FORM 10Q-SB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Three Months Ended Commission File Number
March 31, 2002 333-51880
NEW MEDIUM ENTERPRISES, INC.
(Exact Name of Registrant as Specified in its Charter)
NEVADA 11-3502174
(State of Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
4706 18th Avenue, Brooklyn, New York 11219
(Address of Principal Executive Offices) Zip Code
Registrant's Telephone Number, Including Area Code: (718) 686-0300
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 [X]
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.
Common Stock $.001 par value, 16,409,444
(Title of Class) (Shares outstanding at March 31, 2002)
NEW MEDIUM ENTERPRISES, INC.
FORM 10Q-SB
THREE MONTHS ENDED MARCH 31, 2002
INDEX
Page
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PART I FINANCIAL INFORMATION
ITEM 1 Balance Sheet, March 31, 2002 2
Statement of Operations, March 31, 2002 3
Statement of Stockholders' Equity for the
period ended March 31, 2002 4
Statement of Cash Flows, March 31, 2002 5
Notes to Financial Statements 6
Management's Discussion and
Analysis of Results of Operations 11
PART II Other Information - Items 1-6 11
Signatures 12
NEW MEDIUM ENTERPRISES, INC.
(A development stage company)
BALANCE SHEET (UNAUDITED)
AS AT
MARCH 31, JUNE 30,
ASSETS 2002 2001
------------ -----------
CURRENT ASSETS
Cash and cash equivalents $ 751,382 $ 695,242
Investment 18,840 81,900
Prepaid expenses and taxes 1,740 1,614
------------ -----------
Total Current Assets 771,962 778,756
Property and equipment 34,895 34,895
less: Accumulated depreciation (15,705) (10,470)
------------ -----------
Net Book Value 19,190 24,425
Deferred tax asset 0 0
Web site development costs/ Software Asset 314,302 314,302
Other assets- security deposits 3,600 3,600
------------ -----------
Total Assets $ 1,109,054 $ 1,121,083
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 3,000 $ 1,500
Due to shareholders 989 989
------------ -----------
Total Current Liabilities 3,989 2,489
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, Authorized 10,000,000 shares ; none issued
Common stock, $.001 par value, Authorized 100,000,000 shares;
Issued and outstanding 16,409,444 and 11,965,000 16,409 11,965
Additional paid in capital 1,802,036 1,656,480
Accumulated other comprehensive gain (loss) 677 (13,911)
Deficit accumulated during the development stage (714,057) (535,940)
------------ -----------
Total Stockholders' Equity 1,105,065 1,118,594
------------ -----------
Total Liabilities and Stockholders' Equity $ 1,109,054 $ 1,121,083
============ ===========
NEW MEDIUM ENTERPRISES, INC.
(A development stage company)
STAEMENT OF OPERATIONS
FOR THREE MONTHS ENDED (UNAUDITED)
MARCH 31, MARCH 31,
2002 2001
---------- ----------
REVENUES $ 0 $ 0
OPERATING EXPENSES
General and administrative $ 7,586 $ 65,896
Depreciation 1,745 1,745
-------- ---------
Total operating expenses 9,331 67,641
-------- ---------
Income (loss) from operations (9,331) (67,641)
OTHER INCOME
Interest Income 2,408 9,402
Gains on investments 701 0
-------- ---------
Loss before income taxes (6,222) (58,239)
Income tax benefit 0 0
-------- ---------
NET LOSS ($ 6,222) ($ 58,239)
======== =========
LOSS PER COMMON SHARE- Basic and Diluted ($ 0.00) ($ 0.00)
======== =========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 16,409,444 15,653,000
========== ==========
NEW MEDIUM ENTERPRISES, INC.
(A development stage company)
STAEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
FOR THE PERIOD JULY 1, 2000 - March 31, 2002
Retained
Additional Earnings
Per Share Common Stock Paid-in (Accumulated
Amount Shares Amount Capital Deficit)
------ ------ ------ ------- --------
Balances, June 30, 2000 15,653,000 $ 15,653 $ 1,668,642 ($348,972)
correction of shares issued-August 1999 $ 0.00 2,000 2 ($ 2)
Issuance of shares for services rendered, Sept. 2000 $ 0.50 54,000 54 26,946
Repurchase of common shares $ 0.00 (3,750,000) (3,750) 0
Offering costs-public offering (40,000) 000 000 (40,000)
Issuance of shares for services rendered, May 2001 $ 0.15 6,000 6 894
Comprehensive loss
Net loss for period ended June 30, 2001 (186,968)
========
------------ ----------- ----------- ---------
Balances, June 30, 2001 11,965,000 11,965 1,656,480 (535,940)
Comprehensive gain
Issuance of shares for services rendered, Dec 2001 $ 0.03 4,444,444 4,444 145,556
Net loss for period ended March 31, 2002 (178,117)
------------ ----------- ----------- ---------
Balances, March 31, 2002 16,409,444 $ 16,409 $ 1,802,036 ($ 714,057)
========== ============ =========== ===========
Accumulated
Other
Comprehensive
Gain (Loss) Totals
------------ ------
Balances, June 30, 2000 $ 1,335,323
correction of shares issued-August 1999 $ 0
Issuance of shares for services rendered, Sept. 2000 27,000
Repurchase of common shares (3,750)
Offering costs-public offering
Issuance of shares for services rendered, May 2001 900
Comprehensive loss (13,911) (13,911)
Net loss for period ended June 30, 2001 (186,968)
----------- -----------
Balances, June 30, 2001 (13,911) 1,118,594
Comprehensive gain 14,588 14,588
Issuance of shares for services rendered, Dec 2001 150,000
Net loss for period ended March 31, 2002 (178,117)
----------- -----------
Balances, March 31, 2002 $ 677 $ 1,105,065
=========== ===========
NEW MEDIUM ENTERPRISES, INC.
(A development stage company)
STAEMENT OF CASH FLOWS
FOR THREE MONTHS ENDED
(UNAUDITED)
MARCH 31, MARCH 31,
2002 2001
--------- ---------
Cash flows from operating activities
Net loss ($ 6,222) ($ 58,239)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,745 1,745
Changes in assets and liabilities:
accrued expenses 0 (12,250)
prepaid payroll taxes 0 (1,211)
-------- --------
Net cash used in operating activities (4,477) (69,955)
Cash flows from investing activities
Sale (purchase) of Investment-net 77,648 (100,287)
-------- --------
Net cash used in financing activities 77,648 (100,287)
Cash flows from financing activities 0 0
-------- --------
Net increase (decrease) in cash and cash equivalents 73,171 (170,242)
-------- --------
Cash and cash equivalents, January 1, 678,211 871,796
-------- --------
Cash and cash equivalents, March 31, $751,382 $701,554
-------- --------
NEW MEDIUM ENTERPRISES INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION AND FORMATION AND BUSINESS OF THE COMPANY
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of only normal
recurring accruals) considered necessary for a fair presentation of the
Company's financial position at March 31, 2002, the results of operations for
the three months ended March 31, 2002 are included. Operating results for the
three-month period ended March 31, 2002 are not necessarily indicative of the
results that may be expected for the year ending June 30, 2002. The information
contained should be read in conjunction with audited financial statements as of
June 30, 2001
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 financial statements
reflect the name New Medium Enterprises throughout. The Company's intension was
to operate as an Internet based E-commerce Company. Several websites were
formulated whose purpose was the sale of various goods and services to both
consumers and businesses. Additionally, the Company planned to market its own
proprietary Internet based software package to outside e-commerce companies. As
of the March 31, 2002 the Company is considered a development stage company.
As a result of market conditions severely impacting the markets for the
company's internet websites, its CodeTrek proprietary software and its Broadeo
Wireless business, management has decided to put on hold all of these products
until more visibility emerges that can better guide management to the effective
allocation of its resources. . Since July 2000, the company has been negotiating
with an acquisition prospect for our Company. To date no agreements have been
entered into.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal year
The Company has chosen June 30, as its fiscal year end.
Use of estimates
The preparation of financial statements in conformity with general 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
statements. Actual results could differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents consists 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.
NEW MEDIUM ENTERPRISES INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
(UNAUDITED)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Property and equipment
Property and equipment (primarily computer hardware) are recorded at cost and
depreciated or amortized over the estimated useful lives of the assets (three to
five years) using the accelerated depreciation method allowed by the Internal
Revenue Code.
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.
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 antidiliutive
Recent accounting pronouncements
The Financial Accounting Standards Board (FASB) issued FASB 133, "Accounting for
Derivative Instruments and Hedging Activities", The Company does not engage in
derivative or hedging activities and does not expect the adoption of this new
pronouncement to have a material effect, if any, on its financial condition or
results of operations.
NOTE 3 - LIQUIDITY & PROFITABILITY
As reflected in the accompanying financial statements, the Company incurred a
loss for the current period and expects to incur a loss in the next fiscal
period. Based upon the cash utilization rate and the plans for joint ventures
and acquisitions, it is management's opinion that the current capital base is
sufficient to maintain the Company for at least the following year.
NOTE 4 - DEFERRED OFFERING COSTS
The Company had undertaken a SB-2 registration of some of its shares and all of
its outstanding warrants. Certain costs have been incurred in regard to this
registration. These costs approximate $ 58,000; have been charged against
additional paid in capital. The Company had also incurred costs in regard to the
private placements totaling $69,625. These have been charged against additional
paid in capital.
NEW MEDIUM ENTERPRISES INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
(UNAUDITED)
NOTE 5 - INCOME 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 periods. A valuation allowance is
recognized, if on the weight available evidence, it is more likely than not that
some portion or all of the deferred tax asset will not be realized. 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 6 - WEB SITE DEVELOPMENT COSTS/ SOFTWARE ASSET
The Company has incurred significant costs in the development of its web sites
and e-commerce capabilities. The original intention of the Company was to
develop several web sites. During the development of the proprietary Internet
based software the Company decided to market these software programs to outside
parties. The Emerging Issues Task Force requires following the guidelines of
Statement of Position 98-1 for web site development costs. Under SOP 98-1,
software developed for internal use is capitalized during the development stage
and amortized over its useful life. Software developed for the sale to outside
parties fall under the guidelines of FASB No. 86. Under FASB No. 86, once
technological feasibility has been established, all software production costs
are capitalized and reported at the lower of unamortized cost or net realizable
value. When the product is available for general release to its customers,
amortization will begin. All costs incurred prior to achieving technological
feasibility are expensed as research and development costs. The Company has
incurred approximately $245,000 of costs in the development of a working model.
Those costs have been expensed in a prior period as research and development
costs. The balance of the costs associated with the development of the Web Site
and software were capitalized and will be amortized once the product is
available for general release to its customers and the web site is fully
developed.
NOTE 7 - ACCRUED EXPENSES
Accrued expenses consist of professional and office expenses.
NEW MEDIUM ENTERPRISES INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
(UNAUDITED)
NOTE 8 - COMMITMENTS AND CONTINGENCIES
The Company leases its current location at a monthly rent of $1,200. The lease
expired December 30, 2000, with an automatic twelve-month renewal. The Company
is currently paying $855 on a month to month basis.
The company maintains a $3,600 security deposit with its landlord.
Legal Proceedings
There are no material legal proceedings to which the Company is a party to or
which any of their property is subject.
NOTE 9 - STOCKHOLDERS' EQUITY
The Company's authorized capital stock consists of 100,000,000 shares of common
stock (par value of $.001) and 10,000,000 shares of non-voting preferred stock
(par value $.001).
The Company offered for sale 480 "A" units, 160 "B" units and 100 "C" units of
its securities.
A "A" unit consisted of 10,000 shares of the Company's common stock, and 10,000
Class A warrants. Each Class A warrant entitled the warrant holder to purchase
one share of the Company's common stock at $1.50. The warrants expire July 31,
2002. Each unit sold for $ 5,000.
A "B" unit consisted of 5,000 shares of the Company's common stock, and 7,500
Class B warrants. Each Class B warrant entitled the warrant holder to purchase
one share of the Company's common stock at $1.00. The warrants expire July 31,
2002. Each unit sold for $ 3,750
A "C" unit consisted of 10,000 shares of the Company's common stock, and 10,000
Class D warrants. Each D warrant entitled the warrant holder to purchase one
share of the Company's common stock at $1.25. The warrants expire July 31, 2002.
Each unit sold for $12,500.
On August 20, 1999 the Company sold to various investors and officers 12,620,000
shares of common stock, 3,080,000 Class A warrants (exercisable at $1.50 per
share), 330,000 class B warrants (exercisable at $1.00 per share), 2,580,000 C
warrants exercisable at ($.50 per share). Total consideration received was
$12,670.
On September 2, 1999 the Company sold through a private placement 251 Class A
units for a total gross consideration of $1,255,000 and 52 B units for a total
gross consideration of $195,000.
In January 2000 the Company sold through a private placement 21.3 C units for a
total gross consideration of $266,250.
NEW MEDIUM ENTERPRISES INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2002
(UNAUDITED)
NOTE 9 - STOCKHOLDERS' EQUITY (continued)
The Company incurred costs in regard to the private placements totaling $69,625.
These have been charged against additional paid in capital in the current
period.
The Company issued common stock to various individuals and companies in return
for services rendered. During the period ended June 30, 2000 50,000 common
shares were issued to various suppliers of services. These shares were valued at
$25,000, which approximates the value of the services rendered.
In September 2000 the Company issued an additional 54,000 common shares to
Stratagram .
In August 2000 the Company acquired a majority stake in Broadeo Wireless
Communications Inc., a startup company that is involved in wireless
communications. The Company issued 500,000 B warrants exercisable at $1.00 per
share and 500,000 A warrants exercisable at $1.50 per share. As of Dec. 31, 2001
Broadeo had no operations
In October 2000 the Company purchased 3,750,000 common shares from some of its
original investors for $3,750. The Company issued to these shareholders: 200,000
warrants exercisable at $.75 per share and 300,000 warrants exercisable at $1.00
per share. The 3,750,000 common shares were returned to the Company's treasury
and retired.
No preferred shares have been issued. It is within the discretion of the Board
of Directors to determine the preferences of the preferred stock. The Company
has not yet determined the preferences of the preferred stock
The Company issued 4,444,444 common shares to its president for past and present
services rendered. The shares were valued at the fair market of the services
rendered ($150,000). In addition the company issued 9,000,000 warrants to
various shareholders and officers exercisable at $.045 per share. These options
expire in 2006.
NOTE 10 - INVESTMENTS
On July 15, 2000 the Company formed Intellitian Media Inc., a subsidiary that
will market education and entertainment productions.
NEW MEDIUM ENTERPRISES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
March 31, 2002
At March 31, 2002, the Company's current assets amounted to $771,962, while
current liabilities amounted to $3,989.
PART II OTHER INFORMATION
Item 1 Legal Proceedings - None
Item 2 Changes in Securities - None
Item 3 Defaults Upon Senior Securities - None
Item 4 Submission of Matters to a Vote of Securities Holders - None
Item 5 Other Information - None
Item 6 Exhibits and Reports on Form 8-K - None
SIGNATURES
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.
By: /s/ Ethel Schwartz
-------------------------------------
Ethel Schwartz
President, Treasurer and Director
Date: May 3, 2002