As filed with the Securities and Exchange Commission on September 5, 2002
                             File No. 33- _________

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM S-8
                             Registration Statement
                        Under the Securities Act of 1933

                           NEOMEDIA TECHNOLOGIES, INC.
                       (Name of Registrant in its charter)

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


                          2201 SECOND STREET, SUITE 600
                            FORT MYERS, FLORIDA 33901
                                  239-337-3434
               (Address, including zip code, and telephone number,
        including area code, of Registrant's principal executive offices)

                       DAVID GONZALEZ CONSULTING AGREEMENT
                                       AND
                         NEOMEDIA 2002 STOCK OPTION PLAN
                            (Full Title of the Plan)

                                CHARLES W. FRITZ
                          2201 SECOND STREET, SUITE 600
                            FORT MYERS, FLORIDA 33901
                                  239-337-3434
                               239-337-3668 - FAX
            (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                                 With copies to:



         Clayton Parker                            Charles W. Fritz
         Kirkpatrick & Lockhart LLP                Charles T. Jensen
         Suite 200                                 NeoMedia Technologies, Inc.
         201 South Biscayne Blvd.                  2201 Second Street, Suite 600
         Miami, FL 33131                           Fort Myers, Florida 33901
         (305) 539-3300                            (239) 337-3434
         (305) 358-7095 Fax                        (239) 337-3668 Fax



<PAGE>



                         CALCULATION OF REGISTRATION FEE

--------------------------------------------------------------------------------
                                        PROPOSED      PROPOSED
                                        MAXIMUM        MAXIMUM
                          AMOUNT        OFFERING      AGGREGATE      AMOUNT OF
 TITLE OF SECURITIES       TO BE       PRICE PER      OFFERING     REGISTRATION
   TO BE REGISTERED     REGISTERED       SHARE          PRICE           FEE
--------------------------------------------------------------------------------
Common Stock (1)           837,500       $0.085     $71,187.50        $ 6.55
--------------------------------------------------------------------------------
Common Stock (2)           580,000       $0.085     $49,300.00        $ 4.54
--------------------------------------------------------------------------------
TOTAL REGISTRATION       1,417,500                 $120,487.50        $11.09
FEE
--------------------------------------------------------------------------------



(1)      Represents shares of common stock issued directly to David Gonzalez, an
         unrelated   consultant,   for   consulting   services   rendered.   The
         registration  fee being paid  hereunder  has been  estimated/determined
         pursuant  to Rule  457(h),  and is  based on the  closing  price of the
         Company's Common Stock on the OTCBB market on August 28, 2002.

(2)      Represents  shares  that are  subject to  issuance  at prices  that are
         currently  undeterminable;  consequently,  registration  fee being paid
         hereunder has been estimated/determined pursuant to Rule 457(h), and is
         based on the closing price of the  Company's  Common Stock on the OTCBB
         market on August 30, 2002











                                       2

<PAGE>



                                     PART I

The documents  containing the information  specified in Part I of Form S-8 (plan
information  and registrant  information)  will be sent or given to employees as
specified  by Rule  428(b)(1)  of the  Securities  Act of 1933,  as amended (the
"Act").  Such  documents  need not be filed  with the  Securities  and  Exchange
Commission either as part of this  Registration  Statement or as prospectuses or
prospectus supplements pursuant to Rule 424. These documents,  which include the
statement  of  availability  required by Item 2 of Form S-8,  and the  documents
incorporated by reference in this Registration  Statement  pursuant to Item 3 of
Form S-8 (Part II hereof),  taken  together,  constitute a prospectus that meets
the requirements of Section 10(a) of the Act.

                                     PART II

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.


The following  documents  filed with the Securities and Exchange  Commission are
hereby incorporated by reference:

(a)     The Annual  Report of the Company on Form 10-K for the fiscal year ended
        December 31, 2001.

(b)     Form 10-Q for the three- and six-month periods ending June 30, 2002.

(c)     Form 10-Q for the three-month period ending March 31, 2002.

(d)     Form 10-Q/A for the three- and nine-month  periods ending  September 30,
        2001.

(e)     Form 10-Q for the three- and six-month periods ending June 30, 2001.

(f)     Form 8-K dated June 26, 2002,  disclosing  that the  Company's  Board of
        Directors had elected Charles T. Jensen as President and Chief Operating
        Officer  and  David  A.  Dodge as Vice  President  and  Chief  Financial
        Officer.

(g)     Form 8-K dated May 17, 2002,  disclosing that the Company's common stock
        was delisted from the Nasdaq SmallCap Market effective May 17, 2002, and
        that  the   Company's   common   stock  would   begin   trading  on  the
        Over-the-Counter Bulletin Board the same day.

(h)     Form  8-K  dated  April  15,  2002,  disclosing  that  the  Company  had
        instituted an option  repricing  program for certain of its  outstanding
        stock options.

(i)     Form 8-K dated April 2, 2002, disclosing that the Company had instituted
        a warrant repricing program for all of its outstanding stock warrants.

(j)     Form 8-K/A dated  November  5, 2001,  disclosing  change in  independent
        accountants.

(k)     Form 8-K/A dated June 6, 2001,  disclosing  material  purchase of assets
        from  Qode.com,  Inc.,  except  for  the  December  31,  2000  financial
        statements and audit opinion thereon dated May 4, 2001 and the financial
        statements  of  Qode.Com,  Inc.  (A  Development  Stage  Enterprise)  at
        December  31, 1999 and for the period  from March 29,  1999  (inception)
        through  December  31, 1999 and the audit  opinion  dated July 21, 2000,
        except for the seventh paragraph of Note 8, as to which the date is June
        30, 2001.  Such financial  statements are included in this  registration
        statement.

(l)     The description of the Company's  Common Stock, par value $.01 per share
        (the "Common Stock"),  which is contained in the Company's  Registration
        Statement on Form 8-A filed under the  Securities  Exchange Act of 1934,
        as amended (the  "Exchange  Act") on November 18,  1996,  including  any
        amendment  or  report  filed  with the  Commission  for the  purpose  of
        updating such description of Common Stock.


All  documents  subsequently  filed by the Company  pursuant to Sections  13(a),
13(c),  14 and 15(d) of the Securities  Exchange Act of 1934 prior to the filing
of a post-effective  amendment which indicates that all securities  offered have
been sold or which  deregisters all securities then remaining  unsold,  shall be
deemed to be incorporated by reference in this Registration  Statement and to be
a part hereof from the date of filing such documents.


ITEM 4. DESCRIPTION OF SECURITIES.

Not applicable.




                                       3
<PAGE>

ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.


Not applicable.


ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.


As permitted  by Delaware  General  Corporation  Law  ("DGCL"),  the Company has
included in its  Certificate  of  Incorporation  a provision  to  eliminate  the
personal  liability of its directors for monetary  damages for breach or alleged
breach of their fiduciary duties as directors,  except for liability (i) for any
breach of director's  duty of loyalty to the Company or its  stockholders,  (ii)
for acts or omissions not in good faith or which involved intentional misconduct
or a knowing  violation of law,  (iii) in respect of certain  unlawful  dividend
payments or stock redemptions or repurchases,  as provided in Section 174 of the
DGCL, or (iv) for any  transaction  from which the director  derived an improper
personal benefit.  The effect of this provision in the Company's  Certificate of
Incorporation  is to  eliminate  the rights of the Company and its  stockholders
(through  stockholders'  derivative  suits on behalf of the  Company) to recover
monetary  damages against a director for breach of the fiduciary duty of care as
a director  except in the situations  described in (i) through (iv) above.  This
provision  does not  limit  or  eliminate  the  rights  of the  Company  or any
stockholder to seek  non-monetary  relief such as an injunction or rescission in
the event of a breach of a director's  duty of care.  These  provisions will not
alter the liability of directors under federal securities laws.


The Certificate of Incorporation and the by-laws of the Company provide that the
Company is required  and  permitted to  indemnify  its  officers and  directors,
employees and agents under certain  circumstances.  In addition, if permitted by
law, the Company is required to advance  expenses to its officers and  directors
as incurred in connection  with  proceedings  against them in their  capacity as
directors  or  officers  for which they may be  indemnified  upon  receipt of an
undertaking  by or on behalf of such director or officer to repay such amount if
it  shall  ultimately  be  determined  that  such  person  is  not  entitled  to
indemnification.  At  present,  the  Company  is not  aware  of any  pending  or
threatened litigation or proceeding involving a director,  officer,  employee or
agent of the Company in which  indemnification  would be required or  permitted.
The Company has obtained directors and officers liability insurance. The Company
believes  that  its  charter  provisions  and  indemnification   agreements  are
necessary to attract and retain qualified persons as directors and officers.


Insofar as indemnification  for liabilities arising under the Securities Act may
be permitted to directors and officers of the Company  pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the opinion of the
Securities  and Exchange  Commission  ("Commission"),  such  indemnification  is
against  public  policy as expressed in the  Securities  Act and is,  therefore,
unenforceable.


ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.


Not Applicable





                                       4
<PAGE>

INDEX OF FINANCIAL STATEMENTS





Qode.com, Inc.  financial  statements for the year ended December
      31, 2000...............................................................F-2

Qode.com,  Inc.  (A  Development  Stage   Enterprise)   financial
      statements  for Period from March 29, 1999  (inception)  to
      December 31, 1999.....................................................F-21





























                               F-1
<PAGE>

FINANCIAL INFORMATION

Report of Independent Certified Public Accountants

To Qode.com, Inc.:

We have audited the  accompanying  balance  sheet of  Qode.com,  Inc. (a Florida
corporation in the  development  stage) as of December 31, 2000, and the related
statements   of   operations,   changes  in  redeemable   preferred   stock  and
stockholders'  deficit,  and cash flows for the year then ended and the  related
statements of operations and cash flows for the period from inception (March 29,
1999) to December 31, 2000. These financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial  statements  based  on our  audit.  We did  not  audit  the  financial
statements of Qode.com, Inc. for the period from inception to December 31, 1999.
Such  statements are included in the cumulative  inception to December 31, 2000,
totals of the statements of operations and cash flows and reflect total revenues
and net  loss of zero  percent  and 13  percent,  respectively,  of the  related
cumulative totals. Those statements were audited by other auditors, whose report
has been furnished to us, and our opinion,  insofar as it relates to amounts for
the period from  inception  to December  31,  1999,  included in the  cumulative
totals, is based solely upon the report of the other auditors.

We conducted our audit in accordance with auditing standards  generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit and the  report of the other  auditors
provide a reasonable basis for our opinion.

In our  opinion,  based on our audit and the report of the other  auditors,  the
financial statements referred to above present fairly, in all material respects,
the  financial  position of  Qode.com,  Inc. as of December  31,  2000,  and the
results of its operations and its cash flows for the year then ended and for the
period from  inception to December  31,  2000,  in  conformity  with  accounting
principles generally accepted in the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company has suffered  losses from operations and the
current cash position of the Company raises  substantial doubt about its ability
to continue as a going  concern.  Management's  plans in regard to these matters
are also  described  in Note 1. The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

                                 /s/ ARTHUR ANDERSEN LLP

Tampa, Florida,
May 4, 2001 (except with respect to the matter discussed in Note 13, as to which
the date is June 30, 2001)






                               F-2
<PAGE>

                                 QODE.COM, INC.

                        (A Development Stage Enterprise)

                        BALANCE SHEET - DECEMBER 31, 2000

                             ASSETS                                  AMOUNT
                                                                     ------

CURRENT ASSETS:
       Cash and cash equivalents                                    $18,686
       Accounts receivable                                            6,041
       Inventory                                                    218,690
       Other current assets                                          13,499
                                                                  ---------

                            Total current assets                    256,916

PROPERTY AND EQUIPMENT, net                                         875,263

CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net                       2,359,932

DEPOSITS                                                             39,539
                                                                  ---------

                            Total assets                         $3,531,650
                                                                 ==========





















                                      F-3
<PAGE>

                                 QODE.COM, INC.

                        (A Development Stage Enterprise)

                        BALANCE SHEET - DECEMBER 31, 2000

                                   (continued)

    LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT

                                                                        AMOUNT

CURRENT LIABILITIES:
      Accounts payable                                                 $982,610
      Dividends payable                                                  94,119
      Accrued expenses                                                  425,103
      Current portion of notes payable                                3,617,323
      Current portion of capital lease obligations                      368,574
      Loans from officers                                               224,740
                                                                     ----------
                        Total current liabilities                     5,712,469

NOTES PAYABLE, net of current portion                                     5,857

CAPITAL LEASE OBLIGATIONS, net of current portion                       168,176
                                                                     ----------
                        Total liabilities                             5,886,502
                                                                     ----------
COMMITMENTS AND CONTINGENCIES

SERIES A 15% CUMULATIVE CONVERTIBLE REDEEMABLE
       PREFERRED STOCK, $.0001 par value; 3,000,000 shares
       authorized, 2,044,560 shares issued and
       outstanding, liquidation value of $2,502,641                   2,480,991

STOCKHOLDERS' DEFICIT:
       Common stock, $.0001 par value; 25,000,000 shares
       authorized, 8,023,000 shares issued and outstanding                  802

       Additional paid-in capital - common stock                      1,927,313

       Series U convertible preferred stock, $.0001 par
       value; 1,500,000 shares authorized, issued and
       outstanding                                                          150

       Additional paid-in capital - preferred stock                   2,999,850
       Accumulated deficit                                           (9,763,958)
                                                                     ----------
                        Total stockholders' deficit                  (4,835,843)

                        Total liabilities, redeemable preferred
                             stock and stockholders' deficit         $3,531,650
                                                                     ==========

The accompanying notes are an integral part of this balance sheet.







                                       F-4
<PAGE>

                                 QODE.COM, INC.

                        (A Development Stage Enterprise)

                             STATEMENT OF OPERATIONS

               FOR THE YEAR ENDED DECEMBER 31, 2000 AND THE PERIOD

       FROM MARCH 29, 1999 (DATE OF INCEPTION), THROUGH DECEMBER 31, 2000


                                                                   Cumulative
                                                                 from Inception
                                                                 March 29, 1999
                                                  Year Ended            to
                                                  December 31,     December 31
                                                     2000             2000
                                                     ----             ----


REVENUE                                             $211,952        $211,952

COST OF GOODS SOLD                                   213,345         213,345
                                                 -----------    ------------
GROSS MARGIN                                          (1,393)         (1,393)

COSTS AND EXPENSES:
      Research and development                     1,109,686       1,505,928
      Sales and marketing                            556,541         598,516
      General and administrative                   5,839,413       6,686,825
                                                 -----------    ------------
                   Total costs and expenses        7,505,640       8,791,269

NET INTEREST EXPENSE                               1,008,938         971,296
                                                 -----------    ------------
NET LOSS                                          (8,515,971)     (9,763,958)

PREFERRED STOCK DIVIDENDS                           (356,203)       (552,200)

ACCRETION OF BENEFICIAL CONVERSION FEATURE ON
      PREFERRED STOCK                                (15,296)        (20,010)
                                                 -----------    ------------

Net LOSS AVAILABLE TO COMMON STOCKHOLDERS        $(8,887,470)   $(10,336,168)
                                                 ===========    ============

NET LOSS PER SHARE - BASIC AND DILUTED                $(1.11)         $(1.29)
                                                 ===========    ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES           8,023,000       8,018,071
                                                 ===========    ============


The accompanying notes are an integral part of these statements.



                                      F-5
<PAGE>

<TABLE>
                                                     QODE.COM, INC.

                                            (A Development Stage Enterprise)

                      STATEMENT OF CHANGES IN REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT

                                          FOR THE YEAR ENDED DECEMBER 31, 2000
<CAPTION>
                                                                                            Additional
                                                  Series A                                   Paid-in    Series U Convertible
                                                 Redeemable                                Capital for    Preferred Stock
                                                 Preferred            Common Stock           Common
                                                   Stock          Shares       Amount         Stock       Shares     Amount
                                                   -----          ------       ------         -----       ------     ------
<S>                                              <C>             <C>            <C>       <C>           <C>            <C>
BALANCE, December 31, 1999                       $2,154,711      8,023,000      $802      $   (49,557)          --      $--
      Issuance of 19,560 shares of Series A
        preferred stock in exchange for
        services                                     48,900             --        --               --           --       --
      Issuance of Series U preferred stock               --             --        --               --    1,500,000      150
      Issuance of 372,780 warrants in
        exchange for services                            --             --        --        1,126,790           --       --
      Issuance of 326,666 warrants attached
        with notes payable                               --             --        --          675,681           --       --
      Issuance of employee stock options
        with exercise price below market                 --             --        --          150,216           --       --
        value
      Re-pricing of employee stock options               --             --        --          395,682           --       --
      Series A preferred stock dividends            262,084             --        --         (262,084)          --       --
      Series U preferred stock dividends                 --             --        --          (94,119)          --       --
      Accretion of beneficial conversion
        feature on preferred stock                   15,296             --        --          (15,296)          --       --
      Net loss                                           --             --        --               --           --       --

BALANCE, December 31, 2000                       $2,480,991      8,023,000      $802       $1,927,313    1,500,000     $150
                                                 ==========      =========      ====       ==========    =========     ====
</TABLE>

<TABLE>
<CAPTION>
                                                      Additional
                                                         Paid-in
                                                      Capital for                           Total
                                                        Preferred     Accumulated       Stockholders'
                                                          Stock         Deficit           Deficit
                                                          -----         -------           -------
<S>                                                     <C>            <C>              <C>
BALANCE, December 31, 1999                                      --     $(1,247,987)     $(1,296,742)
      Issuance of 19,560 shares of Series A
        preferred stock in exchange for
        services                                                --              --               --
      Issuance of Series U preferred stock               2,999,850              --        3,000,000
      Issuance of 372,780 warrants in
        exchange for services                                   --              --        1,126,790
      Issuance of 326,666 warrants attached
        with notes payable                                      --              --          675,681
      Issuance of employee stock options
        with exercise price below market                        --              --          150,216
        value
      Re-pricing of employee stock options                      --              --          395,682
      Series A preferred stock dividends                        --              --         (262,084)
      Series U preferred stock dividends                        --              --          (94,119)
      Accretion of beneficial conversion
        feature on preferred stock                              --              --          (15,296)
      Net loss                                                  --      (8,515,971)      (8,515,971)
                                                                        ----------       ----------

BALANCE, December 31, 2000                              $2,999,850     $(9,763,958)     $(4,835,843)
                                                        ==========     ===========      ===========
</TABLE>


The accompanying notes are integral part of this statement.





                                                          F-6
<PAGE>

<TABLE>
                                          QODE.COM, INC.

                                 (A Development Stage Enterprise)

                                      STATEMENT OF CASH FLOWS

                        FOR THE YEAR ENDED DECEMBER 31, 2000 AND THE PERIOD

 FROM MARCH 29, 1999 (DATE OF INCEPTION), THROUGH DECEMBER 31, 2000
<CAPTION>
                                                                                       Cumulative
                                                                                      from Inception
                                                                      Year Ended     (March 29, 1999)
                                                                     December 31,          to
                                                                        2000        December 31, 2000)
                                                                        ----        ------------------
<S>                                                                 <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                        $(8,515,971)       $(9,763,958)
    Adjustments to reconcile net loss to net cash used in
       operating activities-
           Depreciation and amortization                                417,410            434,932
           Series A preferred stock issued for services                  48,900             48,900
           Warrants issued in exchange for services                   1,126,790          1,884,627
           Stock options issued with exercise price below
             market value                                               150,216            150,216
           Expense related to the re-pricing of employee
             stock options                                              395,682            395,682
           Changes in assets and liabilities-
              Accounts receivable                                       (6,041)             (6,041)
              Inventory                                                (218,690)          (218,690)
              Other current assets                                        4,652            (13,499)
              Deposits                                                   (9,310)           (39,539)
              Accounts payable                                          831,022            982,610
              Accrued expenses                                          377,857            425,103
                                                                    -----------        -----------
                 Net cash used in operating activities               (5,397,483)        (5,719,657)
                                                                    -----------        -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                                 (382,222)          (509,013)
    Capitalization of software development costs                      (2,498,752)       (2,498,752)
                                                                    -----------        -----------
                 Net cash used in investing activities                (2,880,974)       (3,007,765)
                                                                    -----------        -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of notes payable and detachable warrants    4,298,861         3,623,180
    Proceeds from loans from officers                                   151,407            224,740
    Principal repayments of capital lease                              (125,612)          (125,612)
    Proceeds from the issuance of common stock                              --              23,800
    Proceeds from the issuance of Series A redeemable preferred stock
        net of issuance costs of $25,000                                    --           2,000,000
    Proceeds from issuance of Series U convertible preferred stock     3,000,000         3,000,000
                                                                    -----------        -----------
                 Net cash provided by financing activities             7,324,656         8,746,108
                                                                    -----------        -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS                              (953,801)            18,686

CASH AND CASH EQUIVALENTS, beginning of year                            972,487                 --
                                                                    -----------        -----------
CASH AND CASH EQUIVALENTS, end of year                                  $18,686            $18,686
                                                                    ===========        ===========
</TABLE>




                                               F-7
<PAGE>

                                 QODE.COM, INC.

                         A Development Stage Enterprise

<TABLE>
                                       STATEMENT OF CASH FLOWS

                                FOR THE YEAR ENDED DECEMBER 31, 2000
                       AND THE PERIOD FROM MARCH 29, 1999 (DATE OF INCEPTION),
                                      THROUGH DECEMBER 31, 2000

                                             (continued)

<CAPTION>
                                                                                    Cumulative from
                                                                                       Inception
                                                                                    (March 29, 1999)
                                                                      Year Ended          To
                                                                      December 31,    December 31,
                                                                          2000            2000
                                                                          ----            ----
<S>                                                                     <C>            <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
      Cash paid for interest                                            $180,000       $160,189

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
      FINANCING ACTIVITIES:
          Accretion of redeemable preferred stock                        $15,296         20,010
          Accrued dividends on Series A preferred stock                 $262,084        458,081
          Accrued dividends on Series U preferred stock                  $94,119         94,119
          Property and equipment acquired under capital lease           $662,362        662,362
</TABLE>


The accompanying notes are an integral part of these statements.






                                                F-8
<PAGE>

                                 QODE.COM, INC.

                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

1      NATURE OF BUSINESS ORGANIZATION

     Qode.com,  Inc. (Qode.com or the Company) commenced operations on March 29,
     1999,  and  is  incorporated  in  the  State  of  Florida.  Qode.com  is  a
     development stage company, as defined in Statement of Financial  Accounting
     Standards  (SFAS) No. 7,  "Accounting  and Reporting By  Development  Stage
     Enterprises".  The  Company  intends to provide  manufacturers,  retailers,
     advertisers and users a unique tool for Website  navigation through the use
     of imbedded  standard bar codes and Uniform  Product Codes (UPC). It is the
     Company's  mission to  develop,  operate,  maintain  and promote the use of
     Qode.com  technologies  to  enable  any bar code to  interface  with  their
     technology.

     The Company's  financial  statements  have been prepared  assuming that the
     Company will continue as a going concern.  The Company has incurred  losses
     since its  inception  and during its  development  stage as it has  devoted
     substantially  all of its efforts toward building  network  infrastructure,
     internal staffing, developing systems, expanding into new markets, building
     a  proprietary  database  and raising  capital.  The Company has  generated
     little  revenue  to date and is  subject  to a number of  risks,  including
     dependence on key  individuals,  the ability to  demonstrate  technological
     feasibility, and the need to obtain adequate additional financing necessary
     to fund the  development  and marketing of its products and  services,  and
     customer  acceptance.  These conditions raise  substantial  doubt about the
     Company's ability to continue as a going concern.  The financial statements
     do not include any  adjustments  to reflect the possible  future effects on
     the  recoverability  and  classification  of  assets  or  the  amounts  and
     classification  of  liabilities  that may results  from the outcome of this
     uncertainty.

2      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     USE OF ESTIMATES

     The  preparation  of financial  statements  in conformity  with  accounting
     principles  generally accepted in the United States requires  management to
     make estimates and assumptions  that affect the reported  amounts of assets
     and liabilities and disclosure of contingent  assets and liabilities at the
     date of the financial  statements and the reported  amounts of revenues and
     expenses  during the  reporting  period.  Actual  results could differ from
     those estimates.

     CASH AND CASH EQUIVALENTS

     For  purposes of reporting  cash flows,  the Company  considers  all highly
     liquid  investments  purchased with an original maturity of three months or
     less to be cash equivalents.

     INVENTORY

     Inventory  is stated at the lower of cost or market,  and at  December  31,
     2000 was comprised of QoderTM handheld scanning systems. Cost is determined
     using the weighted average method.





                                      F-9
<PAGE>

     PROPERTY AND EQUIPMENT

     Property and  equipment are stated at cost less  accumulated  depreciation.
     Repairs and maintenance are charged to expense as incurred. Depreciation is
     computed using the straight-line  method over the estimated useful lives of
     the related  assets.  Computer  hardware and  purchased  software are being
     depreciated over a three-year  period, and furniture and fixtures are being
     depreciated over a five-year period.

     Depreciation expense was $278,590 for the year ended December 31, 2000.

     CAPITALIZED SOFTWARE DEVELOPMENT COSTS

     In accordance with the American  Institute of Certified Public  Accountants
     Statement of Position No. 98-1,  "Accounting for Costs of Computer Software
     Developed  or  Obtained  for  Internal  Use,"  all  costs  related  to  the
     development  or purchase of internal use software other than those incurred
     during the  application  development  stage are to be expensed as incurred.
     Costs incurred during the application  development stage are required to be
     capitalized and amortized over the useful life of the software. The Company
     has  expensed  $1,109,686  in research and  development  costs for the year
     ended December 31, 2000. The Company has capitalized $2,498,752 in software
     development  costs  for the year  ended  December  31,  2000.  Amortization
     expense was $138,820 for the year ended December 31, 2000.

     REDEEMABLE PREFERRED STOCK

     Redeemable  preferred  stock is  carried  at the net  consideration  to the
     Company at time of  issuance,  increased  by accrued and unpaid  cumulative
     dividends  and periodic  accretion to  redemption  value using the interest
     method.  Accrued and unpaid dividends and redemption accretion are affected
     by charges  against  retained  earnings,  or, in the  absence  of  retained
     earnings, additional paid-in capital.

     REVENUE RECOGNITION

     Revenue is generated from the sale of Qode's proprietary hand held bar code
     scanners.  Revenue  is  recognized  when the  product is  delivered  to the
     customer.

     INCOME TAXES

     In accordance with Statement of Financial  Accounting  Standards (SFAS) No.
     109,  "Accounting  for Income Taxes",  income taxes are accounted for using
     the assets and  liabilities  approach.  Deferred tax assets and liabilities
     are recognized for the future tax consequences  attributable to differences
     between the financial  statement  carrying  amounts of existing  assets and
     liabilities,  and their  respective  tax  bases.  Deferred  tax  assets and
     liabilities  are  measured  using  enacted  tax rates  expected to apply to
     taxable  income  in the  years in which  those  temporary  differences  are
     expected to be recovered  or settled.  Deferred tax assets are reduced by a
     valuation  allowance when, in the opinion of management,  it is more likely
     than not that some  portion or all of the  deferred  tax assets will not be
     recognized.  The  Company has  recorded a 100%  valuation  allowance  as of
     December 31, 2000.





                                      F-10
<PAGE>

     COMPUTATION OF NET LOSS PER SHARE

     Basic and diluted  net loss per share is  computed by dividing  net loss by
     the weighted  average number of shares of common stock  outstanding  during
     the period.  The Company has excluded all common stock equivalents from the
     calculation  of diluted net loss per share  because  these  securities  are
     anti-dilutive. The shares excluded from the calculation of diluted net loss
     per share and reserved for future issuance are detailed in the table below:

                                                                       2000
                                                                       ----
       Outstanding stock options                                     1,540,511
       Outstanding warrants                                          1,229,146
       Shares issuable on conversion of notes payable                6,800,000
       Shares issuable on conversion of Series A
            preferred stock                                          4,049,701

     Shares issuable on conversion of notes payable were calculated based on the
     terms of the notes as if they were converted on December 31, 2000.

     FINANCIAL INSTRUMENTS

     The  Company  believes  that the fair  value of its  financial  instruments
     approximate carrying value.

     CONCENTRATION OF CREDIT RISK

     Revenue  was   generated   from  the  selling  of  barcode   scanners  with
     approximately 91 percent of those sales to one customer.

     ACCOUNTING FOR STOCK-BASED COMPENSATION

     The  Company  has  adopted  SFAS  No.  123,   "Accounting  for  Stock-Based
     compensation." The provisions of SFAS 123 allow companies to either expense
     the  estimated  fair value of stock  options or to  continue  to follow the
     intrinsic  value  method set forth in  Accounting  Principles  Board  (APB)
     Opinion No. 25,  "Accounting  for Stock Issued to Employees"  (APB 25), but
     disclose  the pro forma  effects on net income or loss as if the fair value
     had been  expensed.  The Company has elected to apply APB 25 in  accounting
     for its employee  stock options and,  accordingly  recognizes  compensation
     expense for the difference  between the fair value of the underlying common
     stock and the grant price of the option at the measurement date.

     RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998 the FASB  issued  SFAS No.  133,  "Accounting  for  Derivative
     Instruments  and Hedging  Activities",  as amended by SFAS No. 137 and SFAS
     138.  SFAS No.  133,  as  amended,  establishes  accounting  and  reporting
     standards  for  derivative   instruments,   including  certain   derivative
     instruments  embedded in other contracts,  and for hedging  activities.  It
     requires  that an entity  recognize  all  derivatives  as either  assets of
     liabilities  in the balance  sheet and measure  those  instruments  at fair
     value.  The  adoption  of these new  accounting  standards  did not have an
     impact on the Company's financial position or results of operations.

     On December 3, 1999 the  Securities  and  Exchange  Commission  (SEC) staff
     released Staff Accounting  Bulletin (SAB) No. 101,  "Revenue  Recognition".
     This SAB provides guidance on the recognition,  presentation and disclosure
     of revenue in financial statements. The Company implemented SAB No. 101 for
     the quarter ended June 30, 2000. It did not have an impact on the Company's
     results of operations.



                                      F-11
<PAGE>

     COMPREHENSIVE INCOME

     For the year ended December 31, 2000, there were no differences between the
     balance sheet and income statement and therefore no comprehensive income.

3      LOANS FROM OFFICERS

     Between  October  and  December  2000,  several of the  Company's  officers
     elected to defer their salaries due to cash flow  difficulties  experienced
     by the Company. The total amount deferred was $83,154.

     On November  28,  2000,  the Company  issued  promissory  notes to officers
     totaling $135,000, with an interest rate of 6.09 percent. The principal and
     interest are payable on February 26, 2001

4      PROPERTY AND EQUIPMENT

     Property and equipment consists of the following as of December 31, 2000:

                                                                       2000
                                                                       ----
       Computer hardware and purchased software                      $1,139,578
       Furniture and fixtures                                           31,797
                                                                        ------

                                                                      1,171,375
       Less- Accumulated depreciation                                 (296,112)
                                                                      ---------

                                                                      $875,263
                                                                      ========
5      NOTES PAYABLE

     CONVERTIBLE NOTES

     On January 18, 2000,  the Company  entered into a note  purchase  agreement
     with an investor for $3,000,000,  with an interest rate of 12 percent.  The
     principal and interest  were due July 17, 2000.  The principal and interest
     are  convertible  at the option of the holder  upon or after a $10  million
     financing.  The conversion rate is 85 percent of the price per share in the
     financing.  In connection with this note, 200,000 warrants were issued with
     an exercise price of $4.50 per share for the Company's common stock.  These
     warrants may be exercised at anytime following the closing of a $10 million
     financing and expire January 17, 2005.  The Company  allocated the proceeds
     from the issuance of the note  between the note and  warrants  based on the
     relative fair value method.  The difference  between the face amount of the
     note  and the  amount  allocated  to it was  recorded  as a  discount,  and
     amortized to interest expense over the life of the note.

     On August 1, 2000, the Company  extended this note to November 17, 2000. As
     additional consideration for the extension of the note, the Company reduced
     the exercise price of the 200,000 warrants to $1.00. The additional expense
     of $63,180  that  resulted  from the  re-pricing  was  charged to  interest
     expense. As of December 31, 2000, the note had not been repaid.



                                      F-12
<PAGE>

     During  2000,  the  Company   entered  into  four  separate  note  purchase
     agreements  with  investors  totaling  $400,000 with  interest  rates of 12
     percent.  The principal and interest on three of the notes were due October
     9, 2000 through  November 4, 2000,  and principal and interest on the other
     note is due January 6, 2001. The principal and interest are  convertible at
     the  option  of the  holder  upon or  after  a $7  million  financing.  The
     conversion  rate is 85 percent of the price per share in the financing.  In
     connection  with these notes,  26,666 warrants were issued with an exercise
     price of $2.00 per share for the Company's common stock. These warrants may
     be exercised at anytime  following  the closing of a $7 million  financing.
     The proceeds from the issuance of these notes and warrants  were  allocated
     between  the two  using the  relative  fair  value  method.  The  resulting
     discount on the notes was  amortized  to interest  expense over the life of
     the notes.

     OTHER NOTE PAYABLE

     During March 2000, the Company  entered into a note agreement in the amount
     of $42,500,  bearing interest at a rate of 11 percent per year and expiring
     on March 15,  2002,  to finance  its phone  system.  The note is secured by
     telephone equipment.

     On  November  28,  2000 and  December  14,  2000,  the  Company  signed two
     promissory  notes in the amounts of $20,000 and $200,000,  bearing interest
     at a rate of 6.09  percent  and 15 percent  per year,  with  principal  and
     accrued   interest   payable  February  26,  2001  and  January  28,  2001,
     respectively.  In  connection  with the  December  14,  2000 note,  100,000
     warrants  were  issued  with an  exercise  price of $.50 per  share for the
     Company's  common  stock.  These  warrants  may  be  exercised  at  anytime
     following  the  closing of the Next  Financing,  as defined in the  warrant
     agreement.  The proceeds  from the issuance of this note and warrants  were
     allocated  between  the two using  the  relative  fair  value  method.  The
     resulting  discount on the note is being amortized to interest expense over
     the life of the note.

     Notes payable consists of the following:


                                                                        Amount
                                                                        ------

Convertible notes, interest bearing at 12% per annum                 $3,400,000


Note payable,interest bearing at 11% per annum, due in monthly
      installments through March 2002                                    27,679
Note payable, unsecured interest bearing at 6.09% per annum, due
      February 2001                                                      20,000
Note payable, unsecured interest bearing at 15% per annum, due
      January 2001                                                      200,000
                                                                     ----------

                Total notes payable                                   3,647,679
Less discount                                                           (24,499)
Less- Current portion                                                (3,617,323)
                                                                     ----------

                Notes payable, net of current portion                    $5,857
                                                                     ==========

        As of December 31, 2000 there was $197,740 of accrued interest.

6           INCOME TAXES

For the years ended December 31, 2000, the components of income tax expense were
as follows:

                                                       2000
                                                       ----
Current                                                 $-
Deferred                                                 -
                                                      -----

Income tax expense                                      $-




                                      F-13
<PAGE>

The net amounts of deferred tax assets recorded in the balance sheet at December
31, 2000, are as follows:

                                                                         2000
Deferred tax asset:                                                      ----
       Depreciation of property and equipment                           $17,901
       Start-up costs                                                   199,566
       Net operating loss carryforward                                3,443,643
       Less- Valuation allowance                                     (3,661,110)
                                                                     -----------
             Total deferred tax asset                                     $--
                                                                          ===

Deferred tax liabilities:                                                 $--
                                                                          ---

             Total net deferred taxes                                     $--
                                                                          ===

     SFAS No. 109  requires a valuation  allowance  to reduce the  deferred  tax
     assets reported if, based on the weight of the evidence,  it is more likely
     than not,  that some  portion or all of the deferred tax assets will not be
     realized.  After  consideration  of all the  evidence,  both  positive  and
     negative,  management has determined that a $3,661,110  valuation allowance
     at December  31, 2000 is necessary to reduce the deferred tax assets to the
     amount  that will  more  likely  than not be  realized.  The  change in the
     valuation  allowance  for the current year is  $3,194,880.  At December 31,
     2000,  the  Company has  available  net  operating  loss  carryforwards  of
     $9,151,323, which expire in the year 2020 and 2019.

     A reconciliation of income taxes computed at the U.S. federal statutory tax
     rate to income tax  expense for the year ended  December  31,  2000,  is as
     follows:

                                                                        2000
                                                                        ----
       Taxes at the U.S. statutory rate                            $(2,895,430)
       State taxes, net of federal benefit                            (309,129)
       Nondeductible items                                               9,679
       Change in valuation allowance                                 3,194,880
                                                                      ---------

                     Total income tax expense                         $-
                                                                      ===

7           COMMITMENTS AND CONTINGENCIES

     LEGAL PROCEEDINGS

     The Company is not presently a party to any  significant  litigation.  From
     time to time,  however,  the Company is involved in various  legal  actions
     arising in the normal course of business,  which the Company  believes will
     not materially affect the financial position or results of operations.

     EMPLOYMENT CONTRACTS

     The Company has employment  contracts with William  Carpenter,  Greg Miller
     and Michael Miller beginning November 1, 2000.

     Future payments under the above employment contracts are:


                                      F-14
<PAGE>

       2001                          $450,000
       2002                           450,000
       2003                           375,000
                                   ----------
                     Total         $1,275,000
                                   ==========

     CAPITAL LEASE OBLIGATIONS

     During April 2000,  the Company  acquired  computer  equipment for $662,362
     under a capital lease, expiring on April 26, 2002. Accumulated depreciation
     on this equipment was approximately $166,000 at December 31,2001.

     Future minimum lease  payments on capital lease  obligations as of December
     31,2000, are as follows:

       Year                                                         AMOUNT

       2001                                                        $415,358
       2002                                                         173,519
                                                                    -------

                                                                    588,877
       Less - Amount representing interest on
           obligations under capital leases (15%)                   (52,127)
       Current portion of capital lease obligations                (368,574)
                                                                   ---------

       Capital lease obligations, net of current portion           $168,176
                                                                   ========

     OPERATING LEASE OBLIGATIONS

     The Company  leases its office  facility under a  non-cancelable  operating
     lease expiring in March 2005. Rental expense,  net of sub-lease income, was
     $73,036 for the year ended December 31, 2000.

     Lease commitments under this non-cancelable operating leases as of December
     31, 2000, are as follows:

         Year Ending                                          AMOUNT
                                                              ------

             2001                                             $391,399
             2002                                              233,876
             2003                                              154,905
             2004                                              117,768
             2005                                                5,103
                                                              --------
                                                              $903,051
                                                              ========

8           PREFERRED STOCK

     SERIES A 15% CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK

     The Board of  Directors  (the Board) has  authorized  the issuance of up to
     3,000,000  shares  of  Series  A  15  percent  $.0001  par  value,  voting,
     cumulative, redeemable, convertible preferred stock (the Series A Preferred



                                      F-15
<PAGE>

     Stock).  Series A Preferred  Stock is convertible at any time at the option
     of the holder prior to the closing of a Public Offering,  as defined in the
     agreement,  or within 20 days following  receipt of a Notice of Redemption,
     as defined in the agreement, into the Company's common stock for each share
     of the Series A Preferred  Stock held plus accrued and unpaid  dividends on
     the  Series  A  Preferred  Shares.  The  Series  A  Preferred  Stock  has a
     liquidation  preference  of $1 per share and is  mandatorily  redeemable on
     April 15, 2004.

     In June 2000,  the Company  issued  19,560 shares of the Series A Preferred
     Stock at $2.50 per share for services rendered.

     Dividends  on the  Series  A  Preferred  Stock  accrue,  on a daily  basis,
     commencing  on the date of issuance  at an interest  rate of 15 percent per
     annum and are payable on a semi-annual  basis. The Company,  at its option,
     may pay dividends either in cash or by the issuance of additional shares of
     Series A Preferred  Stock.  Aggregate  cumulative  dividends  in arrears at
     December  31,  2000  totaled  $458,081,  and are  included in Series A 15 %
     cumulative  convertible  redeemable  preferred  stock  on the  accompanying
     balance sheet.

     SERIES U CONVERTIBLE PREFERRED STOCK

     The Board has authorized  the issuance of up to 1,500,000  shares of Series
     U, 8 percent $.0001 par value, voting,  cumulative,  convertible  preferred
     stock  (the  Series  U  Preferred  Stock).  Series  U  Preferred  Stock  is
     convertible at any time at the option of the holder prior to the closing of
     a Public  Offering  into the  Company's  common stock for each share of the
     Series U  Preferred  Stock held plus  accrued and unpaid  dividends  on the
     Series U Preferred Shares. Between May and October 2000, the Company issued
     1,500,000 at $2 per share, with proceeds to the Company of $3,000,000.

     Dividends  on the  Series  U  Preferred  Stock  accrue,  on a daily  basis,
     commencing  on the date of issuance  at an  interest  rate of 8 percent per
     annum and are payable on a semi-annual  basis. The Company,  at its option,
     may pay dividends either in cash or by the issuance of additional shares of
     Series U Preferred  Stock.  Aggregate  cumulative  dividends  in arrears at
     December 31, 2000, totaled $94,119.

     9  COMMON STOCK

     The Company is authorized  to issue up to  25,000,000  shares of its $.0001
     par value common stock. During 2000, no shares of common stock were issued.
     As of December 31, 2000, 8,023,000 shares were issued and outstanding.

     10 STOCK BASED COMPENSATION

     STOCK WARRANTS GRANTED IN EXCHANGE FOR SERVICES

     During 2000, the Company  granted  372,780  warrants,  with exercise prices
     ranging from $1.00 to $4.50 per share, to consultants for certain  advisory
     and consulting  services.  The warrants vest  immediately upon issuance and
     can be exercised over a five-year period. In August 2000,  250,000 warrants
     granted at $4.50 were  re-priced  to $1.00 per share.  In  September  2000,
     100,000  warrants  granted at $1.50 were re-priced to $0.01 per share.  The
     Company  valued these  warrants,  and their  re-pricing,  at  $1,126,790 in
     accordance  with SFAS 123,  and  recognized  the  entire  amount in 2000 as
     general  and  administrative  expenses  in the  accompanying  statement  of
     operations.

     STOCK WARRANTS GRANTED ATTACHED TO DEBT AGREEMENTS

     During 2000, the Company  granted  326,666  warrants,  with exercise prices
     ranging  from $.50 to $4.50,  attached  to  various  debt  agreements.  The
     warrants  vest  immediately  upon  issuance  and  can be  exercised  over a
     five-year period.  The Company applied APB Opinion No. 14,  "Accounting for
     Convertible  Debt  and Debt  Issued  with  Stock  Purchase  Warrants",  and
     accounted for the portion of the proceeds of the debt issued with warrants,
     which was allocable to the warrants, as additional paid-in capital based on
     the relative  fair values of the  securities  at the time of issuance,  and
     also recognized a discount on the debt as a result.



                                      F-16
<PAGE>

     In September  2000,  200,000  warrants  granted at $4.50 were  re-priced to
     $1.00 per share in  connection  with an  extension  of the term date of the
     debt.  The Company  valued the  re-pricing at $63,180,  and  recognized the
     entire amount in 2000 as interest expense in the accompanying  statement of
     operations.

     Warrant activity for the year ended December 31, 2000, is as follows:

      Balance December 31, 1999                                  529,700
      Issued                                                     699,446
      Exercised                                                        -
      Expired                                                          -
                                                                ---------

      Balance December 31, 2000                                 1,229,146
                                                                =========

      The following table summarizes  information about warrants  outstanding at
December 31, 2000, all of which are exercisable:

                                        Weighted Average
                           Number of         Remaining
    Range of Exercise    Outstanding    Contractual Life       Weighted Average
          Prices           Warrants          (Years)            Exercise Price
          ------           --------          -------            --------------
  $0.01 to $0.50            200,000             3.3                 $0.26
  $1.00                     527,780             4.2                 $1.00
  $1.50                     429,700             3.8                 $1.50
  $2.00                      26,666             4.3                 $2.00
  $2.50                      45,000             4.2                 $2.50
                          ---------             ---                 -----
                          1,229,146             3.9                 $1.13
                          =========             ===                 =====


     STOCK OPTIONS

     The Board approves all issuances of stock options. All stock options expire
     five  years  from the grant  date.  In  general,  options  vest and  become
     exercisable one third on the one year anniversary of the date of grant, and
     the remainder vest evenly over the two years subsequent to that date.

     The following  table  summarizes  stock option  activity for the year ended
     December 31, 2000:





                                      F-17
<PAGE>

                                                             2000
                                                            Wtd Avg
                                                Options                 Exercise
                                                (In 000'S)                Price
                                                ----------                -----

       Outstanding at Beginning of Year              881                  $1.36
       Granted                                     1,000                   1.10
       Exercised                                      --                   0.00
       Forfeited                                   (340)                   1.63
                                                   -----                   ----

       Outstanding at end of year                  1,541                  $1.15
                                                   =====                  =====

       Vested Options                                846                  $0.56

       Remaining Options available for
       Grant                                       3,459

In June 2000,  the Company  reduced the  exercise  price on all its  outstanding
stock options.  As a result,  the Company  recognized  $395,682 in  compensation
expense in 2000 for the  vested  portion of these  options,  and will  recognize
$933,568 in subsequent periods as these options vest.

The Company  accounts for issuances to employees under APB 25, and  accordingly,
$545,898 of compensation expense, including the amount discussed above, has been
recognized for the year ended December 31, 2000.

SFAS 123 requires pro forma  information  regarding net income as if the Company
has accounted for its employee stock options under the fair value method of that
statement.  The fair value for these  options was estimated at the date of grant
using the Black-Scholes option pricing model with the following assumptions: (i)
risk-free  interest rate of 6 percent,  which  approximates  the four-year  U.S.
Treasury Bill rate at the date of grant,  (ii) dividend yield of 0 percent (iii)
expected  volatility  of 80  percent  (iv) and an average  expected  life of the
option of four years.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options'  vesting  period.  The  Company's  pro
forma information is as follows:

                                                        Year Ended
                                                       December 31,
                                                           2000
                                                           ----
       Net loss:
         As reported                                  $(8,515,971)
         SFAS 123 pro forma                           $(8,902,427)


The  following  table  summarizes  the  weighted  average  fair value of options
granted to employees during the year ended December 31, 2000:



                                      F-18
<PAGE>

                                                                2000
                                                                ----
Stock Price Greater than Exercise Price
    Weighted Average Fair Value                                 $2.98

Stock Price Equal to Exercise Price
    Weighted Average Fair Value                                 $0.84

Stock Price Less than Exercise Price
    Weighted Average Fair Value                                 $0.82


The  following  table  summarizes  information  about  Company's  stock  options
outstanding as of December 31, 2000:

<TABLE>
<CAPTION>
                         Options Outstanding                      Options Exercisable

                         Shares       Wtd. Avg     Wtd. Avg     Options         Wtd. Avg.
Range of Exercise    Outstanding      Remaining    Exercise    Exercisable      Exercise
      Prices           (In 000's)        Life       Price       (In 000's)       Price
      ------           ----------        ----       -----       ----------       -----
<S>                     <C>               <C>        <C>            <C>          <C>
$.25                      350             3.5        $0.25          239          $0.25
$.50                      371             4.3        $0.50          341          $0.50
$.75                      375             4.2        $0.75          185          $0.75
$1.00 to $1.50            445             4.4        $1.05           81          $1.26
                          ---             ---        -----          ---          -----
                        1,541                                       846          $0.56
                        =====                                       ===          =====
</TABLE>


11  RELATED PARTIES

The Company's  primary legal  counsel  holds  3,200,000  shares of the Company's
common  stock in trust for the law firm's  partners.  During  2000,  the Company
recorded expenses of approximately $123,000 related to services performed by its
primary legal counsel. The Company owed its primary legal counsel  approximately
$61,000 at December 31, 2000.






                                      F-19
<PAGE>

During 2000, Q Productions,  Inc., whose owners also own 4,800,000 shares of the
Company,  provided various information  technology services to the Company.  The
Company  recorded   approximately  $930,364  in  expenses  related  to  services
performed  by Q  Productions,  Inc. for the year ended  December  31, 2000.  The
Company owed Q Productions,  Inc. approximately $171,000 at December 31, 2000. Q
Productions, Inc. rented space from Qode.com in 2000 for $43,167 in total.

During 2000, the Company granted 20,000 warrants with an exercise price of $1.00
per share to Q Productions, Inc.

The Company has issued several promissory notes to officers (see Note 3).

12  SUBSEQUENT EVENTS

On January 11, 2001, the Company entered into a note purchase  agreement with an
investor for $300,000,  with an interest  rate of 18 percent.  The principal and
interest are due March 1, 2001.

In January  2001,  the Company  entered into a short-term  loan  agreement  with
NeoMedia  Technologies,  Inc. ("NeoMedia") for the amount of $440,000.  The note
was  forgiven in March 2001 upon the  acquisition  of  substantially  all of the
Company's assets by NeoMedia.

On March 1, 2001, NeoMedia purchased all of the assets of the Company other than
cash  including  but not limited to,  contracts,  customer  lists,  licenses and
intellectual  property.  In consideration for these assets, the Company received
1,676,500  shares of  NeoMedia's  Common  Stock.  In addition,  NeoMedia  issued
274,699  of its  Common  Stock to  certain  creditors  of the  Company,  for the
repayment of $1,561,037 of debt,  forgave the $440,000  short-term note due from
the Company (see above paragraph),  and assumed approximately  $1,407,000 of the
Company's  liabilities.  The 1,676,500 shares paid to the Company are to be held
in escrow for one year, and are subject to downward  adjustment,  based upon the
achievement of certain  performance  targets over the period of March 1, 2001 to
February 28, 2002.

Notes  payable as of  December  31,  2000 that were not  acquired as part of the
March 1, 2001 sale totaled 3,000,000 as of December 31, 2000.

13. SUBSEQUENT EVENTS

On May 31, 2001, three creditors of Qode.com,  Inc, filed in the U.S. Bankruptcy
Court an involuntary bankruptcy petition for Qode.com,  Inc. Qode.com,  Inc. has
consulted  with legal counsel and will be opposing the Chapter 7 proceeding  and
plans to proceed under Chapter 11, U.S. Code to reorganize its debts.




                                      F-20
<PAGE>

                      Report of Independent Certified Public Accountants

The Stockholders and Board of Directors Qode.com, Inc.

We have audited the accompanying  balance sheet of Qode.com,  Inc. (the Company)
(a  development  stage  enterprise)  as of  December  31,  1999 and the  related
statement of operations,  and statement of changes in redeemable preferred stock
and stockholders' deficit, and statement of cash flows for the period from March
29, 1999 (inception)  through December 31, 1999. These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Qode.com,  Inc. at December 31,
1999,  and the results of its operations and its cash flows for the period March
29, 1999  (inception)  through  December 31, 1999, in conformity with accounting
standards generally accepted in the United States.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As more  fully  described  in Note 1,  the
Company, which is in the developmental stages has incurred a net operating loss,
experienced  negative cash flow from  operations and has a net capital  deficit.
These conditions raise substantial doubt about the Company's ability to continue
as a going  concern.  Management's  plans in regards to these  matters  are also
described in Note 1. The financial  statements do not include any adjustments to
reflect the possible future effects on the  recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
outcome of this uncertainty.

                                                 /s/ ERNST & YOUNG LLP
West Palm Beach, Florida
July 21, 2000,  except for the seventh paragraph of Note 8, as to which the date
is June 30, 2001




                                      F-21
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                                  Balance Sheet

                                December 31, 1999

Assets
Current assets:
    Cash and cash equivalents                                   $972,487
    Other current assets                                          18,151
                                                              ----------
Total current assets                                             990,638

Property and equipment, net                                      109,269
Deposits                                                          30,229
                                                              ----------
Total assets                                                  $1,130,136
                                                              ==========
Liabilities, redeemable preferred stock and
stockholders' deficit Current liabilities:
    Accounts payable                                            $151,588
    Accrued expenses                                              47,246
    Due to officers                                               73,333
                                                              ----------
Total current liabilities                                        272,167

15% cumulative convertible redeemable preferred
    stock, $.0001 par value, 3,000,000 shares
    authorized, 2,025,000 shares issued and
    outstanding, liquidation value of
    $2,221,000                                                 2,154,711

Commitments

Stockholders' deficit:

    Common stock, $.0001 par value, 25,000,000
      shares authorized, 8,023,000 shares
      issued and outstanding                                         802

    Capital deficiency                                           (49,557)
    Deficit accumulated during the development stage          (1,247,987)
                                                              ----------
Total stockholders' deficit                                   (1,296,742)
                                                              ----------
Total liabilities, redeemable preferred stock
    and stockholders' deficit                                 $1,130,136
                                                              ==========

See accompanying notes.




                                    F-22
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                             Statement of Operations

           Period from March 29, 1999 (inception) to December 31, 1999

Costs and expenses:
    Research and development                                        $396,242
    Sales and marketing                                               41,975
    General and administrative                                       847,412
                                                                     -------

Total costs and expenses                                           1,285,629
Net interest income                                                  (37,642)
                                                                    --------

Net loss                                                          (1,247,987)

Preferred dividends and redemption accretion                        (200,711)
                                                                    ---------

Net loss applicable to common stockholders                        $(1,448,698)
                                                                  ============

See accompanying notes.






                                      F-23
<PAGE>

<TABLE>
                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                       Statement of Changes in Redeemable
                    Preferred Stock and Stockholders' Deficit

                 Period from March 29, 1999 (inception) to December 31, 1999
<CAPTION>
                                                                                Deficit
                                                                               Accumulated
                                 Redeemable        Common Stock                During the            Total
                                  Preferred                          Capital   Development       Stockholders'
                                    Stock       Shares     Amount   Deficiency   Stage              Deficit
                                    -----       ------     ------   ----------   -----              -------
<S>                               <C>           <C>         <C>       <C>         <C>              <C>
   Issuance of common stock
    on March 29, 1999               $     --    8,000,000   $800         $--              $--         $   800
    (inception)
   Issuance of redeemable
    preferred stock with
    detachable warrants
    valued at $46,000, net
    of issuance costs of           1,954,000           --     --        46,000             --          46,000
    $25,000
   Issuance of common stock               --       23,000      2        22,998             --          23,000
   Issuance of warrants in
    exchange for services                 --           --     --        82,156             --          82,156
   Preferred dividends and
    redemption accretion             200,711           --     --      (200,711)            --        (200,711)

   Net loss                               --           --     --            --     (1,247,987)     (1,247,987)
                                  ----------    ---------   ----      --------    -----------     -----------
Balance at December 31, 1999      $2,154,711    8,023,000   $802      $(49,557)   $(1,247,987)    $(1,296,742)
                                  ==========    =========   ====      ========    ===========     ===========
</TABLE>

See accompanying notes.











                                      F-24
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                             Statement of Cash Flows

                 Period from March 29, 1999 (inception) to December 31, 1999

Operating activities
Net loss                                                            $(1,247,987)
Adjustments to reconcile net loss to net
  cash used in operating activities:
   Depreciation and amortization                                         17,522
   Issuance of warrants in exchange for services                         82,156
   Changes in assets and liabilities:
     Other current assets                                               (18,151)
     Deposits                                                           (30,229)
     Accounts payable                                                   151,588
     Accrued expenses                                                    47,246
     Due to officers                                                     73,333
                                                                      ---------
Net cash used in operating activities                                  (924,522)
                                                                      ---------
Investing activities
Purchases of property and equipment                                    (126,791)
                                                                      ---------
Net cash used in investing activity                                    (126,791)
                                                                      ---------
Financing activities
Proceeds from the issuance of redeemable preferred stock,
    net of issuance costs of $25,000                                  2,000,000
Proceeds from the issuance of common stock                               23,800
                                                                      ---------
Net cash provided by financing activities                             2,023,800
                                                                      ---------
Net increase in cash and cash equivalents                               972,487
Cash at beginning of period                                                  --
                                                                      ---------
Cash at end of period                                                  $972,487
                                                                      =========

Supplemental disclosure of cash flow information
Interest paid                                                              $171

Noncash financing and investing activities
Accrued dividends on redeemable preferred stock                        $195,997
Accretion of redeemable preferred stock                                  $4,714

See accompanying notes.




                                      F-25
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                          Notes to Financial Statements

                 Period from March 29, 1999 (inception) to December 31, 1999

1. NATURE OF BUSINESS

ORGANIZATION

Qode.com,  Inc.  (the  Company)  commenced  operations  on March 29, 1999 and is
incorporated in the state of Florida.  Qode.com is a development  stage company,
as  defined  in  Statement  of  Financial  Accounting  Standards  (SFAS)  No. 7,
Accounting and Reporting By Development Stage  Enterprises.  The Company intends
to provide manufactures, retailers, advertisers, and users a unique tool for Web
site  navigation by the use of imbedded  standard bar codes and Uniform  Product
Codes  (UPC).  It is the  Company's  mission to develop,  operate,  maintain and
promote the use of  Qode.com  technologies  to enable any bar code to  interface
with their technology.

The  Company  has  incurred  losses  since  its  inception  as  it  has  devoted
substantially  all  of  its  efforts  toward  building  network  infrastructure,
internal staffing,  developing systems,  expanding into new markets,  building a
proprietary  database and raising capital.  The Company has generated no revenue
to date  and is  subject  to a  number  of  risks  similar  to  those  of  other
development  stage  companies,  including  dependence  on key  individuals,  the
ability  to  demonstrate  technological  feasibility,  and the  need  to  obtain
adequate additional financing necessary to fund the development and marketing of
its products and services, and customer acceptance.

The Company's financial  statements have been prepared assuming that the Company
will continue as a going concern.  The Company has a limited  operating  history
and intends to  significantly  increase its operational  expenses in fiscal year
2000 to pursue  certain  sales  and  marketing  plans.  These  conditions  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
The financial  statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and  classification  of  liabilities  that may results  from the outcome of this
uncertainty.  In  fiscal  year  2000,  the  Company  plans to  raise  additional
financing from private equity  financing.  The Company  entered into a financing
agreement  subsequent  to  year  end  that  will  provide  the  Company  with an
additional $3 million, see Note 8.






                                      F-26
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of reporting  cash flows,  the Company  considers all highly liquid
investments  purchased  with an original  maturity of three months or less to be
cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost.  Depreciation  is computed  using the
straight-line  method over the  estimated  useful  lives of the related  assets.
Computer  hardware and software are being  depreciated  over a three year period
and furniture and fixtures are being depreciated over a five year period.

SOFTWARE DEVELOPMENT COSTS

In  accordance  with the AICPA SOP No.  98-1,  Accounting  for Costs of Computer
Software  Developed  or Obtained  for  Internal  Use,  all costs  related to the
development  or purchase  of internal  use  software  other than those  incurred
during the application  development stage are to be expensed as incurred.  Costs
incurred during the application development stage are required to be capitalized
and  amortized  over the useful life of the  software.  The Company has incurred
$259,480  in  software  development  costs for the period  from  March 29,  1999
(inception)  through  December 31, 1999.  All costs have been expensed since the
Company has not entered the  application  development  stage as of December  31,
1999.






                                      F-27
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

The Company accounts for income taxes under the liability method, which requires
the  establishment  of a deferred tax asset or liability for the  recognition of
future  deductions  or  taxable  amounts,  and  operating  loss  and tax  credit
carryforwards.  Deferred tax expense or benefit is recognized as a result of the
change in the deferred  asset or liability  during the year. If  necessary,  the
Company will establish a valuation allowance to reduce any deferred tax asset to
an amount which will, more likely than not, be realized.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to a concentration of
credit  risk  consist  principally  of cash and cash  equivalents.  The  Company
maintains its cash and cash equivalents with high quality financial institutions
to mitigate this credit risk.

REDEEMABLE PREFERRED STOCK

Redeemable preferred stock is carried at the net consideration to the Company at
time of  issuance  (fair  value),  increased  by accrued  and unpaid  cumulative
dividends and periodic  accretion to redemption value using the interest method.
Accrued and unpaid  dividends and  redemption  accretion are affected by charges
against  retained  earnings,  or, in the absence of retained  earnings,  paid-in
capital (capital deficiency).

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company has adopted Statement of Financial  Accounting  Standards (SFAS) No.
123, Accounting for Stock-Based  Compensation.  The provisions of SFAS 123 allow
companies  to either  expense the  estimated  fair value of stock  options or to
continue to follow the  intrinsic  value method set forth in  Accounting  Public
Bulletin (APB) Opinion 25, Accounting for Stock Issued to Employees but disclose
the pro  forma  effects  on net  income  or loss as if the fair  value  had been
expensed. The Company has elected to apply APB 25 in accounting for its employee
stock  options  and,  accordingly,   recognizes  compensation  expense  for  the
difference  between the fair value of the underlying  common stock and the grant
price of the option at the date of grant.






                                      F-28
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                                                  December 31,
                                                                     1999
                                                                     ----
            Computer hardware and software                         $120,791
            Furniture and fixtures                                    6,000
                                                                      -----

                                                                    126,791
            Less accumulated depreciation                          (17,522)
                                                                   --------

                                                                   $109,269
                                                                   ========

Depreciation and amortization  expense was $17,939 for the period from March 29,
1999 (inception) to December 31, 1999.

4. INCOME TAXES

The net amounts of deferred tax assets recorded in the balance sheet at December
31, 1999 are as follows:

                                                                        1999
                                                                        ----
            Deferred tax asset:
                Net operating loss carryforward                       $469,050
            Less valuation allowance                                  (466,230)
                                                                     ---------

            Total deferred tax asset                                    $2,820

            Deferred tax liabilities:
                Fixed assets                                           $(2,820)
                                                                      --------

            Total net deferred taxes                                   $    --
                                                                       =======

FASB 109  requires  a  valuation  allowance  to reduce the  deferred  tax assets
reported  if,  based on the weight of the  evidence,  it is more likely than not
that some portion or all of the deferred tax assets will not be realized.  After
consideration  of all the evidence,  both positive and negative,  management has
determined that a $466,230 valuation allowance at December 31, 1999 is





                                      F-29
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

4. INCOME TAXES (CONTINUED)

necessary  to reduce the deferred tax assets to the amount that will more likely
than not be realized. The change in the valuation allowance for the current year
is $466,230.  At December 31, 1999, the Company has available net operating loss
carryforwards of $1,246,478, which expire in the year 2019.

A reconciliation of income taxes computed at the U.S. federal statutory tax rate
to income tax expense for the year ended December 31, 1999 is as follows:

                                                                     1999
            Taxes at the U.S. statutory rate                      $(424,315)
            State taxes, net of federal benefit                     (44,975)
            Nondeductible items                                       3,060
            Change in valuation allowance                           466,230
                                                                    -------

            Total income tax expense                                  $  --
                                                                      =====

5. COMMITMENTS

The Company leases its office  facility under a  non-cancelable  operating lease
expiring  March 2005.  Rental  expense was $19,711 for the period from March 29,
1999 (inception) to December 31, 1999.

Lease commitments under these non-cancelable operating leases as of December 31,
1999 are as follows:

        2000                                                   $100,656
        2001                                                    104,682
        2002                                                    108,876
        2003                                                    113,238
        2004                                                    117,768
                                                               --------

                                                               $545,220
                                                               ========





                                      F-30
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

6. STOCKHOLDERS' EQUITY

15% CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK SERIES A

The Board of Directors has authorized the issuance of up to 3,000,000  shares of
Series A 15% $.0001  par value,  voting,  cumulative,  redeemable,  convertible,
preferred stock (the Preferred Stock) which may be issued in series from time to
time with such designations, rights, preferences and limitations as the Board of
Directors may declare by resolution.  In May 1999, the Company issues  2,025,000
shares of Preferred  Stock at $1.00 per share,  less issuance  costs of $25,000.
One detachable  warrant was attached to each share of the Preferred  Stock.  The
Preferred  Stock was recorded at $1,954,000,  net of the value of the detachable
warrants which was estimated to be $46,000.  The detachable warrants were valued
in  accordance  with SFAS No.  123 at $.23 per share  and are  convertible  into
common stock at $1.50 per share.  The Preferred Stock is convertible at any time
at the  option of the  holder  prior to the  closing  of a Public  Offering,  as
defined in the  agreement,  or within 20 days  following  receipt of a Notice of
Redemption,  as defined in the  agreement,  into the Company's  common stock for
each share of the Preferred Stock held plus accrued and unpaid  dividends on the
Series A Preferred Shares.  The Preferred Stock has a liquidation  preference of
$1 per share and is mandatorily redeemable on April 15, 2004. As of December 31,
1999, all 2,025,000 shares of the Preferred Stock and related 202,500 detachable
warrants remain outstanding.

Dividends on the preferred stock accrue on a daily basis  commencing on the date
of  issuance  at an  interest  rate  of 15%  per  annum  and  are  payable  on a
semi-annual basis. The Company,  at its option, may pay dividends either in cash
or by the issuance of additional  shares of Series A Preferred Stock.  Aggregate
cumulative dividends in arrears at December 31, 1999 totaled $195,997.

COMMON STOCK

The Company is  authorized  to issue up to  20,000,000  shares of its $.0001 par
value common stock. On March 29, 1999  (inception) the Company  received $800 by
issuing 8,000,000 shares of its common stock to its founders.





                                      F-31
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

6. STOCKHOLDERS' EQUITY (CONTINUED)

Additionally,  the Company  issued  13,000  shares of common  stock to a Company
employee in lieu of  relocation  expense  reimbursement  of $13,000,  and 10,000
shares of common stock to an executive recruiter for a corporate staffing fee of
$10,000. These amounts were expensed.

STOCK OPTIONS AND WARRANTS GRANTED IN EXCHANGE FOR SERVICES

During 1999, the Company  granted 327,200 common stock warrants with an exercise
price of $1.50 per share to  consultants  for certain  advisory  and  consulting
services  performed  during the  Company's  start-up  phase.  The warrants  vest
immediately  upon  issuance  and can be exercised  over a five year period.  The
Company  valued the  warrants at $82,156 in  accordance  with SFAS No. 123,  and
recognized  the entire  amount as a general  and  administrative  expense in the
accompanying   statement  of  operations.   The  Company  had  327,200  warrants
outstanding at December 31, 1999.

During 1999,  the Company  granted  400,000 in common stock  options to purchase
shares of common stock at an exercise  price of $.10 per share to an  investment
advisor in exchange for investment  advisory  services.  The options  expired on
June 30,  2000  without  being  exercised  and  accordingly  no expense has been
recorded.

STOCK OPTIONS

In 1999,  the Company's  Board of Directors and  stockholders  approved the 1999
Equity  Compensation  Plan (the Plan).  The Plan  provides  for the  issuance of
incentive  stock options,  nonqualified  stock options and  restricted  stock to
directors,  officers,  and key employees of the Company as well as  non-employee
directors,  advisors,  and  consultants.  The Board  administers  the Plan.  The
Company has  reserved  5,000,000  shares of common  stock to be issued under the
Plan.

The exercise price (as established by the Board) of the stock options granted is
in excess of fair market value of the Company's  Common Stock on the date of the
grant. All stock options expire five years from the grant date in 2004.  Options
granted under the Plan are exercisable as determined by the Board.






                                      F-32
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

6. STOCKHOLDERS' EQUITY (CONTINUED)

The following table  summarizes  stock option activity for the period from March
29, 1999 (inception) to December 31, 1999:


                                                                     Weighted
                                                         Number of    Average
                                                          Shares  Exercise Price
                                                          ------  --------------

          Outstanding at March 29, 1999 (inception)           -        $-
             Granted                                     880,600       1.36
             Exercised                                        -        -
             Forfeited                                        -        -
                                                         -------      -----

          Outstanding at December 31, 1999               880,600      $1.36
                                                         =======      =====

At December 31, 1999,  142,642 options are  exercisable,  at a weighted  average
exercise price of $1.28 per share. The  weighted-average  remaining  contractual
life of the options is 4.7 years.

During 1999,  all of the stock  options  issued were granted to employees of the
Company.  The Company  accounts  for  issuances  to  employees  under APB 25 and
accordingly,  no compensation cost has been recognized for the period from March
29, 1999 (inception) to December 31, 1999.

SFAS No.  123  requires  pro forma  information  regarding  net income as if the
Company has accounted for its employee stock options under the fair value method
of that Statement. The fair value for these options was estimated at the date of
grant  using  the   Black-Scholes   option  pricing  model  with  the  following
assumptions: risk-free interest rates equal to the three-year U.S. Treasury Bill
rate on the grant date,  dividend yield of 0%, expected volatility of 81.1%, and
an average expected life of the option of three years.






                                      F-33
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

6. STOCKHOLDERS' EQUITY (CONTINUED)

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options'  vesting period.  All employee options
granted to date vest over a one to three year period.  The  Company's  pro forma
information is as follows:

                                                     Period from March 29, 1999
                                                             (inception)
                                                        to December 31, 1999
                                                        --------------------

            Net loss:
                As reported                                  $(1,247,987)
                SFAS No. 123 pro forma                       $(1,305,831)


The  weighted  average  fair value of options  granted to  employees  during the
period  from March 29, 1999 to December  31, 1999 for which the  estimated  fair
value of the  stock is less than the  exercise  price is $0.29  per  share.  The
weighted  average fair value of options  granted to employees  during the period
from March 29, 1999 to December 31, 1999 for which the  estimated  fair value of
the stock equals the exercise price is $0.47 per share.

SHARES RESERVED FOR FUTURE ISSUANCE

At December 31, 1999, the Company has reserved the following shares of stock for
issuance:

Common stock                                            11,977,000
Convertible preferred stock                                975,000
                                                        ----------

                                                        12,952,000
                                                        ==========




                                      F-34
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

7. RELATED PARTIES

The Company's  primary legal  counsel  holds  3,200,000  shares of the Company's
common stock in trust for the firm's partners. During 1999, the Company recorded
expenses of approximately  $32,000 related to services  performed by its primary
legal counsel.  The Company owed its primary legal counsel  approximately $3,000
at December 31, 1999.

During  1999,  Q  Productions,  Inc.  provided  various  information  technology
services to the Company. Two owners of Q Productions,  Inc. also aggregately own
4,800,000 shares of the Company. The Company recorded  approximately $129,000 in
expenses related to services performed by Q Productions, Inc. The Company owed Q
Productions, Inc. approximately $97,000 at December 31, 1999.

8. SUBSEQUENT EVENTS

On January 18, 2000,  the Company issued a convertible  subordinated  promissory
note  for $3  million  with a  fixed  interest  rate  of  12% to  Novus  Holding
Corporation.  Principal  and accrued  interest on the note are payable  upon the
earlier  of a) the  day  immediately  following  the  closing  of  financing  or
successive financings which cumulatively aggregate proceeds of $10,000,000 or b)
180 days from the date of the note. The debt is convertible into common stock at
a price equal to 85% of the  purchase  price per share paid by  investors in the
next financing or successive financings of $5,000,000 or more.

On February 11, 2000,  the Company  entered into a letter of intent with a major
supplier to produce  portable bar code scanning devices in exchange for payments
ranging from $32,000,000 to $35,000,000 over a 16 month period  commencing April
28, 2000 through August 1, 2001.

On March 15,  2000,  the Company  entered into a two year term note with a major
lender.  The principal amount of the note was $42,500 with a fixed interest rate
of 11%.  Principal  and  interest  payments  of $1,984 are due  monthly  through
maturity on March 15, 2002.

On March 24, 2000, the Company  obtained a letter of credit for $1,400,000  with
the lender of their term note.






                                      F-35
<PAGE>

                                 Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

8. SUBSEQUENT EVENTS (CONTINUED)

On March 27,  2000,  the Company  entered  into a  consulting  agreement  with a
consultant  for a five month period in return for 250,000  common stock  options
convertible  into the Company's  common  stock.  The options have a term of five
years and an exercise price of $2 per share.  125,000  options vest 45 days from
the   commencement  of  the  agreement  based  on  the  fulfillment  of  certain
contractual  obligations.  The remaining  125,000  options vest 90 days from the
commencement of the agreement  based on the  fulfillment of certain  contractual
obligations.  Additionally,  the Company will pay the consultants  $100,000 over
the period of the contract.

On May 22,  2000,  the Board of Directors  authorized  the issuance of 1,500,000
shares of Series U Convertible  Preferred Stock (the Series U Preferred  Stock).
Dividends on the preferred stock accrue on a daily basis  commencing on the date
of issuance at an interest rate of 8% per annum. The Series U Preferred Stock is
convertible  at any time at the option of the holder  prior to the  closing of a
Public  Offering,  as defined in the agreement,  into one share of the Company's
common stock for each share of the Company's  Series U Preferred Stock held plus
accrued and unpaid dividends on the Series U Preferred  Shares.  In the event of
the closing of the next  financing of $4,000,000 or more within 90 days from the
authorization  of the  Series U  Preferred  Stock,  the  holder of the  Series U
Preferred  Stock shall have the right to convert  all Series U Preferred  Shares
into a number of shares of stock issued in the next financing  which  represents
the  equivalent  amount for the  consideration  paid for the Series U  Preferred
Stock.  The Series U Preferred  Stock has a liquidation  preference of $2.00 per
share.  On May 22, 2000, the Company  entered into an agreement for the issuance
of 1,500,000 shares of Series U Preferred Stock in exchange for $3,000,000.  The
shares will be issued in three separate  financings.  The initial 500,000 shares
are to be issued on the date of the agreement. The next 500,000 shares are to be
issued  upon the  Company  meeting  certain  performance  goals  defined  in the
agreement.  The  remaining  500,000  shares are to be issued,  not earlier  than
August 1, 2000 nor later than October 15, 2000, upon the Company meeting certain
performance goals defined in the agreement.

On May 31, 2001, three creditors of Qode.com,  Inc. filed in the U.S. Bankruptcy
Court an involuntary bankruptcy petition for Qode.com,  Inc. Qode.com,  Inc. has
consulted  with legal counsel and will be opposing the Chapter 7 proceeding  and
plans to proceed under Chapter 11, U.S. Code, to reorganize its debts.







                                      F-36
<PAGE>

ITEM 8. EXHIBITS.

Exhibit

    4          NeoMedia Technologies, Inc. 2002 Stock Option Plan (incorporated
               by reference to Appendix A in NeoMedia Technologies 14A
               Definitive Proxy Statement as filed with the SEC on May 7, 2002).

    5.1        Opinion of Kirkpatrick & Lockhart LLP

    23.1       Consent of Ernst & Young, LLP, former independent certified
               public accountants of Qode.com, Inc.

    23.2       Consent of Stonefield Josephson, Inc., current independent
               auditors of NeoMedia Technologies, Inc.

    23.4       Consent of Kirkpatrick & Lockhart LLP (included in Exhibit 5
               opinion letter).

    24         Power of Attorney (included on signature page).

          In accordance  with  Securities  Act Rule 437a,  the consent of Arthur
Andersen LLP has not been included as an exhibit herewith.  The Company has been
unable to obtain a consent of Arthur  Andersen LLP due to the departure of their
engagement  team leaders from such firm. Any recovery by investors  posed by the
lack of consent is limited by Securities Act Rule 437a.


ITEM 9. UNDERTAKINGS.


(a) The undersigned registrant hereby undertakes:

    (1) To file,  during any period in which  offers or sales are being made,  a
    post-effective  amendment  to this  registration  statement  to include  any
    material information with respect to the plan of distribution not previously
    disclosed  in the  registration  statement  or any  material  change to such
    information in the registration statement;

    (2) That, for the purpose of determining  any liability under the Securities
    Act of 1933, each such post-effective  amendment shall be deemed to be a new
    registration  statement relating to the securities offered therein,  and the
    offering of such  securities  at that time shall be deemed to be the initial
    bona fide offering thereof.

    (3) To remove from  registration by means of a post-effective  amendment any
    of the securities being registered which remain unsold at the termination of
    the offering.

(b)  The  undersigned   registrant  hereby  undertakes  that,  for  purposes  of
determining  any liability  under the Securities Act of 1933, each filing of the
registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Securities  Exchange  Act of  1934  that is  incorporated  by  reference  in the
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification  for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers, and controlling persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant

<PAGE>

has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the registrant of expenses incurred
or paid by a director,  officer,  or controlling person of the registrant in the
successful  defense of any  action,  suit,  or  proceeding)  is asserted by such
director,  officer,  or controlling  person  connected with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.


<PAGE>


                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  Act of 1933,  the  Registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of Fort Myers, State of Florida, on September 4, 2002.

NEOMEDIA TECHNOLOGIES, INC.

By:      /s/ Charles T. Jensen
         --------------------------------------------------
         Charles T. Jensen, Acting Chief Executive Officer,
         President and Chief Operating Officer


                                POWER OF ATTORNEY

The  undersigned  officers and directors of NeoMedia  Technologies,  Inc. hereby
constitute  and  appoint  Charles T.  Jensen  with power to act one  without the
other,  our true and  lawful  attorney-in-fact  and  agent  with  full  power of
substitution  and  resubstitution,  for  us and in our  stead,  in any  and  all
capacities to sign any and all amendments (including post-effective  amendments)
to this Registration  Statement and all documents relating thereto,  and to file
the  same,  with  all  exhibits  thereto,  and  other  documents  in  connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorney-in-fact  and agent, full power and authority to do and perform each and
every act and thing necessary or advisable to be done in and about the premises,
as fully to all intents  and  purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or his
or her substitutes, may lawfully do or cause to be done by virtue hereof.

Signatures                  Title                             Date
----------                  -----                             ----

/s/ Charles W. Fritz        Chairman of the Board and
-------------------------   Director
Charles W. Fritz                                               September 4, 2002

/s/ William E. Fritz        Secretary and Director             September 4, 2002
-------------------------
William E. Fritz

/s/ Charles T. Jensen       President, Acting Chief Executive
-------------------------   Officer, Chief Operating Officer,
Charles T. Jensen           and Director                       September 4, 2002

/s/ David A. Dodge          Vice President, Chief Financial
-------------------------   Officer, and Controller            September 4, 2002
David A. Dodge
[{"type": "S-8", "sequence": "1", "filename": "neomedia_s-8.txt", "description": "SEPTEMBER 4, 2002", "secsgml_size_bytes": 117231}]
{"company-data": {"conformed-name": "NEOMEDIA TECHNOLOGIES INC", "cik": "0001022701", "assigned-sic": "7373", "irs-number": "363680347", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-99183", "film-number": "02757472"}, "business-address": {"street1": "2201 SECOND ST STE 600", "street2": "STE 600", "city": "FORT MYERS", "state": "FL", "zip": "33901", "phone": "6303554404"}, "mail-address": {"street1": "2201 SECOND STREET", "street2": "SUITE 600", "city": "FORT MYERS", "state": "FL", "zip": "33901"}, "former-company": {"former-conformed-name": "DEVSYS INC", "date-changed": "19960911"}}
As filed with the Securities and Exchange Commission on September 5, 2002
                             File No. 33- _________

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM S-8
                             Registration Statement
                        Under the Securities Act of 1933

                           NEOMEDIA TECHNOLOGIES, INC.
                       (Name of Registrant in its charter)

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

                          2201 SECOND STREET, SUITE 600
                            FORT MYERS, FLORIDA 33901
                                  239-337-3434
               (Address, including zip code, and telephone number,
        including area code, of Registrant's principal executive offices)

                       DAVID GONZALEZ CONSULTING AGREEMENT
                                       AND
                         NEOMEDIA 2002 STOCK OPTION PLAN
                            (Full Title of the Plan)

                                CHARLES W. FRITZ
                          2201 SECOND STREET, SUITE 600
                            FORT MYERS, FLORIDA 33901
                                  239-337-3434
                               239-337-3668 - FAX
            (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                                 With copies to:

         Clayton Parker                            Charles W. Fritz
         Kirkpatrick & Lockhart LLP                Charles T. Jensen
         Suite 200                                 NeoMedia Technologies, Inc.
         201 South Biscayne Blvd.                  2201 Second Street, Suite 600
         Miami, FL 33131                           Fort Myers, Florida 33901
         (305) 539-3300                            (239) 337-3434
         (305) 358-7095 Fax                        (239) 337-3668 Fax
CALCULATION OF REGISTRATION FEE

--------------------------------------------------------------------------------
                                        PROPOSED      PROPOSED
                                        MAXIMUM        MAXIMUM
                          AMOUNT        OFFERING      AGGREGATE      AMOUNT OF
 TITLE OF SECURITIES       TO BE       PRICE PER      OFFERING     REGISTRATION
   TO BE REGISTERED     REGISTERED       SHARE          PRICE           FEE
--------------------------------------------------------------------------------
Common Stock (1)           837,500       $0.085     $71,187.50        $ 6.55
--------------------------------------------------------------------------------
Common Stock (2)           580,000       $0.085     $49,300.00        $ 4.54
--------------------------------------------------------------------------------
TOTAL REGISTRATION       1,417,500                 $120,487.50        $11.09
FEE
--------------------------------------------------------------------------------

(1)      Represents shares of common stock issued directly to David Gonzalez, an
         unrelated   consultant,   for   consulting   services   rendered.   The
         registration  fee being paid  hereunder  has been  estimated/determined
         pursuant  to Rule  457(h),  and is  based on the  closing  price of the
         Company's Common Stock on the OTCBB market on August 28, 2002.

(2)      Represents  shares  that are  subject to  issuance  at prices  that are
         currently  undeterminable;  consequently,  registration  fee being paid
         hereunder has been estimated/determined pursuant to Rule 457(h), and is
         based on the closing price of the  Company's  Common Stock on the OTCBB
         market on August 30, 2002

                                       2
PART I

The documents  containing the information  specified in Part I of Form S-8 (plan
information  and registrant  information)  will be sent or given to employees as
specified  by Rule  428(b)(1)  of the  Securities  Act of 1933,  as amended (the
"Act").  Such  documents  need not be filed  with the  Securities  and  Exchange
Commission either as part of this  Registration  Statement or as prospectuses or
prospectus supplements pursuant to Rule 424. These documents,  which include the
statement  of  availability  required by Item 2 of Form S-8,  and the  documents
incorporated by reference in this Registration  Statement  pursuant to Item 3 of
Form S-8 (Part II hereof),  taken  together,  constitute a prospectus that meets
the requirements of Section 10(a) of the Act.

                                     PART II

ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.

The following  documents  filed with the Securities and Exchange  Commission are
hereby incorporated by reference:

(a)     The Annual  Report of the Company on Form 10-K for the fiscal year ended
        December 31, 2001.

(b)     Form 10-Q for the three- and six-month periods ending June 30, 2002.

(c)     Form 10-Q for the three-month period ending March 31, 2002.

(d)     Form 10-Q/A for the three- and nine-month  periods ending  September 30,
        2001.

(e)     Form 10-Q for the three- and six-month periods ending June 30, 2001.

(f)     Form 8-K dated June 26, 2002,  disclosing  that the  Company's  Board of
        Directors had elected Charles T. Jensen as President and Chief Operating
        Officer  and  David  A.  Dodge as Vice  President  and  Chief  Financial
        Officer.

(g)     Form 8-K dated May 17, 2002,  disclosing that the Company's common stock
        was delisted from the Nasdaq SmallCap Market effective May 17, 2002, and
        that  the   Company's   common   stock  would   begin   trading  on  the
        Over-the-Counter Bulletin Board the same day.

(h)     Form  8-K  dated  April  15,  2002,  disclosing  that  the  Company  had
        instituted an option  repricing  program for certain of its  outstanding
        stock options.

(i)     Form 8-K dated April 2, 2002, disclosing that the Company had instituted
        a warrant repricing program for all of its outstanding stock warrants.

(j)     Form 8-K/A dated  November  5, 2001,  disclosing  change in  independent
        accountants.

(k)     Form 8-K/A dated June 6, 2001,  disclosing  material  purchase of assets
        from  Qode.com,  Inc.,  except  for  the  December  31,  2000  financial
        statements and audit opinion thereon dated May 4, 2001 and the financial
        statements  of  Qode.Com,  Inc.  (A  Development  Stage  Enterprise)  at
        December  31, 1999 and for the period  from March 29,  1999  (inception)
        through  December  31, 1999 and the audit  opinion  dated July 21, 2000,
        except for the seventh paragraph of Note 8, as to which the date is June
        30, 2001.  Such financial  statements are included in this  registration
        statement.

(l)     The description of the Company's  Common Stock, par value $.01 per share
        (the "Common Stock"),  which is contained in the Company's  Registration
        Statement on Form 8-A filed under the  Securities  Exchange Act of 1934,
        as amended (the  "Exchange  Act") on November 18,  1996,  including  any
        amendment  or  report  filed  with the  Commission  for the  purpose  of
        updating such description of Common Stock.

All  documents  subsequently  filed by the Company  pursuant to Sections  13(a),
13(c),  14 and 15(d) of the Securities  Exchange Act of 1934 prior to the filing
of a post-effective  amendment which indicates that all securities  offered have
been sold or which  deregisters all securities then remaining  unsold,  shall be
deemed to be incorporated by reference in this Registration  Statement and to be
a part hereof from the date of filing such documents.

ITEM 4. DESCRIPTION OF SECURITIES.

Not applicable.

                                       3
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.

Not applicable.

ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

As permitted  by Delaware  General  Corporation  Law  ("DGCL"),  the Company has
included in its  Certificate  of  Incorporation  a provision  to  eliminate  the
personal  liability of its directors for monetary  damages for breach or alleged
breach of their fiduciary duties as directors,  except for liability (i) for any
breach of director's  duty of loyalty to the Company or its  stockholders,  (ii)
for acts or omissions not in good faith or which involved intentional misconduct
or a knowing  violation of law,  (iii) in respect of certain  unlawful  dividend
payments or stock redemptions or repurchases,  as provided in Section 174 of the
DGCL, or (iv) for any  transaction  from which the director  derived an improper
personal benefit.  The effect of this provision in the Company's  Certificate of
Incorporation  is to  eliminate  the rights of the Company and its  stockholders
(through  stockholders'  derivative  suits on behalf of the  Company) to recover
monetary  damages against a director for breach of the fiduciary duty of care as
a director  except in the situations  described in (i) through (iv) above.  This
provision  does not  limit  or  eliminate  the  rights  of the  Company  or any
stockholder to seek  non-monetary  relief such as an injunction or rescission in
the event of a breach of a director's  duty of care.  These  provisions will not
alter the liability of directors under federal securities laws.

The Certificate of Incorporation and the by-laws of the Company provide that the
Company is required  and  permitted to  indemnify  its  officers and  directors,
employees and agents under certain  circumstances.  In addition, if permitted by
law, the Company is required to advance  expenses to its officers and  directors
as incurred in connection  with  proceedings  against them in their  capacity as
directors  or  officers  for which they may be  indemnified  upon  receipt of an
undertaking  by or on behalf of such director or officer to repay such amount if
it  shall  ultimately  be  determined  that  such  person  is  not  entitled  to
indemnification.  At  present,  the  Company  is not  aware  of any  pending  or
threatened litigation or proceeding involving a director,  officer,  employee or
agent of the Company in which  indemnification  would be required or  permitted.
The Company has obtained directors and officers liability insurance. The Company
believes  that  its  charter  provisions  and  indemnification   agreements  are
necessary to attract and retain qualified persons as directors and officers.

Insofar as indemnification  for liabilities arising under the Securities Act may
be permitted to directors and officers of the Company  pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the opinion of the
Securities  and Exchange  Commission  ("Commission"),  such  indemnification  is
against  public  policy as expressed in the  Securities  Act and is,  therefore,
unenforceable.

ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.

Not Applicable

                                       4
INDEX OF FINANCIAL STATEMENTS

Qode.com, Inc.  financial  statements for the year ended December
      31, 2000...............................................................F-2

Qode.com,  Inc.  (A  Development  Stage   Enterprise)   financial
      statements  for Period from March 29, 1999  (inception)  to
      December 31, 1999.....................................................F-21

                               F-1
FINANCIAL INFORMATION

Report of Independent Certified Public Accountants

To Qode.com, Inc.:

We have audited the  accompanying  balance  sheet of  Qode.com,  Inc. (a Florida
corporation in the  development  stage) as of December 31, 2000, and the related
statements   of   operations,   changes  in  redeemable   preferred   stock  and
stockholders'  deficit,  and cash flows for the year then ended and the  related
statements of operations and cash flows for the period from inception (March 29,
1999) to December 31, 2000. These financial statements are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial  statements  based  on our  audit.  We did  not  audit  the  financial
statements of Qode.com, Inc. for the period from inception to December 31, 1999.
Such  statements are included in the cumulative  inception to December 31, 2000,
totals of the statements of operations and cash flows and reflect total revenues
and net  loss of zero  percent  and 13  percent,  respectively,  of the  related
cumulative totals. Those statements were audited by other auditors, whose report
has been furnished to us, and our opinion,  insofar as it relates to amounts for
the period from  inception  to December  31,  1999,  included in the  cumulative
totals, is based solely upon the report of the other auditors.

We conducted our audit in accordance with auditing standards  generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit and the  report of the other  auditors
provide a reasonable basis for our opinion.

In our  opinion,  based on our audit and the report of the other  auditors,  the
financial statements referred to above present fairly, in all material respects,
the  financial  position of  Qode.com,  Inc. as of December  31,  2000,  and the
results of its operations and its cash flows for the year then ended and for the
period from  inception to December  31,  2000,  in  conformity  with  accounting
principles generally accepted in the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 1 to the
financial  statements,  the Company has suffered  losses from operations and the
current cash position of the Company raises  substantial doubt about its ability
to continue as a going  concern.  Management's  plans in regard to these matters
are also  described  in Note 1. The  financial  statements  do not  include  any
adjustments that might result from the outcome of this uncertainty.

                                 /s/ ARTHUR ANDERSEN LLP

Tampa, Florida,
May 4, 2001 (except with respect to the matter discussed in Note 13, as to which
the date is June 30, 2001)

                               F-2
QODE.COM, INC.

                        (A Development Stage Enterprise)

                        BALANCE SHEET - DECEMBER 31, 2000

                             ASSETS                                  AMOUNT
                                                                     ------

CURRENT ASSETS:
       Cash and cash equivalents                                    $18,686
       Accounts receivable                                            6,041
       Inventory                                                    218,690
       Other current assets                                          13,499
                                                                  ---------

                            Total current assets                    256,916

PROPERTY AND EQUIPMENT, net                                         875,263

CAPITALIZED SOFTWARE DEVELOPMENT COSTS, net                       2,359,932

DEPOSITS                                                             39,539
                                                                  ---------

                            Total assets                         $3,531,650
                                                                 ==========

                                      F-3
QODE.COM, INC.

                        (A Development Stage Enterprise)

                        BALANCE SHEET - DECEMBER 31, 2000

                                   (continued)

    LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT

                                                                        AMOUNT

CURRENT LIABILITIES:
      Accounts payable                                                 $982,610
      Dividends payable                                                  94,119
      Accrued expenses                                                  425,103
      Current portion of notes payable                                3,617,323
      Current portion of capital lease obligations                      368,574
      Loans from officers                                               224,740
                                                                     ----------
                        Total current liabilities                     5,712,469

NOTES PAYABLE, net of current portion                                     5,857

CAPITAL LEASE OBLIGATIONS, net of current portion                       168,176
                                                                     ----------
                        Total liabilities                             5,886,502
                                                                     ----------
COMMITMENTS AND CONTINGENCIES

SERIES A 15% CUMULATIVE CONVERTIBLE REDEEMABLE
       PREFERRED STOCK, $.0001 par value; 3,000,000 shares
       authorized, 2,044,560 shares issued and
       outstanding, liquidation value of $2,502,641                   2,480,991

STOCKHOLDERS' DEFICIT:
       Common stock, $.0001 par value; 25,000,000 shares
       authorized, 8,023,000 shares issued and outstanding                  802

       Additional paid-in capital - common stock                      1,927,313

       Series U convertible preferred stock, $.0001 par
       value; 1,500,000 shares authorized, issued and
       outstanding                                                          150

       Additional paid-in capital - preferred stock                   2,999,850
       Accumulated deficit                                           (9,763,958)
                                                                     ----------
                        Total stockholders' deficit                  (4,835,843)

                        Total liabilities, redeemable preferred
                             stock and stockholders' deficit         $3,531,650
                                                                     ==========

The accompanying notes are an integral part of this balance sheet.

                                       F-4
QODE.COM, INC.

                        (A Development Stage Enterprise)

                             STATEMENT OF OPERATIONS

               FOR THE YEAR ENDED DECEMBER 31, 2000 AND THE PERIOD

       FROM MARCH 29, 1999 (DATE OF INCEPTION), THROUGH DECEMBER 31, 2000

                                                                   Cumulative
                                                                 from Inception
                                                                 March 29, 1999
                                                  Year Ended            to
                                                  December 31,     December 31
                                                     2000             2000
                                                     ----             ----

REVENUE                                             $211,952        $211,952

COST OF GOODS SOLD                                   213,345         213,345
                                                 -----------    ------------
GROSS MARGIN                                          (1,393)         (1,393)

COSTS AND EXPENSES:
      Research and development                     1,109,686       1,505,928
      Sales and marketing                            556,541         598,516
      General and administrative                   5,839,413       6,686,825
                                                 -----------    ------------
                   Total costs and expenses        7,505,640       8,791,269

NET INTEREST EXPENSE                               1,008,938         971,296
                                                 -----------    ------------
NET LOSS                                          (8,515,971)     (9,763,958)

PREFERRED STOCK DIVIDENDS                           (356,203)       (552,200)

ACCRETION OF BENEFICIAL CONVERSION FEATURE ON
      PREFERRED STOCK                                (15,296)        (20,010)
                                                 -----------    ------------

Net LOSS AVAILABLE TO COMMON STOCKHOLDERS        $(8,887,470)   $(10,336,168)
                                                 ===========    ============

NET LOSS PER SHARE - BASIC AND DILUTED                $(1.11)         $(1.29)
                                                 ===========    ============

WEIGHTED AVERAGE NUMBER OF COMMON SHARES           8,023,000       8,018,071
                                                 ===========    ============

The accompanying notes are an integral part of these statements.

                                      F-5
QODE.COM, INC.

                                            (A Development Stage Enterprise)

                      STATEMENT OF CHANGES IN REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT

                                          FOR THE YEAR ENDED DECEMBER 31, 2000
Additional
                                                  Series A                                   Paid-in    Series U Convertible
                                                 Redeemable                                Capital for    Preferred Stock
                                                 Preferred            Common Stock           Common
                                                   Stock          Shares       Amount         Stock       Shares     Amount
                                                   -----          ------       ------         -----       ------     ------
BALANCE, December 31, 1999                       $2,154,711      8,023,000      $802      $   (49,557)          --      $--
      Issuance of 19,560 shares of Series A
        preferred stock in exchange for
        services                                     48,900             --        --               --           --       --
      Issuance of Series U preferred stock               --             --        --               --    1,500,000      150
      Issuance of 372,780 warrants in
        exchange for services                            --             --        --        1,126,790           --       --
      Issuance of 326,666 warrants attached
        with notes payable                               --             --        --          675,681           --       --
      Issuance of employee stock options
        with exercise price below market                 --             --        --          150,216           --       --
        value
      Re-pricing of employee stock options               --             --        --          395,682           --       --
      Series A preferred stock dividends            262,084             --        --         (262,084)          --       --
      Series U preferred stock dividends                 --             --        --          (94,119)          --       --
      Accretion of beneficial conversion
        feature on preferred stock                   15,296             --        --          (15,296)          --       --
      Net loss                                           --             --        --               --           --       --

BALANCE, December 31, 2000                       $2,480,991      8,023,000      $802       $1,927,313    1,500,000     $150
                                                 ==========      =========      ====       ==========    =========     ====
Additional
                                                         Paid-in
                                                      Capital for                           Total
                                                        Preferred     Accumulated       Stockholders'
                                                          Stock         Deficit           Deficit
                                                          -----         -------           -------
BALANCE, December 31, 1999                                      --     $(1,247,987)     $(1,296,742)
      Issuance of 19,560 shares of Series A
        preferred stock in exchange for
        services                                                --              --               --
      Issuance of Series U preferred stock               2,999,850              --        3,000,000
      Issuance of 372,780 warrants in
        exchange for services                                   --              --        1,126,790
      Issuance of 326,666 warrants attached
        with notes payable                                      --              --          675,681
      Issuance of employee stock options
        with exercise price below market                        --              --          150,216
        value
      Re-pricing of employee stock options                      --              --          395,682
      Series A preferred stock dividends                        --              --         (262,084)
      Series U preferred stock dividends                        --              --          (94,119)
      Accretion of beneficial conversion
        feature on preferred stock                              --              --          (15,296)
      Net loss                                                  --      (8,515,971)      (8,515,971)
                                                                        ----------       ----------

BALANCE, December 31, 2000                              $2,999,850     $(9,763,958)     $(4,835,843)
                                                        ==========     ===========      ===========
The accompanying notes are integral part of this statement.

                                                          F-6
QODE.COM, INC.

                                 (A Development Stage Enterprise)

                                      STATEMENT OF CASH FLOWS

                        FOR THE YEAR ENDED DECEMBER 31, 2000 AND THE PERIOD

 FROM MARCH 29, 1999 (DATE OF INCEPTION), THROUGH DECEMBER 31, 2000
Cumulative
                                                                                      from Inception
                                                                      Year Ended     (March 29, 1999)
                                                                     December 31,          to
                                                                        2000        December 31, 2000)
                                                                        ----        ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net loss                                                        $(8,515,971)       $(9,763,958)
    Adjustments to reconcile net loss to net cash used in
       operating activities-
           Depreciation and amortization                                417,410            434,932
           Series A preferred stock issued for services                  48,900             48,900
           Warrants issued in exchange for services                   1,126,790          1,884,627
           Stock options issued with exercise price below
             market value                                               150,216            150,216
           Expense related to the re-pricing of employee
             stock options                                              395,682            395,682
           Changes in assets and liabilities-
              Accounts receivable                                       (6,041)             (6,041)
              Inventory                                                (218,690)          (218,690)
              Other current assets                                        4,652            (13,499)
              Deposits                                                   (9,310)           (39,539)
              Accounts payable                                          831,022            982,610
              Accrued expenses                                          377,857            425,103
                                                                    -----------        -----------
                 Net cash used in operating activities               (5,397,483)        (5,719,657)
                                                                    -----------        -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                                 (382,222)          (509,013)
    Capitalization of software development costs                      (2,498,752)       (2,498,752)
                                                                    -----------        -----------
                 Net cash used in investing activities                (2,880,974)       (3,007,765)
                                                                    -----------        -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of notes payable and detachable warrants    4,298,861         3,623,180
    Proceeds from loans from officers                                   151,407            224,740
    Principal repayments of capital lease                              (125,612)          (125,612)
    Proceeds from the issuance of common stock                              --              23,800
    Proceeds from the issuance of Series A redeemable preferred stock
        net of issuance costs of $25,000                                    --           2,000,000
    Proceeds from issuance of Series U convertible preferred stock     3,000,000         3,000,000
                                                                    -----------        -----------
                 Net cash provided by financing activities             7,324,656         8,746,108
                                                                    -----------        -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS                              (953,801)            18,686

CASH AND CASH EQUIVALENTS, beginning of year                            972,487                 --
                                                                    -----------        -----------
CASH AND CASH EQUIVALENTS, end of year                                  $18,686            $18,686
                                                                    ===========        ===========
F-7
QODE.COM, INC.

                         A Development Stage Enterprise

                                       STATEMENT OF CASH FLOWS

                                FOR THE YEAR ENDED DECEMBER 31, 2000
                       AND THE PERIOD FROM MARCH 29, 1999 (DATE OF INCEPTION),
                                      THROUGH DECEMBER 31, 2000

                                             (continued)
Cumulative from
                                                                                       Inception
                                                                                    (March 29, 1999)
                                                                      Year Ended          To
                                                                      December 31,    December 31,
                                                                          2000            2000
                                                                          ----            ----
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
      Cash paid for interest                                            $180,000       $160,189

SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
      FINANCING ACTIVITIES:
          Accretion of redeemable preferred stock                        $15,296         20,010
          Accrued dividends on Series A preferred stock                 $262,084        458,081
          Accrued dividends on Series U preferred stock                  $94,119         94,119
          Property and equipment acquired under capital lease           $662,362        662,362
The accompanying notes are an integral part of these statements.

                                                F-8
QODE.COM, INC.

                        (A Development Stage Enterprise)

                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 2000

1      NATURE OF BUSINESS ORGANIZATION

     Qode.com,  Inc. (Qode.com or the Company) commenced operations on March 29,
     1999,  and  is  incorporated  in  the  State  of  Florida.  Qode.com  is  a
     development stage company, as defined in Statement of Financial  Accounting
     Standards  (SFAS) No. 7,  "Accounting  and Reporting By  Development  Stage
     Enterprises".  The  Company  intends to provide  manufacturers,  retailers,
     advertisers and users a unique tool for Website  navigation through the use
     of imbedded  standard bar codes and Uniform  Product Codes (UPC). It is the
     Company's  mission to  develop,  operate,  maintain  and promote the use of
     Qode.com  technologies  to  enable  any bar code to  interface  with  their
     technology.

     The Company's  financial  statements  have been prepared  assuming that the
     Company will continue as a going concern.  The Company has incurred  losses
     since its  inception  and during its  development  stage as it has  devoted
     substantially  all of its efforts toward building  network  infrastructure,
     internal staffing, developing systems, expanding into new markets, building
     a  proprietary  database  and raising  capital.  The Company has  generated
     little  revenue  to date and is  subject  to a number of  risks,  including
     dependence on key  individuals,  the ability to  demonstrate  technological
     feasibility, and the need to obtain adequate additional financing necessary
     to fund the  development  and marketing of its products and  services,  and
     customer  acceptance.  These conditions raise  substantial  doubt about the
     Company's ability to continue as a going concern.  The financial statements
     do not include any  adjustments  to reflect the possible  future effects on
     the  recoverability  and  classification  of  assets  or  the  amounts  and
     classification  of  liabilities  that may results  from the outcome of this
     uncertainty.

2      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     USE OF ESTIMATES

     The  preparation  of financial  statements  in conformity  with  accounting
     principles  generally accepted in the United States requires  management to
     make estimates and assumptions  that affect the reported  amounts of assets
     and liabilities and disclosure of contingent  assets and liabilities at the
     date of the financial  statements and the reported  amounts of revenues and
     expenses  during the  reporting  period.  Actual  results could differ from
     those estimates.

     CASH AND CASH EQUIVALENTS

     For  purposes of reporting  cash flows,  the Company  considers  all highly
     liquid  investments  purchased with an original maturity of three months or
     less to be cash equivalents.

     INVENTORY

     Inventory  is stated at the lower of cost or market,  and at  December  31,
     2000 was comprised of QoderTM handheld scanning systems. Cost is determined
     using the weighted average method.

                                      F-9
PROPERTY AND EQUIPMENT

     Property and  equipment are stated at cost less  accumulated  depreciation.
     Repairs and maintenance are charged to expense as incurred. Depreciation is
     computed using the straight-line  method over the estimated useful lives of
     the related  assets.  Computer  hardware and  purchased  software are being
     depreciated over a three-year  period, and furniture and fixtures are being
     depreciated over a five-year period.

     Depreciation expense was $278,590 for the year ended December 31, 2000.

     CAPITALIZED SOFTWARE DEVELOPMENT COSTS

     In accordance with the American  Institute of Certified Public  Accountants
     Statement of Position No. 98-1,  "Accounting for Costs of Computer Software
     Developed  or  Obtained  for  Internal  Use,"  all  costs  related  to  the
     development  or purchase of internal use software other than those incurred
     during the  application  development  stage are to be expensed as incurred.
     Costs incurred during the application  development stage are required to be
     capitalized and amortized over the useful life of the software. The Company
     has  expensed  $1,109,686  in research and  development  costs for the year
     ended December 31, 2000. The Company has capitalized $2,498,752 in software
     development  costs  for the year  ended  December  31,  2000.  Amortization
     expense was $138,820 for the year ended December 31, 2000.

     REDEEMABLE PREFERRED STOCK

     Redeemable  preferred  stock is  carried  at the net  consideration  to the
     Company at time of  issuance,  increased  by accrued and unpaid  cumulative
     dividends  and periodic  accretion to  redemption  value using the interest
     method.  Accrued and unpaid dividends and redemption accretion are affected
     by charges  against  retained  earnings,  or, in the  absence  of  retained
     earnings, additional paid-in capital.

     REVENUE RECOGNITION

     Revenue is generated from the sale of Qode's proprietary hand held bar code
     scanners.  Revenue  is  recognized  when the  product is  delivered  to the
     customer.

     INCOME TAXES

     In accordance with Statement of Financial  Accounting  Standards (SFAS) No.
     109,  "Accounting  for Income Taxes",  income taxes are accounted for using
     the assets and  liabilities  approach.  Deferred tax assets and liabilities
     are recognized for the future tax consequences  attributable to differences
     between the financial  statement  carrying  amounts of existing  assets and
     liabilities,  and their  respective  tax  bases.  Deferred  tax  assets and
     liabilities  are  measured  using  enacted  tax rates  expected to apply to
     taxable  income  in the  years in which  those  temporary  differences  are
     expected to be recovered  or settled.  Deferred tax assets are reduced by a
     valuation  allowance when, in the opinion of management,  it is more likely
     than not that some  portion or all of the  deferred  tax assets will not be
     recognized.  The  Company has  recorded a 100%  valuation  allowance  as of
     December 31, 2000.

                                      F-10
COMPUTATION OF NET LOSS PER SHARE

     Basic and diluted  net loss per share is  computed by dividing  net loss by
     the weighted  average number of shares of common stock  outstanding  during
     the period.  The Company has excluded all common stock equivalents from the
     calculation  of diluted net loss per share  because  these  securities  are
     anti-dilutive. The shares excluded from the calculation of diluted net loss
     per share and reserved for future issuance are detailed in the table below:

                                                                       2000
                                                                       ----
       Outstanding stock options                                     1,540,511
       Outstanding warrants                                          1,229,146
       Shares issuable on conversion of notes payable                6,800,000
       Shares issuable on conversion of Series A
            preferred stock                                          4,049,701

     Shares issuable on conversion of notes payable were calculated based on the
     terms of the notes as if they were converted on December 31, 2000.

     FINANCIAL INSTRUMENTS

     The  Company  believes  that the fair  value of its  financial  instruments
     approximate carrying value.

     CONCENTRATION OF CREDIT RISK

     Revenue  was   generated   from  the  selling  of  barcode   scanners  with
     approximately 91 percent of those sales to one customer.

     ACCOUNTING FOR STOCK-BASED COMPENSATION

     The  Company  has  adopted  SFAS  No.  123,   "Accounting  for  Stock-Based
     compensation." The provisions of SFAS 123 allow companies to either expense
     the  estimated  fair value of stock  options or to  continue  to follow the
     intrinsic  value  method set forth in  Accounting  Principles  Board  (APB)
     Opinion No. 25,  "Accounting  for Stock Issued to Employees"  (APB 25), but
     disclose  the pro forma  effects on net income or loss as if the fair value
     had been  expensed.  The Company has elected to apply APB 25 in  accounting
     for its employee  stock options and,  accordingly  recognizes  compensation
     expense for the difference  between the fair value of the underlying common
     stock and the grant price of the option at the measurement date.

     RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998 the FASB  issued  SFAS No.  133,  "Accounting  for  Derivative
     Instruments  and Hedging  Activities",  as amended by SFAS No. 137 and SFAS
     138.  SFAS No.  133,  as  amended,  establishes  accounting  and  reporting
     standards  for  derivative   instruments,   including  certain   derivative
     instruments  embedded in other contracts,  and for hedging  activities.  It
     requires  that an entity  recognize  all  derivatives  as either  assets of
     liabilities  in the balance  sheet and measure  those  instruments  at fair
     value.  The  adoption  of these new  accounting  standards  did not have an
     impact on the Company's financial position or results of operations.

     On December 3, 1999 the  Securities  and  Exchange  Commission  (SEC) staff
     released Staff Accounting  Bulletin (SAB) No. 101,  "Revenue  Recognition".
     This SAB provides guidance on the recognition,  presentation and disclosure
     of revenue in financial statements. The Company implemented SAB No. 101 for
     the quarter ended June 30, 2000. It did not have an impact on the Company's
     results of operations.

                                      F-11
COMPREHENSIVE INCOME

     For the year ended December 31, 2000, there were no differences between the
     balance sheet and income statement and therefore no comprehensive income.

3      LOANS FROM OFFICERS

     Between  October  and  December  2000,  several of the  Company's  officers
     elected to defer their salaries due to cash flow  difficulties  experienced
     by the Company. The total amount deferred was $83,154.

     On November  28,  2000,  the Company  issued  promissory  notes to officers
     totaling $135,000, with an interest rate of 6.09 percent. The principal and
     interest are payable on February 26, 2001

4      PROPERTY AND EQUIPMENT

     Property and equipment consists of the following as of December 31, 2000:

                                                                       2000
                                                                       ----
       Computer hardware and purchased software                      $1,139,578
       Furniture and fixtures                                           31,797
                                                                        ------

                                                                      1,171,375
       Less- Accumulated depreciation                                 (296,112)
                                                                      ---------

                                                                      $875,263
                                                                      ========
5      NOTES PAYABLE

     CONVERTIBLE NOTES

     On January 18, 2000,  the Company  entered into a note  purchase  agreement
     with an investor for $3,000,000,  with an interest rate of 12 percent.  The
     principal and interest  were due July 17, 2000.  The principal and interest
     are  convertible  at the option of the holder  upon or after a $10  million
     financing.  The conversion rate is 85 percent of the price per share in the
     financing.  In connection with this note, 200,000 warrants were issued with
     an exercise price of $4.50 per share for the Company's common stock.  These
     warrants may be exercised at anytime following the closing of a $10 million
     financing and expire January 17, 2005.  The Company  allocated the proceeds
     from the issuance of the note  between the note and  warrants  based on the
     relative fair value method.  The difference  between the face amount of the
     note  and the  amount  allocated  to it was  recorded  as a  discount,  and
     amortized to interest expense over the life of the note.

     On August 1, 2000, the Company  extended this note to November 17, 2000. As
     additional consideration for the extension of the note, the Company reduced
     the exercise price of the 200,000 warrants to $1.00. The additional expense
     of $63,180  that  resulted  from the  re-pricing  was  charged to  interest
     expense. As of December 31, 2000, the note had not been repaid.

                                      F-12
During  2000,  the  Company   entered  into  four  separate  note  purchase
     agreements  with  investors  totaling  $400,000 with  interest  rates of 12
     percent.  The principal and interest on three of the notes were due October
     9, 2000 through  November 4, 2000,  and principal and interest on the other
     note is due January 6, 2001. The principal and interest are  convertible at
     the  option  of the  holder  upon or  after  a $7  million  financing.  The
     conversion  rate is 85 percent of the price per share in the financing.  In
     connection  with these notes,  26,666 warrants were issued with an exercise
     price of $2.00 per share for the Company's common stock. These warrants may
     be exercised at anytime  following  the closing of a $7 million  financing.
     The proceeds from the issuance of these notes and warrants  were  allocated
     between  the two  using the  relative  fair  value  method.  The  resulting
     discount on the notes was  amortized  to interest  expense over the life of
     the notes.

     OTHER NOTE PAYABLE

     During March 2000, the Company  entered into a note agreement in the amount
     of $42,500,  bearing interest at a rate of 11 percent per year and expiring
     on March 15,  2002,  to finance  its phone  system.  The note is secured by
     telephone equipment.

     On  November  28,  2000 and  December  14,  2000,  the  Company  signed two
     promissory  notes in the amounts of $20,000 and $200,000,  bearing interest
     at a rate of 6.09  percent  and 15 percent  per year,  with  principal  and
     accrued   interest   payable  February  26,  2001  and  January  28,  2001,
     respectively.  In  connection  with the  December  14,  2000 note,  100,000
     warrants  were  issued  with an  exercise  price of $.50 per  share for the
     Company's  common  stock.  These  warrants  may  be  exercised  at  anytime
     following  the  closing of the Next  Financing,  as defined in the  warrant
     agreement.  The proceeds  from the issuance of this note and warrants  were
     allocated  between  the two using  the  relative  fair  value  method.  The
     resulting  discount on the note is being amortized to interest expense over
     the life of the note.

     Notes payable consists of the following:

                                                                        Amount
                                                                        ------

Convertible notes, interest bearing at 12% per annum                 $3,400,000

Note payable,interest bearing at 11% per annum, due in monthly
      installments through March 2002                                    27,679
Note payable, unsecured interest bearing at 6.09% per annum, due
      February 2001                                                      20,000
Note payable, unsecured interest bearing at 15% per annum, due
      January 2001                                                      200,000
                                                                     ----------

                Total notes payable                                   3,647,679
Less discount                                                           (24,499)
Less- Current portion                                                (3,617,323)
                                                                     ----------

                Notes payable, net of current portion                    $5,857
                                                                     ==========

        As of December 31, 2000 there was $197,740 of accrued interest.

6           INCOME TAXES

For the years ended December 31, 2000, the components of income tax expense were
as follows:

                                                       2000
                                                       ----
Current                                                 $-
Deferred                                                 -
                                                      -----

Income tax expense                                      $-

                                      F-13
The net amounts of deferred tax assets recorded in the balance sheet at December
31, 2000, are as follows:

                                                                         2000
Deferred tax asset:                                                      ----
       Depreciation of property and equipment                           $17,901
       Start-up costs                                                   199,566
       Net operating loss carryforward                                3,443,643
       Less- Valuation allowance                                     (3,661,110)
                                                                     -----------
             Total deferred tax asset                                     $--
                                                                          ===

Deferred tax liabilities:                                                 $--
                                                                          ---

             Total net deferred taxes                                     $--
                                                                          ===

     SFAS No. 109  requires a valuation  allowance  to reduce the  deferred  tax
     assets reported if, based on the weight of the evidence,  it is more likely
     than not,  that some  portion or all of the deferred tax assets will not be
     realized.  After  consideration  of all the  evidence,  both  positive  and
     negative,  management has determined that a $3,661,110  valuation allowance
     at December  31, 2000 is necessary to reduce the deferred tax assets to the
     amount  that will  more  likely  than not be  realized.  The  change in the
     valuation  allowance  for the current year is  $3,194,880.  At December 31,
     2000,  the  Company has  available  net  operating  loss  carryforwards  of
     $9,151,323, which expire in the year 2020 and 2019.

     A reconciliation of income taxes computed at the U.S. federal statutory tax
     rate to income tax  expense for the year ended  December  31,  2000,  is as
     follows:

                                                                        2000
                                                                        ----
       Taxes at the U.S. statutory rate                            $(2,895,430)
       State taxes, net of federal benefit                            (309,129)
       Nondeductible items                                               9,679
       Change in valuation allowance                                 3,194,880
                                                                      ---------

                     Total income tax expense                         $-
                                                                      ===

7           COMMITMENTS AND CONTINGENCIES

     LEGAL PROCEEDINGS

     The Company is not presently a party to any  significant  litigation.  From
     time to time,  however,  the Company is involved in various  legal  actions
     arising in the normal course of business,  which the Company  believes will
     not materially affect the financial position or results of operations.

     EMPLOYMENT CONTRACTS

     The Company has employment  contracts with William  Carpenter,  Greg Miller
     and Michael Miller beginning November 1, 2000.

     Future payments under the above employment contracts are:

                                      F-14
2001                          $450,000
       2002                           450,000
       2003                           375,000
                                   ----------
                     Total         $1,275,000
                                   ==========

     CAPITAL LEASE OBLIGATIONS

     During April 2000,  the Company  acquired  computer  equipment for $662,362
     under a capital lease, expiring on April 26, 2002. Accumulated depreciation
     on this equipment was approximately $166,000 at December 31,2001.

     Future minimum lease  payments on capital lease  obligations as of December
     31,2000, are as follows:

       Year                                                         AMOUNT

       2001                                                        $415,358
       2002                                                         173,519
                                                                    -------

                                                                    588,877
       Less - Amount representing interest on
           obligations under capital leases (15%)                   (52,127)
       Current portion of capital lease obligations                (368,574)
                                                                   ---------

       Capital lease obligations, net of current portion           $168,176
                                                                   ========

     OPERATING LEASE OBLIGATIONS

     The Company  leases its office  facility under a  non-cancelable  operating
     lease expiring in March 2005. Rental expense,  net of sub-lease income, was
     $73,036 for the year ended December 31, 2000.

     Lease commitments under this non-cancelable operating leases as of December
     31, 2000, are as follows:

         Year Ending                                          AMOUNT
                                                              ------

             2001                                             $391,399
             2002                                              233,876
             2003                                              154,905
             2004                                              117,768
             2005                                                5,103
                                                              --------
                                                              $903,051
                                                              ========

8           PREFERRED STOCK

     SERIES A 15% CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK

     The Board of  Directors  (the Board) has  authorized  the issuance of up to
     3,000,000  shares  of  Series  A  15  percent  $.0001  par  value,  voting,
     cumulative, redeemable, convertible preferred stock (the Series A Preferred

                                      F-15
Stock).  Series A Preferred  Stock is convertible at any time at the option
     of the holder prior to the closing of a Public Offering,  as defined in the
     agreement,  or within 20 days following  receipt of a Notice of Redemption,
     as defined in the agreement, into the Company's common stock for each share
     of the Series A Preferred  Stock held plus accrued and unpaid  dividends on
     the  Series  A  Preferred  Shares.  The  Series  A  Preferred  Stock  has a
     liquidation  preference  of $1 per share and is  mandatorily  redeemable on
     April 15, 2004.

     In June 2000,  the Company  issued  19,560 shares of the Series A Preferred
     Stock at $2.50 per share for services rendered.

     Dividends  on the  Series  A  Preferred  Stock  accrue,  on a daily  basis,
     commencing  on the date of issuance  at an interest  rate of 15 percent per
     annum and are payable on a semi-annual  basis. The Company,  at its option,
     may pay dividends either in cash or by the issuance of additional shares of
     Series A Preferred  Stock.  Aggregate  cumulative  dividends  in arrears at
     December  31,  2000  totaled  $458,081,  and are  included in Series A 15 %
     cumulative  convertible  redeemable  preferred  stock  on the  accompanying
     balance sheet.

     SERIES U CONVERTIBLE PREFERRED STOCK

     The Board has authorized  the issuance of up to 1,500,000  shares of Series
     U, 8 percent $.0001 par value, voting,  cumulative,  convertible  preferred
     stock  (the  Series  U  Preferred  Stock).  Series  U  Preferred  Stock  is
     convertible at any time at the option of the holder prior to the closing of
     a Public  Offering  into the  Company's  common stock for each share of the
     Series U  Preferred  Stock held plus  accrued and unpaid  dividends  on the
     Series U Preferred Shares. Between May and October 2000, the Company issued
     1,500,000 at $2 per share, with proceeds to the Company of $3,000,000.

     Dividends  on the  Series  U  Preferred  Stock  accrue,  on a daily  basis,
     commencing  on the date of issuance  at an  interest  rate of 8 percent per
     annum and are payable on a semi-annual  basis. The Company,  at its option,
     may pay dividends either in cash or by the issuance of additional shares of
     Series U Preferred  Stock.  Aggregate  cumulative  dividends  in arrears at
     December 31, 2000, totaled $94,119.

     9  COMMON STOCK

     The Company is authorized  to issue up to  25,000,000  shares of its $.0001
     par value common stock. During 2000, no shares of common stock were issued.
     As of December 31, 2000, 8,023,000 shares were issued and outstanding.

     10 STOCK BASED COMPENSATION

     STOCK WARRANTS GRANTED IN EXCHANGE FOR SERVICES

     During 2000, the Company  granted  372,780  warrants,  with exercise prices
     ranging from $1.00 to $4.50 per share, to consultants for certain  advisory
     and consulting  services.  The warrants vest  immediately upon issuance and
     can be exercised over a five-year period. In August 2000,  250,000 warrants
     granted at $4.50 were  re-priced  to $1.00 per share.  In  September  2000,
     100,000  warrants  granted at $1.50 were re-priced to $0.01 per share.  The
     Company  valued these  warrants,  and their  re-pricing,  at  $1,126,790 in
     accordance  with SFAS 123,  and  recognized  the  entire  amount in 2000 as
     general  and  administrative  expenses  in the  accompanying  statement  of
     operations.

     STOCK WARRANTS GRANTED ATTACHED TO DEBT AGREEMENTS

     During 2000, the Company  granted  326,666  warrants,  with exercise prices
     ranging  from $.50 to $4.50,  attached  to  various  debt  agreements.  The
     warrants  vest  immediately  upon  issuance  and  can be  exercised  over a
     five-year period.  The Company applied APB Opinion No. 14,  "Accounting for
     Convertible  Debt  and Debt  Issued  with  Stock  Purchase  Warrants",  and
     accounted for the portion of the proceeds of the debt issued with warrants,
     which was allocable to the warrants, as additional paid-in capital based on
     the relative  fair values of the  securities  at the time of issuance,  and
     also recognized a discount on the debt as a result.

                                      F-16
In September  2000,  200,000  warrants  granted at $4.50 were  re-priced to
     $1.00 per share in  connection  with an  extension  of the term date of the
     debt.  The Company  valued the  re-pricing at $63,180,  and  recognized the
     entire amount in 2000 as interest expense in the accompanying  statement of
     operations.

     Warrant activity for the year ended December 31, 2000, is as follows:

      Balance December 31, 1999                                  529,700
      Issued                                                     699,446
      Exercised                                                        -
      Expired                                                          -
                                                                ---------

      Balance December 31, 2000                                 1,229,146
                                                                =========

      The following table summarizes  information about warrants  outstanding at
December 31, 2000, all of which are exercisable:

                                        Weighted Average
                           Number of         Remaining
    Range of Exercise    Outstanding    Contractual Life       Weighted Average
          Prices           Warrants          (Years)            Exercise Price
          ------           --------          -------            --------------
  $0.01 to $0.50            200,000             3.3                 $0.26
  $1.00                     527,780             4.2                 $1.00
  $1.50                     429,700             3.8                 $1.50
  $2.00                      26,666             4.3                 $2.00
  $2.50                      45,000             4.2                 $2.50
                          ---------             ---                 -----
                          1,229,146             3.9                 $1.13
                          =========             ===                 =====

     STOCK OPTIONS

     The Board approves all issuances of stock options. All stock options expire
     five  years  from the grant  date.  In  general,  options  vest and  become
     exercisable one third on the one year anniversary of the date of grant, and
     the remainder vest evenly over the two years subsequent to that date.

     The following  table  summarizes  stock option  activity for the year ended
     December 31, 2000:

                                      F-17
2000
                                                            Wtd Avg
                                                Options                 Exercise
                                                (In 000'S)                Price
                                                ----------                -----

       Outstanding at Beginning of Year              881                  $1.36
       Granted                                     1,000                   1.10
       Exercised                                      --                   0.00
       Forfeited                                   (340)                   1.63
                                                   -----                   ----

       Outstanding at end of year                  1,541                  $1.15
                                                   =====                  =====

       Vested Options                                846                  $0.56

       Remaining Options available for
       Grant                                       3,459

In June 2000,  the Company  reduced the  exercise  price on all its  outstanding
stock options.  As a result,  the Company  recognized  $395,682 in  compensation
expense in 2000 for the  vested  portion of these  options,  and will  recognize
$933,568 in subsequent periods as these options vest.

The Company  accounts for issuances to employees under APB 25, and  accordingly,
$545,898 of compensation expense, including the amount discussed above, has been
recognized for the year ended December 31, 2000.

SFAS 123 requires pro forma  information  regarding net income as if the Company
has accounted for its employee stock options under the fair value method of that
statement.  The fair value for these  options was estimated at the date of grant
using the Black-Scholes option pricing model with the following assumptions: (i)
risk-free  interest rate of 6 percent,  which  approximates  the four-year  U.S.
Treasury Bill rate at the date of grant,  (ii) dividend yield of 0 percent (iii)
expected  volatility  of 80  percent  (iv) and an average  expected  life of the
option of four years.

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options'  vesting  period.  The  Company's  pro
forma information is as follows:

                                                        Year Ended
                                                       December 31,
                                                           2000
                                                           ----
       Net loss:
         As reported                                  $(8,515,971)
         SFAS 123 pro forma                           $(8,902,427)

The  following  table  summarizes  the  weighted  average  fair value of options
granted to employees during the year ended December 31, 2000:

                                      F-18
2000
                                                                ----
Stock Price Greater than Exercise Price
    Weighted Average Fair Value                                 $2.98

Stock Price Equal to Exercise Price
    Weighted Average Fair Value                                 $0.84

Stock Price Less than Exercise Price
    Weighted Average Fair Value                                 $0.82

The  following  table  summarizes  information  about  Company's  stock  options
outstanding as of December 31, 2000:
Options Outstanding                      Options Exercisable

                         Shares       Wtd. Avg     Wtd. Avg     Options         Wtd. Avg.
Range of Exercise    Outstanding      Remaining    Exercise    Exercisable      Exercise
      Prices           (In 000's)        Life       Price       (In 000's)       Price
      ------           ----------        ----       -----       ----------       -----
$.25                      350             3.5        $0.25          239          $0.25
$.50                      371             4.3        $0.50          341          $0.50
$.75                      375             4.2        $0.75          185          $0.75
$1.00 to $1.50            445             4.4        $1.05           81          $1.26
                          ---             ---        -----          ---          -----
                        1,541                                       846          $0.56
                        =====                                       ===          =====
11  RELATED PARTIES

The Company's  primary legal  counsel  holds  3,200,000  shares of the Company's
common  stock in trust for the law firm's  partners.  During  2000,  the Company
recorded expenses of approximately $123,000 related to services performed by its
primary legal counsel. The Company owed its primary legal counsel  approximately
$61,000 at December 31, 2000.

                                      F-19
During 2000, Q Productions,  Inc., whose owners also own 4,800,000 shares of the
Company,  provided various information  technology services to the Company.  The
Company  recorded   approximately  $930,364  in  expenses  related  to  services
performed  by Q  Productions,  Inc. for the year ended  December  31, 2000.  The
Company owed Q Productions,  Inc. approximately $171,000 at December 31, 2000. Q
Productions, Inc. rented space from Qode.com in 2000 for $43,167 in total.

During 2000, the Company granted 20,000 warrants with an exercise price of $1.00
per share to Q Productions, Inc.

The Company has issued several promissory notes to officers (see Note 3).

12  SUBSEQUENT EVENTS

On January 11, 2001, the Company entered into a note purchase  agreement with an
investor for $300,000,  with an interest  rate of 18 percent.  The principal and
interest are due March 1, 2001.

In January  2001,  the Company  entered into a short-term  loan  agreement  with
NeoMedia  Technologies,  Inc. ("NeoMedia") for the amount of $440,000.  The note
was  forgiven in March 2001 upon the  acquisition  of  substantially  all of the
Company's assets by NeoMedia.

On March 1, 2001, NeoMedia purchased all of the assets of the Company other than
cash  including  but not limited to,  contracts,  customer  lists,  licenses and
intellectual  property.  In consideration for these assets, the Company received
1,676,500  shares of  NeoMedia's  Common  Stock.  In addition,  NeoMedia  issued
274,699  of its  Common  Stock to  certain  creditors  of the  Company,  for the
repayment of $1,561,037 of debt,  forgave the $440,000  short-term note due from
the Company (see above paragraph),  and assumed approximately  $1,407,000 of the
Company's  liabilities.  The 1,676,500 shares paid to the Company are to be held
in escrow for one year, and are subject to downward  adjustment,  based upon the
achievement of certain  performance  targets over the period of March 1, 2001 to
February 28, 2002.

Notes  payable as of  December  31,  2000 that were not  acquired as part of the
March 1, 2001 sale totaled 3,000,000 as of December 31, 2000.

13. SUBSEQUENT EVENTS

On May 31, 2001, three creditors of Qode.com,  Inc, filed in the U.S. Bankruptcy
Court an involuntary bankruptcy petition for Qode.com,  Inc. Qode.com,  Inc. has
consulted  with legal counsel and will be opposing the Chapter 7 proceeding  and
plans to proceed under Chapter 11, U.S. Code to reorganize its debts.

                                      F-20
Report of Independent Certified Public Accountants

The Stockholders and Board of Directors Qode.com, Inc.

We have audited the accompanying  balance sheet of Qode.com,  Inc. (the Company)
(a  development  stage  enterprise)  as of  December  31,  1999 and the  related
statement of operations,  and statement of changes in redeemable preferred stock
and stockholders' deficit, and statement of cash flows for the period from March
29, 1999 (inception)  through December 31, 1999. These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audit  provides a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of Qode.com,  Inc. at December 31,
1999,  and the results of its operations and its cash flows for the period March
29, 1999  (inception)  through  December 31, 1999, in conformity with accounting
standards generally accepted in the United States.

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As more  fully  described  in Note 1,  the
Company, which is in the developmental stages has incurred a net operating loss,
experienced  negative cash flow from  operations and has a net capital  deficit.
These conditions raise substantial doubt about the Company's ability to continue
as a going  concern.  Management's  plans in regards to these  matters  are also
described in Note 1. The financial  statements do not include any adjustments to
reflect the possible future effects on the  recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
outcome of this uncertainty.

                                                 /s/ ERNST & YOUNG LLP
West Palm Beach, Florida
July 21, 2000,  except for the seventh paragraph of Note 8, as to which the date
is June 30, 2001

                                      F-21
Qode.com, Inc.
                        (A Development Stage Enterprise)

                                  Balance Sheet

                                December 31, 1999

Assets
Current assets:
    Cash and cash equivalents                                   $972,487
    Other current assets                                          18,151
                                                              ----------
Total current assets                                             990,638

Property and equipment, net                                      109,269
Deposits                                                          30,229
                                                              ----------
Total assets                                                  $1,130,136
                                                              ==========
Liabilities, redeemable preferred stock and
stockholders' deficit Current liabilities:
    Accounts payable                                            $151,588
    Accrued expenses                                              47,246
    Due to officers                                               73,333
                                                              ----------
Total current liabilities                                        272,167

15% cumulative convertible redeemable preferred
    stock, $.0001 par value, 3,000,000 shares
    authorized, 2,025,000 shares issued and
    outstanding, liquidation value of
    $2,221,000                                                 2,154,711

Commitments

Stockholders' deficit:

    Common stock, $.0001 par value, 25,000,000
      shares authorized, 8,023,000 shares
      issued and outstanding                                         802

    Capital deficiency                                           (49,557)
    Deficit accumulated during the development stage          (1,247,987)
                                                              ----------
Total stockholders' deficit                                   (1,296,742)
                                                              ----------
Total liabilities, redeemable preferred stock
    and stockholders' deficit                                 $1,130,136
                                                              ==========

See accompanying notes.

                                    F-22
Qode.com, Inc.
                        (A Development Stage Enterprise)

                             Statement of Operations

           Period from March 29, 1999 (inception) to December 31, 1999

Costs and expenses:
    Research and development                                        $396,242
    Sales and marketing                                               41,975
    General and administrative                                       847,412
                                                                     -------

Total costs and expenses                                           1,285,629
Net interest income                                                  (37,642)
                                                                    --------

Net loss                                                          (1,247,987)

Preferred dividends and redemption accretion                        (200,711)
                                                                    ---------

Net loss applicable to common stockholders                        $(1,448,698)
                                                                  ============

See accompanying notes.

                                      F-23
Qode.com, Inc.
                        (A Development Stage Enterprise)

                       Statement of Changes in Redeemable
                    Preferred Stock and Stockholders' Deficit

                 Period from March 29, 1999 (inception) to December 31, 1999
Deficit
                                                                               Accumulated
                                 Redeemable        Common Stock                During the            Total
                                  Preferred                          Capital   Development       Stockholders'
                                    Stock       Shares     Amount   Deficiency   Stage              Deficit
                                    -----       ------     ------   ----------   -----              -------
Issuance of common stock
    on March 29, 1999               $     --    8,000,000   $800         $--              $--         $   800
    (inception)
   Issuance of redeemable
    preferred stock with
    detachable warrants
    valued at $46,000, net
    of issuance costs of           1,954,000           --     --        46,000             --          46,000
    $25,000
   Issuance of common stock               --       23,000      2        22,998             --          23,000
   Issuance of warrants in
    exchange for services                 --           --     --        82,156             --          82,156
   Preferred dividends and
    redemption accretion             200,711           --     --      (200,711)            --        (200,711)

   Net loss                               --           --     --            --     (1,247,987)     (1,247,987)
                                  ----------    ---------   ----      --------    -----------     -----------
Balance at December 31, 1999      $2,154,711    8,023,000   $802      $(49,557)   $(1,247,987)    $(1,296,742)
                                  ==========    =========   ====      ========    ===========     ===========
See accompanying notes.

                                      F-24
Qode.com, Inc.
                        (A Development Stage Enterprise)

                             Statement of Cash Flows

                 Period from March 29, 1999 (inception) to December 31, 1999

Operating activities
Net loss                                                            $(1,247,987)
Adjustments to reconcile net loss to net
  cash used in operating activities:
   Depreciation and amortization                                         17,522
   Issuance of warrants in exchange for services                         82,156
   Changes in assets and liabilities:
     Other current assets                                               (18,151)
     Deposits                                                           (30,229)
     Accounts payable                                                   151,588
     Accrued expenses                                                    47,246
     Due to officers                                                     73,333
                                                                      ---------
Net cash used in operating activities                                  (924,522)
                                                                      ---------
Investing activities
Purchases of property and equipment                                    (126,791)
                                                                      ---------
Net cash used in investing activity                                    (126,791)
                                                                      ---------
Financing activities
Proceeds from the issuance of redeemable preferred stock,
    net of issuance costs of $25,000                                  2,000,000
Proceeds from the issuance of common stock                               23,800
                                                                      ---------
Net cash provided by financing activities                             2,023,800
                                                                      ---------
Net increase in cash and cash equivalents                               972,487
Cash at beginning of period                                                  --
                                                                      ---------
Cash at end of period                                                  $972,487
                                                                      =========

Supplemental disclosure of cash flow information
Interest paid                                                              $171

Noncash financing and investing activities
Accrued dividends on redeemable preferred stock                        $195,997
Accretion of redeemable preferred stock                                  $4,714

See accompanying notes.

                                      F-25
Qode.com, Inc.
                        (A Development Stage Enterprise)

                          Notes to Financial Statements

                 Period from March 29, 1999 (inception) to December 31, 1999

1. NATURE OF BUSINESS

ORGANIZATION

Qode.com,  Inc.  (the  Company)  commenced  operations  on March 29, 1999 and is
incorporated in the state of Florida.  Qode.com is a development  stage company,
as  defined  in  Statement  of  Financial  Accounting  Standards  (SFAS)  No. 7,
Accounting and Reporting By Development Stage  Enterprises.  The Company intends
to provide manufactures, retailers, advertisers, and users a unique tool for Web
site  navigation by the use of imbedded  standard bar codes and Uniform  Product
Codes  (UPC).  It is the  Company's  mission to develop,  operate,  maintain and
promote the use of  Qode.com  technologies  to enable any bar code to  interface
with their technology.

The  Company  has  incurred  losses  since  its  inception  as  it  has  devoted
substantially  all  of  its  efforts  toward  building  network  infrastructure,
internal staffing,  developing systems,  expanding into new markets,  building a
proprietary  database and raising capital.  The Company has generated no revenue
to date  and is  subject  to a  number  of  risks  similar  to  those  of  other
development  stage  companies,  including  dependence  on key  individuals,  the
ability  to  demonstrate  technological  feasibility,  and the  need  to  obtain
adequate additional financing necessary to fund the development and marketing of
its products and services, and customer acceptance.

The Company's financial  statements have been prepared assuming that the Company
will continue as a going concern.  The Company has a limited  operating  history
and intends to  significantly  increase its operational  expenses in fiscal year
2000 to pursue  certain  sales  and  marketing  plans.  These  conditions  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
The financial  statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and  classification  of  liabilities  that may results  from the outcome of this
uncertainty.  In  fiscal  year  2000,  the  Company  plans to  raise  additional
financing from private equity  financing.  The Company  entered into a financing
agreement  subsequent  to  year  end  that  will  provide  the  Company  with an
additional $3 million, see Note 8.

                                      F-26
Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of reporting  cash flows,  the Company  considers all highly liquid
investments  purchased  with an original  maturity of three months or less to be
cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost.  Depreciation  is computed  using the
straight-line  method over the  estimated  useful  lives of the related  assets.
Computer  hardware and software are being  depreciated  over a three year period
and furniture and fixtures are being depreciated over a five year period.

SOFTWARE DEVELOPMENT COSTS

In  accordance  with the AICPA SOP No.  98-1,  Accounting  for Costs of Computer
Software  Developed  or Obtained  for  Internal  Use,  all costs  related to the
development  or purchase  of internal  use  software  other than those  incurred
during the application  development stage are to be expensed as incurred.  Costs
incurred during the application development stage are required to be capitalized
and  amortized  over the useful life of the  software.  The Company has incurred
$259,480  in  software  development  costs for the period  from  March 29,  1999
(inception)  through  December 31, 1999.  All costs have been expensed since the
Company has not entered the  application  development  stage as of December  31,
1999.

                                      F-27
Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

The Company accounts for income taxes under the liability method, which requires
the  establishment  of a deferred tax asset or liability for the  recognition of
future  deductions  or  taxable  amounts,  and  operating  loss  and tax  credit
carryforwards.  Deferred tax expense or benefit is recognized as a result of the
change in the deferred  asset or liability  during the year. If  necessary,  the
Company will establish a valuation allowance to reduce any deferred tax asset to
an amount which will, more likely than not, be realized.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to a concentration of
credit  risk  consist  principally  of cash and cash  equivalents.  The  Company
maintains its cash and cash equivalents with high quality financial institutions
to mitigate this credit risk.

REDEEMABLE PREFERRED STOCK

Redeemable preferred stock is carried at the net consideration to the Company at
time of  issuance  (fair  value),  increased  by accrued  and unpaid  cumulative
dividends and periodic  accretion to redemption value using the interest method.
Accrued and unpaid  dividends and  redemption  accretion are affected by charges
against  retained  earnings,  or, in the absence of retained  earnings,  paid-in
capital (capital deficiency).

ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company has adopted Statement of Financial  Accounting  Standards (SFAS) No.
123, Accounting for Stock-Based  Compensation.  The provisions of SFAS 123 allow
companies  to either  expense the  estimated  fair value of stock  options or to
continue to follow the  intrinsic  value method set forth in  Accounting  Public
Bulletin (APB) Opinion 25, Accounting for Stock Issued to Employees but disclose
the pro  forma  effects  on net  income  or loss as if the fair  value  had been
expensed. The Company has elected to apply APB 25 in accounting for its employee
stock  options  and,  accordingly,   recognizes  compensation  expense  for  the
difference  between the fair value of the underlying  common stock and the grant
price of the option at the date of grant.

                                      F-28
Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

                                                                  December 31,
                                                                     1999
                                                                     ----
            Computer hardware and software                         $120,791
            Furniture and fixtures                                    6,000
                                                                      -----

                                                                    126,791
            Less accumulated depreciation                          (17,522)
                                                                   --------

                                                                   $109,269
                                                                   ========

Depreciation and amortization  expense was $17,939 for the period from March 29,
1999 (inception) to December 31, 1999.

4. INCOME TAXES

The net amounts of deferred tax assets recorded in the balance sheet at December
31, 1999 are as follows:

                                                                        1999
                                                                        ----
            Deferred tax asset:
                Net operating loss carryforward                       $469,050
            Less valuation allowance                                  (466,230)
                                                                     ---------

            Total deferred tax asset                                    $2,820

            Deferred tax liabilities:
                Fixed assets                                           $(2,820)
                                                                      --------

            Total net deferred taxes                                   $    --
                                                                       =======

FASB 109  requires  a  valuation  allowance  to reduce the  deferred  tax assets
reported  if,  based on the weight of the  evidence,  it is more likely than not
that some portion or all of the deferred tax assets will not be realized.  After
consideration  of all the evidence,  both positive and negative,  management has
determined that a $466,230 valuation allowance at December 31, 1999 is

                                      F-29
Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

4. INCOME TAXES (CONTINUED)

necessary  to reduce the deferred tax assets to the amount that will more likely
than not be realized. The change in the valuation allowance for the current year
is $466,230.  At December 31, 1999, the Company has available net operating loss
carryforwards of $1,246,478, which expire in the year 2019.

A reconciliation of income taxes computed at the U.S. federal statutory tax rate
to income tax expense for the year ended December 31, 1999 is as follows:

                                                                     1999
            Taxes at the U.S. statutory rate                      $(424,315)
            State taxes, net of federal benefit                     (44,975)
            Nondeductible items                                       3,060
            Change in valuation allowance                           466,230
                                                                    -------

            Total income tax expense                                  $  --
                                                                      =====

5. COMMITMENTS

The Company leases its office  facility under a  non-cancelable  operating lease
expiring  March 2005.  Rental  expense was $19,711 for the period from March 29,
1999 (inception) to December 31, 1999.

Lease commitments under these non-cancelable operating leases as of December 31,
1999 are as follows:

        2000                                                   $100,656
        2001                                                    104,682
        2002                                                    108,876
        2003                                                    113,238
        2004                                                    117,768
                                                               --------

                                                               $545,220
                                                               ========

                                      F-30
Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

6. STOCKHOLDERS' EQUITY

15% CUMULATIVE CONVERTIBLE REDEEMABLE PREFERRED STOCK SERIES A

The Board of Directors has authorized the issuance of up to 3,000,000  shares of
Series A 15% $.0001  par value,  voting,  cumulative,  redeemable,  convertible,
preferred stock (the Preferred Stock) which may be issued in series from time to
time with such designations, rights, preferences and limitations as the Board of
Directors may declare by resolution.  In May 1999, the Company issues  2,025,000
shares of Preferred  Stock at $1.00 per share,  less issuance  costs of $25,000.
One detachable  warrant was attached to each share of the Preferred  Stock.  The
Preferred  Stock was recorded at $1,954,000,  net of the value of the detachable
warrants which was estimated to be $46,000.  The detachable warrants were valued
in  accordance  with SFAS No.  123 at $.23 per share  and are  convertible  into
common stock at $1.50 per share.  The Preferred Stock is convertible at any time
at the  option of the  holder  prior to the  closing  of a Public  Offering,  as
defined in the  agreement,  or within 20 days  following  receipt of a Notice of
Redemption,  as defined in the  agreement,  into the Company's  common stock for
each share of the Preferred Stock held plus accrued and unpaid  dividends on the
Series A Preferred Shares.  The Preferred Stock has a liquidation  preference of
$1 per share and is mandatorily redeemable on April 15, 2004. As of December 31,
1999, all 2,025,000 shares of the Preferred Stock and related 202,500 detachable
warrants remain outstanding.

Dividends on the preferred stock accrue on a daily basis  commencing on the date
of  issuance  at an  interest  rate  of 15%  per  annum  and  are  payable  on a
semi-annual basis. The Company,  at its option, may pay dividends either in cash
or by the issuance of additional  shares of Series A Preferred Stock.  Aggregate
cumulative dividends in arrears at December 31, 1999 totaled $195,997.

COMMON STOCK

The Company is  authorized  to issue up to  20,000,000  shares of its $.0001 par
value common stock. On March 29, 1999  (inception) the Company  received $800 by
issuing 8,000,000 shares of its common stock to its founders.

                                      F-31
Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

6. STOCKHOLDERS' EQUITY (CONTINUED)

Additionally,  the Company  issued  13,000  shares of common  stock to a Company
employee in lieu of  relocation  expense  reimbursement  of $13,000,  and 10,000
shares of common stock to an executive recruiter for a corporate staffing fee of
$10,000. These amounts were expensed.

STOCK OPTIONS AND WARRANTS GRANTED IN EXCHANGE FOR SERVICES

During 1999, the Company  granted 327,200 common stock warrants with an exercise
price of $1.50 per share to  consultants  for certain  advisory  and  consulting
services  performed  during the  Company's  start-up  phase.  The warrants  vest
immediately  upon  issuance  and can be exercised  over a five year period.  The
Company  valued the  warrants at $82,156 in  accordance  with SFAS No. 123,  and
recognized  the entire  amount as a general  and  administrative  expense in the
accompanying   statement  of  operations.   The  Company  had  327,200  warrants
outstanding at December 31, 1999.

During 1999,  the Company  granted  400,000 in common stock  options to purchase
shares of common stock at an exercise  price of $.10 per share to an  investment
advisor in exchange for investment  advisory  services.  The options  expired on
June 30,  2000  without  being  exercised  and  accordingly  no expense has been
recorded.

STOCK OPTIONS

In 1999,  the Company's  Board of Directors and  stockholders  approved the 1999
Equity  Compensation  Plan (the Plan).  The Plan  provides  for the  issuance of
incentive  stock options,  nonqualified  stock options and  restricted  stock to
directors,  officers,  and key employees of the Company as well as  non-employee
directors,  advisors,  and  consultants.  The Board  administers  the Plan.  The
Company has  reserved  5,000,000  shares of common  stock to be issued under the
Plan.

The exercise price (as established by the Board) of the stock options granted is
in excess of fair market value of the Company's  Common Stock on the date of the
grant. All stock options expire five years from the grant date in 2004.  Options
granted under the Plan are exercisable as determined by the Board.

                                      F-32
Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

6. STOCKHOLDERS' EQUITY (CONTINUED)

The following table  summarizes  stock option activity for the period from March
29, 1999 (inception) to December 31, 1999:

                                                                     Weighted
                                                         Number of    Average
                                                          Shares  Exercise Price
                                                          ------  --------------

          Outstanding at March 29, 1999 (inception)           -        $-
             Granted                                     880,600       1.36
             Exercised                                        -        -
             Forfeited                                        -        -
                                                         -------      -----

          Outstanding at December 31, 1999               880,600      $1.36
                                                         =======      =====

At December 31, 1999,  142,642 options are  exercisable,  at a weighted  average
exercise price of $1.28 per share. The  weighted-average  remaining  contractual
life of the options is 4.7 years.

During 1999,  all of the stock  options  issued were granted to employees of the
Company.  The Company  accounts  for  issuances  to  employees  under APB 25 and
accordingly,  no compensation cost has been recognized for the period from March
29, 1999 (inception) to December 31, 1999.

SFAS No.  123  requires  pro forma  information  regarding  net income as if the
Company has accounted for its employee stock options under the fair value method
of that Statement. The fair value for these options was estimated at the date of
grant  using  the   Black-Scholes   option  pricing  model  with  the  following
assumptions: risk-free interest rates equal to the three-year U.S. Treasury Bill
rate on the grant date,  dividend yield of 0%, expected volatility of 81.1%, and
an average expected life of the option of three years.

                                      F-33
Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

6. STOCKHOLDERS' EQUITY (CONTINUED)

For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options'  vesting period.  All employee options
granted to date vest over a one to three year period.  The  Company's  pro forma
information is as follows:

                                                     Period from March 29, 1999
                                                             (inception)
                                                        to December 31, 1999
                                                        --------------------

            Net loss:
                As reported                                  $(1,247,987)
                SFAS No. 123 pro forma                       $(1,305,831)

The  weighted  average  fair value of options  granted to  employees  during the
period  from March 29, 1999 to December  31, 1999 for which the  estimated  fair
value of the  stock is less than the  exercise  price is $0.29  per  share.  The
weighted  average fair value of options  granted to employees  during the period
from March 29, 1999 to December 31, 1999 for which the  estimated  fair value of
the stock equals the exercise price is $0.47 per share.

SHARES RESERVED FOR FUTURE ISSUANCE

At December 31, 1999, the Company has reserved the following shares of stock for
issuance:

Common stock                                            11,977,000
Convertible preferred stock                                975,000
                                                        ----------

                                                        12,952,000
                                                        ==========

                                      F-34
Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

7. RELATED PARTIES

The Company's  primary legal  counsel  holds  3,200,000  shares of the Company's
common stock in trust for the firm's partners. During 1999, the Company recorded
expenses of approximately  $32,000 related to services  performed by its primary
legal counsel.  The Company owed its primary legal counsel  approximately $3,000
at December 31, 1999.

During  1999,  Q  Productions,  Inc.  provided  various  information  technology
services to the Company. Two owners of Q Productions,  Inc. also aggregately own
4,800,000 shares of the Company. The Company recorded  approximately $129,000 in
expenses related to services performed by Q Productions, Inc. The Company owed Q
Productions, Inc. approximately $97,000 at December 31, 1999.

8. SUBSEQUENT EVENTS

On January 18, 2000,  the Company issued a convertible  subordinated  promissory
note  for $3  million  with a  fixed  interest  rate  of  12% to  Novus  Holding
Corporation.  Principal  and accrued  interest on the note are payable  upon the
earlier  of a) the  day  immediately  following  the  closing  of  financing  or
successive financings which cumulatively aggregate proceeds of $10,000,000 or b)
180 days from the date of the note. The debt is convertible into common stock at
a price equal to 85% of the  purchase  price per share paid by  investors in the
next financing or successive financings of $5,000,000 or more.

On February 11, 2000,  the Company  entered into a letter of intent with a major
supplier to produce  portable bar code scanning devices in exchange for payments
ranging from $32,000,000 to $35,000,000 over a 16 month period  commencing April
28, 2000 through August 1, 2001.

On March 15,  2000,  the Company  entered into a two year term note with a major
lender.  The principal amount of the note was $42,500 with a fixed interest rate
of 11%.  Principal  and  interest  payments  of $1,984 are due  monthly  through
maturity on March 15, 2002.

On March 24, 2000, the Company  obtained a letter of credit for $1,400,000  with
the lender of their term note.

                                      F-35
Qode.com, Inc.
                        (A Development Stage Enterprise)

                    Notes to Financial Statements (continued)

8. SUBSEQUENT EVENTS (CONTINUED)

On March 27,  2000,  the Company  entered  into a  consulting  agreement  with a
consultant  for a five month period in return for 250,000  common stock  options
convertible  into the Company's  common  stock.  The options have a term of five
years and an exercise price of $2 per share.  125,000  options vest 45 days from
the   commencement  of  the  agreement  based  on  the  fulfillment  of  certain
contractual  obligations.  The remaining  125,000  options vest 90 days from the
commencement of the agreement  based on the  fulfillment of certain  contractual
obligations.  Additionally,  the Company will pay the consultants  $100,000 over
the period of the contract.

On May 22,  2000,  the Board of Directors  authorized  the issuance of 1,500,000
shares of Series U Convertible  Preferred Stock (the Series U Preferred  Stock).
Dividends on the preferred stock accrue on a daily basis  commencing on the date
of issuance at an interest rate of 8% per annum. The Series U Preferred Stock is
convertible  at any time at the option of the holder  prior to the  closing of a
Public  Offering,  as defined in the agreement,  into one share of the Company's
common stock for each share of the Company's  Series U Preferred Stock held plus
accrued and unpaid dividends on the Series U Preferred  Shares.  In the event of
the closing of the next  financing of $4,000,000 or more within 90 days from the
authorization  of the  Series U  Preferred  Stock,  the  holder of the  Series U
Preferred  Stock shall have the right to convert  all Series U Preferred  Shares
into a number of shares of stock issued in the next financing  which  represents
the  equivalent  amount for the  consideration  paid for the Series U  Preferred
Stock.  The Series U Preferred  Stock has a liquidation  preference of $2.00 per
share.  On May 22, 2000, the Company  entered into an agreement for the issuance
of 1,500,000 shares of Series U Preferred Stock in exchange for $3,000,000.  The
shares will be issued in three separate  financings.  The initial 500,000 shares
are to be issued on the date of the agreement. The next 500,000 shares are to be
issued  upon the  Company  meeting  certain  performance  goals  defined  in the
agreement.  The  remaining  500,000  shares are to be issued,  not earlier  than
August 1, 2000 nor later than October 15, 2000, upon the Company meeting certain
performance goals defined in the agreement.

On May 31, 2001, three creditors of Qode.com,  Inc. filed in the U.S. Bankruptcy
Court an involuntary bankruptcy petition for Qode.com,  Inc. Qode.com,  Inc. has
consulted  with legal counsel and will be opposing the Chapter 7 proceeding  and
plans to proceed under Chapter 11, U.S. Code, to reorganize its debts.

                                      F-36
ITEM 8. EXHIBITS.

Exhibit

    4          NeoMedia Technologies, Inc. 2002 Stock Option Plan (incorporated
               by reference to Appendix A in NeoMedia Technologies 14A
               Definitive Proxy Statement as filed with the SEC on May 7, 2002).

    5.1        Opinion of Kirkpatrick & Lockhart LLP

    23.1       Consent of Ernst & Young, LLP, former independent certified
               public accountants of Qode.com, Inc.

    23.2       Consent of Stonefield Josephson, Inc., current independent
               auditors of NeoMedia Technologies, Inc.

    23.4       Consent of Kirkpatrick & Lockhart LLP (included in Exhibit 5
               opinion letter).

    24         Power of Attorney (included on signature page).

          In accordance  with  Securities  Act Rule 437a,  the consent of Arthur
Andersen LLP has not been included as an exhibit herewith.  The Company has been
unable to obtain a consent of Arthur  Andersen LLP due to the departure of their
engagement  team leaders from such firm. Any recovery by investors  posed by the
lack of consent is limited by Securities Act Rule 437a.

ITEM 9. UNDERTAKINGS.

(a) The undersigned registrant hereby undertakes:

    (1) To file,  during any period in which  offers or sales are being made,  a
    post-effective  amendment  to this  registration  statement  to include  any
    material information with respect to the plan of distribution not previously
    disclosed  in the  registration  statement  or any  material  change to such
    information in the registration statement;

    (2) That, for the purpose of determining  any liability under the Securities
    Act of 1933, each such post-effective  amendment shall be deemed to be a new
    registration  statement relating to the securities offered therein,  and the
    offering of such  securities  at that time shall be deemed to be the initial
    bona fide offering thereof.

    (3) To remove from  registration by means of a post-effective  amendment any
    of the securities being registered which remain unsold at the termination of
    the offering.

(b)  The  undersigned   registrant  hereby  undertakes  that,  for  purposes  of
determining  any liability  under the Securities Act of 1933, each filing of the
registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Securities  Exchange  Act of  1934  that is  incorporated  by  reference  in the
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification  for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers, and controlling persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the registrant of expenses incurred
or paid by a director,  officer,  or controlling person of the registrant in the
successful  defense of any  action,  suit,  or  proceeding)  is asserted by such
director,  officer,  or controlling  person  connected with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES

Pursuant to the  requirements  of the  Securities  Act of 1933,  the  Registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of Fort Myers, State of Florida, on September 4, 2002.

NEOMEDIA TECHNOLOGIES, INC.

By:      /s/ Charles T. Jensen
         --------------------------------------------------
         Charles T. Jensen, Acting Chief Executive Officer,
         President and Chief Operating Officer

                                POWER OF ATTORNEY

The  undersigned  officers and directors of NeoMedia  Technologies,  Inc. hereby
constitute  and  appoint  Charles T.  Jensen  with power to act one  without the
other,  our true and  lawful  attorney-in-fact  and  agent  with  full  power of
substitution  and  resubstitution,  for  us and in our  stead,  in any  and  all
capacities to sign any and all amendments (including post-effective  amendments)
to this Registration  Statement and all documents relating thereto,  and to file
the  same,  with  all  exhibits  thereto,  and  other  documents  in  connection
therewith,  with the  Securities  and Exchange  Commission,  granting  unto said
attorney-in-fact  and agent, full power and authority to do and perform each and
every act and thing necessary or advisable to be done in and about the premises,
as fully to all intents  and  purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or his
or her substitutes, may lawfully do or cause to be done by virtue hereof.

Signatures                  Title                             Date
----------                  -----                             ----

/s/ Charles W. Fritz        Chairman of the Board and
-------------------------   Director
Charles W. Fritz                                               September 4, 2002

/s/ William E. Fritz        Secretary and Director             September 4, 2002
-------------------------
William E. Fritz

/s/ Charles T. Jensen       President, Acting Chief Executive
-------------------------   Officer, Chief Operating Officer,
Charles T. Jensen           and Director                       September 4, 2002

/s/ David A. Dodge          Vice President, Chief Financial
-------------------------   Officer, and Controller            September 4, 2002
David A. Dodge