<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
December 31, 2005 333-51880
NEW MEDIUM ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 11-3502174
(STATE OR OTHER JURISDICTION OF I.R.S. EMPLOYER IDENTIFICATION
NO.)
INCORPORATION OR ORGANIZATION)
MAHESH JAYANARAYAN, CEO
195 The Vale
London W3 7QS
Tel: 011 44 208 746 2018
Fax: 011 44 208 749-8025
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (011 44 870 224 6868)
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 $.0001 PAR VALUE, 147,016,546
(TITLE OF CLASS) (SHARES OUTSTANDING AS OF February 15, 2006
PAGE 1
NEW MEDIUM ENTERPRISES, INC.
FORM 10Q-SB
THREE MONTHS ENDED December 31, 2006
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . . 3
- - --------------------------------------------------------------------- --
ITEM 1. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 3
- - --------------------------------------------------------------------- --
BALANCE SHEET. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
- - --------------------------------------------------------------------- --
STATEMENT OF CASH FLOWS. . . . . . . . . . . . . . . . . . . . . . 4
- - --------------------------------------------------------------------- --
STATEMENT OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . 5
- - --------------------------------------------------------------------- --
STATEMENT OF STOCKHOLDER'S EQUITY. . . . . . . . . . . . . . . . . 6
- - --------------------------------------------------------------------- --
ACCOUNTANT'S LETTER & NOTES TO FINANCIAL STATEMENTS. . . . . . . . 7
- - --------------------------------------------------------------------- --
ITEM 2 MANAGEMENT DISCUSSION & ANALYSIS . . . . . . . . . . . . . . . 12
- - --------------------------------------------------------------------- --
LIQUIDITY & CAPITAL RESOURCES. . . . . . . . . . . . . . . . . . . 16
- - --------------------------------------------------------------------- --
ITEM 3 CONTROLS & PROCEDURES. . . . . . . . . . . . . . . . . . . . . 17
- - --------------------------------------------------------------------- --
PART II OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . 18
- - --------------------------------------------------------------------- --
1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . 18
- - --------------------------------------------------------------------- --
2. CHANGES IN SECURITIES. . . . . . . . . . . . . . . . . . . . 18
- - --------------------------------------------------------------------- --
3. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . 18
- - --------------------------------------------------------------------- --
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS. 18
- - --------------------------------------------------------------------- --
PART III OTHER . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
- - --------------------------------------------------------------------- --
CERTAIN RELATIONSHIPS & RELATED PARTY TRANSACTIONS. . . . . . . . 18
- - --------------------------------------------------------------------- --
SUBSEQUENT EVENTS . . . . . . . . . . . . . . . . . . . . . . . . 20
- - --------------------------------------------------------------------- --
EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . 22
- - --------------------------------------------------------------------- --
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
- - --------------------------------------------------------------------- --
NEW MEDIUM ENTERPRISES, INC.
(A development stage company)
CONSOLIDATED BALANCE SHEET (UNAUDITED)
AT DECEMBER 31, 2005
ASSETS
- -----------
DECEMBER 31,2005 DECEMBER 31,2004
Current Assets
Cash and Cash Equivalents $532,231 $450,229
Investment - 20,198
Prepaid Expenses 21,281 12,722
Rental Deposits 28,056 -
------------------ -------------------
TOTAL CURRENT ASSETS 581,570 483,149
------------------- -------------------
Property and Equipment (net of depreciation
of $84,399 and $47,412 respectively) -Check 127,742 110,628
------------------- -------------------
Intellectual Property 15,188,360 13,751,259
------------------- -------------------
TOTAL OTHER ASSETS 15,316,102 13,861,887
------------------- -------------------
Total Assets $15,897,672 $14,345,036
=================== ===================
CURRENT LIABILITIES
Accrued Expenses $58,701 $28,314
------------------- -------------------
Due to Shareholders $- $174,000
------------------- -------------------
Total Current Liabilities 58,701 202,314
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred Stock $.0001 par value, Authorized
10,000,000 shares;
none issued
Common Stock, $.0001 par value,
Authorized 200,000,000
& 100,000,000 shares, Issued and outstanding
147,016,546 & 98,786,750 shares (to change) 224,315 9,879
Additional paid in capital 21,563,254 17,986,440
Accumulated other comprehensive gain (loss) (26,142) (3,318)
Deficit accumulated during
the development stage (5,922,456) (3,850,279)
Total Stockholders' Equity 15,838,971 14,142,722
------------------- -------------------
Total Liabilities & Stockholders' Equity $15,897,672 $14,345,036
=================== ===================
The accompanying notes are an integral part of the financial statements
<
New Medium Enterprises, Inc.
(A development stage company)
------------------------------
STATEMENT OF CASH FLOWS
------------------------------
FOR THE THREE MONTHS ENDED
------------------------------
(UNAUDITED)
------------------------------
DECEMBER 31, DECEMBER 31,
------------------------------ -------------
2,005 2004
------------------------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES
- -----------------------------------------------
Net loss -$791,160 -$1,199,488
- ----------------------------------------------- ------------------------------ -------------
Adjustments to reconcile net loss to net
- -----------------------------------------------
cash provided by operating activities:
- -----------------------------------------------
Depreciation and amortization 11,865 764,852
- ----------------------------------------------- ------------------------------ -------------
Issue of shares for services rendered 10,000
- ----------------------------------------------- ------------------------------
Changes in assets and liabilities:
- -----------------------------------------------
Change in current assets -2 5,882
- ----------------------------------------------- ------------------------------ -------------
Change in security deposits -9,971 0
- ----------------------------------------------- ------------------------------ -------------
Change in current liabilities 12,607 0
- ----------------------------------------------- ------------------------------ -------------
Net cash used in operating activities -766,661 -428,754
- ----------------------------------------------- ------------------------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES
- -----------------------------------------------
Purchase of fixed assets -34,493 0
- ----------------------------------------------- ------------------------------ -------------
Exchange gain on shares -13,496 0
- ----------------------------------------------- ------------------------------ -------------
Investment in intellectual property -4,500 0
- ----------------------------------------------- ------------------------------ -------------
Net cash provided from investing
activities -52,489 0
- ----------------------------------------------- ------------------------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
- -----------------------------------------------
Issuance of shares for services
rendered 0 2,845
- ----------------------------------------------- ------------------------------ -------------
Proceeds from sale of shares 860,000 97,500
- ----------------------------------------------- ------------------------------ -------------
Net cash provided from financing
activities 860,000 100,345
- ----------------------------------------------- ------------------------------ -------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 40,850 -328,409
- ----------------------------------------------- ------------------------------ -------------
Cash and cash equivalents, October 1, 491,381 778,638
- ----------------------------------------------- ------------------------------ -------------
CASH AND CASH EQUIVALENTS,
DECEMBER 31, $ 532,231 $ 450,229
- ----------------------------------------------- ------------------------------ -------------
Supplemental disclosures
- -----------------------------------------------
Non cash investing and financing activities
- -----------------------------------------------
Issuance of common stock in exchange
for services $ 10,000 $ 4,387
- ----------------------------------------------- ------------------------------ -------------
The accompanying notes are an integral part of the financial statements
NEW MEDIUM ENTERPISES, INC.
- ------------------------------------------------
(A development stage company)
- ------------------------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
- ------------------------------------------------
FOR THE THREE MONTHS ENDED
- ------------------------------------------------
DECEMBER 31, 2005 DECEMBER 31, 2004
------------------- -------------------
Revenues $ 0 $ 0
- ------------------------------------------------ ------------------- -------------------
Operating Expenses
- ------------------------------------------------
General and Administrative 1,816,966 1,208,583
- ------------------------------------------------ ------------------- -------------------
Research and Development Costs 148,535 0
- ------------------------------------------------ ------------------- -------------------
Officer's Compensation 501,902 0
- ------------------------------------------------ ------------------- -------------------
Loss on Foreign Currency 16,210 0
- ------------------------------------------------ ------------------- -------------------
Depreciation 20,836 0
- ------------------------------------------------ ------------------- -------------------
Total Operating Expenses 2,504,449 1,208,583
- ------------------------------------------------ ------------------- -------------------
Income (Loss) From Operations (2,504,449) (1,208,583)
- ------------------------------------------------ ------------------- -------------------
Other Income
- ------------------------------------------------
Investment Income 2,705 9,095
- ------------------------------------------------ ------------------- -------------------
Loss Before Income Taxes (2,501,744) (1,199,488)
- ------------------------------------------------ ------------------- -------------------
Income Tax 0 0
- ------------------------------------------------ ------------------- -------------------
Net Loss (2,501,744) (1,199,488)
- ------------------------------------------------ ------------------- -------------------
Loss Per Common Share - Basic and Diluted ($0.01) ($0.01)
- ------------------------------------------------ ------------------- -------------------
Weighted Average Number of Shares Outstanding 142,416,546 98,582,643
- ------------------------------------------------ =================== ===================
The accompanying notes are an integral part of the financial statements
NEW MEDIUM ENTERPRISES, INC.
----------------------------
(A DEVELOPMENT STAGE COMPANY)
-----------------------------
STATEMENT OF STOCKHOLDER'S EQUITY
---------------------------------
FOR THE PERIOD JULY1, 2003 - December 31, 2005
----------------------------------------------
Accum
Retained ulated
------------ --------
Additional Earnings Other
----------- ------------ --------
(Accum Compre
Per Share Common Stock Paid-in ulated hensive
---------- ----------- ------- ----------- ------------ --------
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
- ---------------------- ---------- ----------- ------- ----------- -----------
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 be
- ----------------------
rendered, 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 0 1,074 1,074
- ---------------------- ---------- ----------- ------- ----------- -----------
Warrants exercised $ 0.25 390,000 39 97,461 97,500
- ---------------------- ---------- ----------- ------- ----------- -----------
October, November,
and December 2004
- ----------------------
Issuance of shares
for services
- ----------------------
rendered, November
December 2004 $ 0.24 18,215 2 4,385 4,387
- ---------------------- ---------- ----------- ------- ----------- -----------
Issuance of shares
for services
- ----------------------
rendered, January
2004 intil May 2005 0.045 1,500,000 150 67,350 67,500
- ---------------------- ---------- ----------- ------- ----------- -----------
Sale of common stock
to investor May 2005 0.02 10,000,000 1,000 199,000 200,000
- ---------------------- ---------- ----------- ------- ----------- -----------
Conversion Of
Outstanding Debt
June 2005 0.05 3,480,000 348 173,652 174,000
- ---------------------- ---------- ----------- ------- ----------- -----------
Sale of common
stock to investor May
2005
- ----------------------
Stocks issued August
2005 0.0689 5,804,594 580 399,420 400,000
- ---------------------- ---------- ----------- ------- ----------- -----------
Net loss for year
ended June 30, 2005 -2,073,734 -2,073,734
- ---------------------- ------------ -----------
Comprehensive loss -4,322 -4,322
- ---------------------- -------- -----------
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-Acquistion
- ----------------------
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
- ----------------------
Sepember 20, 2005
- ----------------------
0.15 5,000,000 500 749,500 750,000
---------- ----------- ------- ----------- -----------
Net loss for three
months ended
- ----------------------
September 30, 2005 -1,710,584 -1,710,584
- ---------------------- ------------ -----------
Comprehensive loss -9,469 -9,469
- ---------------------- -------- -----------
138,436,546 13,844 20,916,528 -5,131,296 -25,449 15,773,627
----------- ------- ----------- ------------ -------- -----------
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
- ---------------------- ---------- ----------- ------- ----------- -----------
Net Loss for the
three months ended
- ----------------------
December 31, 2005 -791,160 -791,160
- ---------------------- ------------ -----------
Comprehensive Loss -13,495 -13,495
- ---------------------- -------- -----------
147,016,546 14,702 21,785,670 -5,922,456 -38,944 15,838,972
----------- ------- ----------- ------------ -------- -----------
- -
Page 6
MORGENSTERN & COMPANY, CPA, P.C
CERTIFIED PUBLIC ACCOUNTANTS
40Exchange 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, 2005 and the consolidated
statements of operations for the three-month ended DECEMBER 31, 2005 and
consolidated statements of cash flows and shareholders equity for the
three-month 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,
2005 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 21, 2005 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, 2005, 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.
/s/ Morgenstern & Company, CPA, P.C Certified Public Accountants
New York, NY February 15, , 2006
NEW MEDIUM ENTERPRISES, INC.
(A development stage company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
NOTE 1 - FORMATION 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 expenditures 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. It is expected to have a full industrial prototype by
March 2006. As of the June 30, 2005 the Company had generated minimal
revenues and is considered a development stage company. Management is
pursuing additional capital through various methods.
NOTE 2 - SUMMARY 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).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 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.
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 recorded at cost and depreciated or
amortized over the estimated useful lives of the assets (three to seven
years) using the straight-line depreciation method.
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 31,2005 DECEMBER 31, 2004
$15,188,360 $13,751,259
Components of finite-lived Intangible assets acquired during fiscal
years ended
DECEMBER 31,2005 DECEMBER 31, 2004 $ 4,500 $ 0
The estimated future amortization expense related to intangible assets
as of DECEMBER 31, 2005 is as follows:
2006 1,518,386 2007 3,036,772 2008 3,036,772 2009 3,036,772 2010
3,036,772
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, 2005 and 2004 there were no revenues.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
STOCK - BASED COMPENSATION
As permitted by Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" ( SFAS 123). The Company
continues to apply the accounting rules of APB No. 25. APB No. 25 measures
compensation expenses on the first date at which both numbers of share and
exercise price are known. Under the Company's plans this would typically be
the grant date. To the extent that the exercise price equals or exceeds the
market value on the date of the grant, no compensation expenses are
reorganized under this accounting treatment.
NOTE 3 - LIQUIDITY AND PROFITABILITY
As reflected in the accompanying financial statements, the Company
incurred losses for the current and prior periods and expects to incur a
loss in the upcoming fiscal period. Based upon the cash utilization rate
and in order to maintain the Company for the following year, management
will have to raise additional funds through equity and or debt financing.
It is management's opinion that it can raise the needed capital.
NOTE 4 - INVESTMENT 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.
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.
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 period. A valuation allowance is deferred tax asset will not be
realized. As of June 30, 2005 the Company had a Federal and State tax net
operating loss of approximately $3,222,000, 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.
NEW MEDIUM ENTERPRISES, INC. (A development stage company) NOTES TO
FINANCIAL STATEMENTS DECEMBER 31, 2005
NOTE 6 - COMMITMENTS AND CONTINGENCIES
In connection with the acquisitions 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 approximated the fair market value
of these shares. Additionally, the Company offered Series A warrant holders
the right to lower the exercise price for $1.50 to $.25 a share in return
for assigning six out of seven warrants to certain parties providing
services to the Company in lieu of compensation. 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.
According the acquisition agreement with MultiDisk Ltd and TriGM
International, the Company was obligated to pay certain milestone payments
amounting to $87,000 each upon the raising of capital in excess of
$500,000. Payment total $174,000. In August 2004 the Company entered into
consulting agreements 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 November 8, 2005 The Company entered into an agreement to merge our
HD technology with Beijing E-World's EVD standard by way of an equity swap.
In the proposed transaction New Medium Enterprises (NME) will grant 40.86%
of its company's equity and invest $8.5 million in return for 69.09% of
E-World. The companies have both been working in the higher capacity
optical storage area and share common goals. The share swap will strengthen
both parties' technological aspirations and goals and accelerate the launch
of a number of red laser HD devices in 2006. The combined group will rename
itself NME-World and will seek to re-list on the NASDAQ in early 2006 and
seek to raise US$10 million for a global launch of its combined products.
QUERY - is this still correct??
On conclusion of the acquisition, NME will pay a brokerage fee to BITE
Investment as an M&A consultant of 30,123,240 Common Shares of NME.
The Company has created a special purpose financing vehicle, New
Medium Enterprises UK Limited (NME UK), trading as New Medium Enterprises
Capital ("NMEC"). NME UK is a wholly owned subsidiary of NME. It is
anticipated that NMEC will fund the sales growth of NME, its parent entity,
in 2006. In addition, NMEC may enter into financing arrangements for other
joint ventures and acquisitions. It is anticipated that NMEC will raise
funds through short term and medium term financing arrangements.
As its initial financing transaction, on 14 December 2005 NMEC placed
a 120-day short term debenture note with a private equity fund, Tribal
SARL, in the principal amount of $1.1 million. These funds will be
exclusively used for the purpose of trade finance by or through E-World.
This initial financing transaction also constitutes part of NME's
investment in E-World pursuant to the terms of the Acquisition Agreement.
BITE Investments (an associated company of Tribal SARL) will receive a
right to participate as a strategic partner in any new or special purpose
vehicle to be rewarded a minimum of 7.5% of the expanded share capital of
NME following an IPO. A placement fee will be payable to BITE Investments
of 7.5% ($82,500) and a transaction fee will be payable to Tribal SARL of
2.5% ($27,500).
As part of this transaction, NME, as the parent entity, will provide a
limited guarantee collateralized, in part, by the securities to be issued
by NME at closing pursuant to the Acquisition Agreement.
Additional material terms relating to this initial short term
financing transaction involving NMEC are as follows:
1) Loan Amount : $1,100,000 Short Term Note .
2) The term of such Note will be for a period of 120 days from
December 16 2005 but at the 31st of December 2005, no amounts have been
loaned.
3) Interest will be payable at maturity and accrue at the interest
rate of 15% ( or 1.25 % for every 30 days)
4) The parent entity, will issue warrants in respect of its common
shares equal to 100 % of the subscribed amount and will be exercisable at
any time within 5 years for issue at 25% discount to the average trading
price during any 30-day period
5) The parent entity, will guaranty payment under this Note. This
guaranty will be specific to the collateral furnished in connection with
this facility, and will be limited to the securities pledged as collateral,
held in escrow and dedicated for the purpose of this financing transaction.
Collateral :-
The collateral security to be furnished in connection with this
initial financing transaction includes the following:
1.Approximately 98 million NME common shares to be held in escrow and
which will be issued at closing under the Acquisition Agreement.
2.Additional 15 million common shares of NME to be pledged as
collateral security and held in escrow.
3.Guaranty of payment from NME, as the parent entity.
Purpose: The proceeds from the Note will be used exclusively for trade
finance in connection with E-World
The Company now rents office space from an external landlord on a
month-to-month basis. Rent for the three months ended DECEMBER 31, 2005 was
$36,654, which has increased significantly from last quarter as the company
also contracted for additional space on the upper floor.
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 also paid consulting fees to various related parties.
During the three months ending DECEMBER 31, 2005 these payments totaled
$46,970 in cash and a former CEO, Ethel Schwartz was paid $15,500 for her
assistance in filing the annual/quarterly and 8k filings and consultancy.
NOTE 8 -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.
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 approximated the fair market value
of these shares. Additionally, the Company offered Series A warrant holders
the right to lower the exercise price for $1.50 to $.25 a share in return
for assigning six out of seven warrants to certain parties involved in the
abovementioned acquisition. These warrants were transferred in lieu of
compensation for services rendered. A total of 1,300,000 warrants were
transferred.
As at 30 September 2005, 138,436,546 shares of common stock had been
issued, giving a valuation of $15,773,627. During the period to 31 December
2005, 8,580,000 shares of common stock were issued in return for
investments received from various accredited investors and officers for
services rendered (for analysis, see notes under Liquidity and resources).
The total number of shares issued as at 31 December, 2005, is 147,016,546
with a valuation of $15,838,972.
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 unissued preferred shares by fixing or altering from time to time any
of the foregoing rights, privileges and qualifications.
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 hereinabove provided or as fixed
herein.
NOTE 9 - SUBSEQUENT EVENTS
On January 27 2006, in accordance to the By-Laws the entire board
resigned and the following were re-elected: Rupert Stow, Mahesh
Jayanarayan, Eugene Levich, Barry Williamson and Irene Kuan. Rupert Stow
also retired as the current chairman as the operations are being carried
out in the UK, and the financial plans for fund raising are to be carried
out in the UK, it was resolved that Philip David be appointed a Director.
Previously Rahul Diddi resigned as CFO, but had remained as a Director. As
the main operations and management of the company is being handled in the
United Kingdom, Rahul Diddi, declined to be re-elected to the board.
The Company also proposes to attend the exhibition at CeBIT in
Hanover, Germany in March 2006. New Medium Enterprises and E-World will
unveil the world's first and only true High Definition solution utilizing
today's Red Laser Technology and its industrial infrastructure. The VMD/EVD
platform, the convergence of their proprietary formats and technologies,
allows for High Definition content playback using its multilayered discs
and backward compatible players. Bundled with High Definition LCD screens,
this is the only high-end offering to the discerning consumer at current
DVD market prices.
CeBIT is the world's largest trade fair showcasing digital IT and
telecommunication solutions for home and work environments, offering an
international platform for comparing notes on current industry trends,
networking, and product presentations, and with over 6,200 exhibitors from
around 70 countries. This year CeBIT 2006 will be held under the "Digital
Solutions for Work & Life" banner. In a show of support, at the same time,
EROS, a leading Bollywood (Indian) film distributor will release 5 titles
(discs) in HD on VMD that is entirely compatible to be read on our VMD/EVD
players.
In the month of January 2006, the Board of Directors voted to lower
the exercise price on the warrants for the Series C warrants to $0.10 cents
per share.
ITEM 2 MANAGEMENT'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 supplies, 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, LaDIS 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, LaDis and Silicon
Valley Plc belong to us. The overall management of our Company is carried
out from our headquarters in the UK. V-Tech will became a subsidiary of
Silicon Valley Plc at the end of February 2006.
In the fourth quarter 2005, the company began to gear up for
production of VMD discs.. 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's management plans to pursue an active policy towards
growth and the creation of revenue through means of strategic alliances,
joint ventures and acquisitions within the realm of content providers,
consumer electronics, manufactures, replicators, drive manufacturing OEMs
and mass retailers.
Beijing E-World, China ----------------------
On June 25, 2005, New Medium Enterprises, Inc. and Beijing E-World
Technology Co Ltd executed a Memorandum of Intent to form a joint R&D
program for the production of a disc player which will incorporate/combine
EVD and VMD technologies.
NME Inc and Beijing E-World has finalised a definitive agreement for a
commercial partnership to exploit NME's VMD technology. The objective is
for Beijing E-World to adopt VMD for the Chinese market and upgrade their
standard EVD player to read VMD discs.
Beijing E-World is one of China's largest optical disc and consumer
electronics design companies. They own EVD, a technology that currently
includes a lower quality High Definition optical disc and player format
validated by the Chinese Government for the Chinese market. Beijing
E-World's EVD and other technologies are 'red laser' based as they see it
as the current market standard like with CDs and DVDs.
Beijing E-World is currently seeking expansion funding and has
aspirations to trade outside of mainland China.
We are seeking growth funding and are keen to expand in to Far Eastern
and other emerging DVD markets.
Beijing E-World provides its customers with one-stop optical disc
based products and services such as software development, hardware design
and system integration. The Company's current main products are special EVD
boards developed in conjunction with US companies such as LSI Logic (LSI),
ST Microelectronic, and Sigma Designs.
Beijing E-World owns EVD key technologies and the EVD trademark. The
company has applied for 29 items technology patents related to EVD of which
9 items have already acquired authorization and 20 are pending. An
additional 40 items are being prepared for application.
The company's aim is to make high definition multimedia entertainment
possible and affordable while allowing the partners upstream (content
owners) and downstream (player manufacturers and content distributors) to
maintain good profit margins. By using the current generation red lasers
and current technology disc media, Beijing E-World recognized that red
laser based disc formats were currently the only consumer affordable format
able to make full use of High Definition Capable Televisions. Most Plasma
Displays and LCD TV's as well as some Projection TV's and CRT's. This makes
the EVD, and by agreement, VMD formats very attractive and cost effective
products for any markets where there is a high penetration or growing sales
of HD capable TV.
Foreign control of core intellectual property has been a major problem
restricting the development of the DVD industry of China for many years.
Foreign companies mastered and control the kernel technology, and Chinese
enterprises have been restricted to the role of only being the factories.
The country's industry has hoped to develop its own kernel technology and
set up new industrial standards to control its own fate. EVD became that
solution, licensed for production in February 2005.
The business combination would allow Beijing to expand overseas whilst
enhancing it's EVD red laser standard with VMD's compatible technology,
gaining much greater capacity, NME's western world momentum and potential
markets.
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 for 2006 subject to the positive result of the aforementioned R&D
collaboration.
The parties are working towards establishing a joint international
Marketing company operating from a jurisdiction outside of China in the UK,
to market VMD and EVD products, including the players, compression
technologies, audio systems, VMDs and the HD digital cinema systems.
Additionally, Beijing E-World will also allow NME to act as a
marketing channel for Beijing E-World products in other world markets.
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 for 2006. 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) for Christmas
2006, with a mutually agreed replicator. Eros has taken a 5% stake in our
Company.
Global MediaCast
NME proposes to enter into a manufacturing and distribution agreement
to licence Global MediaCast Ltd to manufacture and distribute
VMD-incorporated devices for the commercial market. Global MediaCast will
pay NME a royalty to be agreed by both companies by device basis.
On October 2005 the company raised the salaries for the CEO and
Financial Consultant as follows: - CEO from $100,000 to $120,000 -
Financial Consultant from $72,000 to $80,000.
On November 2005 the company raised the salary for the COO from
$50,000 to $60,000.
LIQUIDITY AND CAPITAL RESOURCES:
On DECEMBER 31, 2005, we had available in cash the sum of $532,231 and
accrued expenses of $58,701.
Further to our raised funds through warrant exercise and private
equity transactions from various investors during the period to 31
December, 2005, in this quarter , we received:-
1. On October 13, 2005 the company received $300,000 from an
accredited investor, and the company issued 3,000,000 common shares at
$0.10cents per share.
2. On November 14, 2005 the company received $150,000 from an
accredited investor, and the company issued 1,500,000 common shares at
$0.10cents per share.
3. On December 14, 2005 the company received $150,000 from an
accredited investor, and the company will issue 1,500,000 common shares at
$0.10 cents per share
4. On December 15, 2005 the company received $50,000 from an
accredited investor, and the company will issue 500,000 common shares at
$0.10 cents per share
5. On December 15, 2005 the company received $60,000 from an
accredited investor, and the company will issue 480,000 common shares at
$0.125 cents per share
6. On December 28, 2005 the company received $150,000 from an
accredited investor, and the company will issue 1,500,000 common shares at
$0.10 cents per share
ADDITIONAL EQUITY ISSUED:
On October 17, 2005 the company issued 100,000 common shares at
$0.10cents per share to an officer for services rendered.
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.
ITEM 3: CONTROLS 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
Operating 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 Operating 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, 2005, 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 II OTHER INFORMATION
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.
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
PART III OTHER
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 43,409,429 common
shares equal to approximately 29.53% 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
5,822,279 shares of the Company's common stock. May Ltd. and Southwark
Properties Limited, together own an aggregate of approximately 33.49% 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 100% of Visson Technology and 100% of VTech, a key
R&D facility of the company. Towards the end of February 2006, the shares
in V-Tech will be sold to Silicon Valley Plc for approximately $44,000.
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.
Global MediaCast is a wholly owned subsidiary of Silicon Valley Plc.
Page 18
1. During the annual period ending December 31, 2005 the company paid
$79,121 to VTech, a primary R & D Facility which pays 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 6,098 British Pounds.
During the Period ending December 31, 2005, NME reimbursed to OneSoft
Retail and Business Solutions, a total of $29,686 for use of its office
staff.
3. During the quarter ending December 31, 2005, 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
2005 quarter, the company paid $7,500 to Turtle Technologies (India) Pvt
Ltd.
4. During the quarter ending December 31, 2005, the company paid
$6,555 to Global MediaCast Ltd., a wholly owned subsidiary of Silicon
Valley Plc, for use of its office staff.
5. During the quarter to December 31 2005, 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 has received an aggregate of $20,000 in
consulting fees. He will receive an ongoing monthly fee of $6,666.66.
MAHESH JAYANARAYAN, CEO- RELATED PARTY TRANSACTIONS:
6. 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. Additionally during the quarter
ending 30 September 2005, Mr. Jayanarayan received $12,000 for termination
of his consulting contract which ended upon his appointment of CEO.
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 is also a Director of Triband Global Ltd, Siptalk
Ltd, Global MediaCast Ltd, Business Plans Ltd and New Medium Enterprises UK
Ltd. During the quarter ending 30 September 2005, we paid $11,752 and
$7,688 to Triband Global for office rent and expenses. Additionally we paid
$7,500 to Turtle Technologies (Onesoft) for I.T. during the quarter ending
30 September 2005.
Page 19
Silicon Valley Plc is a public limited company with over 2600
shareholders. It is a I.T. service provider and specializes in Business
related software and Device management software. Global MediaCast, 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
EXHIBITS & REPORTS ON FORM 8-K INCORPORATED BY REFERENCE:
8K Report filed 9-1 Issuance of shares to principals and consultant,
options to May Ltd., election of Eugene Levich as Chief Technology Officer.
8K Report filed 10-14 as of 9-15 issuance of shares in exchange of
fund received and receivable.
8K REPORT FILED 9-2 ELECTION OF RAHUL DIDI AS CFO
AT DECEMBER 31, 2005, THE COMPANY'S CURRENT ASSETS AMOUNTED TO
$581,570 WHILE CURRENT LIABILITIES AMOUNTED TO $58,701.
Page 22
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.
FEBRUARY 15, 2006 NEW MEDIUM ENTERPRISES, INC.
BY: /S/ MAHESH JAYARANAYAN ----------------------- PRESIDENT, CHIEF
EXECUTIVE OFFICER
T