New Medium Enterprises (NMEN) 10QSB 2007 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10QSB

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

For the three months period ended: December 31, 2006

Commission File Number: 333-51880

NEW MEDIUM ENTERPRISES, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NEVADA	11-3502174
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)	(I.R.S. EMPLOYER IDENTIFICATION NO.)

Mahesh Jayanarayan, CEO

195 The Vale

London UK W3 7QS

(Registrant’s Address)

011 44 20 8746 2018

(Registrant's Telephone Number, including Area Code)

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES x  NO ¨

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

INDICATE BY CHECK MARK WHETHER THE ISSUER HAS FILED ALL DOCUMENTS AND REPORTS REQUIRED TO BE FILED BY SECTIONS 2, 13 OR 15(D) OF THE SECURITIES ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN CONFIRMED BY A COURT. YES¨ NO ¨

APPLICABLE ONLY TO CORPORATE ISSUERS:

INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE.

TITLE OF CLASS: COMMON STOCK $.0001 PAR VALUE

SHARES OUTSTANDING AS OF DECEMBER 31, 2006: 241,793,720

- 1 -

NEW MEDIUM ENTERPRISES, INC.

FORM 10QSB

THREE MONTHS PERIOD ENDED DECEMBER 31, 2006

TABLE OF CONTENTS

		PAGE
PART 1. FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	ACCOUNTANT'S LETTER	3
	BALANCE SHEET	4
	STATEMENT OF OPERATIONS(SIX & THREE MONTHS)	5 - 6
	STATEMENT OF CASH FLOWS	7
	STATEMENT OF STOCKHOLDER'S EQUITY	8
	NOTES TO FINANCIAL STATEMENTS	9 - 17
ITEM 2.	MANAGEMENT DISCUSSION & ANALYSIS	18
	LIQUIDITY & CAPITAL RESOURCES	20
ITEM 3.	CONTROLS & PROCEDURES	21
PART II OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS	21
ITEM 2.	CHANGES IN SECURITIES	21
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	21
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS	21
PART III OTHER
	CERTAIN RELATIONSHIPS & RELATED PARTY TRANSACTIONS	22
	EXHIBITS AND REPORTS ON FORM 8-K	23
	SIGNATURE	23
	CERTIFICATIONS

- 2 -

PART IFINANCIAL INFORMATION

Morgenstern, Svoboda, & Baer Cpa's P.C.

CERTIFIED PUBLIC ACCOUNTANTS

40 Exchange Place, Suite 1820

New York, NY 10005 TEL: (212) 925-9490

FAX: (212) 226-9134 E-MAIL: MORGENCPA@CS.COM

The Board of Directors and Stockholders New Medium Enterprises, Inc.

We have reviewed the accompanying consolidated balance sheets of New Medium Enterprises, Inc. as of December 31, 2006 and the consolidated statements of operations for the six and three months ended December 31, 2006 & 2005 and consolidated statements of cash flows and shareholders equity for the six months then ended. These financial statements are the responsibility of the Company's management.

We conducted our review in accordance with standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial statements referred to above for them to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of New Medium Enterprises, Inc. as of June 30, 2006 and the related consolidated statements of income retained earnings and comprehensive income, and consolidated statements of cash flows for the year then ended; and in our report dated October 11, 2006 we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2006, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

The Accompanying financial statements have been prepared assuming that the company will continue as a going concern. As shown in the financial statements, the Company has incurred net losses and has experienced severe liquidity problems. These conditions raise substantial doubt about its ability to continue as a going concern. The statements do not include any adjustments that might result from the outcome of this uncertainty.

Morgenstern, Svoboda, & Baer Cpa's P.C.

Certified Public Accountants

New York, NY

February 13, 2007

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ITEM 1FINANCIAL STATEMENTS

NEW MEDIUM ENTERPRISES, INC.

(A development stage company)

CONSOLIDATED BALANCE SHEET (UNAUDITED)

AT DECEMBER 31, 2006

	December 31, 2006			June 30, 2006
ASSETS
Current Assets
Cash and Cash Equivalents	$	386,790		$	665,597
Investments		780			0
Prepaid Expenses		324,963			414,823
Stock held by Third Party		63,443			0
Rental Deposits		29,091			26,911
Supplier Deposits		560,972			560,972
Other Receivable		110,224			65,968
Value Added Tax recoverable		29,473			57,870
Escrow Deposits		5,550,000			1,650,000
TOTAL CURRENT ASSETS		7,055,736			3,442,141
Property and Equipment		1,003,429			288,512
Less: Accumulated Depreciation		(149,329	)		(101,545	)
		854,100			186,967
Intellectual Property		15,183,860			15,183,860
Patents		52,337			0
Total Other Assets		16,090,297			15,370,827
					0
Total Assets	$	23,146,033		$	18,812,968
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Short Term Loan		1,100,000			0
Accrued Expenses and amount payable		451,770			266,390
Total Current Liabilities	$	1,551,770		$	266,390
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock $.0001 par value, Authorized 200,000,000 shares; none issued
Common Stock, $.0001 par value, Authorized 500,000,000 issued and outstanding
241,793,720 &205,477,579 shares		24,180			20,448
Additional paid in capital		37,173,545			28,424,747
Accumulated other comprehensive gain (loss)		(39,131	)		(37,418	)
Deficit accumulated during the development stage		(15564,331	)		(9,861,199	)
Total Stockholders' Equity		21,594,263			18,546,578
Total Liabilities & Stockholders' Equity	$	23,146,033		$	18,812,968

The accompanying notes are an integral part of the financial statements.

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NEW MEDIUM ENTERPRISES, INC.

(A development stage company)

CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE SIX MONTHS ENDED

	December 31, 2006			December 31, 2005
Revenues
Operating Expenses:
General and Administrative	$	5,231,341		$	1,816,966
Research and Development Costs (see note 7 below)*		222,390			148,535
Officer's Compensation		184,051			501,902
Loss on Foreign Currency		21,237			16,210
Depreciation		47,827			20,836
Total Operating Expenses	$	5,706,846		$	2,504,449
Income (Loss) From Operations		(5,706,846	)		(2,504,449	)
Other Income		3,715
Investment Income		0			2,705
Loss Before Income Taxes		(5,703,131	)		(2,501,744	)
Income Tax		0			0
Net Loss	$	(5,703,131	)	$	(2,501,744	)
Loss Per Common Share - Basic and Diluted		(0.03	)		(0.02	)
Weighted Average Number of Shares Outstanding		223,635,650			133,293,945

The accompanying notes are an integral part of the financial statements.

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NEW MEDIUM ENTERPRISES, INC.

(A development stage company)

CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED

	December 31, 2006			December 31, 2005
Revenues
Operating Expenses:
General and Administrative (see note 7 below)*	$	4,308,817		$	1,456,585
Research and Development Costs		107,906			(705,154	)
Officer's Compensation		77,784			14,290
Loss on Foreign Currency		13,190			16,210
Depreciation		23,627			11,865
Total Operating Expenses	$	4,531,324		$	793,796
Income (Loss) From Operations		(4,531,324	)		(793,796	)
Other Income		1,326
Investment Income		0			2,636
Loss Before Income Taxes		(4,529,998	)		(791,160	)
Income Tax		0			0
Net Loss	$	(4,529,998	)	$	(791,160	)
Loss Per Common Share - Basic and Diluted		(0.02	)		(0.01	)
Weighted Average Number of Shares Outstanding		223,773,316			142,726,546

The accompanying notes are an integral part of the financial statements.

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NEW MEDIUM ENTERPRISES, INC.

(A development stage company)

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

FOR THE SIX MONTHS ENDED

	December 31, 2006			December 31, 2005			Inception to date 31.12.06
Cash flows from operating activities
Net loss	$	(5,703,131	)	$	(2,501,744	)	$	(15,239,330	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		47,827			20,836			166,822
Stock Issued for Services rendered		1,727,529			1,351,011			15,923,684
Profit on Exchange to Shareholder's Equity								0
Write off of web site development costs								314,302
Stock issued for services rendered								4,086,351
Stock issued for services rendered - Escrow		1,650,000						0
Loss on sale of securities								(5,044	)
Changes in assets and liabilities
Other Loans Receivable								0
Change in current assets		7 598			23,576			(1,089,535	)
Change in Security deposits		0			(28,056	)		(26,911	)
Change in current liabilities		185,380			(87,161	)		449,270
Net cash used in operating activities	$	(2,084,797	)	$	(1,221,538	)	$	4,579,609
Cash flows from investing activities
Proceeds from the sale of securities								13,584
Purchase of fixed assets (including investments)		(767,757	)		(34,764	)		(877,129	)
Effects of Exchange gain on Cash		(1,713	)		(13,496	)		(27,473	)
Purchase (write off)of fixed assets		460						(196,130	)
Web site development costs/software asset								(261,402	)
Investment in intellectual property					(4,500	)		(15,183,860	)
Investment purchased - net								(20,198	)
Net cash provided from investing activities	$	(769,010	)	$	(52,760	)	$	(16,552,608	)
Cash flows from financing activities
Proceeds from sale of A,B, and C units								1,819,950
Offering Costs-private placements								(69,625	)
Deferred offering costs-registration statement								(40,000	)
Purchase of Treasury Stock								(3,750	)
Notes Payable								0
Proceeds from sale of shares and warrants to various								0
officers, founders and investors		0			750,000			1,946,670
Proceeds from sale of shares		1,475,000			860,000			7,606,544
Short Term Loan Received		1,100,000			0			1,100,000
Net cash provided from financing activities	$	2,575,000		$	1,610,000		$	12,359,789
Net increase (decrease) in cash and cash equivalents	$	(278,807	)	$	335,702		$	386,790
Cash and cash equivalents, beginning of period		665,597			196,529			0
Cash and cash equivalents, December 31	$	386,790		$	532,231		$	386,790

The accompanying notes are an integral part of the financial statements.

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NEW MEDIUM ENTERPRISES, INC.

(A development stage company)

CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY

FOR THE PERIOD July 1, 2004 - December 31, 2006

												Retained			Accumulated
	Per								Additional			Earnings			Other
	Share		Common			Stock			Paid-in			(Accumulated			Comprehensive
	Amount		Shares			Amount			Capital			Deficit)			Loss			Totals
Balances June 30, 2005				119,571,344			11,957			18,827,404			(3,420,712	)		(15,980	)		15,402,669
Issuance of shares for services
August 18, 2005		0.1		1,000,000			100			99,900									100,000
Issuance of shares for services
August 18, 2005		0.1		5,600,122			560			559,451									560,011
Issuance of shares for Pre-Acquisition Shareholders
September 15, 2005		0.05		915,080			92			45,908									46,000
Issuance of shares for services
September 20, 2005		0.1		3,750,000			375			374,625									375,000
Issuance of shares for services
September 20, 2005		0.1		250,000			25			24,975									25,000
Issuance of shares for services
September 20, 2005		0.1		2,000,000			200			199,800									200,000
Issuance of shares for services
September 20, 2005		0.1		350,000			35			34,965									35,000
Sale of common stock to investor
September 20, 2005		0.15		5,000,000			500			749,500									750,000
Sale of common stock to investor
October 13, 2005		0.1		3,000,000			300			299,700									300,000
Issuance of shares for services
October 17, 2005		0.1		100,000			10			9,990									10,000
Sale of common stock to investor
November 14, 2005		0.1		1,500,000			150			149,850									150,000
Sale of common stock to investor
December 14, 2005		0.1		1,500,000			150			149,850									150,000
Sale of common stock to investor
December 15, 2005		0.1		500,000			50			49,950									50,000
Sale of common stock to investor
December 20, 2005		0.125		480,000			48			59,952									60,000
Sale of common stock to investor
December 28, 2005		0.1		1,500,000			150			149,850									150,000
Sale of common stock to investor
January 20, 2006		0.1		1,500,000			150			149,850									150,000
Warrants Exercised
February 1, 2006		0.1		100,000			10			9,990									10,000
Sale of common stock to investor
March 9, 2006		0.12		500,000			50			59,950									60,000
Warrants Exercised
March 10, 2006		0.1		100,000			10			9,990									10,000
Warrants Exercised
March 22, 2006		0.1		100,000			10			9,990									10,000
Sale of common stock to investor
March 28, 2006		0.12		2,083,334			208			249,792									250,000
Warrants Exercised
06-Apr-06
Sale of common shares to investor
07-Apr-06		0.12		2,083,334			208			249,792									250,000
Sale of common shares to investor
12-Apr-06		0.15		10,000			1			1,499									1,500
Issuance of shares for services
13-Apr-06		0.17		1,250,000			125			212,375									212,500
Sale of common shares to investor
13-Apr-06		0.15		100,000			10			14,990									15,000
Sale of common shares to investor
13-Apr-06		0.15		300,000			30			44,970									45,000
Sale of common shares to investor
13-Apr-06		0.15		200,000			20			29,980									30,000
Sale of common shares to investor
13-Apr-06		0.15		300,000			30			44,970									45,000
Sale of common shares to investor
17-Apr-06		0.15		90,000			9			13,491									13,500
Warrants Exercised
17-Apr-06		0.10		200,000			20			19,980									20,000
Sale of common shares to investor
18-Apr-06		0.14		1,428,571			143			199,857									200,000
Sale of common shares to investor
18-Apr-06		0.15		333,334			33			49,967									50,000
Sale of common shares to investor
20-Apr-06		0.15		200,000			20			29,980									30,000
Sale of common shares to investor
20-Apr-06		0.15		60,000			6			8,994									9,000
Sale of common shares to investor
20-Apr-06		0.15		50,000			5			7,495									7,500
Sale of common shares to investor
20-Apr-06		0.12		7,178,593			718			860,713									861,431
Sale of common shares to investor
21-Apr-06		0.15		50,000			5			7,495									7,500
Sale of common shares to investor
24-Apr-06		0.15		100,000			10			14,990									15,000
Sale of common shares to investor
25-Apr-06		0.15		283,334			28			42,472									42,500
Sale of common shares to investor
25-Apr-06		0.145		1,666,666			167			241,500									241,667
Sale of common shares to investor
25-Apr-06		0.145		1,666,666			167			241,500									241,667
Sale of common shares to investor
25-Apr-06		0.15		300,000			30			44,970									45,000
Sale of common shares to investor
25-Apr-06		0.15		300,000			30			44,970									45,000
Sale of common shares to investor
01-May-06		0.15		90,000			9			13,491									13,500
Sale of common shares to investor
03-May-06		0.15		200,000			20			29,980									30,000
Issuance of shares for services (in event of payment default)
12-May-06		0.1		3,000,000			200			299,800									300,000
Sale of common shares to investor
19-May-06
Sale of common shares to investor
19-May-06		0.15		100,000			10			14,990									15,000
Warrants exercised
24-May-06		0.10		237,000			24			23,676									23,700
Issuance of shares for services
01/06/2006		0.15		1,000,000			100			149,900									150,000
Issuance of shares for services
01/06/2006		0.15		250,000			25			37,475									37,500
Release of debenture on subsidiary
23-Jun-06		0.095		12,500,000			1,250			1,186,250									1,187,500
Issuance of shares for services
23-Jun-06		0.095		2,000,000			200			189,800									190,000
Issuance of shares for services
23-Jun-06		0.095		1,000,000			100			94,900									95,000
Sale of common shares to investor
23-Jun-06		0.13		256,411			25			33,308									33,333
Issuance of shares for services
23-Jun-06		0.095		160,256			16			15,208									15,224
Issuance of shares to officer for services
23-Jun-06		0.095		667,000			66			63,299									63,365
Issuance of shares to officer for services
23-Jun-06		0.095		667,000			67			63,298									63,365
Sale of common shares to investor
23-Jun-06		0.13		256,411			26			33,307									33,333
Issuance of shares for services
23-Jun-06		0.095		160,256			16			15,208									15,224
Issuance of shares for merger held in Escrow
29-Jun-06		0.11		15,000,000			1,500			1,648,500									1,650,000
Comprehensive Loss																(21,438	)		(21,438	)
Net Loss for the year to 30 June 2006													(6,440,487	)					(6,440,487	)
Balances 30 June 2006				205,477,579			20,448			28,424,747			(9,861,199	)		(37,418	)		18,546,578
Issuance of shares for services
17 July 2006		0.09		133,333			13			11,987									12,000
Issuance of shares for services
05 September 2006		0.23		50,000			5			11,495									11,500
Issuance of shares for services
05 September 2006		0.23		50,000			5			11,495									11,500
Issuance of shares for services
05 September 2006		0.23		25,000			3			5,747									5,750
Issuance of shares for services
13 September 2006		0.33		17,000			2			5,608									5,610
Comprehensive Loss																0			0
Net Loss for the 3 months to 30 September 2006													(1,173,133	)					(1,173,133	)
Issuance of shares for services
19 October 2006		0.44		104,167			10			45,823									45,833
Issuance of shares for services
19 October 2006		0.44		667,000			67			293,413									293,480
Issuance of shares for services
19 October 2006		0.44		1,000,000			100			439,900									440,000
Issuance of shares for services
19 October 2006		0.44		100,000			10			43,990									44,000
2001 Options exercised -- 5 December 2006		0.40		6,269,641			627			2,507,229									2,507,856
Sale of common shares to investor
5 December 2006		0.25		800,000			80			199,920									200,000
Sale of common shares to investor
5 December 2006		0.25		480,000			48			119,952									120,000
Sale of common shares to investor
5 December 2006		0.25		1,000,000			100			249,900									250,000
Sale of common shares to investor
5 December 2006		0.25		400,000			40			99,960									100,000
Sale of common shares to investor
5 December 2006		0.25		100,000			10			24,990									25,000
Sale of common shares to investor
5 December 2006		0.25		1,000,000			100			249,900									250,000
Sale of common shares to investor
5 December 2006		0.25		400,000			40			99,960									100,000
Sale of common shares to investor
5 December 2006		0.25		120,000			12			29,988									30,000
Sale of common shares to investor
5 December 2006		0.25		800,000			80			199,920									200,000
Sale of common shares to investor
5 December 2006		0.25		200,000			20			49,980									50,000
Sale of common shares to investor
5 December 2006		0.25		600,000			60			149,940									150,000
Termination of MPEG Joint Venture
29 December 2006		0.11		(15,000,000	)		(1,500	)		(1648,500	)								(1,650,000	)
Adjustment to Opening Balance REF 12 May 06(200 should be 300)							100			(100	)
29 December 2006 Issuance of share(Held in Escrow)		0.05		3,000,000			300			149,700									150,000
29 December 2006 Issuance of share(Held in Escrow)		0.1		24,000,000			2,400			2,397,600									2,400,000
29 December 2006 Issuance of share(Held in Escrow)		0.30		10,000,000			1,000			2,999,000									3,0000,000
Comprehensive Loss																(1,713	)		(1,713	)
Net Loss for the 3 months to 31 December 2006													(4,529,999	)					(4,529,999	)
Equity as at December 31, 2006				241,793,720			24,180			37,173,544			(15,564,331	)		(39,131	)		21,594,263
Balance as at September 30, 2006				205,752,912			20,476			28,471,079			(11,034,332	)		(37,418	)		17,419,805

The accompanying notes are an integral part of the financial statements.

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NEW MEDIUM ENTERPRISES, INC.

(A development stage company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2006

NOTE 1FORMATION AND BUSINESS OF THE COMPANY

New Medium Enterprises Inc. (The "Company") was organized on August 2, 1999 in the State of Nevada under the name Shopoverseas.com, Inc. On July 10, 2000 the name was changed to New Medium Enterprises, Inc. The Company's original intention was to operate as an Internet based E-commerce Company. Several web sites were formulated whose purpose was the sale of various goods and services to both consumers and businesses. During a prior fiscal period, management had decided to cease any further expenditure in regard to the web site and had written off the total cost in the prior period. The Company has acquired the rights to and is currently developing a new Optical Disc format. An industrial prototype was produced in March 2006. As of December 31, 2006 the Company had generated minimal revenues and though it is considered currently, a development stage company. the company is also entering into a product commercialization stage . In January 2007 the company received a purchase order for 10,960 players from PC Rush in US. The company has also received letter of intents from various Original Equipment Manufacturers (OEMs) for the production of our VMD Players, and. as at December 31, 2006 the company holds 500 players as inventory (Stock in trade).The company has attained content relationship with VCL, in Germany The company has reached technical affliation agreements with Atmel Corporation, USA for the optics development, and ASUS Computers Inc Taiwan for the drive technology development. The company will soon be involved in the blue laser technology and will plan on Blue Laser research and development. Management is pursuing additional capital through various methods.

Subsidiaries

A)	New Medium Enterprises UK Ltd (formed previously as Prime Discs UK Ltd), incorporated on February 18, 2004, under the laws of England and Wales,
B)	New Medium Management Ltd (formed previously as Wilton Business Solutions Ltd), incorporated on February 18, 2004, under the laws of England and Wales,
C)	New Medium Enterprises Asia Pacific Ltd, incorporated on June 2, 2006 under the laws of China, Peoples Republic of China.
D)	New Medium Enterprises China Ltd, incorporated on June 2, 2006 under the laws of China, Peoples Republic of China.
E)	New Medium Entertainment Ltd - incorporated 19 September 2006, under the laws of England Wales
F)	New Medium Electronics Ltd - incorporated 19 September 2006, under the laws of England Wales
G)	Intellitain Media Inc - incorporated 13 July 2000 under NEVADA, USA laws

New Medium Enterprises, Inc owns 100% of A), B), C), E), F), G). New Medium Enterprises, Asia Pacific owns 51% of NME, China, the other 49% is owned by other parties.

The losses, attributed to minority interest, which were incurred by one subsidiary company and included in the consolidated statement of operations for the period ended December 31 2006 have not been shown separately in financial statements because they are considered to be immaterial. The minority interest in both periods was $3,062, but restricted to $627, the value of shares held by minority interest.

NOTE 2SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles Of Consolidation

The financial statements include the accounts of New Medium Enterprises, Inc. and its subsidiaries. Inter company transactions and balances have been eliminated. Equity investments in which we exercise significant influence but do not control and are not the primary beneficiary are accounted for using the equity method. Investments in which we are not able to exercise significant influence over the investee are accounted for under the costs method.

Foreign Currencies

Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are charged or credited to Other Comprehensive Income (OCI).

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Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, revenue and expenses as well as the disclosure of contingent assets and liabilities in the financial statement. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents consist of cash, money market funds and other highly liquid investments with a maturity of three months or less from the date of purchase. The Company has not experienced any losses on its cash or cash equivalents.

Investments

Investments include marketable common stock securities traded on the stock exchange. The marketable securities are classified as available for sale, and are measured at fair value in the balance sheet. Unrealized gains and losses on investments are recorded net of tax as a separate component of stockholders' equity. Gains and losses on securities sold are determined based on the specific identification method.

Property and Equipment

Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and settlements are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives of:

Furniture and Fixtures and Office Equipment	3 years
Plant and Machinery	3 years
Others	3 years

As of December 31, 2006 Property, Plant & Equipment consist of the following:

Furniture and Fixture	$	237,795
Plant and Machinery		130,815
Others		634,819
Total		1,003,429
Accumulated depreciation		(149,329)
	$	854,100

Intangible Assets

Intangible Assets are amortized using the straight-line method over their estimated period of benefit, ranging from one to ten years. We evaluate the recoverability of intangible assets periodically and take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of our intangible assets are subject to amortization. No impairments of intangible assets have been identified during any of the periods presented.

The components of finite-lived intangible assets are as follows:

December 31, 2006	June 30, 2006
$15,183,860	$15,183,860

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Components of finite-lived Intangible assets acquired during fiscal years ended

December 31, 2006	June 30, 2006
$0	$0

The estimated future amortization expense related to intangible assets as of December 31, 2006 is as follows:

2007	2,277,579
2008	3,036,772
2009	3,036,772
2010	3,036,772
2011	3,036,772
2012	759,193

Revenue Recognition

The Company recognizes revenue on the accrual basis as the related services are provided to customers and when the customer is obligated to pay for such services. Revenue from product sales is recognized when title transfers to customers, primarily on shipment. For the three months ended December 31, 2006 and 2005 there were no revenues.

Other Income of $1,326 consists of interest received on its bank and fixed deposit account.

Research and Development

Research and Development expenses include payroll, employee benefits, stock-based compensation, and other headcount-related costs associated with product development. We have determined that technological feasibility for our product is reached shortly before the products are released to manufacturing. Costs incurred after technological feasibility is established are not material, and accordingly, we expense all research and development costs when incurred.

Loss per Share

In accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share", the computation of net loss per share is based upon the weighted average number of common shares issued and outstanding for the reporting period. Common stock equivalents related to options, warrants and convertible securities are excluded from the computation when the effect would be anti-dilutive.

Recent Accounting Pronouncements

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections." This statement applies to all voluntary changes in accounting principle and requires retrospective application to prior periods' financial statements of changes in accounting principle, unless this would be impracticable. This statement also makes a distinction between "retrospective application" of an accounting principle and the "restatement" of financial statements to reflect the correction of an error. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

In February 2006, FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments¡¨. SFAS No. 155 amends SFAS No 133, Accounting for Derivative Instruments and Hedging Activities¨, and SFAF No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities¡¨. SFAS No. 155, permits fair value re-measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interest in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives, and amends SFAS No. 140 to eliminate the prohibition on the qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. This statement is effective for all financial instruments acquired or issued after the beginning of the Company’s first fiscal year that begins after September 15, 2006.

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In December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment, an Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires companies to recognize in the statement of operations the grant- date fair value of stock options and other equity-based compensation issued to employees. FAS No. 123R is effective beginning in the Company's first quarter of fiscal 2006.

In June 2005, the EITF reached consensus on Issue No. 05-6, Determining the Amortization Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides guidance on determining the amortization period for leasehold improvements acquired in a business combination or acquired subsequent to lease inception. The guidance in EITF 05-6 will be applied prospectively and is effective for periods beginning after June 29, 2005. EITF 05-6 is not expected to have a material effect on its consolidated financial position or results of operations.

In June 2005, the FASB Staff issued FASB Staff Position 150-5 (FSP 150-5), Issuers Accounting under FASB Statement No. 150 for Freestanding Warrants and Other Similar Instruments on Shares that are Redeemable.¨ FSP 150-5 addresses whether freestanding warrants and other similar instruments on shares that are redeemable, either puttable or mandatorily redeemable, would be subject to the requirements of FASB Statement No. 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity,¨ regardless of the timing or the redemption feature or the redemption price. The FSP is effective after June 30, 2005.

On February 16, 2006 the Financial Accounting Standards Board (FASB) issued SFAS 155, “Accounting for Certain Hybrid Instruments,” which amends SFAS 133, “Accounting for Derivative Instruments and Hedging Activities,” and SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.” SFAS 155 allows financial instruments that have embedded derivatives to be accounted for as a whole (eliminating the need to bifurcate the derivative from its host) if the holder elects to account for the whole instrument on a fair value basis. SFAS 155 also clarifies and amends certain other provisions of SFAS 133 and SFAS 140. This statement is effective for all financial instruments acquired or issued in fiscal years beginning after September 15, 2006. The Company does not expect its adoption of this new standard to have a material impact on its financial position, results of operations or cash flows.

In March 2006, the FASB issued FASB Statement No. 156, Accounting for Servicing of Financial Assets - an amendment to FASB Statement No. 140. Statement 156 requires that an entity recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a service contract under certain situations. The new standard is effective for fiscal years beginning after September 15, 2006. The Company does not expect its adoption of this new standard to have a material impact on its financial position, results of operations or cash flows.

The Company believes that the adoption of these standards will have no material impact on its financial statements.

NOTE 3INVESTMENT IN INTELLECTUAL PROPERTY

On January 13, 2004, the Company acquired the business and all the intellectual property assets pertaining to a new DVD format from MultiDisk Ltd. and TriGM International SA. In connection with the acquisition the Company issued 72,605,776 shares of its stock to the shareholders of MultiDisk and TriGM. These shares were valued at $14,521,155, which approximates the fair market value of that property. The Company also paid additional fees in funding, legal and brokerage fees, which have been capitalized, part of these funds ($150,000) was allocated to Machinery and Equipment.

According to the acquisition agreement, MultiDisk Ltd and TriGM International, S.A. the Company was obligated to pay certain milestone payments amounting to $87,000 to each upon the raising of capital in excess of $500,000. Payment total $174,000. In August 2004 the Company entered into consulting agreement for consulting services. The Company paid a fee of $75,000 and issued 875,000 common shares the shares were valued at $.40, which approximates the fair market value of the shares at the date of issuance.

On June 23, 2005, the Company converted the following outstanding obligations owed to two of its principal shareholders into The Common stock of the company. May Ltd. $87,000 debt converted into 1,740,000 Common shares. TriGM Ltd $87,000 debt converted into 1,740,000 Common Shares.

The asset "Investment in Intellectual Property," having a definite life will be amortized over its expected life using the straight-line method starting in the period reflecting the pattern in which the Company use up the benefits the asset provides.

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NOTE 4INCOME TAXES

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, (SFAS 109) "Accounting for Income Taxes." Under the asset and liability method, deferred income taxes are recognized for the tax consequences of "temporary differences" by applying enacted statutory tax rates applicable to future years to differences between the financial statements carrying amounts and the tax bases of existing assets and liabilities. Under SFAS 109, deferred tax assets may be recognized for temporary differences that will result in deductible amounts in future period. A valuation allowance is deferred tax asset will not be realized. As of June 30, 2006 the Company had a Federal and State tax net operating loss of approximately $6,440,688, which may be applied against future taxable income expiring in the year 2020. The Company established a 100% valuation allowance equal to the net deferred tax assets, as the Company could not conclude that it was more likely than not that the deferred tax asset would be realized.

NOTE 5COMMITMENTS AND CONTINGENCIES

The Company rents office space from a third party on a month-to-month basis in UK, amounting to $11,200 per month, and in Los Angeles, California for six months, at $1,976 per month from November 2006 We have also hired office machinery costing about $500 per month.

In May 2006, the company entered into a contract for Design and Construction of VMD Replication Line with VDL-ODMS. The project has been reassessed and re-priced in November 2006. At December 31 2006 the company is committed to pay, subject to satisfactory completion of Phases of construction, Euros 1.66 million for Equipment and Euros 280,000 for Development and Engineering Fees.

On June 17, 2006, The company signed an agreement with Doug Carson, Inc. to develop VMD file format for VMD optical discs for a contractual price of $500,000.In July 2006, the company approved the security agreement with DCA, Inc, and signed a promissory note for $150,000 secured by 3,000,000 shares in NME, Inc. Between July to September, a total of $250,000 was paid, leaving, $100,000 due in October and a final payment of $150,000 end December 2006. The 3,000,000 shares will be payable in the event of default on the final December payment of $150,000. As the project is yet to be completed, these shares are still held by DCA and the final payments are also not made.

In August 8 2006, after re-negotiations with Beijing E-World, the Company has formulated a joint venture agreement whereby when signed, the company shall issue in total 71.5 million shares in the following manner:

a)	24 million fully paid up shares Restricted under Rule 144 at 10 cents per share on the establishment of the Joint Venture, with a lock-up period of 12 months and a selling limit of 5% per month( These shares has been issued and held in Escrow because shares certificates are still with Lawyers.)
b)	Warrants of up to 10 million shares to be exercised over a 3 year period i.e. 3.3 million @ 20 cents per share - 1st year 3.3 million @ 25 cents per share - 2nd year 3.4 million @ 30 cents per share - 3rd year
c)	51.5 million fully paid up shares for the joint venture to be issued to the Management Team of the Joint Venture, as per list on Schedule 6 of the joint venture agreement. These shares are restricted under Rule 144,with a lock-up period of 12 months and a selling limit of 5% per month per person

This agreement is subject to approval by the Chinese Authorities, and is currently still on-going.

In October 2006, the company appointed COMDRP for communication and press relation services in France for a monthly fee of Euros 1,800 commencing from 1^st November 2006. This contract cannot be terminated for three months and afterwards it can be terminated at one month written notice.

In November 2006, the company signed an agreement with Image Mark (Dean Brand Development Resources) for a competitive assessment and development of NME Brand, logo and website redesigning for a total sum of $105,000. An upfront fee of $35,000 was paid in November 2006 and another $35,000 was paid in December 2006. Balance of $35,000 is to be paid on completion of the project.

In November 2006, the company entered into an agreement with Digital Challenge for software development consultancy and support for HD VMD Authoring tools for a contractual price of $20,000 per month payable in advance for one year as per Schedule D of the said contract.

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In November 2006, the company also entered into another agreement with Digital Challenge for the Acquisition of Authoring tools. As per agreement Company has paid acquisition price $10,000 in cash and 10 million shares have been issued to Digital Challenge (Held in Escrow as still with lawyers.) for receipt of Alpha version in machine readable format tested and verified by our scientists.

In December 2006, the subsidiary, NME Entertainment Ltd signed an agreement with HGC Films (JIAHUA LTD) for Acquisition of 5 Chinese titles for a price of $30,000 in total. The company paid $15,000 upfront and is committed to pay $5,000 per year for next three years.

In December 2006, the company entered into a HD playback Software Purchase agreement with SSX for a total purchase price of $22,500. The company made initial payment of $11,250 and is committed to pay the balance on delivery and verification of software.

In December 2006, the company approached V2 Solutions for the design and development of Authoring software and other related assignments (E-commerce, Graphic designing, and C++, Java programming). As per agreement, the company would pay $12500 per month in cash and NME equity equivalent to $12500 per month at a 25% discounted rate (Calculated at the closing price of the last working day of the month) on receipt of invoice from V2 Solutions. This agreement is for one year and is waiting signing by both parties.

In January 2007, the company entered into an agreement with Zeno Group, Inc to promote media relation services, develop materials supportive of Client positioning in US market and outreach key media for technology, business and consumers for a monthly fee of $15,000 for a period of 1 year after an initial period of 3 months.

During last quarter, the company has secured worldwide patents surrounding its high-capacity Versatile Multilayer Disc (VMD) technology. The company paid $52,337 to IP Lawyers for fees. We are unable to quantify the total fees until the process of registration is completed.

In January, 2007, the company received a purchase order for 10,960 players and is committed to producing 2,160 within 75 days. The delivery schedule for the balance has not yet been decided.

Minimum Obligations due under above leases and contracts are as follows.

2007	$275,104
Thereafter	$10,000

Legal Proceedings

There are no material legal proceedings to which the Company is a party to, or to which any of the Company's properties are subject.

Related Party Transactions

The company paid for R&D to the following for:

Related Party	3 months ended		6 months ended
	December 31, 2006	December 31, 2005	December 31, 2006	December 31, 2005
V Tech For Scientists	$38,400	$50,849	$76,800	$88,265
Turtle Technologies (India) Pvt Ltd for contracted Staff	$17,670	$7,500	$31,407	$15,000
Turtle Technologies (India) Pvt. Ltd associations for contracted Staff	$17,484	0	$24,913	$29,686
Silicon Valley Plc for use of its staff	$11,904	0	$21,199	0
Andrew Danenza, the son of Ann Kallgren for consulting and other services.	$20,000	20,000	$40,000	$38,000

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NOTE 6SHORT TERM LOAN

In August 2006, the company secured a short term loan of $ 1.1 million for 180 days through its subsidiary, New Medium Enterprises UK Ltd. A debenture was granted by the subsidiary to Tribal SARL, and shares in the parent Company were offered as collateral for the loan. The interest payable for the quarter to December 31, 2006 is $21,312.51. The rate of interest as per contract is 2.5% our Base Rate. As at 31 December, 2006 the outstanding Balance on the loan is $ 1.1 million.

The Loan has been was guaranteed by NME Inc by attaching warrants equal to 100% of subscribed amount exercisable at anytime within 5 years of issue at a 25% discounted price to the average price of any given month in case of default of loan.

NOTE 7 STOCKHOLDERS' EQUITY

The Company's authorized capital stocks consist of 500,000,000 shares of common stock (par value of $.0001) and 200,000,000 shares of non-voting preferred stock (par value $.0001).

The original par value had been $.001 per share. In January 2004 management voted to reduce the par value to $.0001 per share. The financial statements have been restated retroactively to recognize the new valuation.

During the period to 31 December 2006, 5,621,167 shares of common stock were issued for services rendered (for analysis, see notes under Liquidity and resources). The total number of shares issued as at 31 December, 2006, is 241,793,720 with a valuation of $60,448,000.

During the period to 31 December 2006, 6,269,641 shares were issued with regards to the 2001 Stock Option plan being exercised. This has increased the Compensation Based Stock Issue cost by $2.5 million for the quarter. 

During the period to 31 December, 2006, 5,900,000 shares of common stock were issued to investors at a fixed price of 25 cents. The company in return received $1,475,000.

During the period to December 2006, 37,000,000 shares of common stock were issued and held in Escrow for total value of $5,550,000.

For each issuance of equity instruments for services provided, the valuation of the issuances represents the fair market value of the shares at the date of issuance and has been charged to the statement of operations. The equity issuances to management are in accordance with their own compensation as per their service contracts. These initial issuances are further inducements for management to join for the time being a non - commercialized product entity

In accordance with FASB issued SFAS No. 123R all "Share-Based Payment," are measured and recognized as compensation expense for all stock-based payments at fair value. The Company has also awarded liability instruments that required employee and consultants to provide services over a requisite period. All of these issuances were also valued at fair value.

No preferred shares have been issued. It is within the discretion of the Board of Directors to determine the references of the preferred stock. The Company on November 1, 2005 determined the preferences of the preferred stock. The Preferred shares shall be issued from time to time in one or more series, with such distinctive serial designations as shall be stated and expressed in the resolution or resolutions providing for the issuance of such shares as adopted by the Board of Directors; the Board of Directors is expressly authorized to fix the number of shares of each series, the annual rate or rates of dividends for the particular series, the dividend payment dates for the particular series and the date from which dividends on all shares of such series issued prior to the record date for the first dividend payment date shall be cumulative, the redemption price or prices for the particular series, the voting powers for the particular series, the rights, if any, of holders of the shares of the particular series to convert the same into shares of any other series or class or other securities of the corporation, with any provisions for the subsequent adjustment of such conversion rights, the rights, if any, of the particular series to participate in distributions or payments upon liquidation, dissolution or winding up of the corporation, and to classify or reclassify any un issued preferred shares by fixing or altering from time to time any of the foregoing rights, privileges and qualifications.

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All the Preferred shares of any one series shall be identical with each other in all respects, except that shares of any one series issued at different times may differ as to the dates from which dividends thereon shall be cumulative; and all preferred shares shall be of equal rank, regardless of series, and shall be identical in all respects except as to the particulars fixed by the Board as herein above provided or as fixed herein.

Deferred Share Subscriptions and Outstanding warrants

Apart from above Share issues one current shareholder has subscribed for 4 million shares at 0.25 cents per share. 1 million shares have been issued in December 2006 and rest is due as follows.

No. of shares of $0.0001	Due Date	Share Price	Total Subscription
1,500,000	March 31, 2007	$ 0.25	$375,000
1,500,000	June 30, 2007	$ 0.25	$375,000

Following Warrants and Stock options are outstanding

Warrants No	No of shares Entitled	Exercisable price	Expiry Dates
F102	3,750,000	$0.04	August 11, 2009
F103	2,000,000	$0.10	June 08, 2007
F104	16,923,077	$.065	April 20,2011
F105	4,000,000	$0.25	May 31, 2010

The following warrants are (deferred) to be issued to the following under the contractuals agreement with Consultants:

Name	No. of Shares/Investment Funds Received	Term
David McGuire	25,000 per month	To commence on sales achievement
Neil Bottrill	3,000,000	Over 3 years, exercisable in 3 installments
Neil McEwan	250,000	Within 3 years

NOTE 8SUBSEQUENT EVENTS

On January 4, 2007, the company terminated its Joint venture negotiations with MPEG Holdings, as it has implemented two of its own trading operations in Hong Kong.

On January 5, 2007, NME Creative and Software Division announced today that it has successfully trialled its HD VMD playback software as well as VMD multilayer PC drives. The company will release the HD VMD playback software for download in February 2007, initially in 10 regions worldwide. The software will also be offered to hardware manufacturers as a bundling solution.

On January 11, 2007 the company announced its intention of listing on the NASDAQ Market during the third quarter of 2007.

On January 29, 2007 the company received an investment subscription of $25,000 from an accredited investor, and the company will issue 117,316 common shares at $0.2131 cents per share.

On January 11, 2007, the company announced as it is the first company to perfect a commercially-viable process and a cost-efficient, high yield 2P process. VMD 2p technology has been validated by established Netherlands-based replicators VDL ODMS.

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On January 30, 2007, the company announced that it is set to offer the fast-growing high-definition (HD) market with a break-through optical storage capacity, playback format, and disc player that will deliver consumers high quality HD content at a comparable cost to the current consumer DVD market.

On February 07, 2007, the company announced it has signed an NDA with Atmel Corporation, USA and ASUS Computers Inc Taiwan to explore Business and Technology in Optical Media.

On February12, 2007, the company has negotiated with another party to restructure $1.1 million short term loan. The new loan will be for 13 month starting from the date of expiry of the Tribal SARL Loan.The company will secure this long term loan of $ 1.144 million for 13 months through its subsidiary, New Medium Enterprises UK Ltd. A debenture will be granted by the subsidiary to Postie Trade Ltd, and shares in the parent Company will be offered as collateral for the loan.

On February 12, 2007, Metcash Ltd. subscribed for 4,000,000 shares @ 0.20 cents and Metcash Ltd was also granted 2,500,000 warrants @ 0.32 cents exercisable within 5 years.

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ITEM 2MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

Forward Looking Statements

Some of the information in this 10Q Report or the documents we incorporate by reference in this 10Q Report may contain forward-looking statements. You can identify forward-looking statements by the use of forward-looking language such as "will likely result," "may," "believes," "is expected to," "is anticipated to," "is forecasted to," "is designed to," "plans to," "predicts," "seeks," "estimates," "projects," "intends to" or other similar words. Important factors that could cause actual results to differ materially from expectations include:

·   failing to produce a workable product;

·   failure to raise sufficient capital to fund business operating plans;

·   market conditions and demand for new optical storage Media development and storage technology;

·   our competitors' ability to successfully develop new technologies to satisfy demand for data storage;

·   difficulties in achieving sales, gross margin and operating expense targets based on competitive market factors;

·   difficulties in competing successfully in the markets for new products with established and emerging competitors;

·   difficulties with single source suppliers, product defects or product delays;

·   difficulties in forming and maintaining successful joint venture relationships;

·   difficulties in obtaining, maintaining and using intellectual property protections;

·   changes in data storage technological protocols and standards;

·   difficulties in state, federal, foreign and international regulation and licensing requirements;

·   litigation actions by directors, employees, investors and others;

·   limited operation and management history;

·   dependence on key personnel;

·   inability to conclude the relationship as outlined in the letter of intent and other documents executed with Eros into definitive agreements;

·   other factors discussed in this 10Q Report

We are a development stage company currently engaged in the development of our proprietary technology, VMD, a next generation, high capacity optical storage disc. To date, we have generated no revenues.

We have entered into agreements with V-Tech, and Silicon Valley Plc for the research and development of prototypes and commercializing product. V-Tech consists of a unique scientific and entrepreneurial team with many years of experience in optical storage Media development and specifically multilayer technology. All intellectual property, patents, equipment, know-how and products developed by V-Tech, and Silicon Valley Plc belong to NME. The overall management of the Company is carried out from headquarters in the UK. V-Tech became a subsidiary of Silicon Valley Plc at the end of February 2006.

In the fourth quarter 2006, the company began to gear up for production of VMD discs and the first generation VMD players. By doing so, the company will need to continue to raise additional capital to finance the manufacturing facility and engineering teams.

Plan of Operations for the next 12 months:

The company plans to continue with the research and development to enhance and master the application of its VMD disc and player to diversify the product range for different market segments around the globe. The company intends to develop its own file format in order to be self-reliant. The company also plans to develop in-house authoring tools to complement the conversion of media contents to our VMD disc.

We have entered into an agreement with VDL-ODMS for the design and development of VMD disc manufacturing line. We intend to order the first line from the same vendor and plan to commence production by the first quarter of 2007.

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The company plans to hire key personnel for further development of business as it grows. However we do not expect significant changes in the number of employees.

The company's management plans to pursue an active policy towards growth and the creation of revenue through means of sale of products using strategic alliances, joint ventures and acquisitions within the realm of content providers, manufactures, replicators and drive manufacturing OEMs.

Over the next 12 months the company plans for several commercial launches for its products and services. One of these is the 2p process including other proprietary modules developed with VDL-ODMS, which will be installed and licensed in future for disc manufacturing lines.

The first VMD disc manufacturing line prototype should be finished and be “in production” over the next three to four months. This line is designed and co-developed by VDL-ODMS and NME and will allow for the manufacturing of four different types of discs-dual-layer red laser (DVD-9), a multilayer red laser (VMD), a dual-layer blue laser (HD-DVD) and a multi-layer blue laser.

In our electronics division, we have taken a new stance on what type of player is to be released first. Instead of initially launching with our original disc player which was to be future-proof for VMD discs, the management has decided to release a player which will be the first player to play high definition titles with the HD VMD file format.

The above player is based on an LSI chipset and has already been developed with the collaboration of our joint venture partner E-World in Beijing and NME China Ltd., our subsidiary in Shenzhen. We anticipate this initial player will be launched in the next 2 months in certain key launch territories (i.e. China, India, Russia) and will continue into Latin America and Eastern Europe.

We expected to launch our second and third generation players at CES 2007 show, however on advise of our Media Relations and Branding Agency we were advised to focus our efforts and finances on our roll-out of the products on a global basis

NME plans to render a decision regarding global assembly and logistics for the medium- and long-term. We are currently deciding between two of the world’s largest EMS (Electronics Manufacturing Service) firms that have a global presence and who assemble for many large international companies. Along with this task, NME anticipates that it will be adopting a global CRM and business software package to suit the operations of our EMS, OEM and ODM partners and keep track of production, logistics and sales.

Some of our most important contracts regarding content distribution are near to completion and we are preparing to launch with VCL in Germany and Europa Corp. in France. In this new fiscal year, we anticipate we will be heavily concentrated on closing content distribution deals and growing the existing library of titles available on VMD.

This library of titles will be available inside a newly designed VMD disc box, which we plan to launch in the coming month. The new disc packaging design will allow the consumer to differentiate a VMD title from any other DVD or other disc titles.

Because our technologies must be launched globally, over the next year, we plan to develop our representational offices to handle their local markets with more independence. These new representational offices include our Paris, France; Munich, Germany, Warsaw, Poland, Los Angeles, USA, Tokyo, Japan and Sydney, Australia locations. London will however remain the headquarters with a key decision-making structure.

Key trade fairs we intend to visit over the next 12 months are: For our content division… American Film Market, Berlinale, Cannes Film Market, Shanghai Film Market, MIPTV. For our electronics division…Hong Kong Electronics Show, CES CeBIT, IFA. For our optics division…MediaTech.

Beijing E-World, China

On June 25, 2005, New Medium Enterprises, Inc. and Beijing E-World Technology Co Ltd signed a Memorandum of Intent to form a joint R&D program for the production of a disc player which will incorporate EVD and VMD technologies. In July 2006, an agreement to form a joint venture instead was signed by both parties, and the go ahead is awaiting approval from the Chinese authorities.

The business combination would allow Beijing to expand overseas whilst enhancing its EVD red laser standard with VMD's compatible technology, gaining much greater capacity, NME's western world momentum and potential markets.

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Beijing E-World Technology Co., Ltd is a Chinese public listed company engaged in the development of electronic chip and board technology. Beijing E-World is the developer of EVD which is currently selling in China. Under the parameters of the agreement NME Inc. and Beijing E-world will collaborate on R&D to develop a dual EVD/VMD player.

Beijing E-world will have access to the VMD technology in China, royalty free while NME Inc. will be free to market the player technology to the rest of the world, and charge a royalty for it.

NME Inc. will also grant Beijing E-World the right to produce VMD optical discs in China under a new brand.

For such a right, NME Inc. will have the right to royalty payments as will be agreed by separate agreement. Beijing E-World has agreed to place an order of 100,000 VMD discs from NME Inc. for pilot marketing work in China subject to the positive result of the aforementioned R&D collaboration.

Eros, India

On June 24, 2005, New Medium Enterprises, Inc. entered into a strategic agreement with Eros Media Ltd, a leading distributor of Bollywood movies worldwide and mainstream western media in India.

Bollywood is the most prolific film industry in the world. Eros is the single largest International distributor of Bollywood films worldwide with over 70% market share in the business. It has distributed some of the biggest Bollywood blockbusters of all times - Dil Se, Hum Aapke Hain Kaun, Taal, Saath Hain, Dilwale Dulhaniya Le Jayenge to name a few. Eros content library includes: approximately 2,000 Indian film titles approximately 20,000 Indian music and dance videos, documentaries, sport and other genres.

According to the Letter of Intent executed with Eros, Eros will have rights to use VMD to distribute all the above content plus any new movies acquired or produced by Eros and plans to do this on 500,000 VMD discs later this year. Eros plans to show its movies at the Cannes film festival in High Definition on VMD discs and corresponding drives.

The other key terms of the agreement are; Eros has the right to showcase all of its content on VMD optical discs in high definition (HD) to promote itself and its content to the market. Eros will commercialize at its own expense 50 block buster Bollywood titles. These expenses will include: manufacturing of the VMD discs, stamping the content onto the discs distribution and marketing of HD Bollywood movies on VMD. Eros will place an order for 500,000 VMD discs (50 films, 10,000 each) , with a mutually agreed replicator. Eros has taken a 2.3% stake in our Company.

LIQUIDITY AND CAPITAL RESOURCES:

On December 31, 2006, we had available in cash the sum of $386,790 and accrued expenses of $137,433.

We raised funds through private equity transactions from accredited investors during the period to 31 December, 2006,and received $1,475,000. A short term loan of $ 1.1 million for 180 days through its subsidiary, New Medium Enterprises UK Ltd was obtained in August 2006 and will be extended for by mutual consent.. A debenture was granted by the subsidiary to Tribal SARL, and shares in the parent Company were offered as collateral for the loan.

We have a underwriting commitment from one of our existing Shareholder for $750,000 worth of shares receivable in two equal installments 31^st March 2007 and 30^th June 2007

We intend to meet our long-term liquidity needs through available cash and cash flow as well as through additional financing from outside sources. We anticipate raising additional funds from the possible exercise of outstanding warrants or equity financing with private investors.

We are currently in discussions with several sources of funds for additional investments. There is no assurance that the company will enter into an agreement for funding, or that funding will be available at an acceptable cost of funds. In the event the company is unable to raise the necessary funds, it will be forced to significantly curb its activities in order to preserve its capital.

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ITEM 3CONTROLS AND PROCEDURES

The Company's Chief Executive Officer (CEO) periodically reviews the design and effectiveness of its disclosure controls and internal controls, and their associated procedures, over financial reporting. The CEO makes modifications to improve the Company's disclosure controls and internal control structure, and may take corrective action, if such reviews identify a need for such modifications or actions.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.

Additionally, controls can be circumvented by the acts of some persons, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements may occur and not be detected.

Under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) of the end of the period covered by this report (the Evaluation Date). Based upon that evaluation, the Chief Executive Officer and Chief Finanacial Officer concluded that, as of the Evaluation Date, the Company's disclosure controls and procedures were effective in timely alerting them to the material information relating to the Company (or its consolidated subsidiaries) required to be included in the Company's periodic filings with the SEC.

During the quarter ended December 31, 2006 there was no significant change in the Company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART IIOTHER INFORMATION

ITEM 1LEGAL PROCEEDINGS

There are no legal proceedings to which the company is a party to or which any of their property is subject.

ITEM 2CHANGES IN SECURITIES

Due to the termination of the Joint Venture agreement with MPEG Holdings in Hong Kong,, 15,000,000 common stock which were issued and held in Escrow in Hong Kong have been cancelled.

ITEM 3DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.

In November 2006, NME’s Board approved a compensation plan for its directors, management, and consultants which was subject to majority shareholders consent. We received 53% consent from the shareholders and the compensation plan has been approved. An Information Statement has been issued beginning February 2007.

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PART IIIOTHER

None.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS:

MAY LTD - Affiliate:

May Ltd is a private equity offshore investment company established in Nevis. It has a portfolio of Technology, Telecommunication, media and Property related investments in the UK and abroad. The company has a collective management expertise with a wide range of corporate specialization ranging from Venture capital, Corporate finance, Marketing and Planning to Corporate Rescue. Where a business calls for outside its range of expertise the company has the ability to call on a host of associate Consultants. The company specializes in identifying and evaluating emerging technologies, judging when they are appropriate and sufficiently mature to be commercialized.

May Ltd. is an affiliate of the Company which owns 33,000,249 common shares equal to 16.8%of the outstanding shares of the Company's common stock. Ann Kallgren is the sole shareholder of May Ltd. She is also the sole shareholder of Southwark Properties Limited which owns 5,972,279 shares of the Company's common stock. May Ltd. and Southwark Properties Limited, together own an aggregate of 19.9% of the Company's outstanding common stock, over which Ann Kallgren and her spouse, Victor Danenza, share joint voting control. Victor Danenza is a control person of the company.

May Ltd. also owns 58.8% of the outstanding stock each of Triband Global Limited and also owned 85% of OneSoft Technologies UK Limited and associated companies. The latter has now been acquired by Silicon Valley Plc through new issue of shares.

May Ltd. also owns 29% of Silicon Valley plc which is a public limited company with over 2600 shareholders. It is an I.T service provider and specializes in Business related software and Device management software.

1.   During the annual period ending December 31, 2006 the company paid $38,400 to VTech, a primary R & D Facility which employs key scientists.

2.   The Company shares its office space with various entities in which May Ltd. is a principal shareholder. From October 2005, a new rental agreement was signed with Pentagon Glass for larger office space including previous Triband Global offices for a monthly fee of $11,200. During the Period ending December 31, 2006 NME reimbursed to OneSoft Retail and Business Solutions, a total of $17,484 for use of its office staff. The company also paid Triband Global $1,589 for Telephony consultancy for FMTV project in the near future.

3.   During the quarter ending December 31, 2006, the Company continued with the services of OneSoft Technologies UK, formerly Turtle Technologies UK Ltd to provide certain consulting services related to the design of its website, and for R&D with its associated company in India. For the December 31, 2006, the company paid $17,670 to Turtle Technologies (India) Pvt Ltd for their ongoing R&D and website development and maintenance.

4.   During the quarter ending December 31, 2006, the company paid $11,904 to Silicon Valley Plc, for use of its office staff.

5.   During the quarter to December 31, 2006, the Company continued with the services of Andrew Danenza, the son of Ann Kallgren, who is the sole shareholder of May Ltd. and Southwark Properties Limited to provide consulting and other services for the Company. Andrew Danenza is a consultant to the company and receives an ongoing monthly fee of $6,666.66.

MAHESH JAYANARAYAN, CEO- RELATED PARTY TRANSACTIONS:

Prior to being appointed as CEO, Mahesh Jayanarayan was a consultant to the company. In August 2004 the Company paid $75,000 consulting fee and 875,000 shares valued at $350,000 to Business Plans Ltd. Mahesh and family own 100% of Business Plans Ltd. Mahesh has received fees as a consultant prior to his appointment as CEO totaling 34,000 British Pounds equivalent of approximately $60,000.

Mahesh Jayanarayan and family members owns 10.4% of Triband Global Ltd, had owned 10.8% of OneSoft Technologies UK Ltd and 15% of OneSoft Retail & Business Solutions Ltd. See related transaction May Ltd. #4 and #5. Mahesh Jayanarayan was a Director of Triband Global Ltd (resigned 3 July 2006), Siptalk Ltd, Global MediaCast Ltd and Business Plans Ltd but resigned form all these companies in July 2006. He is also a Director of New Medium Enterprises UK Ltd.

Silicon Valley Plc is a public limited company with over 2600 shareholders. It is an I.T. service provider and specializes in Business related software and Device management software. OneSoft Technologies and V-Tech are wholly owned subsidiaries of Silicon Valley Plc. Mahesh Jayanarayan is a shareholder and, along with family members, owns 14% of Silicon Valley PLC. See related transaction May Ltd. # 3 & 4.

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EXHIBITS & REPORTS ON FORM 8-K INCORPORATED BY REFERENCE:

Date of Earliest Event	Date 8k Filed	Summary of 8K Incorporated by Reference
01/04/2007	01/04/2007	NME terminated the Joint Venture with MPEG technology Co. Ltd.
11/30/2006	12/01/2006	NME raised Finance of $1,475,000 from the sale of its common shares.
11/01/2006	11/08/2006	NME acquired software from Digital Challenge and NME board recommend compensation for Directors and Management subject shareholders approval.
10/10/2006	10/18/2006	Content Agreement with VCL Communications GmbH(VCL) for making available 800 titles of NME
10/10/2006	10/18/2006	NME appointed Mr. Lawrence Meyers as a Media and Content Advisor to the board
10/10/2006	10/18/2006	NME announced appointment of Mr. Neil Bottrill as Vice President, Creative Services for the Authoring Compression Business

At December 31, 2006, the Company's Current Assets Amounted To $7,505,736 While Current Liabilities Amounted To $1,551,770

SIGNATURE

In accordance with the requirements of the exchange act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NEW MEDIUM ENTERPRISES, INC.

FEBRUARY 13, 2007

BY: /s/ MAHESH JAYANARAYAN

Mahesh Jayanarayan

PRESIDENT & CHIEF EXECUTIVE OFFICER

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