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
SEPTEMBER 30, 2004 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)
1510 51 ST., BROOKLYN, NEW YORK 11219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) ZIP CODE
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (718) 435-5291
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, 98,478,535
(TITLE OF CLASS) (SHARES OUTSTANDING AT November 7, 2004)
PAGE 1
NEW MEDIUM ENTERPRISES, INC.
FORM 10Q-SB
THREE MONTHS ENDED SEPTEMBER 30, 2004
TABLE OF CONTENTS
BALANCE SHEET. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
- ------------------------------------------------------------------------ -
STATEMENT OF CASH FLOWS. . . . . . . . . . . . . . . . . . . . . . . . . 4
- ------------------------------------------------------------------------ -
STATEMENT OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . 5
- ------------------------------------------------------------------------ -
STATEMENT OF STOCKHOLDERS EQUITY . . . . . . . . . . . . . . . . . . . . 6
- ------------------------------------------------------------------------ -
NOTES TO FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . 7
- ------------------------------------------------------------------------ -
ITEM 1 LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . 8
- ------------------------------------------------------------------------ -
ITEM 2 CHANGES IN SECURITIES. . . . . . . . . . . . . . . . . . . . 8
- ------------------------------------------------------------------------ -
ITEM 3 DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . 8
- ------------------------------------------------------------------------ -
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS. 8
- ------------------------------------------------------------------------ -
ITEM 5 OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . 8
- ------------------------------------------------------------------------ -
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . 8
- ------------------------------------------------------------------------ -
ITEM 7 MANAGEMENT DISCUSSION & ANALYSIS:. . . . . . . . . . . . . 9
- ------------------------------------------------------------------------ -
NOTE 8- COMMITMENTS AND CONTINGENCIES . . . . . . . . . . . . . . . . 9
- ------------------------------------------------------------------------ -
PAGE 2
BALANCE SHEET
NEW MEDIUM ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
(UNAUDITED) AS AT SEPTEMBER 30, 2004
ASSETS SEPT. 30, 2004 JUNE 30, 2004
CURRENT ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . $ 778,638 $ 103,930
Investment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,560 8,540
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,467 30,667
------------ ------------
Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 812,665 $ 143,137
Property and equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,040 158,040
less: Accumulated depreciation. . . . . . . . . . . . . . . . . . . . . . . . (39,510) 118,530 (31,608) 126,432
------------ --------
Intellectual property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,139,001 14,877,509
less: Accumulated amortization. . . . . . . . . . . . . . . . . . . . . . . . (630,792) 14,508,209 0 14,877,509
------------ --------
Deferred tax asset. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 0
------------ ------------
Total Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,439,404 $15,147,078
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,859 $ 53,314
Due to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174,000 0
------------ ------------
Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . $ 201,859 $ 53,314
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, Authorized 10,000,000 shares ; none issued ----- -----
Common stock, $.0001 par value , Authorized 200,000,000 &
100,000,000 shares; Issued & outstanding 98,378,535 & 92,147,220 shares . . . 9,839 9,215
Additional paid in capital. . . . . . . . . . . . . . . . . . . . . . . . . . 17,886,135 16,443,185
Accumulated other comprehensive gain (loss) . . . . . . . . . . . . . . . . . (7,638) (11,658)
Deficit accumulated during the development stage. . . . . . . . . . . . . . . (2,650,791) (1,346,978)
------------ ------------
Total Stockholders' Equity. . . . . . . . . . . . . . . . . . . . . . . . . . 15,237,545 15,093,764
------------ ------------
Total Liabilities and Stockholders' Equity. . . . . . . . . . . . . . . . . . $15,439,404 $15,147,078
Page 3
STATEMENT OF CASH FLOWS
NEW MEDIUM ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS (UNAUDITED)
AS AT SEPTEMBER 30, 2004
SEPTEMBER 30 SEPTEMBER 30
2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss. . . . . . . . . . . . . . . . . . . . . ($1,303,813) ($4,263)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation. . . . . . . . . . . . . . . . . . . 638,694 0
Stock issued for services rendered. . . . . . . . 381,074 0
Changes in assets and liabilities:
Accrued expenses. . . . . . . . . . . . . . . . . (25,455) (5,525)
Security deposits . . . . . . . . . . . . . . . . 0 0
Due to shareholders . . . . . . . . . . . . . . . 174,000 0
Prepaid insurance . . . . . . . . . . . . . . . . 9,200 (2,297)
-------------- --------------
Net cash used in operating activities . . . . . . (126,300) (12,085)
CASH FLOWS FROM INVESTING ACTIVITIES
Intellectual property . . . . . . . . . . . . . . (261,492) 0
Change in investments . . . . . . . . . . . . . . 0 58,922
-------------- --------------
Net cash provided ( used) in financing activities (387,792) 58,922
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of shares. . . . . . . . . . . 1,000,000 0
Proceeds from exercise of warrants. . . . . . . . 62,500 0
-------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS . . . . 674,708 46,837
-------------- --------------
Cash and cash equivalents, July 1,. . . . . . . . 103,930 557,894
-------------- --------------
CASH AND CASH EQUIVALENTS, SEPTEMBER 30 , . . . . $ 778,638 $ 604,731
4
STATEMENT OF OPERATIONS
NEW MEDIUM ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS (UNAUDITED)
AS AT SEPTEMBER 30, 2004
SEPT. 30 SEPT. 30
2004 2003
REVENUES. . . . . . . . . . . . . . . . . . . $ 0 $ 0
OPERATING EXPENSES
General and administrative. . . . . . . . . . 649,765 20,091
Depreciation and Amortization . . . . . . . . 638,694 0
Loss on foreign currency. . . . . . . . . . . 17,046 0
------------- ------------
Total operating expenses. . . . . . . . . . . 1,305,505 20,091
------------- ------------
Income (loss) from operations . . . . . . . . (1,305,505) (20,091)
OTHER INCOME
Gain on sale of securities. . . . . . . . . . 0 14,930
Interest and Dividend Income. . . . . . . . . 1,692 898
------------- ------------
Loss before income taxes. . . . . . . . . . . (1,303,813) (4,263)
Income tax benefit. . . . . . . . . . . . . . 0 0
------------- ------------
NET LOSS. . . . . . . . . . . . . . . . . . . ($1,303,813) ($4,263)
LOSS PER COMMON SHARE- Basic and Diluted. . . ($0.01) ($0.00)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 96,332,659 18,429,444
Page 5
STATEMENT OF EQUITY
NEW MEDIUM ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF EQUITY (UNAUDITED)
AS AT SEPTEMBER 30, 2004
ACCUMULATED
RETAINED
ADDITIONAL EARNINGS OTHER
PER SHARE COMMON STOCK PAID-IN (ACCUMULATED COMPREHENSIVE
AMOUNT SHARES AMOUNT CAPITAL DEFICIT) LOSS TOTALS
BALANCES, JULY 1, 2003. 18,429,444 $ 1,843 $ 1,867,402 ($1,190,495) $ 11,519 $ 690,269
ISSUANCE OF SHARES TO
OFFICER FOR
SERVICES RENDERED
OCT. 2003. . . . . . 0.06 1,112,000 111 61,889 62,000
ISSUANCE OF SHARES
FOR PURCHASE OF. . . . 0.20 72,605,776 7,261 14,513,894 14,521,155
INTELLECTUAL PROPERTIES
COMPREHENSIVE LOSS. . . (23,177) (23,177)
NET LOSS FOR YEAR
ENDED JUNE 30, 2004. . (156,483) (156,483)
BALANCES, JUNE 30, 2004 92,147,220 9,215 16,443,185 (1,346,978) (11,658) 15,093,764
WARRANTS EXERCISED. . . $0.25 250,000 25 62,475 62,500
JULY AND AUGUST 2004
ISSUANCE OF SHARES
FOR SERVICES
RENDERED, AUGUST 2004 . 0.30 100,000 10 29,990 30,000
ISSUANCE OF SHARES
FOR SERVICES TO BERENDERED,
AUGUST 2004 . $0.40 875,000 88 349,912 350,000
SALE OF COMMON
STOCK TO INVESTOR . . 0.20 5,000,000 500 999,500 1,000,000
AUGUST 2004
ISSUANCE OF SHARES
FOR SERVICES
RENDERED, SEPTEMBER
2004 $ 0.17 6,315 1 1,073 1,074
COMPREHENSIVE GAIN. . . 4,020 4,020
NET LOSS FOR PERIOD
ENDED SEPT. 30, 2004 . (1,303,813) (1,303,813)
BALANCES, SEPTEMBER
30, 2004 98,378,535 $ 9,838 $ 17,886,135 ($2,650,791) ($7,638) $15,237,545
Page 6
NOTES TO FINANCIAL STATEMENTS
NEW MEDIUM ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
AS AT SEPTEMBER 30, 2004
NEW MEDIUM ENTERPRISES INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - 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 September 30, 2004, the results of operations
for the three months ended September 30, 2004. Operating results for the
three-month period ended September 30, 2004 are not necessarily indicative of
the results that may be expected for the year ending June 30, 2005.The
information contained should be read in conjunction with audited financial
statements as of June 30, 2004
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. As of the September 30, 2004
the Company is considered a development stage company. The Company has acquired
the rights to and is currently developing a new DVD format. As of the June 30,
2004 the Company had generated minimal revenues and is considered a development
stage company. Management is pursuing additional capital through various
methods.
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
those supplies. 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. During July 2004 the Company developed a
working prototype and started amortizing the product over a sixty month life
using the straight-line method .
Page 7
Shareholders Equity
In January 14, 2004 the Company voted to raise the authorized common shares from
100,000,000 to 200,000,000 and changed the par value to $.0001 per share.
In connection with the acquisition the Company issued 72,605,776 shares of its
stock to the shareholders of Multitask and TriGM. These shares were valued at
$14,521,155, which approximated the fair market value of these shares.
Additionally, the Company offered Series A warrant holders the right to lower
the exercise price from $1.50 to $.25 a share in return for assigning six out of
seven warrants to certain parties providing services to the Company. These
warrants were transferred in lieu of compensation for services rendered. A total
of 1,300,000 warrants were lowered to .25 cents exercise price.
On July 18, 2003 the Board of Directors voted to extend the Series A,B,C,D and E
warrants until July 2005.
In July and August 2004 two shareholders exercised 250,000 warrants at .$25 per
share for a total of $62,500. The shareholders paid $62,500 to the Company and
received 250,000 common shares.
In August 2004 the Company issued 100,000 shares to a vendor in return for
current and future services . The shares were valued at $.30 which approximates
the fair market value of the shares at the date of issuance.
In August 2004 an investor purchase 5,000,000 common shares in a private
placement for $1,000,000.
According the acquisition agreements with MultiDisc Ltd and TriGM International,
the Company was obligated to pay certain milestone payment amounting to $87,000
to each upon the raising of capital in excess of $500,000.
In August 2004 the Company entered into a 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
In September 2004 the Company issued 6315 shares to a Consultant in return for
current services rendered. The shares were valued at $.17 which approximates the
fair market value of the shares at the date of issuance.
ITEM 1 LEGAL PROCEEDINGS
There are no legal proceedings to which the company is a party to or
which any of their property is subject.
Page 8
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 -
2. ON July 1, 2004 WE FILED AN 8K REPORT
3. August 9, 2004 WE FILED AN 8K REPOR
ITEM 7 MANAGEMENT DISCUSSION & ANALYSIS:
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations:
We are a development stage company currently engaged in the development of our
proprietary technology, VMD (Versatile MultiLayer Disc), next generation, high
capacity high definition discs & players capable of playing High Definition
content such as movies, sporting events, and other HD applications.
The VMD products and prototypes are being developed by P.G. Engineering S.A,
through a contractual arrangement entered into on January 13, 2004 in
conjunction with our acquisition of the VMD Assets,
PG Engineering Inc. consists of a unique scientific and entrepreneurial team
with many years of experience in optical storage Media development and
specifically multi-layer technology. We have entered into a long term Agreement
with PG Engineering for the development of the prototypes and products. All
intellectual property, patents, equipment, know-how and products developed by
P.G. Engineering S.A. belong without exception to us. The components of VMD are
outsourced at the labs of several European and U.S. locations while we are also
considering other suitable arrangements. The IP of VMD, including all know-how,
was assigned to us and is now owned by us.
The overall management of our Company is carried out from our headquarters in
New York and U.K.
As of September 30, 2004 we have completed the initial first-generation product
prototype of prerecorded 120 mm Red Laser 20GB VMD (Multilayer Video Disc),
providing 180 minutes of High-Definition (1080i) Video Content in full MPEG-2
format. We anticipate that by early 2005 we will achieve six layers yielding
30GB of storage capacity with bit rates up 60 Mbs maximal, capable of playing
High Definition content for both HDTV and Digital Cinema on a single VMD Player.
We are currently planning to conduct a series of road shows across the globe to
demonstrate the VMD products to select groups at various times and locations to
be announced.
The company's plans for 2005-2007 include building cost-effective red laser
VMD-ROM and VMD-R (recordable) systems with up to 50GB storage capacity for HDTV
and Digital Cinema. At the same time the company plans to begin developing Blue
Laser VMD with 200GB capacity on each disc for high-end Digital Cinema and
Video-On-Demand (VOD) applications.
On August 8, 2004, we received a $1,000,000 investment from a single, accredited
Investor against the issuance of 5,000,000 common shares. Shares are subject to
Rule 144. In August we re-established a U.K. office to focus on business
Development. We signed a month to month lease for approximately 1300 British
Pounds per month.
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. As of September 30, 2004 no agreements
have been undertaken to obtain any funding. The warrants are exercisable at
price ranges from $.25 per share to $1.50 per share. The company does not expect
that warrants will be exercised if the prevailing price of the stock at such
time of exercise is below or at the exercise price.
Page 9
NOTE 8- COMMITMENTS AND CONTINGENCIES
The Company has entered into several ongoing consultancy agreements with various
individuals and companies. Monthly payments are approximately $10,000 per month
In August we re-established a U.K. office to focus on business Development. We
signed a month to month lease for approximately 1300 British Pounds.per month
AT September 30, 2004, THE COMPANY'S CURRENT ASSETS AMOUNTED TO $812,665 WHILE
CURRENT LIABILITIES AMOUNTED TO $27,859.00.
SIGNATURE
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.
November 8, 2004 NEW MEDIUM ENTERPRISES, INC.
BY: /S/ ETHEL SCHWARTZ
CEO, President, & Director
PAGE 10