AMENDED SCHEDULE 14A
                                 (Rule 14a-101)

                     INFORMATION REQUIRED IN PROXY STATEMENT

                            SCHEDULE 14A INFORMATION

                    Proxy Statement Pursuant to Section 14(a)
                     of the Securities Exchange Act of 1934

                                (Amendment No. 2)


                           Filed by the Registrant [X]
                 Filed by a Party other than the Registrant [ ]

                           Check the appropriate box:

                         [X] Preliminary Proxy Statement
                         [ ] Definitive Proxy Statement
                       [ ] Definitive Additional Materials
        [ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
                [ ] Confidential, For Use of the Commission Only
                       (as permitted by Rule 14a-6(e)(2))

                           NEOMEDIA TECHNOLOGIES, INC.

                (Name of Registrant as Specified in Its Charter)

    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

               Payment of Filing Fee (Check the appropriate box):

                              [X] No fee required.

[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)      Title of each class of securities to which transaction applies:

(2)      Aggregate number of securities to which transaction applies:

(3)      Per unit  price  or other  underlying  value  of  transaction  computed
         pursuant to  Exchange  Act Rule 0-11 (set forth the amount on which the
         filing fee is calculated and state how it was determined):

(4)      Proposed maximum aggregate value of transaction: (5) Total fee paid:

[ ]      Check box if any part of the fee is offset as provided by Exchange  Act
Rule  0-11(a)(2)  and identify the filing for which the  offsetting fee was paid
previously.  Identify the previous filing by registration  statement  number, or
the form or schedule and the date of its filing.

(1)      Amount previously paid:

(2)      Form,  Schedule or  Registration  Statement No.:

(3)      Filing Party:

(4)      Date Filed:








                           NEOMEDIA TECHNOLOGIES, INC.
                          2201 Second Street, Suite 402
                            Fort Myers, Florida 33901



Dear Shareholder:

You are cordially  invited to attend the 2003 Annual Meeting of  Shareholders of
NeoMedia  Technologies,  Inc.  The annual  meeting will be held at the office of
NeoMedia, 2201 Second Street, Suite 402, Fort Myers, Florida 33901, on September
24, 2003, beginning at 10:00 a.m., Eastern Daylight Savings Time.

Your vote is important  and I urge you to vote your shares by proxy,  whether or
not you plan to attend the meeting. After you read this proxy statement,  please
indicate  on the proxy  card the  manner  in which you want to have your  shares
voted. Then date, sign and mail the proxy card in the postage-paid envelope that
is  provided.  If you sign and return your proxy card  without  indicating  your
choices,  it will be  understood  that you  wish to have  your  shares  voted in
accordance with the recommendations of NeoMedia's Board of Directors.

We hope to see you at the meeting.

                                        Sincerely,


                                        /s/ Charles T. Jensen
                                        President and Chief Executive Officer



August 21, 2003










                           NEOMEDIA TECHNOLOGIES, INC.
                          2201 Second Street, Suite 402
                            Fort Myers, Florida 33901

                   NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO
                          BE HELD ON SEPTEMBER 24, 2003
               --------------------------------------------------

NOTICE IS HEREBY  GIVEN that an Annual  Meeting  of  Stockholders  (the  "Annual
Meeting") of NeoMedia Technologies, Inc. will be held at the office of NeoMedia,
2201 Second Street, Suite 402, Fort Myers, Florida 33901, on September 24, 2003,
beginning  at 10:00 a.m.,  Eastern  Daylight  Savings  Time,  for the  following
purposes:

1.       To elect five directors to hold office until the next annual meeting of
         stockholders and the due election and qualification of their successors
         (Item No. 1 on proxy card);

2.       To approve an amendment to NeoMedia's  Certificate of  Incorporation to
         increase the number of shares of  authorized  common  stock,  par value
         $0.01,  from 200,000,000 to  1,000,000,000  shares (Item No. 2 on proxy
         card);

3.       To approve the 2003 Stock Option Plan (Item No. 3 on proxy card); and

4.       To consider such other business as may properly come before the meeting
         or any postponements or adjournments thereof.

         The Board of  Directors  has fixed the close of  business  on August 6,
2003, as the record date for determining the shareholders  entitled to notice of
and to vote at the Annual Meeting or at any adjournment thereof. A complete list
of the  shareholders  entitled  to vote at the Annual  Meeting  will be open for
examination by any shareholder  during  ordinary  business hours for a period of
ten days prior to the Annual  Meeting at the  office of  NeoMedia,  2201  Second
Street, Suite 402, Fort Myers, Florida 33901.

      YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSALS.

                                    IMPORTANT

         You are cordially  invited to attend the Annual  Meeting in person.  In
order to ensure your  representation  at the meeting,  however,  please promptly
complete, date, sign and return the enclosed proxy in the accompanying envelope.
If you  should  decide to attend  the  Annual  Meeting  and vote your  shares in
person, you may revoke your proxy at that time.

--------------------------------------------------------------------------------
PLEASE NOTE THAT  ATTENDANCE AT THE MEETING WILL BE LIMITED TO  STOCKHOLDERS  OF
NEOMEDIA AS OF THE RECORD  DATE (OR THEIR  AUTHORIZED  REPRESENTATIVES)  HOLDING
ADMISSION  TICKETS OR OTHER  EVIDENCE  OF  OWNERSHIP.  THE  ADMISSION  TICKET IS
DETACHABLE  FROM YOUR PROXY  CARD.  IF YOUR SHARES ARE HELD BY A BANK OR BROKER,
PLEASE  BRING TO THE  MEETING  YOUR BANK OR  BROKER  STATEMENT  EVIDENCING  YOUR
BENEFICIAL OWNERSHIP OF NEOMEDIA STOCK TO GAIN ADMISSION TO THE MEETING.

BY ORDER OF THE BOARD OF DIRECTORS
--------------------------------------------------------------------------------



August 21, 2003                              /s/ William E. Fritz, Secretary
Fort Myers, Florida                          -------------------------------
                                             William E. Fritz, Secretary




                                       2






                               Proxy Statement for
                        Annual Meeting of Stockholders of
                           NEOMEDIA TECHNOLOGIES, INC.
                        To Be Held on September 24, 2003

                                TABLE OF CONTENTS



                                                                                                                       Page
                                                                                                                      
   ABOUT THE MEETING......................................................................................................1
     What is the purpose of the annual meeting?...........................................................................1
     Who is entitled to vote?.............................................................................................1
     Who can attend the annual meeting?...................................................................................1
     What constitutes a quorum?...........................................................................................2
     How do I vote?.......................................................................................................2
     What if I do not specify how my shares are to be voted?..............................................................2
     Can I change my vote after I return my proxy card?...................................................................2
     What are the Board's recommendations?................................................................................2
     What vote is required to approve each item?..........................................................................2
PRINCIPAL HOLDERS OF VOTING SECURITIES....................................................................................4
PROPOSAL ONE..............................................................................................................6
   ELECTION OF DIRECTORS..................................................................................................6
     Directors Standing for Election......................................................................................6
   RECOMMENDATION OF THE BOARD OF DIRECTORS...............................................................................6
     The Board of Directors Unanimously Recommends a Vote "FOR" the Election of Each of the Nominees......................6
     Meetings.............................................................................................................7
     Committees Of The Board Of Directors.................................................................................7
     Compensation Of Directors............................................................................................7
     Vote Required For Election of Nominees for Directors.................................................................7
   MANAGEMENT.............................................................................................................8
   EXECUTIVE COMPENSATION.................................................................................................8
     Employment Agreements................................................................................................9
     Incentive Plan For Management........................................................................................9
     Stock Option Plans...................................................................................................9
     401(k) Plan..........................................................................................................9
     Options And Warrants Granted In The Last Fiscal Year................................................................10
     Option And Warrant Exercises In Last Fiscal Year And Fiscal Year-End Values.........................................10
   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................................................................10
   SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE...............................................................11
   COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS.........................................................................11
   REPORT OF THE COMPENSATION COMMITTEE  OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION(1)..........................11
     General Compensation Philosophy.....................................................................................12
   COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION...........................................................13
   REPORT OF THE AUDIT COMMITTEE.........................................................................................13
PROPOSAL TWO.............................................................................................................14
   INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK...............................................................14

     General Information.................................................................................................14
     Vote Required For An Increase In Authorized Shares Of Common Stock..................................................16
   RECOMMENDATION OF THE BOARD OF DIRECTORS..............................................................................16
   DESCRIPTION OF SECURITIES.............................................................................................16
     Common Stock........................................................................................................17
     Preferred Stock.....................................................................................................17
     Warrants And Options................................................................................................19
     Anti-Takeover Effects Of Provisions Of The Certificate Of Incorporation.............................................20
PROPOSAL THREE...........................................................................................................21
   APPROVAL OF THE 2003 STOCK OPTION PLAN................................................................................21
     General Information.................................................................................................21
     The Plan And Participants...........................................................................................21
     Option Terms And Grants.............................................................................................22
     Federal Tax Aspects Of The Plan.....................................................................................22
     Vote Required For Approval Of The Plan..............................................................................24
     Recommendation Of The Board Of Directors............................................................................24
AUDITORS.................................................................................................................25
     Audit Fees..........................................................................................................25
     Financial Information Systems Design And Implementation Fees........................................................25
     Other Fees..........................................................................................................25
OTHER MATTERS TO BE ACTED UPON AT THE ANNUAL MEETING OF STOCKHOLDERS.....................................................25
ADDITIONAL INFORMATION...................................................................................................25

APPENDIX A................................................................................................................1
   NEOMEDIA TECHNOLOGIES, INC.  2003 STOCK OPTION PLAN....................................................................1
APPENDIX B................................................................................................................1











                           NEOMEDIA TECHNOLOGIES, INC.
                          2201 SECOND STREET, SUITE 402
                            FORT MYERS, FLORIDA 33901


                            -------------------------

                                 PROXY STATEMENT
                                 AUGUST 6, 2003

                            -------------------------

         This  proxy  statement  contains  information  related  to  the  Annual
Stockholders  Meeting (the "Annual Meeting") of NeoMedia  Technologies,  Inc., a
Delaware corporation ("NeoMedia" or the "Company"),  to be held at the principal
executive  offices of  NeoMedia,  2201  Second  Street,  Suite 402,  Fort Myers,
Florida  33901 on  September  24,  2003,  beginning  at 10:00  a.m.,  and at any
postponements or adjournments  thereof,  for the purposes set forth herein. This
proxy  statement,  the enclosed proxy and a copy of NeoMedia's  Annual Report to
Stockholders for the fiscal year ended December 31, 2002, are first being mailed
on or about August 22, 2003, to all stockholders  entitled to vote.  NeoMedia is
making this proxy solicitation.


                                ABOUT THE MEETING


WHAT IS THE PURPOSE OF THE ANNUAL MEETING?

         At NeoMedia's  annual meeting,  shareholders  will act upon the matters
outlined  in the notice of  meeting  on the cover page of this proxy  statement,
which  relates to the  election of  directors,  the  approval of an amendment to
NeoMedia's  Certificate of Incorporation to increase the authorized common stock
to 1,000,000,000 shares.


WHO IS ENTITLED TO VOTE?

         Only  shareholders  of record on the close of  business  on the  record
date,  August 6, 2003,  are entitled to receive notice of the annual meeting and
to vote the shares of common  stock that they held on that date at the  meeting,
or any  postponements or adjournments of the meeting.  Each outstanding share of
capital stock will be entitled to the number of votes set forth in the following
table on each  matter to be voted  upon at the  meeting.  The  holders of common
stock vote together as a single class. See "Description of Securities."

DESCRIPTION OF CAPITAL STOCK        NUMBER OF VOTES              TOTAL VOTES
----------------------------        ---------------              -----------

Common Stock                        One Vote Per Share           157,650,104


WHO CAN ATTEND THE ANNUAL MEETING?

         All  shareholders  as of the  record  date,  or  their  duly  appointed
proxies,  may attend  the annual  meeting,  and each may be  accompanied  by one
guest.  Seating,  however,  is limited.  Admission  to the meeting  will be on a
first-come, first-serve basis. Registration will begin at 8:30 a.m., and seating
will begin at 8:45 a.m. Each  shareholder  may be asked to present valid picture
identification,  such as a driver's  license  or  passport.  Cameras,  recording
devices and other electronic devices will not be permitted at the meeting.

         Please  note that if you hold your  shares in "street  name"  (that is,
through a broker or other nominee), you will need to bring a copy of a brokerage
statement  reflecting your stock ownership as of the record date and check in at
the registration desk at the meeting.



                                       1



WHAT CONSTITUTES A QUORUM?

         The presence at the meeting, in person or by proxy, of the holders of a
majority  of the shares of common  stock  outstanding  on the  record  date will
constitute a quorum,  permitting the meeting to conduct its business.  As of the
record  date,  the  shareholders  held a total of  157,650,104  votes.  As such,
holders of at least 78,825,053  shares (i.e., a majority) must be present at the
meeting, in person or by proxy, to obtain a quorum.  Proxies received but marked
as abstentions  and broker  non-votes will be included in the calculation of the
number of shares considered to be present at the meeting.


HOW DO I VOTE?

         If you  complete  and  properly  sign the  accompanying  proxy card and
return  it to  NeoMedia,  then it  will be  voted  as you  direct.  If you are a
registered  shareholder  and  attend  the  meeting,  then you may  deliver  your
completed  proxy card in person or vote by ballot at the meeting.  "Street name"
shareholders  who wish to vote at the  meeting  will need to obtain a proxy form
from the institution that holds their shares.


WHAT IF I DO NOT SPECIFY HOW MY SHARES ARE TO BE VOTED?

         If you submit a proxy but do not indicate any voting instructions, then
your shares will be voted in accordance with the Board's recommendations.


CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?

         Yes. Even after you have submitted your proxy card, you may change your
vote at any time before the proxy is exercised  by filing with the  Secretary of
NeoMedia  either a notice of revocation or a duly executed proxy bearing a later
date.  The  powers of the proxy  holders  will be  suspended  if you  attend the
meeting in person and so request, although attendance at the meeting will not by
itself revoke a previously granted proxy.


WHAT ARE THE BOARD'S RECOMMENDATIONS?

         Unless you give other  instructions  on your proxy  card,  the  persons
named as proxy  holders  on the  proxy  card will  vote in  accordance  with the
recommendation  of the Board of  Directors.  The Board's  recommendation  is set
forth  together with the  description of such item in this proxy  statement.  In
summary, the Board recommends a vote:

         o    FOR the election of the nominated slate of directors (see page 6);

         o    FOR the  approval of an amendment  to  NeoMedia's  Certificate  of
              Incorporation  to increase the  authorized  shares  of  NeoMedia's
              common stock to 1,000,000,000 shares (see page 14);

         o    FOR the approval of the 2003 Stock Option Plan (see page 19).

         With  respect  to any other  matter  that  properly  comes  before  the
meeting,  the proxy holders will vote as  recommended  by the Board of Directors
or, if no recommendation is given, in their own discretion.


WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?

         ELECTION OF DIRECTORS. The affirmative vote of a plurality of the votes
cast at the  meeting  (regardless  of the  class or  series  of  stock  held) is
required for the election of  directors.  This means that the five nominees will
be elected if they  receive  more  affirmative  votes than any other  person.  A
properly  executed proxy marked  "Withheld"  with respect to the election of any
director will not be voted with respect to such director indicated,  although it
will be counted for purposes of determining whether there is a quorum.


                                       2


         INCREASE IN  AUTHORIZED  SHARES.  For the  approval of an  amendment to
NeoMedia's  Certificate of  Incorporation  to increase the authorized  shares of
NeoMedia's  common stock to  1,000,000,000  shares,  the affirmative vote of the
holders of a majority  of the  outstanding  shares  (regardless  of the class or
series of stock held) will be required for approval.  A properly  executed proxy
marked "Abstain" with respect to such matter will not be voted, although it will
be counted for purposes of determining  whether there is a quorum.  Accordingly,
an abstention will have the effect of a negative vote.

         APPROVAL OF THE 2003 STOCK  OPTION  PLAN.  For the approval of the 2003
Stock Option Plan,  and any other item that  properly  comes before the meeting,
the  affirmative  vote of the  holders of a majority of the  outstanding  shares
(regardless of the class or series of stock held) will be required for approval.
A properly  executed proxy marked "Abstain" with respect to such matter will not
be voted,  although it will be counted for purposes of determining whether there
is a quorum. Accordingly, an abstention will have the effect of a negative vote.

         If you hold your  shares  in  "street  name"  through a broker or other
nominee,  your  broker  or  nominee  may not be  permitted  to  exercise  voting
discretion with respect to some of the matters to be acted upon. Thus, if you do
not give your broker or nominee  specific  instructions,  your shares may not be
voted on those  matters  and will not be  counted in  determining  the number of
shares necessary for approval.  Shares  represented by such "broker  non-votes,"
however, will be counted in determining whether there is a quorum.






                                       3





                     PRINCIPAL HOLDERS OF VOTING SECURITIES

         The following table contains information about the beneficial ownership
of our common stock as of August 6, 2003, for:

         (i)      each person who  beneficially  owns more than five  percent of
                  the common stock;

         (ii)     each of our directors;

         (iii)    the named executive officers; and

         (iv)     all directors and executive officers as a group.



                                                                        AMOUNT AND NATURE
                                                                          OF BENEFICIAL          PERCENT
                                                                           A OWNERSHIP (1)      OF CLASS (1)

                                                                                             
               Charles W. Fritz (2)(3)                                     20,316,467              12.6%
               William Fritz(2)(4)                                         55,674,776              34.7%
               Charles T. Jensen(2)(5)                                      1,506,886                  *
               David A. Dodge(2)(6)                                           495,700                  *
               A. Hayes Barclay(2)(7)                                         269,000                  *
               James J. Keil(2)(8)                                            793,000                  *
                                                                        ------------------------------------
               Officers and Directors as a Group (9 Persons)(9)            79,055,829              47.7%
                                                                        ====================================


------------------------------------------
* Indicates less than 1%.


(1)      Applicable  percentage of ownership is based on  157,650,104  shares of
         common stock outstanding as of August 6, 2003, together with securities
         exercisable or  convertible  into shares of common stock within 60 days
         of  August  6,  2003  for each  stockholder.  Beneficial  ownership  is
         determined in accordance with the rules of the Commission 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 August 6, 2003 are deemed to be beneficially owned by
         the person  holding  such  options  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.

(2)      Address of the  referenced  individual  is c/o  NeoMedia  Technologies,
         Inc., 2201 Second Street, Suite 402, Fort Myers, FL, 33901.

(3)      Shares  beneficially  owned  include  100  shares  owned by each of Mr.
         Fritz's four minor  children for an aggregate of 400 shares,  1,549,000
         shares of common stock issuable upon exercise of options  granted under
         our 2002 and 1998 stock option plans,  1,510,000  shares  issuable upon
         exercise of stock warrants,  15,714,098 shares of common stock owned by
         Mr.  Charles W. Fritz  directly,  and 1,542,969  shares of common stock
         held by the  CW/LA II  Family  Limited  Partnership,  a family  limited
         partnership for the benefit of Mr. Fritz's family.

(4)      William E. Fritz,  NeoMedia's  corporate secretary and a director,  and
         his wife,  Edna  Fritz,  are the general  partners of the Fritz  Family
         Limited  Partnership and therefore each are deemed to be the beneficial
         owners of the 1,511,742 shares held in the Fritz Family Partnership. As
         trustee of each of the  Chandler R. Fritz 1994 Trust,  Charles W. Fritz
         1994  Trust and Debra F.  Schiafone  1994  Trust,  William  E. Fritz is
         deemed to be the  beneficial  owner of the  165,467  shares of NeoMedia
         held in  these  trusts.  Additionally,  Mr.  Fritz  is  deemed  to own:
         51,172,567  shares held directly by Mr. Fritz or his spouse,  2,540,000
         shares to be issued upon the exercise of warrants  held by Mr. Fritz or
         his  spouse,  and  285,000  shares to be issued  upon the  exercise  of
         options  held by Mr. Fritz or his spouse.  Mr.  William E. Fritz may be
         deemed to be a parent and  promoter  of  NeoMedia,  as those  terms are
         defined in the Securities Act.

(5)      Includes  1,505,386  shares of common stock  issuable  upon exercise of
         options  granted under  NeoMedia's  2002,  1998,  and 1996 stock option
         plans, and 1,500 shares owned by Mr. Jensen's son.


                                       4



(6)      Includes  495,700  shares of common  stock  issuable  upon  exercise of
         options granted under NeoMedia's 2002 and 1998 stock option plans.

(7)      Includes  264,000  shares of common  stock  issuable  upon  exercise of
         options  granted under  NeoMedia's  2002,  1998,  and 1996 stock option
         plans, and 5,000 shares owned by Mr. Barclay directly.

(8)      Includes 10,000 shares issuable upon exercise of warrants,  and 783,000
         shares owned by Mr. Keil directly.

(9)      Includes an  aggregate of 4,099,086  currently  exercisable  options to
         purchase shares of common stock granted under  NeoMedia's  2002,  1998,
         and 1996 stock option plans,  4,060,000 currently  exercisable warrants
         to  purchase  shares of  common  stock,  and  70,896,743  shares  owned
         directly by NeoMedia's officers and directors.









                                       5





                                  PROPOSAL ONE


                              ELECTION OF DIRECTORS


DIRECTORS STANDING FOR ELECTION

         The Board of Directors of NeoMedia  consists of 5 seats.  Each director
holds office  until the first annual  meeting of  shareholders  following  their
election or appointment  and until their  successors  have been duly elected and
qualified.

         The Board of  Directors  has  nominated  Charles W.  Fritz,  Charles T.
Jensen,  William E. Fritz,  James J. Keil and A Hayes  Barclay  for  election as
directors.  The  accompanying  proxy  will be voted  for the  election  of these
nominees,  unless authority to vote for one or more nominees is withheld. In the
event that any of the nominees is unable or unwilling to serve as a director for
any reason (which is not anticipated),  the proxy will be voted for the election
of any substitute nominee designated by the Board of Directors. The nominees for
directors  have  previously  served  as  members  of the Board of  Directors  of
NeoMedia and have consented to serve such term.


                    RECOMMENDATION OF THE BOARD OF DIRECTORS


THE BOARD OF DIRECTORS UNANIMOUSLY  RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH
OF THE NOMINEES


DIRECTORS - PRESENT TERM EXPIRES AT THE ANNUAL MEETING

         The following is information  concerning nominees for election proposed
by the Board of Directors. None of the nominees are adverse parties in any legal
proceedings involving NeoMedia.

         CHARLES W. FRITZ, age 47, is a founder of NeoMedia and has served as an
officer and as a Director of NeoMedia  since our  inception.  On August 6, 1996,
Mr. Fritz was  appointed  Chief  Executive  Officer and Chairman of the Board of
Directors.  On April 2, 2001,  Mr. Fritz was  appointed  as  President  where he
served  until June 2002.  Mr.  Fritz is  currently a member of the  Compensation
Committee.  Prior to founding NeoMedia,  Mr. Fritz was an account executive with
IBM Corporation from January 1986 to January 1988, and Director of Marketing and
Strategic  Alliances for the information  consulting group from February 1988 to
January  1989.  Mr.  Fritz holds an M.B.A.  from  Rollins  College and a B.A. in
finance  from the  University  of  Florida.  Mr.  Fritz is the son of William E.
Fritz, a Director of NeoMedia.

         CHARLES T. JENSEN, age 59, was Chief Financial  Officer,  Treasurer and
Vice-President  of NeoMedia  since May 1, 1996.  Mr.  Jensen has been a Director
since August 6, 1996, and currently is a member of the  Compensation  Committee.
During June 2002, Mr. Jensen was promoted to President, Chief Operating Officer,
and Acting Chief Executive Officer.  Prior to joining NeoMedia in November 1995,
Mr.  Jensen  was Chief  Financial  Officer  of Jack M.  Berry,  Inc.,  a Florida
corporation  which grows and processes  citrus  products,  from December 1994 to
October 1995, and at Viking Range Corporation,  a Mississippi  corporation which
manufactures gas ranges, from November 1993 to December 1994. From December 1992
to February  1994,  Mr.  Jensen was  Treasurer  of Lin Jensen,  Inc., a Virginia
corporation specializing in ladies clothing and accessories. Prior to that, from
January 1982 to March 1993,  Mr. Jensen was  Controller  and  Vice-President  of
Finance of The Pinkerton Tobacco Co., a tobacco manufacturer. Mr. Jensen holds a
B.B.A. in accounting from Western Michigan  University and is a Certified Public
Accountant.

         WILLIAM E. FRITZ,  age 73, is a founder of  NeoMedia  and has served as
Secretary and Director of NeoMedia since our inception. Mr. Fritz also served as
Treasurer of NeoMedia from its inception until May 1, 1996. Since February 1981,
Mr.  Fritz has been an officer  and either  the sole  stockholder  or a majority
stockholder of G.T.  Enterprises,  Inc.  (formerly  Gen-Tech,  Inc.), D.M., Inc.
(formerly  Dev-Mark,  Inc.) and EDSCO,  three  railroad  freight  car  equipment
manufacturing  companies.  Mr.  Fritz  holds a B.S.M.E.  and a Bachelor of Naval
Science  degree from the  University  of  Wisconsin.  Mr. Fritz is the father of
Charles W. Fritz,  NeoMedia's former Chief Executive Officer and Chairman of the
Board of Directors.

         JAMES J. KEIL,  age 75, has been a Director of NeoMedia since August 6,
1996. Mr. Keil currently is a member of the  Compensation  Committee,  the Stock
Option Committee and the Audit Committee.  He is founder and President of Keil &
Keil Associates, a business and marketing consulting firm located in Washington,
D.C.,  specializing  in  marketing,   sales,  document  application  strategies,
recruiting  and  electronic  commerce  projects.  Prior to  forming  Keil & Keil
Associates in 1990,  Mr. Keil worked for 38 years at IBM  Corporation  and Xerox
Corporation in various  marketing,  sales and senior executive  positions.  From


                                       6


1989-1995,  Mr.  Keil  was on the  Board of  Directors  of  Elixir  Technologies
Corporation (a non-public  corporation),  and from 1990-1992 was the Chairman of
its  Board of  Directors.  From  1992-1996,  Mr.  Keil  served  on the  Board of
Directors of Document  Sciences  Corporation.  Mr. Keil holds a B.S. degree from
the  University of Dayton and did Masters level studies at the Harvard  Business
School and the University of Chicago in 1961/62.

         A. HAYES BARCLAY,  age 72, has been a Director of NeoMedia since August
6, 1996,  and currently is a member of the Stock Option  Committee and the Audit
Committee.  Mr. Barclay has practiced law for  approximately 37 years and, since
1967,  has been an  officer,  owner and  employee  of the law firm of  Barclay &
Damisch,  Ltd.  and its  predecessor,  with  offices  in  Chicago,  Wheaton  and
Arlington  Heights,  Illinois.  Mr.  Barclay  holds a B.A.  degree from  Wheaton
College,  a B.S.  from the  University  of Illinois and a J.D. from the Illinois
Institute of Technology - Chicago Kent College of Law.

         NeoMedia's  by-laws  permit the Board of  Directors to fill any vacancy
and such director may serve until the next annual  meeting of  shareholders  and
the due election and qualification of his successor.


MEETINGS

         During the year ended  December  31, 2002,  NeoMedia  held 7 directors'
meetings and each incumbent director attended more than seventy-five  percent of
the total of meetings of the Board of Directors  and the  Committees of which he
is a member.


COMMITTEES OF THE BOARD OF DIRECTORS

         NeoMedia's  Board of  Directors  has an Audit  Committee,  Compensation
Committee and a Stock Option  Committee.  The Board of Directors does not have a
standing Nominating Committee.

         AUDIT  COMMITTEE.  The Audit  Committee is  responsible  for nominating
NeoMedia's  independent  accountants  for  approval  by the Board of  Directors,
reviewing the scope, results and costs of the audit with NeoMedia's  independent
accountants,  and  reviewing  the  financial  statements,  audit  practices  and
internal controls of NeoMedia.  During 2002, members of the Audit Committee were
nonemployee directors James J. Keil and A. Hayes Barclay. During 2002, the Audit
Committee held one meeting.

         COMPENSATION  COMMITTEE.  The Compensation Committee is responsible for
recommending compensation and benefits for the executive officers of NeoMedia to
the Board of  Directors  and for  administering  NeoMedia's  Incentive  Plan for
Management.  Charles W. Fritz, Charles T. Jensen, A. Hayes Barclay, and James J.
Keil,  were members of  NeoMedia's  Compensation  Committee  during  2002.  This
Committee held one meeting during 2002.

         STOCK OPTION COMMITTEE. The Stock Option Committee,  which is comprised
of non-employee  directors,  is responsible for  administering  NeoMedia's Stock
Option  Plans.  A. Hayes  Barclay and James J. Keil are the  current  members of
NeoMedia's  Stock  Option  Committee.  During  2002,  this  Committee  held five
meetings.


COMPENSATION OF DIRECTORS

         Each outside director will be granted  1,000,000 options at an exercise
price of $0.01 per share from the 2003 Stock  Option Plan,  pending  approval of
such stock option plan.  The last grant to outside  directors  was at NeoMedia's
previous  annual  meeting held on June 6, 2002,  at which each outside  director
received  100,000  options with an exercise  price of $0.05 per share.  NeoMedia
does not have a written  compensation  policy for its outside  directors at this
time.


VOTE REQUIRED FOR ELECTION OF NOMINEES FOR DIRECTORS

         Election of the nominees for director  will require that the holders of
at least a plurality of the shares of Common Stock present or represented at the
meeting and entitled to vote thereon vote "FOR".


                                       7



                                   MANAGEMENT

         As of August 6, 2003, NeoMedia's directors and executive officers were:

           NAME                    AGE      POSITION
           ----                    ---      --------
           Charles W. Fritz        47       Chairman of the Board of Directors
           Charles T. Jensen       59       President, Chief Operating Officer,
                                              Acting Chief Executive Officer and
                                              Director
           David A. Dodge          28       Vice-President, Chief Financial
                                              Officer and Controller
           William E. Fritz        73       Secretary and Director
           James J. Keil           75       Director
           A. Hayes Barclay        72       Director

         Below are  biographies  of our  executive  officers  (who were not also
directors) as of August 6, 2003:

         DAVID A.  DODGE  joined  NeoMedia  in 1999 as the  Financial  Reporting
Manager.  Since then,  Mr. Dodge has acted as  NeoMedia's  Director of Financial
Planning and Controller,  and currently holds the title of Vice President, Chief
Financial  Officer and Controller.  Prior to joining NeoMedia in 1999, Mr. Dodge
was an auditor  with Ernst & Young LLP for 2 years.  Mr.  Dodge  holds a B.A. in
economics from Yale  University and an M.S. in accounting from the University of
Hartford, and is also a Certified Public Accountant.


                             EXECUTIVE COMPENSATION

         The following table sets forth certain  information with respect to the
compensation  paid during the years ended December 31, 2002,  2001, and 2000 to:
(i)  NeoMedia's  Chief  Executive  Officer  and (ii)  each of  NeoMedia's  other
executive  officers  as  of  December  31,  2002  who  received  aggregate  cash
compensation  during the year ended  December 31, 2001 in excess of $100,000 for
services rendered to NeoMedia (collectively, "the Named Executive Officers"):



                           SUMMARY COMPENSATION TABLE

                                        ANNUAL COMPENSATION                       LONG-TERM COMPENSATION
                                                             OTHER               SECURITIES
                                                            ANNUAL   RESTRICTED  UNDERLYING
                                                           COMPENS-     STOCK     OPTIONS/     LTIP      ALL OTHER
           NAME AND                   SALARY    BONUS        ATION    AWARD(S)    SARS (1)    PAYOUTS   COMPENSATION
      PRINCIPAL POSITION      YEAR     ($)       ($)          ($)        ($)         (#)        ($)         ($)
------------------------------------------------------------------------------------------------------------------------------

                                                                                 
Charles W. Fritz              2002   $ 144,583    $   -     $  -      $   -      1,800,000    $   -      $    4,470(3)
  Chairman of the Board       2001     221,758        -        -          -        400,000        -          21,532(3),(4)
                              2000     250,000  148,800(2)     -          -         49,000        -          22,502(3),(4)

Charles T. Jensen             2002     163,542        -        -          -        800,000        -           5,079(3)
  Chief Operating Officer,    2001     144,239        -        -          -        240,000        -          17,794(3),(4)
  President, Acting Chief     2000     150,000   87,860(2)     -          -         37,000        -          29,767(3),(4)
  Executive Officer


(1)      Represents  options granted under NeoMedia's 2002 and 1998 Stock Option
         Plans and warrants  granted at the  discretion of  NeoMedia's  Board of
         Directors.

(2)      In June 2001, NeoMedia's Compensation Committee approved an adjustment,
         relating to the Digital:Convergence  patent license fees, to the Annual
         Incentive  Plan for  Management  that  reduced the 2000 bonus payout by
         approximately  $1.1 million.  The original  amount recorded in 2000 and
         reported on NeoMedia's Form 10-KSB for 2000 was $430,800 for Charles W.
         Fritz and  $193,860 for Charles T.  Jensen.  The  adjusted  amounts are
         presented in the table above.


                                       8



(3)      Includes  automobile  expenses  attributable  to  personal  use and the
         corresponding income tax effects.

(4)      Includes life insurance  premiums where policy  benefits are payable to
         beneficiary of the Named Executive Officer.

EMPLOYMENT AGREEMENTS

         NeoMedia does not currently  have any unexpired  employment  agreements
with any of its officers or employees.


INCENTIVE PLAN FOR MANAGEMENT

         Effective as of January 1, 1996,  NeoMedia  adopted an Annual Incentive
Plan for  Management  ("Incentive  Plan"),  which provides for annual bonuses to
eligible  employees  based  upon the  attainment  of  certain  corporate  and/or
individual  performance goals during the year. The Incentive Plan is designed to
provide  additional  incentive to NeoMedia's  management to achieve these growth
and profitability goals. Participation in the Incentive Plan is limited to those
employees  holding  positions  assigned to incentive  eligible salary grades and
whose  participation  is authorized by NeoMedia's  Compensation  Committee which
administers the Incentive Plan,  including  determination of employees  eligible
for  participation  or exclusion.  The Board of Directors  can amend,  modify or
terminate  the  Incentive  Plan for the next plan year at any time  prior to the
commencement of such next plan year.

         To be eligible for  consideration  for inclusion in the Incentive Plan,
an employee must be on NeoMedia's  payroll for the last three months of the year
involved.  Death, total and permanent disability or retirement are exceptions to
such  minimum  employment,  and awards in such  cases are  granted on a pro-rata
basis. In addition, where employment is terminated due to job elimination, a pro
rata  award  may  be  considered.  Employees  who  voluntarily  terminate  their
employment,  or who are  terminated  by NeoMedia for  unacceptable  performance,
prior to the end of the year are not eligible to  participate  in the  Incentive
Plan.  All awards are subject to any  governmental  regulations in effect at the
time of payment.

         Performance  goals  are  determined  for  both  NeoMedia's  and/or  the
employee's  performance  during the year, and if performance goals are attained,
eligible employees are entitled to an award based upon a specified percentage of
their base salary.

         No incentive plan was in place for fiscal year 2002.


STOCK OPTION PLANS

         Effective February 1, 1996 (and amended and restated effective July 18,
1996 and further amended through  November 18, 1996),  NeoMedia adopted its 1996
Stock  Option  Plan  ("1996  Stock  Option  Plan").  The 1996 Stock  Option Plan
provides for the granting of  non-qualified  stock options and "incentive  stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended,  and provides  for the issuance of a maximum of 1,500,000  shares of
common stock.

         Effective March 27, 1998,  NeoMedia  adopted its 1998 Stock Option Plan
("1998 Stock Option Plan"). The 1998 Stock Option Plan provides for the granting
of  non-qualified  stock  options and  provides for the issuance of a maximum of
8,000,000 shares of common stock.

         Effective  June 6, 2002,  NeoMedia  adopted its 2002 Stock Option Plan.
The 2002 Stock Option Plan  provides for authority for the Board of Directors to
the grant  non-qualified  stock  options with respect to a maximum of 10,000,000
shares of common stock.


401(K) PLAN

         NeoMedia  maintains a 401(k) Profit Sharing Plan and Trust (the "401(k)
Plan"). All employees of NeoMedia who are 21 years of age and who have completed
three months of service are  eligible to  participate  in the 401(k)  Plan.  The
401(k) Plan provides that each participant may make elective contributions of up
to 20% of such  participant's  pre-tax  salary (up to a  statutorily  prescribed
annual  limit) to the 401(k) Plan,  although the  percentage  elected by certain
highly  compensated  participants  may be  required  to be  lower.  All  amounts
contributed  to the 401(k) Plan by employee  participants  and earnings on these
contributions  are fully vested at all times.  The 401(k) Plan also provides for
matching and discretionary  contributions by NeoMedia. To date, NeoMedia has not
made any such contributions.


                                       9



OPTIONS AND WARRANTS GRANTED IN THE LAST FISCAL YEAR

         The  following  table  contains  information  concerning  the  grant of
options,  all of which are  nonqualified,  and  warrants to the Named  Executive
Officers during the year ended December 31, 2002:



                                         PERCENT OF
                        NUMBER OF          TOTAL
                        SECURITIES        OPTIONS/                                            POTENTIAL REALIZABLE VALUE
                        UNDERLYING          SARS                                                AT ASSUMED ANNUAL RATES
                         OPTIONS         GRANTED TO      EXERCISE OR                          OF STOCK PRICE APPRECIATION
                         GRANTED        EMPLOYEES IN      BASE PRICE       EXPIRATION               FOR OPTION TERM
       NAME                (#)          FISCAL YEAR       ($/SHARE)           DATE               5% ($)         10% ($)

                                                                                                 
Charles W. Fritz              50,000        0.3%            $0.14       January 9, 2012               $4,245        $10,758
                             250,000        1.4%            $0.05       June 6, 2012                  $7,861        $19,922
                           1,500,000        8.7%            $0.05       June 6, 2007                 $20,721        $45,788

Charles T. Jensen             50,000        0.3%            $0.14       January 9, 2012               $4,245        $10,758
                             250,000        1.4%            $0.05       June 6, 2012                  $7,861        $19,922
                             500,000        2.9%            $0.05       June 6, 2012                 $15,722        $39,844



OPTION AND WARRANT EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES

         The  following  table sets forth  options  exercised by NeoMedia  Named
Executive  Officers  during  fiscal  2002,  and  the  number  and  value  of all
unexercised options at fiscal year end.



                                                       NUMBER OF UNEXERCISED
                       SHARES                          SECURITIES UNDERLYING                 VALUE OF UNEXERCISED IN-
                      ACQUIRED        VALUE               OPTIONS/SARS AT                    THE-MONEY OPTIONS/SARS AT
                     ON EXERCISE    REALIZED             DECEMBER 31, 2002                     DECEMBER 31, 2002 (1)
NAME                     (#)           ($)        EXERCISABLE      UNEXERCISABLE          EXERCISABLE      UNEXERCISABLE

                                                                                             
Charles W. Fritz          140,775       $1,408         2,829,400             219,600               -                  -

Charles T. Jensen               -            -         1,400,586             104,800               -                  -



(1)      The value of the in the money options is  calculated by the  difference
         between the market  price of the stock at December 31, 2002 ($0.01) and
         the  exercise  price  of the  options.  No  options  held by the  Named
         Executive Officers were "In-the-money" as of December 31, 2002.




                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         During February 2002,  NeoMedia  borrowed $10,000 from William E. Fritz
under a note  payable  bearing  interest at 8% per annum with a term of 30 days.
The note was repaid during April 2003.

         During March 2002,  NeoMedia  borrowed  $190,000  from William E. Fritz
under a note  payable  bearing  interest at 8% per annum with a term of 16 days.
The note was repaid during March 2002.

         During  April 2002,  NeoMedia  borrowed  $11,000  from William E. Fritz
under a note  payable  bearing  interest at 8% per annum with a term of 60 days.
The note was repaid during April 2003.

     During November 2002,  NeoMedia issued Convertible Secured Promissory Notes
with an aggregate face value of $60,000 to 3 separate parties, including Charles
W. Fritz,  Chairman of the Board of Directors of NeoMedia;  William E. Fritz, an
outside  director;  and James J.  Keil,  an  outside  director.  The notes  bear
interest  at a rate of 15% per annum,  and  matured  at the  earlier of i.) four
months, or ii.) the date the shares underlying the Cornell Equity Line of Credit
are registered  with the SEC. The notes were  convertible,  at the option of the
holder,  into  either  cash or shares of our common  stock at a 30%  discount to
either  market  price upon  closing,  or upon  conversion,  whichever  is lower.
NeoMedia  also  granted to the  holders an  additional  1,355,670  shares of its
common stock and 60,000 warrants to purchase shares of its common stock at $0.03
per share,  with a term of three  years.  The warrants and shares were issued in
January 2003.  In addition,  since this debt is  convertible  into equity at the
option of the note holder at beneficial conversion rates, an embedded beneficial
conversion  feature was  recorded as a debt  discount  and  amortized  using the
effective interest rate over the life of the debt in accordance with EITF 00-27.


                                       10


Total cost of beneficial conversion feature, fair value of the stock and cost of
warrants  issued  exceed the face value of the notes  payable,  therefore,  only
$60,000,  the face amount of the note, was  recognizable  as debt discount,  and
amortized  over the life of the notes  payable.  During  March 2003,  two of the
affiliated  parties,  Mr.  William  Fritz and Mr.  Keil,  agreed  to extend  the
maturity  date due to the  Company's  capital  constraints.  The Company  repaid
Charles  Fritz's note in full during March 2003, and repaid James J. Keil's note
in full during April 2003.  The Company paid $30,000 of the principal on William
Fritz's note during  April 2003,  and entered into a new note with Mr. Fritz for
the remaining  $10,000.  The new note bears  interest at a rate of 10% per annum
and matures in April 2004.  The new note also includes a provision  under which,
as consideration for the loan, Mr. Fritz will receive a 3% royalty on all future
revenue generated from the Company's intellectual property.

         During  April 2003,  the Board of  Directors  of NeoMedia  approved the
payment in full of  approximately  $154,000 of  liabilities  owed by NeoMedia to
Charles W. Fritz,  NeoMedia's  Founder and  Chairman of the Board of  Directors,
through the issuance of 15,445,967 shares of common stock.

         During April 2003, NeoMedia sold 25,000,000 shares of its common stock,
par value  $0.01,  in a private  placement  at a price of $0.01  per  share.  In
connection  with the  sale,  NeoMedia  also  granted  the  purchaser  25,000,000
warrants to purchase  shares of NeoMedia's  common stock at an exercise price of
$0.01 per share.  The  purchaser  was William E. Fritz,  a member of  NeoMedia's
Board of Directors.  Proceeds to NeoMedia from sale of the shares were $250,000.
On August 6, 2003,  Mr. Fritz  exercised his warrants and  purchased  25,000,000
additional shares of common stock at a price of $0.01 per share.

         During July 2003,  William E. Fritz lent NeoMedia $25,000.  This amount
was added to the principal of the currently  outstanding $10,000 note to William
Fritz maturing in April 2004, raising the total principal  liability to $35,000.
As an inducement for Mr. Fritz to fund the loan,  NeoMedia granted him 2,500,000
warrants to purchase  shares of NeoMedia's  common stock at an exercise price of
$0.01 per share.


             SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a)  of  the  Securities   Exchange  Act  of  1934  requires
NeoMedia's officers and directors,  and persons who own more than ten percent of
a registered class of NeoMedia's equity securities, to file reports of ownership
and changes in ownership with the Securities and Exchange Commission.  Officers,
directors  and  greater  than  ten-percent  shareholders  are  required  by  SEC
regulation to furnish NeoMedia with copies of all Section 16(a) forms they file.

         Based  solely on a review  of the  copies of such  forms  furnished  to
NeoMedia,   NeoMedia   believes  that  during  2002  all  Section  16(a)  filing
requirements  applicable  to  NeoMedia's  officers,  directors  and ten  percent
beneficial owners were complied with.


                  COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS

         The  Compensation  Committee,  which  meets  on a  periodic  basis,  is
comprised  of Messrs.  Charles  W. Fritz and  Charles  T.  Jensen,  officers  of
NeoMedia and James J. Keil, a non-employee member of the Board of Directors. The
Compensation Committee formulates and administers  compensation policies for the
President and Chief Executive  Officer and all vice  presidents of NeoMedia.  (A
Stock Option Committee  consisting of two non-employee  Directors is responsible
for  determining  to whom and under what terms stock options  should be granted,
other than options  which are  automatically  granted to members of the Board of
Directors, under the Plan.)


                      REPORT OF THE COMPENSATION COMMITTEE
             OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION(1)

         The following is a report of the Compensation Committee of the Board of
Directors (the "Committee")  describing the compensation  policies applicable to
NeoMedia's executive officers during the fiscal year ended December 31, 2002.

         The  Committee is  responsible  for  establishing  and  monitoring  the
general compensation policies and compensation plans of NeoMedia, as well as the
specific compensation levels for executive officers.



                                       11


GENERAL COMPENSATION PHILOSOPHY

         Under the supervision of the Committee,  NeoMedia's compensation policy
is designed to attract, motivate and retain qualified key executives critical to
NeoMedia's  success.  It is the  objective of NeoMedia to have a portion of each
executive's  compensation  dependent upon NeoMedia's performance as well as upon
the executive's individual  performance.  Accordingly,  each executive officer's
compensation  package is  comprised  of three  elements:  (i) base salary  which
reflects  individual  performance and expertise,  (ii) variable bonus payable in
cash and tied to the achievement of certain annual  performance  goals and (iii)
stock  options  which are  designed  to align  the  long-term  interests  of the
executive  officer with those of NeoMedia's  stockholders.  NeoMedia did not pay
any bonuses during 2001 or 2002.

         The  Committee  considers  the  total  compensation  of each  executive
officer in establishing  each element of compensation,  other than stock options
which  are the  responsibility  of the Stock  Option  Committee.  All  incentive
compensation  plans are  reviewed  at least  annually  to  assure  they meet the
current strategies and needs of NeoMedia.

         The  summary  below  describes  in more  detail  the  factors  that the
Committee  considers in establishing each of the three primary components of the
compensation package provided to the executive officers.


BASE SALARY

         Base  salary  ranges  are  established  based on  benchmark  data  from
nationally recognized surveys of similar high-technology  companies that compete
with NeoMedia for executive officers and NeoMedia's  research of peer companies.
Each  executive  officer's  base  salary  is  established  on the  basis  of the
individual's qualifications and relevant experience.


VARIABLE BONUS

         The  Committee  believes  that a  substantial  portion  of  the  annual
compensation of each executive  should be in the form of variable  incentive pay
to reinforce  the  attainment of NeoMedia's  goals.  The Incentive  Plan rewards
achievement of specified  levels of corporate  profitability.  A pre- determined
formula, which takes into account profitability against the annual plan approved
by the Board of Directors,  is used to determine the bonus award. The individual
executive  officer's bonus award is based upon discretionary  assessment of each
officer's  performance  during the prior fiscal  year.  NeoMedia did not pay any
bonuses during 2001 or 2002.


COMPENSATION FOR THE CHIEF EXECUTIVE OFFICER

         Charles W. Fritz served as  NeoMedia's  Chairman of the Board and Chief
Executive  Officer from August 1996 until June 2002. During June 2002, Mr. Fritz
resigned  his  duties  as  Chief  Executive  Officer,  and  Charles  T.  Jensen,
NeoMedia's  former Chief  Financial  Officer,  was elected  president  and Chief
Operating Officer, and also named acting CEO.

         BASE SALARY: The Committee reviews the Chief Executive  Officer's major
accomplishments  and reported base salary  information  for the chief  executive
officers of other  companies in NeoMedia's  peer group.  Mr.  Jensen's salary is
currently  $175,00 per year. During the period from May 1, 2003 through July 15,
2003,  Mr.  Jensen's  salary was  reduced to  $120,000  per year in an effort to
reduce costs. He is not under contract with NeoMedia.

         CASH INCENTIVE:  The Chief Executive  Officer's  incentive target is at
the discretion of the  Committee.  Achievement of the target is based on overall
company  income  versus  annual Plan income.  Neither Mr.  Fritz nor Mr.  Jensen
earned a bonus relating to fiscal 2002 or 2001.  During June 2001, the Committee
approved an adjustment, relating to the Digital:Convergence patent license fees,
to the 2000 Incentive Plan that reduced the bonus payout by  approximately  $1.1
million. Mr. Fritz's incentive relating to fiscal 2000 was reduced from $430,800
to $148,800.  The award was paid in April 2003 with shares of NeoMedia's  common
stock.  NeoMedia did not recognize or pay a bonus to any employees during fiscal
2001 or 2002.

                             COMPENSATION COMMITTEE
                             ----------------------
                                Charles W. Fritz
                                Charles T. Jensen
                                  James J. Keil



                                       12


(1)      This Section is not  "soliciting  material," is not deemed "filed" with
         the SEC and is not to be  incorporated  by  reference  in any filing of
         NeoMedia  under  the 1933 Act or the 1934 Act  whether  made  before or
         after the date hereof and  irrespective  of any  general  incorporation
         language in any such filing.



           COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         The Compensation Committee of the Board of Directors currently consists
of Messrs. Fritz, Jensen, and Keil. During the last fiscal year, no interlocking
relationship  existed  between  NeoMedia's  Board of Directors  or  Compensation
Committee  and the board of  directors  or  compensation  committee of any other
company.


                          REPORT OF THE AUDIT COMMITTEE

         The  Audit  Committee  for  the  last  fiscal  year  consisted  of  two
nonemployee  Directors.  The Board of Directors has determined  that none of the
members of the Audit Committee has a relationship to NeoMedia that may interfere
with his independence from NeoMedia and its management.  The Audit Committee has
a written  charter,  a copy of which was filed as Appendix A to  NeoMedia  proxy
statement filed on May 23, 2001.

         The primary  function of the Audit  Committee is to assist the Board of
Directors in fulfilling its oversight  responsibilities  by reviewing  financial
reports and other financial information provided by NeoMedia to any governmental
body or the public,  NeoMedia's  systems of internal controls regarding finance,
accounting,  legal  compliance  and  ethics  that  management  and the  Board of
Directors have established,  and NeoMedia's  auditing,  accounting and financial
processes  generally.  The Audit Committee  annually  recommends to the Board of
Directors  the  appointment  of a firm of  independent  auditors  to  audit  the
financial  statements  of NeoMedia and meets with such  personnel of NeoMedia to
review the scope and the results of the annual audit,  the amount of audit fees,
NeoMedia's  internal  accounting   controls,   NeoMedia's  financial  statements
contained in NeoMedia's Annual Report to Stockholders and other related matters.

         The Audit  Committee has reviewed and  discussed  with  management  the
financial statements for fiscal year 2002 audited by Stonefield Josephson, Inc.,
NeoMedia's   independent  auditors.  The  Audit  Committee  has  discussed  with
Stonefield Josephson,  Inc. various matters related to the financial statements,
including  those  matters  required to be discussed by SAS 61  (Codification  of
Statements  on Auditing  Standards,  AU ss. 380).  The Audit  Committee has also
received the written disclosures and the letter from Stonefield Josephson,  Inc.
required by Independence Standards Board Standard No. 1 (Independence  Standards
Board Standard No. 1, Independence  Discussions with Audit Committees),  and has
discussed with the firm its independence. Based upon such review and discussions
the Audit  Committee  recommended  to the Board of  Directors  that the  audited
financial  statements be included in  NeoMedia's  Annual Report on Form 10-K for
the fiscal  year  ending  December,  2002 for  filing  with the  Securities  and
Exchange Commission.

                                 AUDIT COMMITTEE
                                 ---------------
                                  James J. Keil
                                A. Hayes Barclay

         The report of the Audit Committee  shall not be deemed  incorporated by
reference  by any  general  statement  incorporating  by  reference  this  proxy
statement  into  any  filing  under  the  Securities  Act of 1933 or  under  the
Securities  Exchange  Act  of  1934,  except  to  the  extent  that  the  filing
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.





                                       13





                                  PROPOSAL TWO


             INCREASE IN NUMBER OF AUTHORIZED SHARES OF COMMON STOCK


GENERAL INFORMATION

         NeoMedia's Board of Directors has authorized an amendment to NeoMedia's
Certificate  of  Incorporation  to increase the number of  authorized  shares of
Common Stock from 200,000,000 to 1,000,000,000. As of August 6, 2003, there were
157,650,104  shares  of  Common  Stock  outstanding.  In  addition,   11,972,794
additional shares are reserved for issuance upon exercise of outstanding options
and warrants and 150,000,000 shares will be reserved for issuance under the 2003
Stock Option Plan if approved at the Annual  Meeting.  NeoMedia  has  previously
issued an aggregate of 452,489 shares of a Series A Convertible Preferred Stock,
which  were  subsequently  converted  into the same  number  of shares of Common
Stock,  thereby  reducing  the  shares  of  Preferred  Stock  that the  Board of
Directors is  authorized  under the  Certificate  of  Incorporation  to issue to
24,547,511 shares.

         The additional  shares will be issuable for proper corporate  purposes,
such as the  issuance  of Common  Stock  upon the  exercise  of  options  issued
pursuant to the terms of the 2002,  1998,  and 1996 Stock Option Plans,  and the
2003 Stock  Option Plan,  if  approved,  and  outstanding  warrants;  for future
financing and acquisition transactions; and for dividends or splits. Stockholder
approval of the amendment to NeoMedia's Certificate of Incorporation to increase
the authorized shares of Common Stock will give NeoMedia greater  flexibility by
permitting  such stock to be issued  without the delay of obtaining  stockholder
approval.  The Board of  Directors  believes it to be in the best  interests  of
NeoMedia to increase the number of  authorized  shares of Common Stock to ensure
that  adequate  shares are  available  for  issuance  if such  issuance  becomes
desirable.


         Some  of the  additionally  authorized  shares  may  be  used  for  the
following purposes:

         Loch Energy,  Inc. Merger.  Some of the additionally  authorized shares
may be used as part of a merger  contemplated  by the Company  with Loch Energy,
Inc. ("Loch"). During the first quarter of 2003, NeoMedia announced that that it
had reached an agreement in principle to acquire and merge with Loch, an oil and
gas  provider  based in Humble,  Texas.  Loch  currently  owns mineral and lease
rights to five  properties,  totaling  approximately  130 acres,  near  Houston,
Texas. Loch's portion of the proven reserves on the five properties is estimated
at  7,707,247  barrels.  Loch's  portion of the  probable  reserves  on the five
properties is estimated at an additional 5,963,748 barrels.

         Pursuant to the terms outlined in the  Memorandum of Terms,  the merger
would provide for the shareholders of Loch to receive at closing shares equaling
25% of the  outstanding  shares of NeoMedia as of the date of the  Memorandum of
Terms, March 7, 2003 (the "Memorandum Date"). The Memorandum of Terms also calls
for an earn-out,  under which Loch shareholders could receive additional shares,
based  on oil  production  during  the  first  year  after  the  signing  of the
Memorandum of Terms,  that,  if the below  targets are achieved,  would give the
Loch shareholders just below 50% of the outstanding shares of NeoMedia as of the
Memorandum Date. Based on NeoMedia's shares  outstanding on the Memorandum Date,
the  following  table shows the  percentage  of total shares of NeoMedia  common
stock  (including  shares  issued at  closing)  that  would be issued to Loch at
different level of oil production:

                                FINAL PERCENTAGE OF SHARES OF
                                    NEOMEDIA COMMON STOCK
       OIL PRODUCTION               TO LOCH SHAREHOLDERS
         (IN BARRELS)            (BASED ON MEMORANDUM DATE)
       --------------           ----------------------------
    Greater than 358,075                    49.9%
      286,460 - 358,074                     44.4%
      214,845 - 286,459                     37.5%
      143,230 - 214,844                     28.6%
      Less than 143,230                     25.0%


         The parties are currently  performing due diligence and negotiating the
terms of a definitive agreement. Although a final agreement has not been signed,
it is likely that the oil and share  targets will change from those  outlined in


                                       14


the  Memorandum  of  Terms.  If the  Companies  merge,  and Loch  meets  its oil
production   targets,   it  is  likely  that  Loch   shareholders  will  receive
approximately  (but not to exceed) 50% of NeoMedia's  outstanding  shares at the
time of the definitive agreement.  If this occurs, current NeoMedia shareholders
will experience dilution of their current NeoMedia holdings of up to 50% because
NeoMedia would have  approximately  double the number of  outstanding  shares of
common stock.

      Secure Source Technologies Acquisition.  Additionally,  some of the shares
may be used by the Company for the  potential  purchase by the Company of Secure
Source  Technologies  ("SST").  On July 28, 2003,  the Company  signed a binding
letter of intent to purchase  SST, a provider of security  solutions  and covert
security technology for the manufacturing and financial services industries. SST
owns  patents  that  compliment   NeoMedia's  existing   intellectual   property
portfolio.  Pending  completion  of due diligence  and required  approvals,  the
planned  acquisition  and merger would be completed  through the exchange of 3.5
million shares of NeoMedia's common stock for all outstanding shares of SST. The
parties have not negotiated or completed a definitive agreement to date.

      Equity Line of Credit with Cornell Capital Partners LP. NeoMedia may issue
additional shares of common stock under its Equity Line of Credit Agreement with
Cornell  Capital  Partners  LP, as  NeoMedia's  cash  requirements  dictate.  On
February  11, 2003,  NeoMedia and Cornell  entered into an Equity Line of Credit
Agreement  under  which  Cornell  agreed  to  purchase  up to $10.0  million  of
NeoMedia's  common stock over a two-year  period,  with the timing and amount of
the purchase at the Company's discretion. The maximum amount of each purchase is
$150,000 with a minimum of seven days between  purchases.  The shares are valued
at 98% of the lowest closing bid price during the five-day period  following the
delivery of a notice of purchase by NeoMedia. Cornell retains 5% of the proceeds
of each draw by the Company.  On February 14, 2003,  the SEC declared  effective
the S-1  registration  statement  containing 102 million  shares  underlying the
Equity Line of Credit.

         During the six months  ended June 30,  2003,  NeoMedia  received  gross
funding of  $997,000  from the sale of stock  under the  Equity  Line of Credit,
through the sale of 31,864,244  shares of its common stock.  The following table
summarizes funding received from the Equity line of Credit during the six months
ended June 30, 2003:





                                                                           SIX MONTHS
                                             FIRST           SECOND           ENDED
                                            QUARTER         QUARTER       JUNE 30, 2003
                                            -------         -------       -------------
                                                                  
Number of shares sold to Cornell           3,452,373       28,411,871      31,864,244

Gross funds received by NeoMedia            $312,000         $685,000        $997,000
Less: discount                               (28,000)         (50,000)        (78,000)
                                       ---------------------------------------------------
Net funding received by NeoMedia            $284,000         $635,000        $919,000
                                       ---------------------------------------------------




     Subsequent to June 30, 2003 and through the Record Date, NeoMedia has drawn
an additional $400,000 gross funds from Cornell, leaving $8,603,000 remaining on
the Equity Line of Credit.

      Other Vendors.  NeoMedia also plans to issue additional shares to vendors,
in lieu of cash,  where it deems  appropriate.  NeoMedia does not currently have
any agreements,  written or otherwise, to issue additional stock to vendors, and
management  cannot  anticipate  the number of shares  that will be issued in the
future for such purposes.  Any stock  issuances to settle  outstanding  debt are
subject to approval by NeoMedia's Board of Directors.


         In  addition  to the  reasons  specified  above,  NeoMedia's  Board  of
Directors believes that it is desirable to have additional  authorized shares of
common  stock  available  for  possible  future   financings,   possible  future
acquisition  transactions  and other  general  corporate  purposes.  Having such
additional  authorized  shares of common  stock  available  for  issuance in the
future would give our Company  greater  flexibility and may allow such shares to
be issued  without  the expense  and delay of a special  shareholders'  meeting.
Although such issuance of  additional  shares with respect to future  financings
and acquisitions would dilute existing  shareholders,  management  believes that
such transactions would increase the value of our Company to our shareholders.


                                       15


         Except the  transactions  described above, the Company is not currently
considering  any other  acquisition  transactions,  future  financings  or other
general  corporate  purposes  that would  require the  issuance of shares of the
Company's common stock.



         There are possible negative  ramifications  associated with authorizing
additional shares of common stock. These include the following:

     o    Dilution to the existing shareholders, including a decrease in our net
          income per share in future periods.  This could cause the market price
          of our stock to decline.

     o    The issuance of authorized but unissued stock could be used to deter a
          potential  takeover of NeoMedia  that may  otherwise be  beneficial to
          shareholders  by diluting  the shares  held by a  potential  suitor or
          issuing  shares to a  shareholder  that will vote in  accordance  with
          NeoMedia's Board of Directors'  desires.  A takeover may be beneficial
          to independent  shareholders because, among other reasons, a potential
          suitor may offer such shareholders a premium for their shares of stock
          compared to the then-existing market price. NeoMedia does not have any
          plans or proposals to adopt  provisions or enter into  agreements that
          may have material anti-takeover consequences.

         The additional  shares of Common Stock  authorized would become part of
NeoMedia's  existing  class of Common  Stock and would have the same  rights and
privileges as the shares of Common Stock presently outstanding.  All outstanding
shares of Common  Stock will  continue to have one vote per share.  There are no
preemptive  rights with  respect to  NeoMedia's  Common  Stock.  NeoMedia has no
present  agreement  or intent to issue any  additional  shares of Common  Stock,
other  than  pursuant  to the  foregoing  Stock  Option  Plans  and  outstanding
warrants.

         The Board of Directors of NeoMedia has the authority to issue shares of
Preferred  Stock  authorized  in one or  more  series  and  to fix  the  powers,
designations,   rights,   preferences  and   restrictions   thereof,   including
liquidation  preferences  and  rights as to  dividends,  conversion,  voting and
redemption,  and the number of shares  constituting  each  series,  without  any
further vote or action by NeoMedia's  shareholders.  The issuance of a series of
Preferred  Stock in  certain  circumstances,  based on its  terms,  may delay or
prevent a change in  control of  NeoMedia,  may  discourage  bids for the Common
Stock at a premium  over the market  price of the Common  Stock and may directly
affect the market  price of and the voting and other rights of holders of Common
Stock.  NeoMedia currently has no plans to issue any further series of Preferred
Stock.

         If the  amendment to our  Company's  Certificate  of  Incorporation  is
adopted,  an amendment to the Certificate of  Incorporation of NeoMedia shall be
filed  with the  Delaware  Secretary  of State  so that  Article  IV shall be as
follows:

         "The total number of shares of capital  stock that the  Corporation  is
authorized to issue is  1,025,000,000,  which are to be divided into two classes
as follows:  1,000,000,000 shares of common stock, par value $.01 per share; and
25,000,000 shares of preferred stock, par value $.01 per share.


VOTE REQUIRED FOR AN INCREASE IN AUTHORIZED SHARES OF COMMON STOCK

         Approval of an amendment to NeoMedia's  Certificate of Incorporation to
increase the number of  authorized  shares of common stock will require that the
holders  of at least a  majority  of the  shares  of  common  stock  present  or
represented at the meeting and entitled to vote thereon vote "FOR".


                    RECOMMENDATION OF THE BOARD OF DIRECTORS

         OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL
OF AN AMENDMENT TO OUR COMPANY'S  CERTIFICATE OF  INCORPORATION  TO INCREASE THE
NUMBER OF AUTHORIZED  SHARES OF COMMON STOCK,  $0.01 PAR VALUE, FROM 200,000,000
TO1,000,000,000 SHARES.


                            DESCRIPTION OF SECURITIES

         The following  description of our capital stock and certain  provisions
of our  Certificate of  Incorporation  and By-Laws is a summary.  For additional
information,  please refer to our Certificate of Incorporation,  as amended, and
By-Laws.



                                       16


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 stockholders. Holders of the common
stock do not have cumulative voting rights, 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 the 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
nonassessable. In the event we were to elect to sell additional shares of common
stock following this offering, investors in this offering would have no right to
purchase additional shares. As a result,  their percentage equity interest in us
would be diluted.

         The shares of our common stock  offered in this  offering will be, when
issued and paid for, fully paid and not liable for further call and  assessment.
Except as otherwise  permitted 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  voted as a single  class
present at a meeting of stockholders at which a quorum  consisting of a majority
of the outstanding shares of common stock is present in person or proxy.


PREFERRED STOCK

         The Company 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 the Board of Directors.
Preferred  stock may be issued in the future in  connection  with  acquisitions,
financings,  or other matters,  as the Board of Directors deems appropriate.  In
the event that the Company  determines to issue any shares of preferred stock, a
certificate of designation containing the rights, privileges, and limitations of
this series of preferred stock shall be filed with the Secretary of State of the
State of Delaware.  The effect of this preferred stock designation power is that
the 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  NeoMedia  without  further  action by its
stockholders,  and may  adversely  affect  the  voting  and other  rights of the
holders of the  Company's  common  stock.  The issuance of preferred  stock with
voting and conversion  rights may also adversely  affect the voting power of the
holders of the Company's  common stock,  including the loss of voting control to
others.

         During December 1999, the 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 carries the following rights:

         o        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;

         o        One hundred votes per each share of Series A Preferred on each
                  matter submitted to a vote of the Company's stockholders;

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

         o        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  this
                  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.


                                       17


         o        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.

         o        The right to be  redeemed  in  accordance  with the  Company's
                  stockholders 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 to be issued in connection  with the
Company's  stockholders  rights plan. No shares of Series A Preferred  have been
issued to date.

         On June 19, 2001,  the Board of  Directors  approved a  Certificate  of
Designations  to  Create a Class of  Series A  Convertible  Preferred  Stock for
NeoMedia  Technologies,  Inc., filed with the Secretary of State of the State of
Delaware  on June 20,  2001.  By this  approval  and filing,  47,511  shares are
designated  as Series A Convertible  Preferred  Stock.  The  Company's  Series A
Convertible  Preferred  Stock,  par value  $0.01 per  share,  has the  following
rights:


                  o        Series A Convertible  Preferred is  convertible  into
                           shares of common stock at a one-to-one ratio, subject
                           to  proportional  adjustments  in the  event of 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;

                  o        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;

                  o        Upon merger or  consolidation,  or the sale, lease or
                           other conveyance of all or  substantially  all of the
                           Company's  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;

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


         In June 2001,  452,489  shares of Series A Convertible  Preferred  were
issued to About.com,  Inc. pursuant to a certain Agreement for Payment in Common
Stock, in lieu of cash payment to About.com for online advertising  services. On
January 2, 2002, such shares were converted into 452,489 shares of common stock.

         On January 16, 2002,  the Board of Directors  approved a Certificate of
Designation,  Preferences,  Rights and  Limitations of Series B 12%  Convertible
Redeemable  Preferred  Stock of  NeoMedia  Technologies,  Inc.,  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.  The Company's Series B 12% Convertible  Redeemable
Preferred Stock, par value $0.01 per share, has the following rights:


                  o        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;

                  o        Series B Preferred is redeemed 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;

                  o        Series B  Preferred  receive  proceeds  of $12.00 per
                           share upon the Company's liquidation,  dissolution or
                           winding up;

                  o        To the extent,  not redeemed on the first anniversary
                           of  issuance,  Series B  Preferred  is  automatically
                           convertible  into  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
                           $0.20 and the lowest publicly-sold share price during
                           the 90 day period  preceding the conversion date, but
                           in  no  event  more  than  19.9%  of  the   Company's
                           outstanding  capital stock as of the date immediately
                           prior to conversion.



                                       18


                  o        Upon merger or  consolidation,  or the sale, lease or
                           other conveyance of all or  substantially  all of the
                           Company's  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

                  o        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.

         The  Company's  Preferred  Stock is currently  comprised of  25,000,000
shares,  par value $0.01 per share,  of which 200,000  shares are  designated as
Series A  Preferred  Stock,  none of  which  are  issued  or  outstanding,  and,
following  the  conversion  into  common  stock of  452,489  shares  of Series A
Convertible  Preferred  Stock issued to  About.com,  of which 47,511  shares are
designated as Series A Convertible Preferred Stock, none of which are issued and
outstanding,  and of which 100,000 shares of Series B 12% Convertible Redeemable
Preferred Stock,  none of which are issued and  outstanding.  We have no present
agreements  relating to or requiring the  designation  or issuance of additional
shares of preferred stock.


WARRANTS AND OPTIONS

         As of August 6, 2003 there were  outstanding  warrants  and  options to
purchase  6,195,000  and  5,777,794,  shares  of  the  Company's  common  stock,
respectively,  with exercise prices ranging from $0.01 to $10.88.  The number of
shares  issuable  upon  exercise  and the  exercise  prices of the  warrants are
subject to  adjustment in the event of certain  events such as stock  dividends,
splits and  combinations,  capital  reorganization  and with  respect to certain
warrants,  issuance of shares of common stock at prices below the then  exercise
price of the warrants.

         As of June 6, 2002,  NeoMedia  shareholders  approved  the 2002  Option
Plan. Under this plan, NeoMedia is authorized to grant to employees,  directors,
and  consultants  up to 10,000,000  options to share of its common stock.  As of
August 6, 2003, we had issued  10,000,000  options under the 2002 plan, of which
7,819,500 had been exercised.

         In March 2002, the Company  adopted a warrant  repricing  program.  The
program  entitled holders of up to 1.2 million warrants to exercise the warrants
within a period ending the earlier of September 19, 2002 or the expiration  date
of the  warrant at a price per share equal to the greater of $0.12 or 50% of the
closing sales per share price on the OTC Bulletin Board of the Company's  common
stock  on  the  trading  date  immediately   preceding  the  date  of  exercise.
Approximately  0.4 million of the warrants placed in the program were exercised.
The Company recognized  approximately $38,000 in expense relating to the program
during the first nine months of 2002.

         During  April 2002,  the Company  repriced  7.4  million  common  stock
options held by employees,  consultants and advisors for a period of six months.
During the term of the option  repricing  program,  participating  holders  were
entitled to exercise subject options at an exercise price per share equal to the
greater of (1) $0.12 or (2) 50% of the last sale price of shares of Common Stock
on the OTCBB,  on the trading date  immediately  preceding the date of exercise.
Shortly after the  announcement of the repricing  program,  the market price for
the  Company's  common  stock fell below  $0.12,  and has not closed above $0.12
since. As a result, no options were exercised under the terms of the program and
we did not recognize any expense  relating to the repricing  program  during the
first six months of 2002.

      During May 2003,  the Company  re-priced  approximately  8.0 million stock
options under a 6-month repricing program.  Under the terms of the program,  the
exercise price for outstanding  options under the Company's 2002, 1998, and 1996
Stock Option Plans was restated to $0.01 per share for a period of 6 months.  In
accordance with FASB Interpretation, FIN 44, Accounting for Certain Transactions
Involving Stock Transactions,  the award has been accounted for as variable from
May 19, 2003 through the period ended June 30, 2002. Accordingly,  approximately
$178,000  was recorded as  compensation  in general and  administrative  expense
during the three months ended June 30, 2003.


      During April 2003, the Company repriced approximately 1.9 million warrants
held by  Thornhill  Capital  LLC  ("Thornhill"),  an outside  consultant  to the
Company. Of the 1.9 million warrants, 1.5 million had an exercise price of $0.05
per share,  and  approximately  0.4 million  had an exercise  price of $2.09 per
share.  All 1.9 million  warrants were repriced to $0.00 per share.  The Company


                                       19


recognized  an  expense of  approximately  $26,000  related to this  transaction
during the second quarter of 2003.




ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION

         On December 10, 1999,  the Board of  Directors  adopted a  stockholders
rights plan and declared a non-taxable dividend of one right on each outstanding
share of the Company's  common stock to  stockholders  of record on December 10,
1999 and each share of common  stock  issued  prior to the rights  plan  trigger
date.  The  stockholder  rights  plan was adopted as an  anti-takeover  measure,
commonly  referred  to as a  "poison  pill."  The  stockholder  rights  plan was
designed to enable all  stockholders  to receive fair and equal treatment in any
proposed  takeover of the corporation and to guard against partial or two-tiered
tender offers,  open market  accumulations and other hostile takeover tactics to
gain  control of NeoMedia.  The  stockholders  rights plan,  which is similar to
plans adopted by many leading public  companies,  was not adopted in response to
any effort to acquire  control of NeoMedia at the time of  adoption.  Certain of
the Company's directors, officers and principal stockholders,  Charles W. Fritz,
William E. Fritz and The Fritz Family  Limited  Partnership  and their  holdings
were exempted  from the  triggering  provisions  of the Company's  "poison pill"
plan, as a result of the fact that,  as of the plans  adoption,  their  holdings
might have otherwise triggered the "poison pill".






                                       20





                                 PROPOSAL THREE


                     APPROVAL OF THE 2003 STOCK OPTION PLAN


GENERAL INFORMATION

         NeoMedia  currently has in effect its 1996 Stock Option Plan (the "1996
Stock Option Plan"),  1998 Stock Option Plan (the "1998 Stock Option Plan"), and
2002 Stock Option Plan (the "2002 Stock Option  Plan"),  the purpose of which is
to retain the  services of  selected  employees  and to attract  new  employees,
consultants,  advisors and directors by providing  them with the  opportunity to
acquire a  proprietary  interest  in  NeoMedia  and thus share in its growth and
success.  The 1996 Stock  Option Plan  provides for the granting of a maximum of
1,500,000  "incentive  stock options"  within the meaning of Section 422A of the
Internal  Revenue  Code of 1986,  as amended  ("Code"),  and  non-qualified  (or
nonstatutory)  stock  options.  As of  August  6,  2003,  125,494  options,  all
non-qualified,  to purchase  shares of Common Stock were  outstanding  under the
1996 Stock Option Plan.  The 1998 Stock Option Plan provides for the granting of
a  maximum  of  8,000,000   incentive  stock  options,   and  non-qualified  (or
nonstatutory)  stock  options.  As of August 6,  2003,  3,166,800  options,  all
non-qualified,  to purchase  shares of Common Stock were  outstanding  under the
1998 Stock Option Plan.  The 2002 Stock Option Plan provides for the granting of
a  maximum  of  10,000,000   incentive  stock  options,  and  non-qualified  (or
nonstatutory)  stock  options.  As of August 6,  2003,  2,485,500  options,  all
non-qualified, to purchase shares of Common Stock were outstandingunder the 2002
Stock Option Plan.

         In the opinion of the Board of Directors, NeoMedia and its stockholders
have  benefited  substantially  from being able to grant  options  under the its
Stock Option Plans in addition to its authority to grant warrants. Such options,
in the opinion of the Board of Directors, have been a highly effective incentive
to the employees,  consultants  and directors  receiving them and have created a
commonality  of  purpose  between  NeoMedia's   officers  and  other  employees,
consultants,   directors  and  its  stockholders   with  respect  to  NeoMedia's
strategies for profitable growth and share-value appreciation. In the opinion of
the Board of Directors,  NeoMedia's  ability to provide additional stock options
to its officers, employees, consultants and directors in the future will benefit
NeoMedia's  long-term  performance.  Accordingly,  the  Board of  Directors  has
adopted the 2003 Stock Option Plan (the "Plan") and believes it is in NeoMedia's
best interest for the  shareholders to approve the Plan which will authorize the
Board of  Directors to award stock  options to its  officers,  other  employees,
consultants and directors without further stockholder actions.


THE PLAN AND PARTICIPANTS

         The Plan authorizes the grant of  non-qualified  options to purchase up
to an  aggregate  of  150,000,000  shares of  NeoMedia's  Common  Stock,  to (i)
officers and other  full-time  salaried  employees of NeoMedia with  managerial,
professional or supervisory responsibilities,  (ii) consultants and advisors who
render bona fide services to NeoMedia,  in each case, where the Committee of the
Board of Directors which will administer the Plan, determines that such officer,
employee,  consultant  or  advisor  has  the  capacity  to  make  a  substantial
contribution to the success of NeoMedia,  and (iii) to NeoMedia's directors.  As
used  herein  with  respect  to  the  Plan,   references  to  NeoMedia   include
subsidiaries of NeoMedia.

         The  purposes of the Plan are to enable  NeoMedia to attract and retain
persons of ability as officers and other  employees,  to attract and retain able
directors  and  consultants,  and to  motivate  such  persons  to use their best
efforts on behalf of NeoMedia by providing them with an equity  participation in
NeoMedia.  The full text of the Plan is set forth in Appendix A hereto,  and the
following description is qualified in its entirety by reference to Appendix A.

         The Plan will be administered  by a Committee,  which will be appointed
by NeoMedia's  Board of Directors and must consist of two or more members of the
Board of  Directors,  each of whom must be a  "disinterested"  person within the
meaning of Rule 16b-3 under the  Securities  Exchange Act of 1934. The appointed
Committee will be the Stock Option committee, which is currently comprised of A.
Hayes Barclay and James J. Keil. Under the terms of the Plan, the Committee will
have the  authority to  determine,  subject to the terms and  conditions  of the
Plan, the persons to whom options are granted,  the number of options granted to
each  optionee  and the terms  and  conditions  of each  option,  including  its
duration.

         The Plan can be amended, suspended,  reinstated or terminated, in whole
or in part, by the Board of Directors;  provided, however, that without approval
of NeoMedia's  stockholders,  no amendment shall be made which (i) increases the
maximum  number of shares of Common Stock which may be subject to stock  options
granted under the Plan, except for specified adjustment provisions, (ii) extends
the term of the Plan, (iii) increases the period during which a stock option may


                                       21


be  exercised  beyond  ten years  from the date of the  grant,  (iv)  materially
increases the benefits  accruing to participants  under the Plan, (v) materially
modifies the  requirements as to eligibility for  participation  in the Plan, or
(vi)  will  cause  stock  options  granted  under  the  Plan to fail to meet the
requirements  of Rule  16b-3.  Unless  previously  terminated  by the  Board  of
Directors,  the Plan will terminate  exactly ten (10) years from the date of its
approval by the Board of  Directors,  and no  additional  options may be granted
under the Plan after that date.


OPTION TERMS AND GRANTS

         Stock options may be granted under the Plan to purchase Common Stock at
an exercise  price  determined by the Committee  which may be less than the fair
market  value of the shares on the date of grant but not less than the par value
of $0.01 per share.  There is no  limitation on the number of stock options that
may be granted to any optionee under the Plan.

         Exercise  of the  options  will be  contingent  on (a)  the  optionee's
employment  or  relationship  with  NeoMedia  at the  time of  exercise  and (b)
determination  by the  Committee  no later than 30 days prior to  exercise  that
performance of an optionee merits such exercise.

         The Plan provides that, if a stock option or portion thereof expires or
is terminated, canceled or surrendered for any reason without being exercised in
full,  the  unpurchased  shares of Common Stock which were subject to such stock
option or portion  thereof shall be available for future grants of stock options
under the Plan.

         Under the terms of the Plan,  the option  price for all options must be
paid in cash,  by check,  bank draft or money  order,  or with  Common  Stock of
NeoMedia  owned by the  optionee  and having a fair market  value on the date of
exercise equal to the aggregate  exercise price of the shares to be so purchased
(subject  to  limitations  or  conditions  determined  by the  Committee  in its
discretion), or a combination thereof.

         Under its terms, the Plan becomes  effective upon adoption by the Board
of  Directors  subject,  however,  to approval of the Plan by the  stockholders.
Options may be granted from time to time  following  adoption of the Plan by the
Board of Directors and prior to approval by the  stockholders;  however,  if the
Plan is not  approved  by the  stockholders,  then  the  Plan,  and all  options
previously granted under it, become null and void and of no effect.

         Options  granted under the Plan will not be assignable or  transferable
except by will or the laws of  intestate  succession  or pursuant to a qualified
domestic relations order. Options granted under the Plan may be exercised by the
optionee (or the  optionee's  legal  representative)  only while the optionee is
employed by NeoMedia,  or within one year after termination of employment due to
a permanent  disability,  or within three months after termination of employment
due to retirement. The executor or administrator of a deceased optionee's estate
or the person or persons to whom the deceased  optionee's rights thereunder have
passed by will or by the laws of descent or  distribution  shall be  entitled to
exercise the option within one year after the death of the optionee.

         Options  expire  immediately  in the event that the employment or other
relationship  of the  relevant  optionee  with  NeoMedia is  terminated  with or
without cause or expires;  provided,  however,  in the event NeoMedia terminates
the employment of an optionee who at the time of such termination was an officer
of NeoMedia and had been  continuously  employed by NeoMedia during the two-year
period  immediately  preceding  such  termination,  for any reason  except "good
cause" (as defined in the Plan),  each stock option held by such optionee (which
had not then  previously  lapsed or  terminated  and which had been held by such
optionee  for  more  than  six  months  prior  to  such  termination)  shall  be
exercisable  for a period of three months after such  termination  to the extent
otherwise  exercisable  during the  period.  Options  granted to a  non-employee
director  who  ceases to be a  director  are  exercisable  within one year after
termination of service. All of the aforementioned  exercise periods set forth in
this paragraph are subject to the further  limitation  that an option shall not,
in any case, be exercisable beyond its stated expiration date.

         The  purchase  price  and the  number  and kind of  shares  that may be
purchased  upon exercise of options  granted  under the Plan,  and the number of
shares which may be granted under the Plan, are subject to adjustment in certain
events,  including stock splits,  recapitalizations and reorganizations.  If any
portion of an option  terminates or lapses without being  exercised,  the shares
which were subject to the unexercised portion will continue to be subject to the
Plan,  and new options  may be granted in respect of such  shares in  accordance
with the terms and conditions of the Plan.


FEDERAL TAX ASPECTS OF THE PLAN

         Non-qualified  options  granted  under  the  Plan are not  intended  to
qualify  for the  favorable  income  tax  treatment  accorded  under the Code to
incentive stock options.  Each such optionee should not recognize any income for
Federal  income tax purposes at the time of the grant of options under the Plan.


                                       22


Upon  exercise,  (a) ordinary  income is realized by such  optionee in an amount
equal to the  difference  between the option  price and the fair market value of
the shares on the date of exercise  (NeoMedia may be required to withhold income
tax on this  amount)  and (b)  generally  NeoMedia  will  be  entitled  to a tax
deduction for the same amount.  Upon disposition of the shares,  appreciation or
depreciation  after the date of exercise is treated as  short-term  or long-term
capital  gain or loss  and  will  not  result  in any  additional  deduction  by
NeoMedia.  If such optionee  exercises a nonqualifed option by delivering shares
of Common Stock to NeoMedia in payment of the exercise price, special rules will
apply.

         On July 16, 2003, the Company's  Board of Directors  voted to authorize
the issuance of approximately 31.7 million stock options to employees, under the
2003 Stock  Option  Plan  contingent  upon the passage at the  Company's  annual
meeting on  September  24,  2003,  of a proposal to adopt the 2003 Stock  Option
Plan.  These options will be allocated to the individuals set forth in the table
below.

PENDING OPTION GRANT

         On July 16, 2003, the Company's  Board of Directors  voted to authorize
the issuance of approximately  31.7 million stock options to employees,  and 1.0
million options to each of the Company's three outside directors, under the 2003
Stock Option Plan,  contingent upon the passage at the Company's  annual meeting
on September 24, 2003, of a proposal to adopt the 2003 Stock Option Plan.  These
options will only be issued upon approval by the  shareholders of the 2003 Stock
Option Plan. These options will be allocated to the individuals set forth in the
table below.



                                                                  NUMBER OF            FAIR VALUE OF
                                                                  OPTIONS (1)           OPTIONS (2)
                                                                  -----------           -----------
                                                                                   
Charles T. Jensen, President, COO, Acting CEO, and director (3)   10,000,000             $279,996
Charles W. Fritz, Chairman of the Board of Directors (4)          10,000,000             $279,996
David A. Dodge, Vice President and CFO                            2,000,000               $55,999
Kevin Hunter, Chief Scientist (5)                                 2,000,000               $55,999

Executive Group (3 persons)                                       22,000,000             $615,991

Non-Executive Director Group (3 persons)                          3,000,000               $83,999

Non-Executive Officer Employee Group (12 persons)                 9,670,450              $270,769


----------------------------------------

(1)      - All options  were  granted at an  exercise  price of $0.01 per share,
         with a term of ten years from the date of grant.

         Federal  Income Tax  Consequence:  All options to be granted  under the
         2003 Stock  Option  Plan,  if  approved,  will be  non-qualified  stock
         options.  Each  optionee  should not  recognize  any income for Federal
         income tax purposes at the time of the grant of options under the Plan.
         Upon  exercise,  (a) ordinary  income is realized by the optionee in an
         amount  equal to the  difference  between the option price and the fair
         market  value of the shares on the date of  exercise  (NeoMedia  may be
         required  to  withhold  income tax on this  amount)  and (b)  generally
         NeoMedia will be entitled to a tax deduction for the same amount.  Upon
         disposition of the shares,  appreciation or depreciation after the date
         of exercise is treated as short-term or long-term  capital gain or loss
         and will not result in any  additional  deduction by NeoMedia.  If such
         optionee exercises a nonqualified option by delivering shares of Common
         Stock to NeoMedia in payment of the exercise price,  special rules will
         apply.

(2)      - Fair value is calculated using the Black/Scholes  pricing model, with
         the following  assumptions:  Risk free interest rate of 4.5%,  expected
         life of 10 years, no dividends, and volatility of 264%.

(3)      - Mr. Jensen became President, COO, and Acting CEO on June 6, 2002.

(4)      - Mr. Fritz served as CEO until June 6, 2002.


                                       23


(5)      - Per Item 10(b)(2)(ii)(F), this non-executive received greater than 5%
         of the options granted, and therefore is disclosed separately


VOTE REQUIRED FOR APPROVAL OF THE PLAN

         Approval  of the  Plan  will  require  that the  holders  of at least a
majority of the shares of Common Stock present or represented at the meeting and
entitled to vote thereon vote "FOR".


RECOMMENDATION OF THE BOARD OF DIRECTORS

         THE BOARD OF DIRECTORS OF NEOMEDIA RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE 2003 STOCK OPTION PLAN.






                                       24




                                    AUDITORS

         Following  the  recommendation  of the  Audit  Committee,  the Board of
Directors has selected Stonefield Josephson, Inc. as the independent auditors of
the  Corporation  and its  consolidated  subsidiaries  for the fiscal year ended
December 31, 2003.


AUDIT FEES

         The aggregate fees billed by Stonefield Josephson,  Inc. ("Stonefield")
for professional  services rendered for the audit of NeoMedia's annual financial
statements for the fiscal year ended December 31, 2002 and for the review of the
financial  statements  included  in  NeoMedia's  Reports  on Form  10-Q  for the
quarterly periods during 2002 were  approximately  $107,000.  The aggregate fees
billed by Stonefield  and Ernst & Young LLP relating to accounting  services for
reviews and independent auditors' consents were approximately $58,000.


FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES

         There were no fees  billed by  Stonefield  Josephson,  Inc.  and Arthur
Andersen  LLP  for  financial  information  systems  design  and  implementation
professional services for the year ended December 31, 2002.


OTHER FEES

         There were no other fees billed  Stonefield  Josephson,  Inc. or Arthur
Andersen LLP to NeoMedia for other fees for the year ended December 31, 2002.


                         OTHER MATTERS TO BE ACTED UPON
                      AT THE ANNUAL MEETING OF STOCKHOLDERS

         The management of NeoMedia knows of no other matters to be presented at
the Annual Meeting. Should any matter requiring a vote of the stockholders other
than those  listed in this Proxy  Statement  arise at the  meeting,  the persons
named in the proxy will vote the proxies in accordance with their best judgment.


                             ADDITIONAL INFORMATION

         PROPOSALS OF  SHAREHOLDERS  FOR THE NEXT ANNUAL  MEETING.  Proposals of
shareholders  intended  for  presentation  at the 2004  annual  meeting  must be
received by NeoMedia on or before  December 15, 2003, in order to be included in
the proxy statement and form of proxy for that meeting.  Additionally,  NeoMedia
must have notice of any shareholder  proposal to be submitted at the 2004 Annual
Meeting  (but not required to be included in the Proxy  Statement)  by March 18,
2004, or such proposal  will be considered  untimely  pursuant to Rule 14a-4 and
Rule 14a-5(e) under the Exchange Act and persons named in the proxies  solicited
by management may exercise  discretionary  voting authority with respect to such
proposal.

         PROXY  SOLICITATION  COSTS.  Our  Company is  soliciting  the  enclosed
proxies.  The cost of  soliciting  proxies in the enclosed form will be borne by
our  Company.  Officers  and regular  employees  of our Company may, but without
compensation other than their regular  compensation,  solicit proxies by further
mailing  or  personal  conversations,  or  by  telephone,  telex,  facsimile  or
electronic means. Our Company will, upon request,  reimburse brokerage firms for
their reasonable expenses in forwarding solicitation materials to the beneficial
owners of stock.


                                       25


         INCORPORATION  BY REFERENCE.  Certain  financial and other  information
required  pursuant to Item 13 of the Proxy Rules is incorporated by reference to
NeoMedia's  Annual  Report on Form 10-K for the year ended  December  31,  2002,
which are being  delivered to the  shareholders  with this proxy  statement.  In
order to facilitate  compliance with Rule 2-02(a) of Regulation S-X, one copy of
the  definitive  proxy  statement  will  include a manually  signed  copy of the
accountant's report.



August 18, 2003                              /s/ William E. Fritz
                                             --------------------
Fort Myers, Florida                          William E. Fritz, Secretary








                                       26



                                   APPENDIX A


                           NEOMEDIA TECHNOLOGIES, INC.
                             2003 STOCK OPTION PLAN


         1.       PURPOSE OF THE PLAN

         This Stock  Option Plan (the "Plan") is intended as an incentive to key
employees,  consultants  and  directors  of  NeoMedia  Technologies,  Inc.  (the
"Company")  and its  subsidiaries.  The  purpose  of the Plan is to  assist  the
Company in retaining  its employees  with a high degree of training,  experience
and  ability,  to attract new  employees  and  consultants  whose  services  are
considered  unusually  valuable and to provide stock ownership  opportunities to
the members of the Board of  Directors  of the Company who are not  employees of
the Company or a subsidiary ("Nonemployee Directors").

         2.       GENERAL PROVISIONS

         2.1      DEFINITIONS AS USED IN THE PLAN:

         (a) "Board of Directors" means the Board of Directors of the Company.

         (b) "Code" means the Internal  Revenue Code of 1986,  including any and
all amendments thereto.

         (c) "Committee" means the options  committee  appointed by the Board of
Directors from time to time to administer the Plan pursuant to Section 2.2.

         (d) "Common Stock" means the Company's Common Stock, $.01 par value.

         (e)  "Participant"  means a  person  to whom a Stock  Option  has  been
granted under the Plan.

         (f) "Rule  16b-3"  means Rule 16b-3  promulgated  under the  Securities
Exchange Act of 1934, as amended from time to time, or any successor rule.

         (g) "Stock Option" means an option granted under the Plan.

         (h) "Subsidiary"  means any corporation  (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
granting  of the Stock  Option,  each of the  corporations  other  than the last
corporation  in the unbroken chain owns 50% or more of the total voting power of
all classes of stock in one of the other corporations in such chain.

         2.2      ADMINISTRATION OF THE PLAN

         (a) The Plan shall be  administered by the Committee which shall at all
times consist of two (2) or more persons,  each of whom shall be a member of the
Board of Directors. Each member of the Committee shall be a disinterested person
(as such term is defined in Rule 16b-3). The Board of Directors may from time to
time remove  members  from, or add members to, the  Committee.  Vacancies on the
Committee,  howsoever  caused,  shall be filled by the Board of  Directors.  The
Committee  shall select one of its members as Chairman,  and shall hold meetings
at such times and places as it may determine.

         (b) The Committee shall have the full power,  subject to and within the
limits of the Plan, to: (i) interpret and administer the Plan, and Stock Options
granted  under  it;  (ii)  make and  interpret  rules  and  regulations  for the
administration  of the Plan and to make  changes  in and  revoke  such rules and
regulations  (and in the exercise of this power,  shall generally  determine all
questions  of policy and  expediency  that may arise and may correct any defect,
omission,  or inconsistency in the Plan or any agreement evidencing the grant of
any Stock  Option in a manner and to the extent it shall deem  necessary to make
the Plan fully  effective);  (iii) determine those persons to whom Stock Options
shall be granted  and the number of Stock  Options to be granted to any  person;
(iv)  determine  the terms of Stock Options  granted under the Plan,  consistent
with the  provisions of the Plan;  and (v)  generally,  exercise such powers and
perform  such  acts in  connection  with the  Plan as are  deemed  necessary  or


                                      A-1


expedient to promote the best interests of the Company.  The  interpretation and
construction  by the  Committee  of any  provision  of the Plan or of any  Stock
Option shall be final, binding and conclusive. Members of the Committee shall be
subject to any additional  restrictions  necessary to satisfy the  disinterested
administration of the Plan as required in Rule 16b-3.

         (c) The  Committee  may act only by a majority of its  members  then in
office;  however, the Committee may authorize any one (1) or more of its members
or any officer of the Company to execute and deliver  documents on behalf of the
Committee.

         (d) No member of the Committee  shall be liable for any action taken or
omitted  to be taken or for any  determination  made by him or her in good faith
with respect to the Plan, and the Company shall indemnify and hold harmless each
member of the Committee against any cost or expense  (including counsel fees) or
liability  (including any sum paid in settlement of a claim with the approval of
the  Committee)  arising  out of any act or  omission  in  connection  with  the
administration  or  interpretation  of the  Plan,  unless  arising  out of  such
person's own fraud or bad faith.

         2.3      EFFECTIVE DATE

         The Plan  shall  become  effective  upon its  adoption  by the Board of
Directors,  and Stock Options may be granted upon such adoption and from time to
time thereafter,  subject,  however, to approval of the Plan by affirmative vote
of the holders of a majority of the shares of the Common Stock present in person
or by proxy and entitled to vote at an annual meeting of the shareholders of the
Company or at a special  meeting of the  shareholders  of the Company  expressly
called for such purposes,  or any adjournments  thereof,  within 12 months after
the adoption of the Plan by the Board of Directors.  If the Plan is not approved
at such annual or special meeting or at any adjournments  thereof, this Plan and
all Stock Options previously granted thereunder shall become null and void.

         2.4      DURATION

         If approved by the shareholders of the Company,  as provided in Section
2.3, unless sooner terminated by the Board of Directors,  this Plan shall remain
in effect for a period of ten (10) years  following its adoption by the Board of
Directors.

         2.5      SHARES SUBJECT TO THE PLAN

         The  maximum  number of shares of Common  Stock which may be subject to
Stock  Options  granted under the Plan shall be  150,000,000.  The Stock Options
shall be subject to adjustment in accordance with Section 5, as appropriate, and
shares to be issued upon exercise of Stock Options may be either  authorized and
unissued  shares of Common Stock or authorized and issued shares of Common Stock
purchased  or  acquired by the Company  for any  purpose.  If a Stock  Option or
portion  thereof shall expire or is terminated,  canceled or surrendered for any
reason without being exercised in full, the  unpurchased  shares of Common Stock
which were  subject to such Stock Option or portion  thereof  shall be available
for future grants of Stock Options under the Plan.

         2.6      AMENDMENTS

         The Plan may be  suspended,  terminated or  reinstated,  in whole or in
part, at any time by the Board of Directors,  provided however, that without the
approval  of  NeoMedia's  stockholders,  no  amendment  shall be made  which (i)
increases  the maximum  number of shares of Common Stock which may be subject to
stock  options  granted  under  the  Plan,   except  for  specified   adjustment
provisions, (ii) extends the term of the Plan, (iii) increases the period during
which a stock  option  may be  exercised  beyond  ten years from the date of the
grant, (iv) materially  increase the benefits accruing to participants under the
Plan,  (v)  materially   modifies  the   requirements   as  to  eligibility  for
participation  in the Plan, or (vi) will cause stock  options  granted under the
Plan to fail to meet the  requirements of Rule 16b-3. The Board of Directors may
from  time to time make such  amendments  to the Plan as it may deem  advisable.
Except as otherwise provided herein,  termination or amendment of the Plan shall
not,  without the consent of a  Participant,  affect such  Participant's  rights
under any Stock Options previously granted to such Participant.

         2.7      PARTICIPANTS AND GRANTS

         Stock  Options  may be  granted  by  the  Committee  to (i)  directors,
officers  and  other  full-time  salaried  employees  of  the  Company  and  its
Subsidiaries with managerial,  professional or supervisory  responsibilities and
(ii)  consultants  and advisors who render bona fide services to the Company and
its  Subsidiaries,  in each  case,  where  the  Committee  determines  that such


                                      A-2


officer, employee,  consultant or advisor has the capacity to make a substantial
contribution  to the  success of the  Company.  The  Committee  may grant  Stock
Options  to  purchase  such  number of shares of Common  Stock  (subject  to the
limitations  of Sections  2.5) as the  Committee  may,  in its sole  discretion,
determine.  In granting  Stock  Options  under the Plan,  the  Committee,  on an
individual  basis, may vary the number of Stock Options as between  Participants
and may grant Stock  Options to a  Participant  in such amounts as the Committee
may determine in its sole discretion.

         3.       STOCK OPTIONS

         3.1      GENERAL

         All Stock Options  granted under the Plan shall be evidenced by written
agreements  executed by the Company and the  Participant to whom granted,  which
agreement  shall  state  the  number of  shares  of  Common  Stock  which may be
purchased  upon  the  exercise   thereof  and  shall  contain  such   investment
representations and other terms and conditions as the Committee may from time to
time determine.

         3.2      PRICE

         The purchase  price per share of Common Stock subject to a Stock Option
shall be  determined  by the  Committee  which may be less than the fair  market
value on the date of grant.

         3.3      PERIOD

         The duration or term of each Stock Option  granted under the Plan shall
be for such period as the  Committee  shall  determine but in no event more than
ten (10) years from the date of grant thereof.

         3.4      EXERCISE

         Stock Options may be exercisable at such time or times as the Committee
shall  specify when  granting the Stock Option  subject to  satisfaction  of all
conditions  for exercise  recited  herein and in the Option  Agreement.  Without
limiting  the  foregoing,  the Stock  Option  may not be  exercised  unless  the
Participant  at the time of such exercise  shall have been in continuous  employ
of, or relationship  with, the Company up to the date of exercise and unless the
Committee has provided to the Participant a written  determination  no more than
30 days prior to the exercise date that the  individual  job  performance of the
Participant  merits the Participant's  right to exercise such Stock Option.  The
Committee  shall be entitled to act in its sole  discretion  and the decision of
the Committee as to the Participant's  right to exercise the Participant's Stock
Option shall be final, binding and conclusive on the Participant. Failure of the
Committee  to deliver  the  Participant  such a written  determination  shall be
deemed a  determination  that the  Participant  is not entitled to exercise such
Stock Option.

         Once exercisable,  a Stock Option shall be exercisable,  in whole or in
part,  by delivery  of a written  notice of  exercise  to the  Secretary  of the
Company at the principal  office of the Company  specifying the number of shares
of Common  Stock as to which the Stock Option is then being  exercised  together
with payment of the full purchase price for the shares being purchased upon such
exercise.  Until  the  shares  of  Common  Stock as to which a Stock  Option  is
exercised  are  issued,  the  Participant  shall  have  none of the  rights of a
shareholder of the Company with respect to such shares.

         3.5      PAYMENT

         The  purchase  price for  shares  of  Common  Stock as to which a Stock
Option  has  been  exercised  and  any  amount  required  to  be  withheld,   as
contemplated by Section 6.1, may be paid:

         (a) In United States dollars in cash, or by check,  bank draft or money
order payable in United States dollars to the order of the Company; or

         (b) By the delivery by the  Participant  to the Company of whole shares
of Common  Stock  having an  aggregate  fair market value on the date of payment
equal to the  aggregate  of the  purchase  price of Common Stock as to which the
Stock Option is then being  exercised or by the  withholding  of whole shares of
Common  Stock  having  such fair  market  value upon the  exercise of such Stock
Option; or

         (c) By a combination of both (a) and (b) above.


                                      A-3


         The Committee may, in its discretion,  impose  limitations,  conditions
and  prohibitions  on the use by a Participant  of shares of Common Stock to pay
the  purchase  price  payable by such  Participant  upon the exercise of a Stock
Option.

         3.6      TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP

         (a) In the event a Participant's  employment by, or relationship  with,
the Company shall terminate for any reason other than those reasons specified in
Sections 3.6(b),  (c), (d), (e) or (g) hereof while such Participant holds Stock
Options  granted  under  the  Plan,  then  all  rights  of any  kind  under  any
outstanding  Option held by such  Participant  which  shall not have  previously
lapsed or terminated shall expire immediately.

         (b) If a Participant's employment by, or relationship with, the Company
or its  Subsidiaries  shall  terminate as a result of such  Participant's  total
disability, each Stock Option held by such Participant (which has not previously
lapsed or terminated)  shall be exercisable by such  Participant for a period of
one year  after  termination  but only to the  extent  the  Option is  otherwise
exercisable during that period. For purposes of the foregoing  sentence,  "total
disability" shall mean permanent mental or physical  disability as determined by
the Committee.

         (c) In the event of the death of a Participant,  each Stock Option held
by such  Participant  (which has not previously  lapsed or terminated)  shall be
exercisable by the executor or administrator of the  Participant's  estate or by
the person or persons to whom the deceased Participant's rights thereunder shall
have passed by will or by the laws of descent or  distribution,  for a period of
one year  after  such  Participant's  death but only to the extent the Option is
otherwise exercisable during that period.
         (d) In the case of a Participant who is an employee of the Company,  if
a  Participant's  employment  by the Company  shall  terminate by reason of such
Participant's  retirement in accordance with Company policies, each Stock Option
held by such  Participant at the date of  termination  (which has not previously
lapsed or  terminated)  shall be  exercisable  for a period of three (3)  months
after  termination,  but only to the extent the Option is otherwise  exercisable
during that period.

         (e) In the event the Company terminates the employment of a Participant
who at the time of such  termination  was an officer of the Company and had been
continuously  employed by the Company during the two (2) year period immediately
preceding  such  termination,  for any reason  except  "good  cause"  (hereafter
defined)  and  except  upon  such  Participant's   death,  total  disability  or
retirement in accordance with Company  policies,  each Stock Option held by such
Participant  (which has not  previously  lapsed or terminated and which has been
held by such Participant for more than six (6) months prior to such termination)
shall be  exercisable  for a period of three (3) months after such  termination,
but only to the extent the Option is otherwise exercisable during that period. A
termination  for  "good  cause"  shall be deemed  to have  occurred  only if the
Participant  in question (i) is  terminated  by written  notice for  dishonesty,
because  of his  conviction  of a felony,  or because  of his  violation  of any
material  provision of any employment or other agreement,  written or oral, with
the  Company or any of its  Subsidiaries,  or (ii) shall  voluntarily  resign or
terminate his employment  with the Company or any of its  Subsidiaries  under or
followed by such  circumstances  as would  constitute  a breach of any  material
provision of any  employment or other  agreement  between him and the Company or
any of its Subsidiaries,  or (iii) shall have committed an act of dishonesty not
discovered by the Company or any of its  Subsidiaries  prior to the cessation of
his employment with the Company or any of its Subsidiaries, but which would have
resulted  in his  discharge  if  discovered  prior to such date,  or (iv) shall,
either before or after  cessation of his  employment  with the Company or any of
its  Subsidiaries,  without  the  written  consent of the  Company or any of its
Subsidiaries,  use  (except  for  the  benefit  of  the  Company  or  any of its
Subsidiaries)  or  disclose  to any other  person any  confidential  information
relating to the  continuation  or proposed  continuation  of the business or any
trade secrets of the Company of any of its Subsidiaries  obtained as a result of
or in connection with such employment.

         (f) Notwithstanding  the foregoing,  if at any time after termination a
Participant  engages in  "detrimental  activity" (as hereinafter  defined),  the
Committee in its discretion may cause the  Participant's  right to exercise such
option  to  be  forfeited.  If  an  allegation  of  detrimental  activity  by  a
Participant is made to the Committee,  the  exercisability  of the Participant's
options will be suspended  for up to two months to permit the  investigation  of
such  allegation.  For purposes of this section,  "detrimental  activity"  means
activity that is determined by the Committee in its sole and absolute discretion
to be  detrimental  to the interests of the Company or any of its  Subsidiaries,
including but not limited to  situations  where such  Participant:  (1) divulges
trade secrets of the Company, proprietary data or other confidential information
relating to the Company or to the business of the Company and any  Subsidiaries,
(2) enters into employment with a competitor under circumstances suggesting that
such Participant  will be using unique or special  knowledge gained as a Company
employee to compete with the  Company,  (3) is convicted by a court of competent
jurisdiction  of any  felony  or a crime  involving  moral  turpitude,  (4) uses
information  obtained  during the course of his or her employment for his or her
own purposes,  such as for the  solicitation  of business,  (5) is determined to
have engaged  (whether or not prior to termination  due to retirement) in either
gross misconduct or criminal  activity harmful to the Company,  or (6) takes any
action that harms the business interests, reputation, or goodwill of the Company
and/or its subsidiaries.


                                      A-4


         (g) In the case of Stock Options granted to a nonemployee  director who
ceases to be a member of the Board of Directors, such Stock Options then held by
such individual  shall be exercisable  within one year after such termination of
service.

         3.7      EFFECT OF LEAVES OF ABSENCE

         It  shall  not  be  considered  a  termination  of  employment  when  a
Participant  is on  military  or sick  leave or such other type leave of absence
which is considered  as continuing  intact the  employment  relationship  of the
Participant with the Company or any of its  Subsidiaries.  In case of such leave
of absence, the employment  relationship shall be deemed to have continued until
the later of (i) the date when such leave shall have lasted  ninety (90) days in
duration,  or (ii) the date as of which the  Participant's  right to  employment
shall have no longer been guaranteed either by statute or contract.

         4.       ASSIGNABILITY OF STOCK OPTIONS

         Stock  Options  granted  under  the Plan  shall  not be  assignable  or
otherwise  transferable by the recipient except by will or the laws of intestate
succession,  or pursuant to a qualified  domestic  relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder.   Otherwise,   Stock  Options  granted  under  this  Plan  shall  be
exercisable  during the lifetime of the Participant  only by the Participant for
his or her individual account,  and no purported  assignment or transfer of such
Stock Options thereunder,  whether voluntary or involuntary, by operation of law
or otherwise, shall vest in the purported assignee or transferee any interest or
right therein  whatsoever but immediately upon any such purported  assignment or
transfer,  or any attempt to make the same, such Stock Options  thereunder shall
terminate and become of no further effect.

         5. REORGANIZATION AND RECAPITALIZATION OF THE COMPANY

         (a) The  existence  of this Plan and Stock  Options  granted  hereunder
shall  not  affect  in  any  way  the  right  or  power  of the  Company  or its
stockholders  to make or  authorize  any or all  adjustments,  recapitalization,
reorganizations  or other  changes in the  Company's  capital  structure  or its
business,  or any merger or consolidation of the Company, or any issue of bonds,
debentures,  preferred or prior  preference  stocks  ahead of or  affecting  the
Common Stock or the rights  thereof,  or the  dissolution  or liquidation of the
Company,  or any sale or transfer of all or any part of its assets or  business,
or any other  corporate  act or  proceeding,  whether of a similar  character or
otherwise.

         (b) Except as hereinafter provided,  the issue by the Company of shares
of stock of any class,  or  securities  convertible  into shares of stock of any
class, for cash or property,  or for labor or services,  either upon direct sale
or  upon  exercise  of  rights  or  warrants  to  subscribe  therefore,  or upon
conversion of shares or obligations of the Company  convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number of shares of Common  Stock  subject to Stock
Options granted hereunder.

         (c) If,  and  whenever,  prior  to the  delivery  by the  Company  or a
Subsidiary  of all of the shares of Common  Stock which are subject to the Stock
Options or rights granted  hereunder,  the Company shall effect a subdivision or
consolidation of shares or other capital  readjustments,  the payment of a stock
dividend or other  increase or  reduction  of the number of shares of the Common
Stock outstanding without receiving compensation therefore in money, services or
property,  the number of shares  subject  to the Plan  shall be  proportionately
adjusted  and the number of shares with respect to which Stock  Options  granted
hereunder may thereafter be exercised  shall: (i) in the event of an increase in
the number of outstanding  shares, be  proportionately  increased,  and the cash
consideration (if any) payable per share shall be proportionately  reduced;  and
(ii) in the  event of a  reduction  in the  number  of  outstanding  shares,  be
proportionately  reduced,  and the cash consideration (if any) payable per share
shall be proportionately increased.

         (d)  If  the  Company  merges  with  one  or  more   corporations,   or
consolidates  with  one or  more  corporations  and  the  Company  shall  be the
surviving  corporation,  thereafter,  upon any exercise of Stock Options granted
hereunder,  the Participant  shall, at no additional cost (other than the option
price,  if any) be  entitled  to  receive  (subject  to any  required  action by
stockholders)  in lieu of the number of shares as to which  such  Stock  Options
shall  then be  exercisable  the  number  and  class of shares of stock or other
securities to which the  Participant  would have been  entitled  pursuant to the
terms of the agreement of merger or consolidation,  if immediately prior to such
merger or  consolidation  the  Participant  had been the holder of record of the
number of shares of Common Stock of the Company equal to the number of shares as
to which such  Stock  Options  shall be  exercisable.  Upon any  reorganization,
merger or consolidation where the Company is not the surviving corporation,  the



                                      A-5


Committee  shall  have the  right to make all  outstanding  options  vest and be
exercisable  immediately,  by giving notice to each holder thereof or his or her
personal  representative  and by  permitting  the  exercise  for a period not to
exceed ninety (90) days from the date of such  determination  by the  Committee.
Upon liquidation or dissolution of the Company, all outstanding options shall be
cancelled.

         6. MISCELLANEOUS PROVISIONS

         6.1      WITHHOLDING

         The  Company's   obligations  under  this  Plan  shall  be  subject  to
applicable federal, state and local tax withholding requirements. Federal, state
and local withholding tax due at the time of a grant or upon the exercise of any
Stock  Option  may, in the  discretion  of the  Committee,  be paid in shares of
Common Stock  already owned by the  Participant  or through the  withholding  of
shares otherwise issuable to such Participant, upon such terms and conditions as
the Committee shall  determine.  If the  Participant  shall fail to pay, or make
arrangements  satisfactory  to the Committee for the payment,  to the Company of
all such federal,  state and local taxes required to be withheld by the Company,
then the Company shall, to the extent permitted by law, have the right to deduct
from any payment of any kind  otherwise due to such  Participant an amount equal
to any federal,  state or local taxes of any kind required to be withheld by the
Company.

         6.2      COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES

         No Stock  Option shall be  exercisable  and no shares will be delivered
under the Plan except in compliance  with all applicable  federal and state laws
and regulations including,  without limitation,  compliance with all federal and
state securities laws and withholding tax requirements and with the rules of the
NASDAQ Small Cap Market and of all other domestic  stock  exchanges on which the
Common Stock may be listed.  Any share certificate issued to evidence shares for
which a Stock Option is exercised may bear legends and  statements the Committee
shall  deem  advisable  to assure  compliance  with  federal  and state laws and
regulations.  No  Stock  Option  shall  be  exercisable  and no  shares  will be
delivered  under the Plan,  until the Company has  obtained  consent or approval
from regulatory bodies,  federal or state, having jurisdiction over such matters
as the  Committee  may deem  advisable.  In the case of the  exercise of a Stock
Option by a person or estate acquiring the right to exercise the Stock Option as
a result of the death of the Participant,  the Committee may require  reasonable
evidence as to the  ownership of the Stock  Option and may require  consents and
releases of taxing authorities that it may deem advisable.

         6.3      NO RIGHT TO EMPLOYMENT

         Neither the  adoption of the Plan nor its  operation,  nor any document
describing or referring to the Plan,  or any part  thereof,  nor the granting of
any Stock Options  hereunder,  shall confer upon any Participant  under the Plan
any right to continue in the employ of the Company or any  Subsidiary,  or shall
in any way  affect  the right  and power of the  Company  or any  Subsidiary  to
terminate  the  employment  of any  Participant  at any  time  with  or  without
assigning a reason therefore,  to the same extent as might have been done if the
Plan had not been adopted.

         6.4      EXCLUSION FROM PENSION COMPUTATIONS

         By  acceptance  of a grant  of a  Stock  Option  under  the  Plan,  the
Participant  shall be deemed to agree that any income  realized upon the receipt
or exercise thereof or upon the disposition of the shares received upon exercise
will not be taken into  account as "base  remuneration",  "wages",  "salary"  or
"compensation"  in determining  the amount of any  contribution to or payment or
any other benefit under any pension,  retirement,  incentive,  profit-sharing or
deferred compensation plan of the Company or any Subsidiary.

         6.5      ABANDONMENT OF OPTIONS

         A  Participant  may at any time  abandon  a Stock  Option  prior to its
expiration date. The abandonment shall be evidenced in writing,  in such form as
the  Committee  may from time to time  prescribe.  A  Participant  shall have no
further rights with respect to any Stock Option so abandoned.

         6.6      SEVERABILITY AS TO RULE 16B-3

         If any of the  terms  or  provisions  of the  Plan  conflict  with  the
requirements  of Rule  16b-3,  then  such  terms or  provisions  shall be deemed
inoperative to the extent they so conflict with the requirements of Rule 16b-3.


                                      A-6


         6.7      INTERPRETATION OF THE PLAN

         Headings are given to the Sections of the Plan solely as a  convenience
to facilitate reference. Such headings,  numbering and paragraphing shall not in
any case be deemed in any way  material or relevant to the  construction  of the
Plan or any provision hereof. The use of the masculine gender shall also include
within its meaning the  feminine.  The use of the  singular  shall also  include
within its meaning the plural and vice versa.

         6.8      USE OF PROCEEDS

         Funds  received by the Company upon the exercise of Stock Options shall
be used for the general corporate purposes of the Company.

         6.9      CONSTRUCTION OF PLAN

         The  place  of  administration  of the Plan  shall  be in the  State of
Florida,  and the validity,  construction,  interpretation,  administration  and
effect of the Plan and of its rules and regulations,  and rights relating to the
Plan,  shall be determined  solely in  accordance  with the laws of the State of
Florida.








                                      A-7




                                   APPENDIX B

                                 REVOCABLE PROXY

                           NEOMEDIA TECHNOLOGIES, INC.

         The undersigned  hereby appoints CHARLES W. FRITZ and CHARLES T. JENSEN
and  WILLIAM  E.  FRITZ,  or  any of  them  individually,  with  full  power  of
substitution,  to act as proxy  and to  represent  the  undersigned  at the 2002
Annual  Meeting  of  shareholders  and to vote all  shares  of  common  stock of
NeoMedia  Technologies,  Inc.  which  the  undersigned  is  entitled  to vote if
personally  present at said  meeting to be held at the  Company's  Headquarters,
2201 Second  Street,  Suite 402,  Fort Myers,  Florida on September  24, 2003 at
10:00 a.m., and at all  postponements or adjournments  thereof upon all business
as may  properly  come  before the meeting  with all the powers the  undersigned
would possess if then and there personally present.


THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF  DIRECTORS.  THIS PROXY,  WHEN
PROPERLY  EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN.  IF NO DIRECTION
IS MADE, THIS PROXY WILL BE VOTED FOR ALL OF THE NOMINEES FOR DIRECTOR LISTED IN
PROPOSAL 1 AND FOR  PROPOSALS  2 AND 3 LISTED ON THE REVERSE  SIDE.  PROXIES ARE
GRANTED  THE  DISCRETION  TO VOTE UPON ALL OTHER  MATTERS  THAT MAY  PROPERLY BE
BROUGHT BEFORE THE MEETING OR ANY POSTPONEMENT OR ADJOURNMENT THEREOF.

THIS PROXY,  WHEN PROPERLY  EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE  UNDERDSIGNED.  IF NO DIRECTION  IS MADE,  THE SHARES WILL BE VOTED "FOR"
PROPOSALS ONE AND TWO. SUCH PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY TO VOTE
WITH REPSECT TO ANY OTHER  BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING OR
ANY ADJOURNMENTS OR POSTPONEMENTS THEREOF.

                  (CONTINUED, AND TO BE SIGNED ON REVERSE SIDE)

                       PLEASE RETAIN THIS ADMISSION TICKET
                                     FOR THE
                        ANNUAL MEETING OF STOCKHOLDERS OF
                           NEOMEDIA TECHNOLOGIES, INC.
              COMPANY HEADQUARTERS - 2201 SECOND STREET, SUITE 402.
                            FT. MYERS, FLORIDA 33901
                               SEPTEMBER 24, 2003
                    10:00 A.M., EASTERN DAYLIGHT SAVINGS TIME

PRESENT  THIS  TICKET TO A NEOMEDIA  TECHNOLOGIES,  INC.  REPRESENTATIVE  AT THE
ENTRANCE TO THE MEETING ROOM.

VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid  envelope
we have  provided  or return it to  Neomedia  Technologies,  Inc.,  c/o ADP,  51
Mercedes Way, Edgewood, NY, 11717.

IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THIS MEETING, WHETHER OR NOT
YOU ATTEND THE MEETING IN PERSON.  TO MAKE SURE YOUR SHARES ARE REPRESENTED,  WE
URGE YOU TO COMPLETE AND MAIL THE PROXY CARD BELOW.

IF YOU PLAN TO ATTEND THE 2003 ANNUAL MEETING OF  STOCKHOLDERS,  PLEASE MARK THE
APPROPRIATE BOX ON THE PROXY CARD BELOW.






                                      B-1



               THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED

NEOMEDIA TECHNOLOGIES, INC.


Vote on Directors


      1. Election of directors - The election of the  following  nominees to the
      Board of Directors unless otherwise indicated:

         01) A. Hayes  Barclay     04)  Charles T. Jensen
         02) Charles W. Fritz      05)  James J. Keil
         03) William E. Fritz

         For All [  ]        Withhold All [  ]         For All Except [  ]

     To withhold  authority to vote for any  particular  nominee,  mark "For All
     Except"    and    write    the    nominee's     number    on    the    line
     below_____________________________

VOTE ON PROPOSALS

      2. To approve an amendment to NeoMedia's  Certificate of  Incorporation to
      increase the number of authorized  shares of Common Stock from 200,000,000
      to 1,000,000,000. FOR [ ] AGAINST [ ] ABSTAIN [ ]

      3. To approve the 2003 Stock Option Plan. FOR [ ] AGAINST [ ] ABSTAIN [ ]

      4. To transact such other business as may properly come before the meeting
      or any adjournments or postponements thereof.


THE UNDERSIGNED HEREBY ACKNOWLEDGES  RECEIPT OF THE NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT OF THE COMPANY.

         Please sign your name exactly as it appears on your stock  certificate.
When signing as attorney-in-fact,  executor, administrator, trustee or guardian,
please add your title as such. When signing as joint tenants, all parties in the
joint  tenancy  must  sign.  If signer  is a  corporation,  please  sign in full
corporate  name by duly  authorized  officer or officers and affix the corporate
seal.



Please indicate if you plan to attend this meeting:  Yes [  ]   No [  ]



---------------------  -------------    -------------------------  -------------
Signature              Date             Signature (Joint Owners)   Date



                                      B-2