As filed with the Securities and Exchange Commission on March 30, 2001
Registration No. ________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[x] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2000.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
------------------------------------------------
Commission File Number 0-29195
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(Name of Small Business Issuer in Its Charter)
Colorado (7310) 84-1463284
--------------------------------------------------------------------------------
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or Classification Code Number) Identification No.)
organization)
101 Philippe Parkway, Suite 300
Safety Harbor, Florida 34695
(727) 797-6664
--------------
(Address and Telephone Number of Principal Executive Offices and
Principal Place of Business)
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
John D. Thatch, President
New Millennium Media International, Inc.
101 Philippe Parkway, Suite 300
Safety Harbor, Florida 34695
(Name, Address and Telephone Number of Agent for Service)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock
The issuer (1) filed all reports required to be filed by Section 13 or 15(d) of
the Exchange Act during the past 12 months (or for such 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. [X] Yes [ ] No
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
The issuer's revenues for its most recent fiscal year ended December 31, 2000
were $154,400.
The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which common equity was
sold, or the average bid and asked price of such common equity, as of March 15,
2001 was $8,865,263 (calculated by excluding restricted shares, which includes
shares owned beneficially by affiliates, directors and officers, 14,434,800
shares excluded). See Item 11. The total number of shares of issuer's common
equity outstanding as of March 15, 2001 was 27,099,462 shares.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of March 15, 2001, the registrant
had 27,099,462 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents are incorporated by reference into the following parts
of this Form 10-KSB: certain information required in Part I of this Form 10-KSB
is incorporated from the issuer's Registration Statement for Small Business
Issuers, filed September 13, 2000 and certain information required in Parts I
and II of this Form 10-KSB is incorporated from its Definitive Proxy Statement,
filed June 29, 2000.
Transitional Small Business Disclosure Format (Check one): Yes No X
--- ---
PART I
Item 1. Description of Business.
Brief History
New Millennium Media International, Inc. is a Colorado corporation organized on
April 21, 1998. NMMI's principal place of business is located at 101 Philippe
Parkway, Suite 300, Safety Harbor, Florida 34695. NMMI is the successor to
Progressive Mailer Corp. (`PMC"), a corporation organized in Florida on February
5, l997. In March 1997 and April 1998, PMC conducted offerings of its common
stock pursuant to the exemption from registration afforded by Rule 504 of
Regulation D under the Securities Act of l933, as amended. On November 3, l997,
PMC received clearance from the NASD to have its common stock listed on the OTC
Bulletin Board.
In February, l998, PMC's sole officer and director resigned and sold all of her
share ownership in PMC, which represented 95% of the issued and outstanding
shares of PMC, to Troy Lowrie who as elected President and Director of PMC. The
principal offices of PMC were relocated to Denver, Colorado.
Effective, April 8, l998 PMC entered into an Asset Purchase Agreement with LuFam
Technologies, Inc, a California corporation, in exchange for the issuance of
shares of PMC's common stock to LuFam. Pursuant to the terms of the Asset
Purchase Agreement, PMC acquired distribution rights to the
IllumiSign-EyeCatcher display system, a special advertising display machine.
NMMI currently markets and sells advertising space on these machines.
Effective April 30, l998, PMC was merged into NMMI and the separate existence of
PMC terminated pursuant to the merger agreement. In connection with the merger,
each share of PMC outstanding on April 30, l998 was exchanged for a like number
of shares of New Millennium.
August 31, 1999 NMMI entered into an Amended and Restated Agreement and Plan of
Merger among NMMI, New Millennium Media, Inc., a wholly owned subsidiary of NMMI
and Unergi, Inc. NMMI acquired all of the issued shares of stock of Unergi in
exchange for 16,566,667 shares of NMMI common stock.
New Millennium's common stock is traded on the Nasdaq OTC Bulletin Board under
the symbol NMMI.
Business Overview
NMMI provides two types of visual advertising: The Illumisign-Eyecatcher movable
display boards and LED display boards. NMMI retains ownership of both types of
the machines and sell the advertising space on a monthly basis.
NMMI has the exclusive United States manufacture and distribution license from
the patent owner for the Illumisign EyeCatcher display boards. This board is
steel incased, front lighted and displays poster type ads. These mechanical
devises come in various sizes ranging from 11 inches by 17 inches to 4 feet by 6
feet. Each machine is capable of rotating up to 24 posters at preprogrammed
intervals from 3 seconds to one hour. Because the poster material is critical to
the functionality as well as the longevity of the poster, it is necessary for
the advertisers to rely on our graphic arts department to develop and supply the
necessary posters. These Mechanical Eyecatcher movable displays are then placed
in various sites in stores, shopping malls, movie theaters and anywhere else
where indoor poster type advertising is feasible. NMMI has registered the
trademark, "Illumisign-Eyecatcher" for electric sign products with the United
States Department of Commerce, Patent and Trademark Office.
The LED display boards are generally placed out doors either freestanding or
affixed onto the sides of buildings or located in athletic stadiums. The LED
boards range in size from 8 feet by 10 feet to 20 feet by 30 feet and even
larger in custom designs. They are capable of displaying a near infinite number
of either stationary or motion images. Because the images need to be programmed
into the LED boards, it is necessary that our graphic arts department be
involved in both the design and set up of the intended displays.
NMMI has a strategic relationship with E-Vision LED, Inc., a U.S. based company
whose affiliates manufacture these high quality LED units. E-Vision will sell
the LED boards to NMMI
at cost and will share in the revenues that the LED boards produce. This allows
NMMI to procure the highest quality LED display boards at a greatly reduced
cost. This business arrangement is designed to enable NMMI to deploy
approximately 2 1/2 times the number of boards in a short period of time.
Because these LED boards can run any commercial format on any sized board, we
feel that NMMI has a strong competitive advantage over other display boards for
which the visual display must be reformatted. Formatting often takes weeks.
E-Vision LED displays will run any format on any size board with consistent
color quality and clarity. These LED boards have the potential to display
countless images in full color both static and full motion. Color quality and
clarity are very important to national advertisers who want consistency of
colors on all boards. E-Vision will assist NMMI with training and support from
the first board and with ongoing assistance in all aspects of programming,
technical and software support. As a strategic partner, E-Vision and its
affiliates will supply NMMI, free of charge, software upgrades as they become
available.
In relation to these two types of display media, NMMI is capable of providing
advertisers with visual communications and media services in both indoor and
outdoor environments. We offer a comprehensive range of visual movable board
solutions designed to improve clients' advertising needs and processes including
professional services such as strategic site location, consulting and analysis
as well as poster design and development. This enables us to locate boards and
sell advertising on a national level that will benefit NMMI in placing boards
throughout the U.S.
NMMI purchased a mobile, self contained and generated, LED (light emitting
diode) unit that contains a 10 feet x 13 feet full color digital display screen.
This truck mounted "Superscreen" is similar to large LED screens that can be
seen in indoor and outdoor sports stadiums. Any image that can be displayed on a
computer or television can be displayed on this LED screen at any location and
will run on any format, including live broadcast feed. This allows any venue
that does not have a fixed display screen, such as NASCAR events, golf
tournaments, fishing tournaments and grand openings the ability to now have a
large scoreboard or screen at their event which can travel to different
locations on the tour. This mobile unit has already appeared at Universal
Studios, Walt Disney Event Productions, Wal-Mart, Tampa Bay Buccaneer Game with
Pepin Distributing (a Budweiser Distributor), the opening home game of the Tampa
Bay Lighting, a Monday Night football promotion with Hooters and many other
events.
NMMI signed a one-year with option for eight additional one year terms marketing
agreement with Carson-Jensen-Anderson Enterprises, Inc. d/b/a EyeCatcher
Marketing Company through which agreement the Illumisign-Eyecatcher display
boards will be marketed throughout the 50 United States. EyeCatcher Marketing
Company will locate and contract the site locations as well as sell the
advertising for the display boards. NMMI will retain ownership of the display
boards and will supply the graphic artwork to the advertisers' specifications.
Employees
NMMI has eight employees. None of our employees is represented by a labor union.
We consider our relations with our employees to be good. Because a major portion
of our business involves nationwide site location and procurement as well as
sales and marketing of advertising space, it is advantageous for us to outsource
this segment of our business through strategic partnering and subcontracting. We
intend to utilize in-house employees and plan to add additional staff as needed
to handle all other phases of our business including graphic arts, warehousing,
distribution, purchasing, distribution, shipping, accounting and bookkeeping.
Item 2. Description of Property.
NMMI owns no real estate. It has a one-year lease plus a two-year renewal option
with Investment Management of America, Inc. to occupy property located in Safety
Harbor, Florida which lease expires May 2, 2003. This lease includes office
space and sufficient storage space to warehouse, test and repair the machines
prior to their site placement. It is intended that, upon the various sites being
contracted, the machines will be shipped directly to the site location and for
those machines that require more detailed installation such as the LED boards,
the machines will be shipped directly to the installer. Machines that are in
need of repair are repaired on-site whenever possible. Those machines that are
not repairable on-site are repaired in-house at the Safety Harbor, Florida
facility.
Item 3. Legal Proceedings.
The Company is a defendant in a lawsuit filed on November 5, 1999 in the Circuit
Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida,
Case Number 99-26073 CA 10. January 24, 2001 the parties agreed to a settlement
whereby the Company paid $5,000 to Joseph Maenza and is obligated to pay $57,000
within 120 days. When this payment is made, the litigation will be dismissed
with prejudice.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted to security holders for a vote during the course
of the fourth quarter of the last fiscal year.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters.
As of March 15, 2001, the Company reported 27,099,462 outstanding shares of
common stock, $.001 par value. Based on a closing market price of $0.07 per
share, the outstanding common stock had a market capitalization of approximately
$1,896,962 at that time, which includes restricted shares owned beneficially by
officers and directors.
The company has outstanding 1,000,000 warrants to purchase additional common
shares at a price of $0.30, subject to semiannual reset provisions, expiring on
or before March 15, 2005.
Presently, the Company's securities are traded under the NASDAQ system OTC
Bulletin Board under the symbol "NMMI".
The following table sets forth the high and low bid prices of our common stock
on the last day of each quarter beginning with the first quarter of 1999 through
the fourth quarter of 2000. The quotations set forth below reflect inter-dealer
prices, without retail mark-up, markdown or commission and may not represent
actual transactions.
Year High Bid Low Bid
---- -------- -------
1999
----
First Quarter 0.313 0.313
Second Quarter 0.406 0.406
Third Quarter 0.125 0.125
Fourth Quarter 0.120 0.120
2000
----
First Quarter 1.250 1.250
Second Quarter 1.187 0.760
Third Quarter 0.650 0.430
Fourth Quarter 0.350 0.219
There were approximately 355 shareholders and reported beneficial owners of
record of the Company's common stock listed by the Company's transfer agent as
of March 15, 2001.
The Company has not paid cash dividends on its common stock and does not expect
to pay cash dividends on its common stock in the future.
Item 6. Management's Discussion and Analysis or Plan of Operation.
General
Management's discussion and analysis contains various "forward looking
statements." Such statements consist of any statement other than a recitation of
historical fact and can be identified by the use of forward-looking terminology
such as "may," "expect," "anticipate," "estimate," or "continue" or use of
negative or other variations or comparable terminology. We caution that these
statements are further qualified by important factors that could cause actual
results to differ materially from those contained in the forward-looking
statements, that these forward-looking statements are necessarily speculative,
and there are certain risks and uncertainties that could cause actual events or
results to differ materially from those referred to in such forward-looking
statements.
Overview
The Company is an operational stage company, heretofore having been considered a
development stage company. We have generated cash needs through equity
financings and loans from officers and stockholders. As an operational stage
company, we have devoted substantially all of our efforts in securing and
establishing new business. We have engaged in activities in the advertising
business, but no significant revenues have been generated to date. The primary
activity of the Company currently involves two types of visual advertising, the
Illumisign-Eyecatcher movable display boards and LED display boards. We retain
ownership of both types of these machines and sell the advertising space on a
monthly basis.
Liquidity and Capital Resources
To date, our liquidity has been principally supplied by equity financing and
loans from related parties. As of December 31, 2000 net cash provided by
financing activities was $888,918. The total current liabilities have decreased
from $1,810,536 as of December 31, 1999 to $813,228 as of December 31, 2000.
Accordingly, for the same comparative periods the total stockholders' equity
increased from a negative $624,323 to a positive $750,208, an increase of
$1,374,531.
Results of Operations
The discussion and financial statements contained herein are for the twelve
months ended December 31, 1999 and 2000. The following discussion regarding the
financial statements of the Company should be read in conjunction with the
financial statements of the Company included herewith.
Gross revenues for the twelve months ended December 31, 2000 increased $105,224
from twelve months ended December 31, 1999 from $49,176 to $154,400, an increase
of approximately 300%. This is due primarily to our concentration on
establishing new business and increasing sales relating to both the IllumiSign
Eyecatcher and the LED display sign truck.
General and Administrative Expenses
The combined general and administrative and general and administrative - related
expenses for the twelve months ended December 31, 2000 increased $519,825 in
comparison to the twelve months ended December 31, 1999 from $376,707 to
$896,532, an increase of approximately 238%. This increase is due primarily to
increased staffing levels, higher facility costs and professional fees to
support the growth of our infrastructure. We expect to hire additional support
personnel and will incur additional costs related to being a public company,
including insurance for employees, investor relations programs, administrative
support and other related professional fees.
Net Loss
As a result of the above items, we incurred net loss for the twelve months ended
December 31, 2000 of $946,613 compared to $445,985 for the twelve months ended
December 31, 1999, an increased loss of $500,628 or approximately 212%.
Item 7. Financial Statements.
Financial Statements are incorporated by reference and attached as an exhibit.
Item 8. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure.
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act.
At present John "JT" Thatch is the sole officer and director of the company. He
serves as President and Chief Executive Officer. Gerald C. Parker, Andrew M.
Badolato and Antonio P. Gomes resigned their respective positions as directors
and officers:
Name Age Position
---- --- --------
Gerald Parker 59 Chairman of the Board
Andrew Badolato 38 Chief Financial Officer, Vice President/
Corporate Finance and Director
Antonio P. Gomes 38 Vice President/Strategic Planning
The corporate by-laws require that, except for resignation, the directors hold
office until the next annual meeting of shareholders of the Company and until
their successors are elected and qualified. Officers hold office until the first
meeting of directors following the annual meeting of shareholders and until
their successors are elected and qualified, subject to earlier removal by the
Board of Directors. It is expected that interim directors and officers will be
appointed in compliance with the by-laws to fill the vacancies until the annual
meeting of shareholders to be scheduled in June.
Gerald C. Parker, Chairman of the Board of Directors Mr. Parker has been
Chairman of the Board of the Company since August 1999. From 1997 to the
present, Mr. Parker has served as President of Investment Management of America,
Inc. From 1995 to 1997, Mr. Parker served as President of St. James Capital,
Inc., a private real estate company. Mr. Parker is a founder of Inktomi, a
publicly traded firm that develops scalable network applications. Mr. Parker is
chairman of all Investment Management of America, Inc. portfolio companies.
John "JT" Thatch, President/CEO and Director
John "JT" Thatch serves as Director, CEO and President of New Millennium Media
International, Inc. He brings to the company over 15 years of entrepreneurial
experience. He has successfully founded, operated and managed his own businesses
and limited partnerships. He brings experience in the areas of management,
retail sales and financing. J.T. has ties in the business community and brings
solid leadership and integrity to the company. His experience and enthusiasm
will provide us with the ability to expand our growth within the outdoor/indoor
advertising arena.
Andrew Badolato, Chief Financial Officer, Vice President/Corporate Finance and
Director Mr. Badolato has been a director and Vice President of corporate
finance of the company since May 1999 and has been its Chief Financial Officer
since August 2000. Mr. Badolato is the founder and Chief Executive officer of
Investment Management of America, Inc., a strategic advisor of the company. Mr.
Badolato was the cofounder and president of Military Commercial Technologies,
inc. (Milcom.net) and is the Vice President of Finance for Milcom.net,
ByeByenow.com and Liquid Golf. Mr. Badolato is also a founder of Triton Network
Systems. Mr. Badolato serves on the Board of Directors of all Investment
Management of America, Inc. portfolio companies. Mr. Badolato attended St.
Thomas of Villanova University.
Antonio P. Gomes, Vice President/Strategic Planning and Director
Since August 1999, Mr. Gomes has served as the Vice President of Strategic
Planning for the Company. Since 1998, Mr. Gomes has served as Chief Operating
Officer of Investment Management of America, Inc. From April 1999 to the
present, Mr. Gomes has served as a director of Marketing of ByeByeNOW.com, Inc.
From 1993 to 1998, Mr. Gomes was the Director of Marketing for Tropicana
Products, Inc. Mr. Gomes received a B.B.A. from the University of Massachusetts
and a Masters in Business Administration from the University of Texas.
Item 10. Executive Compensation.
The following table lists the cash remuneration paid or accrued during 1999 and
2000 to John Thatch, president and CEO. Except for John Thatch, none of our
executive officers and directors received compensation of $100,000 or more in
1999 and 2000.
SUMMARY COMPENSATION TABLE
------------------------------------------------------------------------------------------------------
Long Term Compensation
------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
------------------------------------------------------------------------------------------------------
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principle Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
------------------------------------------------------------------------------------------------------
John 10% of all Stock option Per month:
Thatch, 10,000 issued to be 500 medical
Pres./CEO 2000 140,000 expenses common determined by 500 car
stock Board 250 celphone
------------------------------------------------------------------------------------------------------
Director Compensation
No Director is specially compensated for the performance of duties in that
capacity or for his/her attendance at Director meetings.
Employment Agreements
NMMI has one written employment agreement, John Thatch, President and CEO, see
Item 12, below.
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding beneficial
ownership of our issued common stock by (i) each shareholder known by us to be
the beneficial owner of 5% or more of the outstanding common stock, (ii) each of
our directors and (iii) all directors and executive officers as a group. Except
as otherwise indicated, we believe that the beneficial owners of the common
stock listed below, based on information furnished by such owners, have sole
investment and voting power with respect to such shares, subject to community
property laws where applicable. Shares of common stock issuable upon exercise of
options and warrants have not been included in this table.
Name and Address Amount and Nature Percent of Class
of Beneficial of Beneficial
Owner Ownership
---------------- ---------------- ----------------
John Thatch 2,500,000 9%
President/CEO
and Director
Gerald Parker (2) -0- 0%
Chairman
Andy Badolato (2) -0- 0%
Director & Vice
President of Finance
Tony Gomes (2) -0- 0%
Director & Vice President
Of Corporate Marketing
Investment Management 12,632,080 46%
of America, Inc.(2)(3)
Troy Lowrie 2,250,000 9%
(Resigned)(4)
Officers, Directors 17,382,080 64%
and Affiliates as a group
(1) Based upon 27,099,462 outstanding shares of common stock.
(2) Parker, Badolato and Gomes are officers, directors and majority
shareholders in Investment Management of America, Inc.
(3) Includes 3,000,000 shares of Series A Preferred stock traded with NMMI for
3,000,000 shares of common stock.
(4) Mr. Troy Lowrie was the past president and director of PMC which was merged
into New Millennium.
Item 12. Certain Relationships and Related Transactions.
Except as set forth below, there have neither occurred within the preceding two
year period, nor are there pending or proposed, any direct or indirect material
transactions between us and any of our directors, executive officers or
controlling shareholders outside the ordinary course of our business.
Item 13. Exhibits and Reports
Indemnification of Directors and Officers
The Colorado General Corporation Act provides that each existing or former
director and officer of a corporation may be indemnified in certain instances
against certain liabilities which he or she may incur, inclusive of fees, costs
and other expenses incurred in connection with such defense, by virtue of his or
her relationship with the corporation or with another entity to the extent that
such latter relationship shall have been undertaken at the request of the
corporation; and may have advanced such expenses incurred in defending against
such liabilities upon undertaking to repay the same in the event an ultimate
determination is made denying entitlement to indemnification. The Company's
bylaws incorporate the statutory form of indemnification by specific reference.
The Company has never acquired or applied for any policy of directors' and
officers' liability insurance as a means of offsetting its obligation for
indemnity.
Reports to Shareholders
We intend to voluntarily send annual reports to our shareholders, which will
include audited financial statements. We are a reporting company, and file
reports with the Securities and Exchange Commission (SEC), including this Form
10-KSB as well as quarterly reports under Form 10-QSB. The public may read and
copy any materials filed with the SEC at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. Information on the operation of the
Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The
company files its reports electronically and the SEC maintains an Internet site
that contains reports, proxy and information statements and other information
filed by the company
with the SEC electronically. The address of that site is http://www.sec.gov. The
company filed no reports on Form 8-K. during the last quarter of the period
covered by this report.
The company also maintains an Internet site, which contains information about
the company, news releases and summary financial data. The address of that site
is http://www.nmmimedia.com.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements of the Company, which are furnished herein as of March
20, 2001, have been audited by Richard J. Fuller, CPA, Clearwater, Florida,
independent auditors, as described in its reports with respect thereto.
The following list sets forth a brief description of each of the Company's
financial statements and exhibits being filed as a part of this Form 10 KSB, as
well as the page number on which each statement or exhibit commences:
Audited Fiscal Year End December 31, 2000
Index to Financial Statements F-2
Independent Auditor's Report F-3
Balance Sheet, December 31, 2000 F-4
Statement of Operations for
each of the years ended December 31, 1999
and 2000 F-5
Statement of Shareholder's (Deficit) Equity
from January 1, 1999 through
December 31, 2000 F-6
Statement of Cash Flows for each of the
years ended December 31, 1999
and 2000 and from inception F-7
Notes to Financial Statements F-8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
March 30, 2001 New Millennium Media International, Inc.
By: /s/ John "JT" Thatch
------------------------------------
John "JT" Thatch, President/CEO
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
FINANCIAL STATEMENTS
as of year end December 31, 2000
INDEX
Index to Financial Statements ............................................. F-2
Independent Auditors' Report .............................................. F-3
Consolidated Balance Sheets ............................................... F-4
Consolidated Statements of Operations ..................................... F-5
Consolidated Statements of Stockholders' Equity ........................... F-6
Consolidated Statements of Cash Flows ..................................... F-7
Notes to the Consolidated Financial Statements ............................ F-8
F-2
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
New Millennium Media International, Inc.
Safety Harbor, Florida
We have audited the balance sheets of New Millennium Media International, Inc.
as of December 31, 1999 and 2000, and the related statements of operations,
stockholders' (deficit) equity and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New Millennium Media
International, Inc. at December 31, 1999 and 2000 and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has incurred losses for the years ended
December 31, 1999 and 2000. This condition raises substantial doubt about its
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Richard J. Fuller, CPA, PA
Clearwater, Florida
March 20, 2001
F-3
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
BALANCE SHEETS
December 31, 1999 and December 31, 2000
1999 2000
------------ ------------
ASSETS
Current Assets:
Cash $ 2,063 $ --
Accounts receivable -- 16,636
Inventories 548,862 3,255
Prepaid expenses -- 9,096
------------ ------------
Total Current Assets 550,925 28,987
------------ ------------
Furniture and Equipment:
Furniture, fixtures and equipment,net 3,964 924,148
------------ ------------
Other Asssets:
Goodwill, net 655,007 610,301
Other intangibles 417 --
------------ ------------
Total Other Assets 655,424 610,301
------------ ------------
$ 1,210,313 $ 1,563,436
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 85,235 $ 81,556
Accrued expenses payable 129,289 73,562
Related payables 1,596,012 658,110
------------ ------------
Total Current Liabilities 1,810,536 813,228
------------ ------------
Long-term Liabilities -- --
Stockholders' (Deficit) Equity
Common stock, par value $.001; 25,000,000 and 75,000,000
shares authorized, 24,099,881 and 28,440,614 shares issued
and outstanding, respectively, 1999 and 2000 24,100 28,441
Preferred stock, par value $.001; shares authorized, 10,000,000
no shares issued and outstanding -- --
Additional paid in capital 448,991 2,741,694
Deficit (1,073,314) (2,019,927)
------------ ------------
Total Stockholders' (Deficit) Equity (624,323) 750,208
------------ ------------
$ 1,186,213 $ 1,563,436
============ ============
F-4
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
STATEMENT OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 2000
1999 2000
------------ ------------
Income $ 49,176 $ 154,400
Costs and Expenses:
General and administrative $ 141,847 $ 741,532
General and administrative -related 234,860 155,000
Interest expense - related 95,382 63,587
Depreciation and amortization 23,072 140,894
------------ ------------
Total costs and expenses 495,161 1,101,013
------------ ------------
Loss from Operations (445,985) (946,613)
Net Loss $ (445,985) $ (946,613)
============ ============
Basic and Diluted Loss Per Common Share $ (0.03) $ (0.04)
============ ============
Weighted average common shares outstanding 15,559,940 26,270,250
============ ============
F-5
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE PERIOD FROM JANUARY 1, 1999 THROUGH DECEMBER 31, 2000
Common Stock Additional Total
--------------------------- Paid - in stockholders'
Shares Amount Capital Deficit equity
----------- ----------- ----------- ----------- -----------
Balance, January 1, 1999 7,020,000 $ 7,020 $ 403,115 $ (627,329) $ (217,194)
----------- ----------- ----------- ----------- -----------
Shares issued to purchase Unergi, Inc. 16,566,667 16,567 -- -- 16,567
Shares issued for cash 513,214 513 45,876 -- 46,389
Net loss for the period ended
December 31, 1999 -- -- -- (445,985) (445,985)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 1999 24,099,881 $ 24,100 $ 448,991 $(1,073,314) $ (600,223)
Shares issued for services to officers -
net of recission (1,020,419) (1,020) 3,520 -- 2,500
Shares issued:
in settlement of debt to related parties 3,641,152 3,641 1,487,403 -- 1,491,044
in connection with acquisition of equipment 200,000 200 342,800 -- 343,000
for Scovel Corporation 500,000 500 -- 500
for cash 1,020,000 1,020 458,980 -- 460,000
Net loss for the period ended
December 31, 2000 -- -- -- (946,613) (946,613)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2000 28,440,614 $ 28,441 $ 2,741,694 $(2,019,927) $ 750,208
=========== =========== =========== =========== ===========
F-6
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 2000
1999 2000
------------ ------------
Cash Flows from Operating Activities:
Net loss $ (445,985) $ (946,613)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 23,072 140,894
(Decrease) in accounts receivable -- (16,636)
(Decrease) in inventories (66,946) (124)
(Decrease) in prepaid expenses -- (9,096)
Increase (decrease) in accounts payable 49,007 (3,679)
Increase (decrease) in accrued expenses 96,221 (55,727)
------------ ------------
Total adjustments 101,354 55,632
------------ ------------
Net Cash Used in Operating Activities (344,631) (890,981)
------------ ------------
Cash Flows from Investing Activities
Purchase of goodwill -- --
Purchase of fixed assets (2,539) --
------------ ------------
Net Cash Used in Investing Activities (2,539) --
------------ ------------
Cash Flows from Financing Activities
Related payables refinancings 296,033 428,918
Proceeds from common stock issued 46,389 460,000
------------ ------------
Net Cash provided by Financing Activities 342,422 888,918
------------ ------------
Increase in cash and cash equivalents $ (4,748) $ (2,063)
Cash and cash equivalents at beginning of period $ 6,811 $ 2,063
------------ ------------
Cash and cash equivalents at end of period $ 2,063 $ --
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the year for interest -- --
Cash paid during the year for income taxes -- --
Supplemental schedule of noncash investing
and financing activities:
Issuance of common stock for purchase of
equipment, furniture and goodwill $ 677,594 $ 450,500
Less debts assumed (661,027) (107,000)
------------ ------------
Common stock issued $ 16,567 $ 343,500
============ ============
Issuance of common stock in settlement
of related party debt
Common stock issued -- 1,491,044
Less related party debt -- (1,491,044)
------------ ------------
$ -- $ --
============ ============
F-7
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 2000
1. Organization and summary of significant accounting policies
-----------------------------------------------------------
A summary of the Company's significant accounting policies consistently applied
in the preparation of the accompanying financial statements follows.
Nature of Business
New Millennium Media International, Inc. (formerly Progressive Mailer Corp.)
(NMMI or the Company) was incorporated under the laws of the State of Florida on
February 5, 1997. On April 30, 1998, as part of a plan or reorganization, the
Company became New Millennium Media International, Inc., a Colorado company. On
April 14, 1998, all the assets of Lufam Technologies, Inc. were acquired in
exchange for 1,710,000 shares of the Company's $.001 par value common stock. On
August 31, 1999, pursuant to an Agreement and Plan of merger, the Company
acquired all the issued and outstanding stock of Unergi, Inc. in exchange for
16,566,667 shares of the Company's $.001 par value common stock. Further, on
March 9, 2000, the Company acquired 100% of the issued and outstanding common
stock of Scovel Corporation in exchange for 500,000 shares of the Company.
The Company is in the business of developing and marketing advertising space in
special movable advertising display machines and LED display boards. The Company
provides two types of visual advertising including movable display boards and
LED display boards. NMMI sells advertising space while retaining ownership of
the boards. During the year, the Company negotiated the ability to manufacture
the advertising machines previously supplied principally by one foreign vendor.
The Company is no longer considered to be in the development stage for 2000. In
prior years, the Company had been in the development stage.
Basis of presentation
---------------------
The financial statements have been prepared using the accrual method of
accounting. Revenues are recognized when earned and expenses when incurred.
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 amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
F-8
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 2000
Organization and summary of significant accounting policies - Cont'd.
---------------------------------------------------------------------
Going Concern Uncertainty
-------------------------
The Company has incurred recurring operating losses and negative cash flows and
has negative working capital. The Company has financed itself primarily through
the sale of its stock and related party borrowings. These conditions raise
substantial doubt about the Company's ability to continue as a going concern. As
noted in Note 5, the Company has initiated several actions to generate working
capital for expected advertising growth.
There can be no assurance that the Company will be successful in implementing
its plans, or if such plans are implemented, that the Company will succeed.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern and do not include any adjustments to
reflect the possible future effect on the recoverability and classification of
assets or the amount and classification of liabilities that might result from
the outcome of this uncertainty.
Comprehensive Income
--------------------
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," establishes standards for reporting and display of
comprehensive income, its components and accumulated balances. Comprehensive
income is defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures, SFAS
No. 130 requires that all items that are required to be recognized under current
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The Company does not have any items requiring disclosure
of comprehensive income.
Segments of Business Reporting
------------------------------
Statement of Financial Accounting Standards (SFAS) No. 131, establishes
standards for the way that public companies report information about operating
segments in annual financial statements and requires reporting of selected
information about operating segments in interim financial statements issued to
the public. It also establishes standards for disclosures regarding products and
services, geographic areas and major customer. SFAS 131 defines operating
segments as components of a company about which separate financial information
is available that is evaluated regularly by the chief operating decision maker
in deciding how to allocate resources and in assessing performance. The Company
has evaluated this SFAS and does not believe it is applicable at this time.
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 2000
Organization and summary of significant accounting policies - Cont'd.
---------------------------------------------------------------------
Intangible assets
-----------------
Organization costs are amortized using the straight-line method over their
estimated useful lives of five years and are stated at cost less accumulated
amortization. The Company reviews for the impairment of long-lived assets and
certain identifiable intangibles annually. No such impairment losses have been
identified by the Company for the years presented.
Under the purchase method of accounting, tangible and identifiable intangible
assets acquired and liabilities assumed are recorded at their estimated fair
values. The excess of the purchase price, including estimated fees and expenses
related to the merger, over the net assets acquired is classified as goodwill by
the Company. The estimated fair values and useful lives of assets acquired and
liabilities assumed are based on a preliminary valuation and are subject to
final valuation adjustments which may cause some of the intangibles to be
amortized over a shorter life than the goodwill amortization period of 15 years
Inventories
-----------
Inventories consist primarily of supplies related to advertising machines and
are carried at the lower of cost (first-in, first-out) or market. Once the
advertising machines are available for rental and placed in service,
depreciation is recognized. During the year, the advertising machines were made
available for rental. Depreciation is recognized for the year ended 2000 because
rental activity commenced during the year.
Furniture and equipment
-----------------------
Furniture and equipment is stated at cost and depreciated using the
straight-line method, over the estimated useful lives of five to seven years.
Income Taxes
------------
The Company accounts for income taxes under Statement of Financial Accounting
Standards No. 109 (SFAS No. 109). Under SFAS No. 109, deferred income tax assets
and liabilities are determined based upon differences between financial
reporting and tax bases of assets and liabilities and are measured using
currently enacted tax rates. SFAS No. 109 requires a valuation allowance to
reduce the deferred tax assets reported if, based on the weight of the evidence,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized.
Basic and Diluted Loss Per Common Share
---------------------------------------
Basic loss per common share is based on the weighted average number of shares
outstanding during the period. The computation of diluted loss per common share
is similar to basic earnings per share, except that the denominator is increased
to include the number of additional common shares that would have been
outstanding if the potentially dilutive common shares had been issued. Diluted
loss per common share is not presented since the result is antidilutive.
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 2000
Organization and summary of significant accounting policies - Cont'd.
---------------------------------------------------------------------
Cash Equivalents
----------------
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
Fair Value of Financial Instruments
-----------------------------------
All financial instruments are held for purposes other than trading. The
following methods and assumptions were used to estimate the fair value of each
financial instrument for which it is practicable to estimate that value:
For cash, cash equivalents and notes payable, the carrying amount is assumed to
approximate fair value due to the short-term maturities of these instruments.
Concentrations of Credit Risk
-----------------------------
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of cash. The Company places its cash with high
quality financial institutions. At times during the year, the balance at any one
financial institution may exceed FDIC limits.
2. Furniture, fixtures and equipment
---------------------------------
Furniture, fixtures and equipment is summarized as follows:
1999 2000
----------- -----------
Boards available for lease $ -- $ 545,483
Equipment -- 468,731
Furniture & fixtures 4,249 5,490
----------- -----------
4,249 1,019,704
Less accumulated depreciation (285) (95,555)
----------- -----------
Net $ 3,964 $ 924,149
=========== ===========
During the year 2000, the advertising boards became available for lease.
3. Goodwill
---------
On August 31, 1999 the Company acquired all the outstanding stock of Unergi,
Inc. The acquisition was accounted for as a purchase. Consideration for the
purchase was the issuance of 16,566,667 shares of $.001 par value stock of the
Company. The purchase price exceeded the fair value of the net assets acquired
by $677,594 which has been recorded as goodwill. On March 9, 2000, the Company
acquired 100% of the issued and outstanding common stock of Scovel Corporation
in exchange for 500,000 shares of the Company.
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 2000
Goodwill - cont'd.
------------------
Goodwill consists of the following:
1999 2000
---------- ----------
Goodwill in connection with acquisition of
Unergi, Inc. accounted for as a purchase
with 16,566,667 common shares issued $ 677,594 $ 677,594
Scovel Corporation accounted for as a purchase
With 500,000 common shares issued -- 500
---------- ----------
677,594 678,094
Less accumulated amortization (22,587) (67,793)
---------- ----------
Net $ 655,007 $ 610,301
========== ==========
4. Related party payables
----------------------
Related party payables consists of the following: 1999 2000
---------- ----------
Note due stockholder/former officer at 10% $ 641,152 $ --
Accounts payable to stockholders,
non-interest bearing 954,860 249,860
$100,000 convertible note payable, with interest
accrued @ 10%, (convertible $1.00 of debt
into common stock) -- 102,500
$125,000 convertible note payable, with interest
accrued @15%, secured by equipment(convertible
$1.00 of debt into common stock) -- 143,750
$162,000 convertible note payable, interest @8%
to officer/stockholder(convertible $.10 of debt
into preferred stock) 162,000
---------- ----------
$1,596,012 $ 658,110
========== ==========
During the year, the Company issued common stock in settlement of certain debt
to stockholders and former officers. Currently, the Company disputes a note to a
prior officer but has recognized the debt for financial statement purposes.
5. Income Taxes
------------
The Company has available net operating loss carryforwards of $1,950,000 which
expire through 2020.
After consideration of all the evidence, both positive and negative, management
has determined that a full valuation allowance is necessary to reduce the
deferred tax assets to the amount that will more likely than not be realized.
Accordingly, components of the Company's net deferred income taxes are as
follows:
1999 2000
---------- ----------
Deferred tax assets:
Net operating loss carryforwards $ 870,000 $1,950,000
Valuation allowance for deferred tax asset (870,000) (1,950,000)
---------- ----------
$ -- $ --
========== ==========
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 2000
6. Equity Transactions
-------------------
On May 2, 2000, the Company entered into an agreement with Swartz Private Equity
to provide an equity line of $25,000,000 based upon the Company issuing warrants
convertible into 1,000,000 shares of the Company's Common Stock. Certain
provisions of the Agreement provide for the issuance of additional warrants
equal to 4.0% of the fully diluted shares of the Company's Common Stock. The
exercise price of the warrants is based in part upon the closing bid price for 5
trading days prior to March 6, 2000 or $.30. Management has entered into these
agreements, in part, to provide the necessary capital needed for the expected
growth in outdoor advertising business. As part of this agreement, the Company
has issued 1,000,000 warrants.