10QSB 1 x10qsb-1102.txt NEW MILLENNIUM MEDIA INTERNATIONAL 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 11 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 12 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