   |  | Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                            |  | X |  |      |  |      |  |          
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|99.1   |  | Press Release dated April 1, 2013                                                                                                                                                                                             |  |   |  |      |  |      |  |          
|       |  |                                                                                                                                                                                                                               |  |   |  |      |  |      |  |          
|101**  |  | Interactive Data File                                                                                                                                                                                                         |  |   |  |      |  |      |  |          



Page 80







SIGNATURES



In accordance with
Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.



|                    | NEOMEDIA TECHNOLOGIES, INC.
|------------------- | ---------------------------
|                    |                            
|Date: April 1, 2013 |                            
|                    |                            
|                    | By:                        
|                    |                            
|                    |                            
|                    |                            
|                    |                            
|                    |                            
|                    |                            



In accordance with
the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated on April 1, 2013.



|Signatures            |  | Title                                                                      |  | Date         
|--------------------- |  | -------------------------------------------------------------------------- |  | -------------
|                      |  |                                                                            |  |              
|/s/ Laura A. Marriott |  | Chief Executive Officer, Principal Executive Officer and Board Chairperson |  | April 1,2013 
|Laura A. Marriott     |  |                                                                            |  |              
|                      |  |                                                                            |  |              
|/s/ Barry S Baer      |  | Chief Financial Officer, Principal Financial and Accounting Officer        |  | April 1, 2013
|Barry S Baer          |  |                                                                            |  |              
|                      |  |                                                                            |  |              
|/s/ George G. O’Leary |  | Chief Operating Officer, Director                                          |  | April 1, 2013
|George G. O’Leary     |  |                                                                            |  |              
|                      |  |                                                                            |  |              
|/s/ Sarah Fay         |  | Director                                                                   |  | April 1, 2013
|Sarah Fay             |  |                                                                            |  |              
|                      |  |                                                                            |  |              
|/s/ Peter Mannetti    |  | Director                                                                   |  | April 1, 2013
|Peter Mannetti        |  |                                                                            |  |              



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