NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------------------------
For quarter ended September 30, 2002
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 organization) Classification Code Number) Identification No.)
200 9th Avenue North, Suite 210
Safety Harbor, Florida 34695
(727) 797-6664
--------------
(Address and Telephone Number of Principal Executive Offices and
Principal Place of Business)
John D. Thatch, President
New Millennium Media International, Inc.
200 9th Avenue North, Suite 210
Safety Harbor, Florida 34695
(Name, Address and Telephone Number of Agent for Service)
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 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.
Yes X No
--- ---
As of September 30, 2002 there were 10,623,006 shares of the Company's common
stock issued and outstanding.
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
INDEX
Page
----
Part I Financial Information ............................................ 3
Item 1 Financial Statements ................................... 3
Condensed Balance Sheet ................................ 3
Condensed Statement of Operations ...................... 4
Condensed Statement of Cash Flows ...................... 5
Notes to the Condensed Financial Statements ............ 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations .......... 8
Overview ............................................... 8
Critical Accounting Policies ........................... 8
Liquidity and Capital Resources ........................ 9
Material Changes in Financial Condition ................ 9
Results of Operations .................................. 9
Net Loss ............................................... 10
Trends and Events ...................................... 10
Item 3 Quantitative and Qualitative Disclosures
About Market Risk ...................................... 11
Part II Other Information ................................................ 11
Item 1 Legal Proceedings ...................................... 11
Item 2 Changes in Securities and Use of Proceeds .............. 11
Common Stock Transferred ............................... 11
Warrants Issued ........................................ 12
Use of Proceeds ........................................ 12
Item 3 Defaults Upon Senior Securities ........................ 12
Item 4 Submission of Matters to a Vote of Security Holders .... 12
Item 5 Other Information ...................................... 12
Item 6 Exhibits and Reports on Form 8-K ....................... 13
Signatures ................................................................. 13
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED BALANCE SHEET
September 30, December 31,
2002 2001
(UNAUDITED) (AUDITED)
------------ ------------
ASSETS
Current Assets:
Cash $ 30,723 $ 47,239
Accounts receivable 15,195 23,395
Inventory -- --
Prepaid assets 21,728 47,227
------------ ------------
Total Current Assets 67,646 117,861
------------ ------------
Property and Equipment
Property and equipment - net 1,340,040 1,461,824
------------ ------------
Other Assets
Intangible assets - net 95,000 665,095
Other assets 69,902 13,986
------------ ------------
Total Other Assets 164,902 679,081
------------ ------------
$ 1,572,588 $ 2,258,766
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 421,836 $ 520,377
Notes and loans payable 700,519 612,697
Related party payables 1,012,514 809,554
------------ ------------
Total Current Liabilities 2,134,869 1,942,628
------------ ------------
Long-term Liabilities -- --
Stockholders' Equity
Common stock, par value $.001; 15,000,000 shares
authorized; 10,623,006 and 8,610,047 shares issued
and outstanding, respectively, 2002 and 2001 10,623 8,610
Common stock warrants 70,890 69,290
Common stock options; 25,000 issued and outstanding,
exercisable at $.005 per option 1,228 1,175
Preferred stock, par value $.001; 10,000,000 shares
authorized, no shares issued and outstanding -- --
Additional paid in capital 6,149,245 5,336,697
Accumulated deficit (4,960,892) (3,266,259)
------------ ------------
1,271,094 2,149,513
Less common stock subscribed (1,833,375) (1,833,375)
------------ ------------
Total Stockholders' Equity (562,281) 316,138
------------ ------------
$ 1,572,588 $ 2,258,766
============ ============
See accompanying notes.
3
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
FOR THE FOR THE FOR THE FOR THE
Quarter Quarter Nine Months Nine Months
Ended Ended Ended Ended
9/30/02 9/30/01 9/30/02 9/30/01
------------ ------------ ------------ ------------
Revenues $ 73,100 $ 10,441 $ 532,347 $ 229,182
Costs and Expenses:
General and administrative 512,049 372,268 1,434,842 934,997
Interest expense 28,823 21,216 92,942 47,959
Depreciation and amortization 43,729 35,116 130,726 105,348
------------ ------------ ------------ ------------
Total costs and expenses 584,601 428,600 1,658,510 1,088,304
------------ ------------ ------------ ------------
Loss from Operations (511,501) (418,159) (1,126,163) (859,122)
------------ ------------ ------------ ------------
Other Income
Gain on settlement of debt 7,989 -- 7,989 --
------------ ------------ ------------ ------------
Loss before cumulative effect of change
in accounting principle (503,513) (418,159) (1,118,174) (859,122)
Cumulative effect of change in accounting principle -- 11,298 (565,095) 33,894
------------ ------------ ------------ ------------
Net Loss $ (503,513) $ (406,861) $ (1,683,269) $ (825,228)
============ ============ ============ ============
Basic and diluted loss per common share:
Loss before cumulative effect of change
in accounting principle $ (0.049) $ (0.055) $ (0.116) $ (0.124)
Cumulative effect of change in
accounting principle -- 0.001 (0.059) 0.005
------------ ------------ ------------ ------------
Net Loss $ (0.049) $ (0.054) $ (0.175) $ (0.119)
============ ============ ============ ============
Weighted Average Number of Shares Outstanding 10,178,027 7,649,361 9,616,527 6,935,992
============ ============ ============ ============
See accompanying notes.
3
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
For the For the For the For the
QUARTER QUARTER NINE MONTHS NINE MONTHS
ENDED ENDED ENDED ENDED
9/30/02 9/30/01 9/30/02 9/30/01
----------- ----------- ----------- -----------
Cash Flows from Operating Activities:
Net income (loss) $ (503,513) $ (418,159) $(1,683,269) $ (859,122)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Cumulative effect of change in accounting principle -- -- 565,095 --
Gain on conversion of debt to equity (7,989) -- 7,989 --
Depreciation and amortization 43,729 35,116 130,726 105,348
Fair value of shares issued for services 213,788 15,000 348,438 91,685
Fair value of warrants / options issued for services 17,409 17,409
Fair value of options issued 3,683 -- 8,261 --
Fair value of warrants issued -- -- 1,600 --
(Increase) decrease in accounts receivable 54,829 78,776 8,200 (36,163)
(Increase) decrease in intangible assets 5,000 -- 5,000 --
(Increase) decrease in prepaid expenses -- (500) 25,500 (2,376)
(Increase) decrease in other assets (18,191) (110,304) (57,216) (110,304)
Increase (decrease) in accounts payable
and accrued expenses (914) 129,123 (101,910) 209,039
Increase (decrease) in related party payables 31,595 -- 245,512 --
----------- ----------- ----------- -----------
Net cash provided by (used in)
operating activities (177,983) (253,539) (496,074) (584,484)
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment -- (239,547) (7,940) (250,314)
----------- ----------- ----------- -----------
Net provided by (used in) investing activities -- (239,547) (7,940) (250,314)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans 100,000 -- 341,198 --
Proceeds from notes payable - Related 5,000 10,000 5,000 320,000
Proceeds from common stock transactions 100,000 465,000 140,000 515,000
Proceeds from exercise of common stock options 950 -- 1,300 --
----------- ----------- ----------- -----------
Net cash provided by (used in)
financing activities 205,950 475,000 487,498 835,000
----------- ----------- ----------- -----------
Increase (decrease) in cash and cash equivalents $ 27,967 $ (18,086) $ (16,516) $ 202
Cash and cash equivalents at beginning of period 2,755 18,288 47,239 --
----------- ----------- ----------- -----------
Cash and cash equivalents at end of period $ 30,723 $ 202 $ 30,723 $ 202
=========== =========== =========== ===========
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:
Fair value of shares issued (1,000) to purchase
purchase property and equipment $ -- $ -- $ 1,000 $ --
Fair value of shares issued (10,000) for
conversion of debt to equity 3,700 -- 314,458 --
Fair value of shares issued (20,000) for amounts
previously owed to secretary / treasurer -- 13,000 -- 13,000
See accompanying notes.
4
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
---------------------
The accompanying unaudited condensed statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information in accordance with rules and regulations of the
Securities and Exchange Commission, including the instructions to Form
10-Q. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements and should be read in conjunction with the Company's Annual
Report (Form 10-KSB) for the year ended December 31, 2001. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The
results of operations for the nine months ended September 30, 2002 are not
necessarily indicative of the operating results for the full fiscal year or
any future period.
2. Going Concern Uncertainty
-------------------------
The financial statements are presented assuming the Company will continue
as a going concern. 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.
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 achieve its goals. Further, the Company has not received approval from
the SEC concerning filing of its Post Effective Amendment of an SB-2, which
is necessary for the Company to effect its agreement with Swartz Private
Equity and obtain necessary funding for operations.
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.
3. Effect of Recent Accounting Pronouncements
------------------------------------------
In June 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141, Business
Combinations, and (SFAS) No. 142, Goodwill and Other Intangible Assets.
SFAS No. 141 requires that the purchase method of accounting be used for
all business combinations and prohibits the use of the pooling-of-interests
method. Further, Statement No. 141 changes the criteria to recognize
intangible assets apart from goodwill. The adoption of Statement No. 141
did not have a material effect on the company's financial position or
results of operations.
SFAS No. 142 changes the accounting for goodwill from an amortization
method to an impairment-only approach. Thus, amortization of goodwill,
including goodwill recorded in past business combinations, will cease upon
adoption of this statement. Those intangible assets that will continue to
be classified as goodwill or as other intangibles with indefinite lives are
no longer amortized. Finite lived intangibles will continue to be amortized
over their estimated useful lives.
Under Statement No. 142, all intangible assets, including goodwill that
results from business combinations, are periodically (at least annually)
evaluated for impairment, with any resulting impairment loss being charged
against earnings. Any impairment loss that is recognized as a result of
completing the transitional impairment testing in the year of adoption is
treated as a cumulative effect of a change in accounting principle and
recognized in these interim financial statements. Statement No. 142
prescribes a two-step process for impairment testing of goodwill: (i) the
determination of impairment, based upon the fair value of a reporting unit
as compared to its carrying value, and (ii) if there is an impairment, this
step measures the amount of impairment loss by comparing the implied fair
value of goodwill with the carrying amount of that goodwill. The Company
completed its step one impairment analysis during the current quarter,
which indicated that the carrying value was greater than the fair value and
that an impairment existed. The Company also completed step two of the
testing during the first quarter allocating the fair value of the reporting
unit considering the sources of recognized goodwill in making the initial
assignment as well as the reporting units to which the related acquired net
assets were assigned. As a result of using the fair value approach, an
impairment charge of $ 565,095 has been recognized.
5
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Effect of Recent Accounting Pronouncements - Cont'd.
----------------------------------------------------
In accordance with Statement No. 142, the effect of this change is reflected
prospectively. The following table reflects the results of operations adjusted
as though the adoption of SFAS No. 141 and 142 occurred as of January 1, 2001:
FOR THE QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------- -------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net loss before cumulative effect of accounting change:
As reported $ (503,513) $ (418,159) $(1,683,269) $ (859,122)
Goodwill amortization -- 11,298 -- 33,894
---------- ---------- ---------- ----------
Net loss after cumulative effect of accounting change $ (503,513) $ (406,861) $(1,683,269) $ (825,228)
========== ========== ========== ==========
cumulative effect of accounting change:
As reported $ (0.049) $ (0.055) $ (0.175) $ (0.124)
========== ========== ========== ==========
As adjusted $ (0.049) $ (0.053) $ (0.175) $ (0.119)
========== ========== ========== ==========
4. Fair value information
----------------------
Fair value of shares issued as indicated in accordance with FASB No. 123 as
restated consists of:
FOR THE QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------------------- --------------------------------------------
2002 2001 2002 2001
-------------------- -------------------- -------------------- --------------------
NO. OF NO. OF NO. OF NO. OF
SHARES / SHARES / SHARES / SHARES /
OPTIONS AMOUNT OPTIONS AMOUNT OPTIONS AMOUNT OPTIONS AMOUNT
-------- -------- -------- -------- -------- -------- -------- --------
COMMON STOCK:
Conversion of short-term
debt to equity 60,000 $ 6,155 15,000 $ 15,000 620,000 $316,913 15,000 $ 15,000
Shares issued for services 563,292 213,788 -- -- 870,292 348,438 306,740 76,685
-------- -------- -------- --------
$219,943 $ 15,000 $665,351 $ 91,685
======== ======== ======== ========
COMMON STOCK OPTIONS:
Options issued for services -- $ -- -- $ -- 175,000 $ 7,033 -- $ --
======== ======== ======== ========
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
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
New Millennium Media International, Inc. (NMMI) is engaged in activities in the
advertising business. The primary activity of the Company currently involves
several types of visual advertising: The IllumiSign-EyeCatcher front-lit motion
display boards, the IllumiSign-EyeCatcher back-lit motion display boards, plasma
screens and LED display boards. NMMI sells advertising space on these display
boards on a contractual yearly basis, payable monthly or in the case of the LED
boards, on an event basis. In certain instances we sell and continue to sell
motion display boards. The criteria that determines the sale rather than leasing
the displays is two fold: (i) sales in foreign countries where recovery of the
displays in the event of non-payment would be a major expense and recovery of
the display economically impractical and, (ii) sales to customers in large
quantity where leasing the displays is determined to be nearly impossible and
the customer retains the displays for its own benefit and the customer intends
to place the displays in non-competition with the business model of the Company.
The Company is continuing to devote substantially all of its present efforts to
implementing its operational and marketing plans designed to establish new
business accounts for its mobile LED boards and the motion display boards.
NMMI continues to incur significant losses from operations. We incurred losses
from operations of $503,513 for the quarter ended September 30, 2002 compared to
$406,861 for the same term of 2001and the loss for the first nine months of 2002
was $1,683,269 compared to $825,228 for the first nine months of 2001. As of
September 30, 2002, we had an accumulated deficit of $4,960,892.
CRITICAL ACCOUNTING POLICIES
Our financial statements and related financial information are based on the
application of accounting principles generally accepted in the United States
(GAAP). The preparation of financial statements under GAAP requires management
to make estimates and assumptions that affect the reported amount of revenue and
expenses during the periods. We believe our use of estimates and underlying
accounting assumptions adhere to GAAP and are consistently and conservatively
applied. Estimates have been made by management in several areas including, but
not limited, to accounts receivable allowances, valuation of long-lived and
intangible assets including goodwill. We have based our estimates on historical
experience and on various other assumptions that we believe to be reasonable
under the circumstances and review valuations based on estimates for
7
reasonableness and conservatism on a consistent basis. Actual results may differ
materially from these estimates under different assumptions or conditions.
As discussed in Note 3 to the financial statements, in June 2001, the Financial
Accounting Standards Board (FASB) issued Statement of Financial Accounting
Standards (SFAS) No. 141, Business Combinations, and (SFAS) No. 142, Goodwill
and Other Intangible Assets. We adopted these Standards and have performed the
required impairment tests of goodwill and indefinite intangible assets and have
recognized an impairment charge of $565,095 resulting from the cumulative effect
of the change in accounting principle during the nine months ended September 30,
2002.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, we have funded our operations and investments in equipment
primarily through equity financings and borrowing from related parties that are
not necessarily isolated transactions; however, there is no assurance that there
will be proceeds from such transactions in the future.
MATERIAL CHANGES IN FINANCIAL CONDITION
As shown on the attached Condensed Balance Sheet, the Property and Equipment net
has decreased only slightly, 8%, during the first nine months period of 2002
compared to December 31, 2001 due to depreciation expense; however, the Total
Other Assets shows a decrease of $514,179, 76%. This is primarily because of the
$565,095 of Intangible Assets decrease to zero that was caused by the impairment
of goodwill under a recent Financial Accounting Standards Board Statement. A
detailed explanation of this issue is included in Note 3, EFFECT OF RECENT
ACCOUNTING PRONOUNCEMENTS in the Notes to the Condensed Financial Statements
attached hereto. The increase in Total Current Liabilities during these first
nine months of 2002 increased by $192,241, 10%. The Total Stockholders' Equity
decreased $878,419, a decrease of 278% for this nine months period due to these
losses.
RESULTS OF OPERATIONS
Revenue
The comparative revenue for the third quarter of 2002 compared to the same
period for 2001 shows an increase of $62,659, 600%. For the first three quarters
of 2002 compared to 2001, the increase is $303,165 which equates to 132%. This
increase is due primarily to the contract rental of the mobile LED unit and the
increase of advertising revenue generated by the EyeCatcher motion displays. The
Company continues to lease the motion displays and to sell the displays on a
limited basis, see the section captioned "Overview" above. The Graphic Arts
Department continues to be a revenue source for the Company for both the lease
and sale of the motion displays. The Company retains the rights to print the
display posters for the motion displays whether they are leased or sold. As the
Company installs additional display boards, additional advertisements are sold.
Generally, this is cumulative, i. e., as the display boards are placed, the
advertisements are sold for a term of several months or yearly. Even though the
advertisement contracts expire, many are renewed with a minimal amount of sales
effort so long as the display board continues to produce revenue with no
additional effort. No additional effort is generally necessary to place the
display board because it remains in place at the host venue.
8
General and Administrative Costs and Expenses
There was an increase in the General and Administrative Costs and Expenses of
$139,781, 38% for the third quarter comparison of 2002 and 2001 and an increase
of $499,845, 53%, for the first three quarters comparison of 2002 and 2001.
These increases are due primarily to the Company continuing to grow, adding
employees, providing employee incentives, employee benefits, management
consulting, interest, depreciation and royalty allowance for the
IllumiSign-EyeCatcher front-lit licensing agreement. The current staffing of the
Company is expected to be sufficient to carry the Company through its growth
during the next six to twelve months at the present rate of growth.
Interest Expense
Interest Expense increased by $7,607, 36%, for the third quarter of 2002
compared to the same period of 2001 and $44,983, 94%, for the three quarters
comparison for those same years. This interest expense increased primarily as a
result of the Company continuing to finance its operation through borrowing
funds.
Depreciation
Depreciation and amortization increased by $8,613, 25%, for the third quarter
and $25,378, 24%, for the first three quarters of 2002 and 2001. This increase
continues to be the result of additional advertising boards being available for
lease.
Total Costs and Expenses
The Total Costs and Expenses have increased by $156,001, an increase of 36% in
this third quarter of 2002 when compared to the third quarter of 2001 and
$570,206, 52%, for the first nine months comparison for these years. This is the
effect of the Company continuing to grow and add EyeCatcher motion displays and
support personnel as described above under the heading General and
Administrative Costs and Expenses. Many of these costs and expenses are
non-recurring startup expenses.
Loss Before Cumulative Effect of Change in Accounting Principle
This loss increased 20%, $85,354, for the third quarter comparison and 30%,
$259,052 for the first three quarters comparison for years 2002 and 2001. This
operational loss is principally due to the continuing Company growth which
requires additional display boards and equipment as well as the in-house
personnel necessary to provide operational support.
Cumulative Effect of Change in Accounting Principle
For a detailed explanation of this issue please see Note 3, EFFECT OF RECENT
ACCOUNTING PRONOUNCEMENTS, in the Notes to the Condensed Financial Statements
attached hereto.
Basic and Fully Diluted Loss Per Common Share
The Basic Loss Per Common Share BEFORE cumulative effect of change in accounting
principle for the third quarter of 2002 compared to the same quarter of 2001
decreased from $(0.055) to $(0.049), a comparative Basic Loss Per Common Share
decrease of approximately 11%. For the first nine months comparison there was a
decrease in the loss per share of $(0.008), 6.4%. This decrease in loss per
common share is a function of the increase in the number of Weighted Average
Number of Shares Outstanding. As stated above, a major portion of the Costs and
Expenses are non-reoccurring start-up costs. Compared to a year ago, we are now
fully staffed and beginning to produce income. We are continuing to concentrate
on establishing new business and increasing sales relating to the IllumiSign
EyeCatcher backlit and front-lit display board and the LED display sign truck.
9
Cumulative Effect of Change in Accounting Principle
The $(0.001) Cumulative Effect of Change in Accounting Principle cannot be
compared to any earlier period. For a detailed analysis of this principle,
please see Note 3, EFFECT OF RECENT ACCOUNTING PRONOUNCEMENTS, in the Notes to
the Condensed Financial Statements attached hereto.
Net Loss and Weighted Average Common Shares Outstanding
The Net Loss has decreased by 9%, $0.005, for the 2002 and 2001 quarters ending
September 30 and has increased 47% for the nine months ending September 30. This
nine months increase is due primarily to the change in accounting principle as
noted above and in Note 4, FAIR VALUE INFORMATION, in the Notes to the Condensed
Financial Statements attached hereto. The Weighted Average Common Shares
Outstanding increased by 2,528,666 shares for the comparison of the third
quarters of 2001 to 2002 and 2,680,535 for the first three quarters comparison.
TRENDS AND EVENTS
Over the past approximately nine months we have been engaged in a slight change
in our operations model primarily in that we have agreed to sell
IllumiSign-EyeCatcher motion displays in limited circumstances. This change in
Company policy is described above in the section entitled "Overview". Management
feels that this is a positive change in that the Company now has the opportunity
to earn additional revenue in foreign countries as well as certain United States
based advertising entities that otherwise would purchase from competitors of the
Company or not use motion displays at all. Thus far, all purchasers of the
displays have agreed to purchase all of the advertising posters from the
Company. This sale of in-house printed posters is an additional source of
Company revenue.
Although forward looking with no real assurance that the future will unfold as
anticipated by management, the Company management certainly feels that the
current trend of the Company is toward an increased number of motion displays in
place and a continuing increase in the number of bookings for the mobile LED
unit. In the opinion of management, the cumulative effect of these events is a
positive trend. Thus far the Company has continued to grow at a slow, but steady
pace, there is, however, no real assurance that this positive trend will
continue.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Registrant is a Small business issuer as defined by these Regulations and need
not provide the information required by this Item 3.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is presently negotiating the settlement of an ongoing litigation in
Great Britain with the individual patent owner who licenses to the Company the
current manufacture and sale of the front-lit IllumiSign EyeCatcher display.
This litigation is described as Maurice Grosse and New Millennium Media
International, Inc., Claim Number HQ02X01340 in the High Court of Justice,
Queen's Bench Division. These settlement negotiations are progressing and should
be concluded in the next few months. This litigation was initiated as a result
of the Company deciding to phase out distribution of the IllumiSign-EyeCatcher
front-lit displays in deference to the more modern back-lit displays.
10
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
COMMON STOCK TRANSFERRED
The company relied on Section 4(2) of the Securities Act of 1933 as the basis
for an exemption from registration regarding the following transfers to
accredited investors because they did not involve a public offering.
July 1, 2002, the Company issued 200,000 shares of restricted common stock to an
Accredited Investor (as that term is defined in Regulation D promulgated under
the Securities Act of 1933, as amended) in consideration for consulting services
in the area of public relations, corporate communications, investor relations,
market information, preparing/editing press releases, preparation for
conferences with market/securities analysts and manning a dedicated investor
relations "hotline".
July 24, 2002, the Company issued 20,000 shares of New Millennium Media
International, Inc. 2000 Stock Option Plan shares to an Accredited Investor (as
that term is defined in Regulation D promulgated under the Securities Act of
1933, as amended) in consideration for professional advice and consulting
services relating to existing and potential market makers, broker-dealers and
underwriters, as well as being a liaison between the Company and such persons.
The advice and services includes assistance in establishing and advising the
Company with respect to: meetings and interviews of Company officers by other
members of the financial community, both in the United States and in Europe and
generally as a financial public relations counselor to the Company, including
introducing the Company to broker-dealers, market makers, banks, financial
advisor, financial institutions and potential investors, both in the United
States and in Europe and introducing the Company to potential business partners
and customers.
July 31, 2002, the Company issued 10,000 shares of restricted common stock to an
Accredited Investor (as that term is defined in Regulation D promulgated under
the Securities Act of 1933, as amended) in consideration for a full and general
release of all claims relating to a $10,000 demand promissory note made by the
Company in favor of the investor dated May 20, 1999.
August 27, 2002, the Company issued 312,625 shares of restricted common stock to
an Accredited Investor (as that term is defined in Regulation D promulgated
under the Securities Act of 1933, as amended) in consideration for reimbursement
of shares used by the investor for marketing services that directly benefited
the Company.
September 16, 2002, the Company issued 266,667 shares of restricted common stock
to an Accredited Investor (as that term is defined in Regulation D promulgated
under the Securities Act of 1933, as amended) in consideration for $100,000 cash
to the Company.
September 16, 2002, the Company issued 30,667 shares of restricted common stock
to an Accredited Investor (as that term is defined in Regulation D promulgated
under the Securities Act of 1933, as amended) in consideration for consulting
services in the area of public relations, corporate communications, investor
relations and market information.
USE OF PROCEEDS
The proceeds from these transactions (Common Stock Transferred) were used for
working capital and general corporate purposes, including acquisitions, funding
anticipated
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operating losses, sales and marketing expenses, purchase of additional
inventory, working capital and to fund payment obligations for contemplated
acquisitions, corporate partnering arrangements and lawsuit settlement. We
reserve the right to vary the use of proceeds among these categories because our
ability to use the proceeds is dependent on a number of factors, including the
extent of market acceptance of our variety of display boards, unexpected
expenditures for further technical development, sales and marketing efforts and
the effects of competition.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
On March 19, 2002 the Company filed an amended Form 10-KSB/A for year-end 2001
and filed a second amended Post Effective Amendment to Form SB-2 Registration
Statement for Small Business Issuers the original of which was filed September
13, 2000. On April 22, 2002 the Securities and Exchange Commission commented on
the second amended Post Effective Amendment. A third amended Post Effective
Amendment to Form SB-2 Registration Statement for Small Business Issuers is
currently in process.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (SECT. 249.308 OF THIS CHAPTER).
Financial Statements are incorporated in the body of this report.
No reports on Form 8-K have been filed during the quarter for which this report
is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Signed and submitted this 14 day of November 2002.
New Millennium Media International, Inc.
(Registrant)
by: /s/
-------------------------------------
John Thatch as President/CEO/Director
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EXHIBIT INDEX
Exhibit Number Title
99.1 Certifying Statement of the Chief Executive Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
13
CERTIFICATIONS
I, John "JT" Thatch, as CEO/President/Director of New Millennium Media
International, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q of New Millennium Media
International, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
function):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 14, 2002 New Millennium Media International, Inc.
by: /s/
---------------------------------------
John "JT" Thatch CEO/President/Director
14