As filed with the Securities and Exchange Commission on August 28, 2000
Registration No. ________
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(Name of Small Business Issuer in Its Charter)
Colorado (7310) 84-1463284
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(State or jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification No.)
organization) Code Number)
101 Philippe Parkway, Suite 300
Safety Harbor, Florida 34695
(727) 797-6664
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(Address and Telephone Number of Principal Executive Offices
and Principal Place of Business)
John D. Thatch, President
New Millennium Media International, Inc.
101 Philippe Parkway Suite 300
Safety Harbor, Florida 34695
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(Name, Address and Telephone Number of Agent for Service)
Copies to:
Gerald C. Parker, Chairman of the Board of Directors
7820 South Holiday Drive
Suite 320
Sarasota, Florida 34321
(941) 925-2500
Fax (941) 925-2503
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this registration statement.
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |X|
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. | |
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. | |
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If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. | |
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. | |
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<CAPTION>
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CALCULATION OF REGISTRATION FEE
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Title of each Amount to Proposed maximum Proposed Amount of
class of be offering price maximum registration
securities to registered per unit aggregate fee
be registered offering
price
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<S> <C> <C> <C> <C>
Common stock 2,160,000 (1) $ 0.70 1,512,000 399.17
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Common stock(a) 17,181,818 (2) $ 0.70 12,027,273 3,175.20
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Common stock(b) 1,100,000 (3) $ 0.70 770,000 203.28
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Common stock(c) 1,718,182 (4) $ 0.70 1,202,727 317.52
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Common stock(d) 3,000,000 (1)(5) $ 0.70 2,100,000 554.40
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Totals 25,160,000 17,612,000 4,649.57
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</TABLE>
Title of each class of securities to be registered:
(a) Swartz Investment Agreement purchase over three years.
(b) Shares of Common Stock issuable upon exercise by Swartz "Commitment
warrants" and "additional warrants".
(c) Shares of Common Stock issuable upon exercise by Swartz "Purchase
warrants".
(d) Shares of Common Stock issuable upon conversion.
Proposed maximum offering price per unit:
(1) Based upon the average of the bid and asked prices of New Millennium Media
International, Inc. common stock as reported on the OTC Bulletin Board on
August 28, 2000 (within 5 business days of this filing), pursuant to Rules
457(c) and (g) of the Securities Act of 1933.
(2) Issuable periodically over a 36 months term pursuant to the Swartz
Investment Agreement. Swartz Private Equity, LLC will purchase under
Regulation D up to $25,000,000 of shares at a price of the lesser of the
market price minus $0.10 or 92% of the market price for 20 days following
each put date.
(3) Swartz has already received a "commitment warrant" ((c) above) to purchase
1,000,000 shares at signing the letter of intent at an initial price of
$0.30 per share and may thereafter be reset every 6 months. At the earlier
of March 15, 2001 or the date of the first put notice delivered to Swartz,
Swartz shall receive "additional warrants" (included in (c) above) for
additional shares and on the date of any reverse stock split and on each
one-year anniversary thereafter Swartz shall receive "additional warrants"
so that the sum of "commitment warrants" and "additional warrants" may
equal up to 4% of the number of fully diluted common outstanding shares.
The price shall be the same as that calculated for "commitment warrants".
(4) Issuable to Swartz Private Equity, LLC upon the exercise of common stock
purchase warrants. The warrants are issuable to Swartz from
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time to time when NMMI exercises its put right to sell shares of common
stock to Swartz. The exercise price of a warrant will initially be equal to
110% of the market price for that put and thereafter may be reset every six
months. Each warrant initially will be immediately exercisable and have a
term beginning on the date of issuance and ending five years thereafter.
(5) Issuable upon conversion of Series A Convertible Preferred stock issued to
Investment Management of America, Inc. The conversion ratio is 1:1.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
Filing Type: SB-2
Description: Registration Statement for
Small Business Issuers
Filing Date: August 28, 2000
Period End: N/A
Primary Exchange: Over the Counter Includes OTC and OTCBB
Ticker: NMMI
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Table of Contents
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Page
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Part I ............................................................ 9
Item 3, Summary Information and Risk Factors ....................... 9
Item 4, Use of Proceeds ............................................ 19
Item 5, Determination of Offering Price ............................ 19
Item 6, Dilution ................................................... 20
Item 7, Selling Security Holders ................................... 21
Item 8, Plan of Distribution ....................................... 22
Item 9, Legal Proceedings .......................................... 26
Item 10, Directors, Officers, Promoters and Control
Persons .................................................... 26
Item 11, Security Ownership of Certain Beneficial Owners
And Management ............................................. 27
Item 12, Description of Securities .................................. 28
Item 13, Interest of Named Experts and Counsel ...................... 29
Item 14, Disclosure of Position of Indemnification for
Securities Act Liabilities ................................. 30
Item 15, Organization within Last Five Years ........................ 30
Item 16, Description of Business .................................... 30
Item 17, Management's Discussion and Analysis or Plan of Operation .. 33
Item 18, Description of Property .................................... 34
Item 19, Certain Relationships and Related Transactions ............. 35
Item 20, Market for Common Equity and Related Stockholder
Matters .................................................... 35
Item 21, Executive Compensation ..................................... 36
Item 22, Financial Statements ....................................... 37
Part II ........................................................... 58
Item 23, Changes and Disagreements with Accounts on
Accounting and Financial Disclosures ....................... 58
Item 24, Indemnification of Directors and Officers .................. 58
Item 25, Other Expenses of Issuance and Distributions ............... 58
Item 26, Recent Sales of Unregistered Securities .................... 59
Item 27, Exhibits Index ............................................. 60
Item 28, Undertakings ............................................... 61
EX-3.1, Articles of Incorporation ..................................
EX-3.1(a), Designation of Preferred Stock .............................
EX-3.2, Bylaws of NMMI .............................................
EX-4.1, Swartz Agreement ...........................................
EX-4.2, Form of Commitment Warrants to Swartz ......................
EX-4.3, Form of Purchase Warrants to Swartz ........................
EX-4.4, Warrant Side-Agreement with Swartz .........................
EX-4.5, Registration Rights Agreement with Swartz ..................
EX-4.6, Letter Agreement with Swartz ...............................
EX-4.7, Employees Stock Option Plan ................................
EX-5.1, Legal Opinion ..............................................
EX-8.5, Form of Additional Warrants to Swartz ......................
EX-10.1, Contract with Investment Management of America, Inc. .......
EX-10.2, Progressive Mailer Corporation Merger Agreement ............
EX-10.3, LuFam Technologies, Inc. Asset Purchase Agreement ..........
EX-10.4, Unergi, Inc. Amended Agreement and Plan of Merger ..........
EX-10.5, Scovel Corporation Agreement and Plan of Merger ............
EX-10.6, Multiadd, LLC Exclusive Distribution Contract ..............
EX-10.7, Carson-Jensen-Anderson Enterprises, Inc.
Marketing Agreement ........................................
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EX-10.8, St. James Properties, Inc. Lease Contract ..................
EX-21.1, List of Subsidiaries .......................................
EX-23.1, Consent of Legal Counsel ...................................
EX-23.2, Consent of Independent Auditors ............................
EX-27.1, Financial Data Schedule ....................................
EX-99.1, Trademark Registration Pending Documents ...................
EX-99.2, John Thatch, President/CEO Employment Agreement ............
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PROSPECTUS
New Millennium Media International, Inc.
101 Philippe Parkway Suite 300
Safety Harbor, Florida 34695
(727) 797-6664
The Resale of 25,160,000 Shares of Common Stock
The selling price of the shares will be determined by market factors at the time
of their resale.
This prospectus relates to the resale by the selling shareholders of up to
25,160,000 shares of common stock. The selling shareholders may sell the stock
from time to time in the over-the-counter market at the prevailing market price
or in negotiated transactions. Of the shares offered,
o 2,160,000 shares are presently outstanding to accredited investors,
o up to 17,181,818 shares are issuable to Swartz Private Equity, LLC based on
an Investment Agreement dated as of May 19, 2000,
o up to 1,100,000 shares are issuable to Swartz Private Equity, LLC upon the
exercise of warrants issued to Swartz under the Investment Agreement as
Commitment Warrants and Additional Warrants,
o up to 1,718,182 shares are issuable to Swartz Private Equity, LLC upon the
exercise of warrants issued to Swartz under the Investment Agreement as
"Purchase Warrants",
o 3,000,000 shares are outstanding to Investment Management of America, Inc.
to convert 3,000,000 shares of Series A Convertible Preferred Stock.
We will receive no proceeds from the sale of the shares by the selling
shareholders. However, we have received proceeds from the sale of the Series A
Preferred shares that are presently outstanding and may receive up to $25
million of proceeds from the sale of shares to Swartz and we may receive
additional proceeds from the sale to Swartz of shares issuable upon the exercise
of any warrants that may be exercised by Swartz.
Our common stock is quoted on the over-the-counter Electronic Bulletin Board
under the symbol NMMI. On August 28, 2000, the average of the bid and asked
prices of the common stock on the Bulletin Board was $0.70 per share.
Investing in the common stock involves a high degree of risk. You should invest
in the common stock only if you can afford to lose your entire investment See
"Risk Factors" beginning on page 12 of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities nor determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is August 28, 2000.
Please read this prospectus carefully. It describes our company, finances,
products and services. Federal and state securities laws require that we include
in this prospectus all the important information that you will need to make an
investment decision.
You should rely only on the information contained or incorporated by reference
in this prospectus to make your investment decision. We have not authorized
anyone to provide you with different information. The selling shareholders are
not offering these securities in any state where the offer is not permitted. You
should not assume that the information in this prospectus is accurate as of any
date other than the date on the front page of this prospectus.
The following table of contents has been designed to help you find important
information contained in this prospectus. We encourage you to read the entire
prospectus.
Table of Contents
Page Page
Prospectus Summary.................. 7 Where You Can Find More
Summary Financial Data..............11 Information.......................29
Risk Factors........................12 Description of Business.............30
Use of Proceeds.....................19 Management's Discussion and
Price Range of Common Stock.........19 Analysis or Plan of Operation.....33
Dilution............................20 Description of Property.............34
Selling Security Holders............20 Certain Relationships and
Plan of Distribution................22 Related Transactions..............34
Swartz Investment Agreement.........22 Market for Common Equity and
Additional Securities Being Related Stockholder Matters.......35
Registered........................24 Executive Compensation..............36
Legal Proceedings...................26 Index to Financial Statements.......37
Directors and Officers..............26 Indemnification of Directors
Security Ownership of Certain and Officers......................58
Beneficial Owners and Expenses of Issuance and
Management........................27 Distribution......................58
Description of Securities...........28 Recent Sales of Unregistered
Interest of Named Experts Securities........................59
and Counsel.......................29 Exhibits Index......................60
Disclosure of Commission Undertakings........................61
Position of Indemnification Signatures..........................63
For Securities Act
Liabilities.......................30
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ITEM 3. SUMMARY INFORMATION AND RISK FACTORS
This summary highlights information contained elsewhere in this prospectus. This
summary is not complete and does not contain all of the information you should
consider before investing in the common stock. You should read the entire
prospectus carefully, including the "Risk Factors" section.
New Millennium Media International, Inc. was originally incorporated April 21,
1998 in Colorado under the name New Millennium Media International, Inc. On
April 30, 1998 Progressive Mailer Corp., a Florida corporation, merged into
NMMI. August 31, 1999 NMMI acquired Unergi, Inc., a Nevada corporation, by
merging Unergi into New Millennium Media, Inc., a Colorado corporation, a wholly
owned subsidiary of NMMI by way of a tax free reorganization.
Our principal executive offices are located at 101 Philippe Parkway, Suite 300,
Safety Harbor, Florida 34695, (727) 797-6664, fax (727) 797-7770.
Some of the statements contained in this prospectus, including statements under
"Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operation" and "Business," are
forward-looking and may involve a number of risks and uncertainties. Actual
results and future events may differ significantly based upon a number of
factors, including:
o our significant historical losses and the expectation of continuing losses;
o rapid technological change in the motion billboard industry;
o our reliance on key strategic relationships and accounts;
o the impact of competitive products, services and pricing;
o uncertain protection of our intellectual property rights; and
o uncertainty of our exclusivity in the United States regarding our purchase
of "Eye Catcher" display boards.
In this prospectus, we refer to New Millennium Media International, Inc. as
"NMMI" or "we". We refer to Swartz Private Equity, LLC as "Swartz".
OUR BUSINESS
According to the Outdoor Advertising Association of America, Inc. the outdoor
display advertising business reported earnings of 2.330 billion in 1998, an
increase of 9.1% over the previous year and the first quarter of 1999 revenues
were up 7.5% over the same period in 1998. This continued growth reflects the
popularity and effectiveness of outdoor and indoor advertising from both
existing and new advertisers. NMMI intends to capitalize on the demand for
display advertising in two ways. NMMI plans to install LED outdoor displays in
high traffic areas, and form joint ventures with strategic partners to place a
large number of indoor "Illumisign-Eyecatcher" patented eye catcher boards. NMMI
intends to secure highly visible sites throughout the United States and provide
superior service within the industry. The new millennium will demand the highest
digital quality and the most cost efficient LED advertising boards available. We
believe NMMI already has the product available and subject to available
financing we are ready to introduce the product to the consumer. NMMI has an
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opportunity to become an industry leader in the indoor and outdoor advertising
industry. NMMI has the exclusive U.S. rights to an indoor advertising board
called the Illumisign-EyeCatcher Display. This is a patented product, which
ranges in size from 11"x17" to 48"x72". These signs can display up to 24
advertisements on a rotating basis. Each rotation can be set to run from three
seconds to one hour. Illumisigns can generate revenues up to $5,000 a month per
display.
NMMI has another product from a manufacturer of LED boards. NMMI has partnered
with E-Vision LED, Inc., a U.S. based company whose affiliates manufacture LED
displays. E-Vision will sell us the LED boards at manufacturer's cost and will
be a limited partner in the revenues that the boards produce. This allows NMMI
to purchase the highest quality product at a greatly reduced cost. This business
arrangement should also enable us to deploy approximately 2 1/2 times the number
of boards that we would otherwise have been able to. We also have teamed up with
several advertising companies throughout the country. This enables us to sell
advertisements on a national level that will benefit us in placing boards
throughout the U.S.
E-Vision's supplier has the capability to manufacture any size board including
boards for sporting events. These LED boards can operate any commercial format
on any size board. Management believes this gives NMMI a strong competitive
advantage over other display boards for which the commercial must be reformatted
which often takes weeks. E-Vision LED displays will run any format on any size
board with consistent color quality and clarity. Color quality and clarity are
very important to a national advertiser who wants their colors and logos the
same on all boards. E-Vision will assist NMMI with training and support from the
first board and will provide NMMI with ongoing assistance in all aspects of
programming, technical and software support. As a manufacturing partner,
E-Vision and its affiliates will supply NMMI, free of charge software upgrades
as they become available. NMMI also has an agreement for the U.S. distribution
rights from Multiadd, a Great Britain based company and its patent owner,
Maurice Grosse. Multiadd manufactures a patented indoor display board, which is
called the "Illumisign-Eyecatcher" display. This display is steel incased, front
lighted, and displays poster type ads. The "Illumisign-Eyecatcher" is capable of
displaying up to 24 advertisements from size 11"x17" to 48"x72." Each
advertisement has the ability to rotate in cycles of two seconds to one hour.
This is a significant advantage over other indoor boards, as the competitive
boards only display one to ten poster ads at a time.
OUR INVESTMENT AGREEMENT
We have entered into an Investment Agreement with Swartz Private Equity, LLC
("Swartz") to raise up to $25 million over a term ending 36 months after the
effective date of this registration statement through a series of sales of our
common stock to Swartz. The dollar amount of each sale is limited by our common
stock's trading volume. A minimum period of time must occur between sales. In
turn, Swartz will either sell our stock in the open market, sell our stock to
other investors through negotiated transactions or hold our stock in its own
portfolio. This prospectus covers the resale of our stock by Swartz either in
the open market or to other investors.
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ADDITIONAL SHARES WE ARE REGISTERING
On April 12, 2000 we designated 5,000,000 of the 10,000,000 authorized Preferred
shares as Series A Convertible Preferred Stock, par value $0.001, and issued
3,000,000 shares as Series A Convertible Preferred Stock to Investment
Management of America, Inc. A fund of 3,000,000 shares of Common Stock from
which to convert the 3,000,000 shares of Series A Convertible Preferred Stock is
included in this registration statement.
Recently, we conveyed an aggregate of 2,160,000 shares of common stock to
certain qualified private investors. This number includes options, see Item 26,
Recent Sales of Unregistered Securities. The resale of these shares of common
stock by the private investors is included in this registration statement.
Key Facts
Total shares outstanding prior 24,099,462(1) as of August 28, 2000
to this offering
Shares being offered for resale 25,160,000(2) (Maximum)
to the public
Total shares outstanding after 52,259,462
this offering
Price per share to the public Market price at time of resale
Total proceeds raised by offering None; however, we have received proceeds
from the sale of shares that are
presently outstanding, we may receive up
to $25 million from the sale to Swartz of
shares issuable upon the exercise of any
warrants issued to Swartz pursuant to the
Investment Agreement.
Use of proceeds from the sale We plan to use the proceeds for working
of the shares to Swartz capital and general corporate purposes.
OTC Bulletin Board Symbol NMMI
(1) Does not include 3,000,000 shares of Series A Convertible Preferred Stock
issued to Investment Management of America, Inc.
(2) Includes (i) 2,160,000 shares that are presently outstanding to qualified
investors, (ii) up to 17,181,818 shares that may be issued to Swartz
pursuant to the Investment Agreement, (iii) 1,100,000 shares underlying
warrants issued and issuable to Swartz in connection with the Investment
Agreement, (iv) 3,000,000 shares as a pool from which to issue the ESOP
shares as required from time to time, (v) 3,000,000 shares of Common Stock
from which to convert the 3,000,000 shares of Class A Convertible Preferred
Stock issued to Investment Management of America, Inc.
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SUMMARY FINANCIAL DATA
The information below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the financial statements and notes thereto included elsewhere in this
prospectus.
Year Ended Six Months Ended
December 31 June 30
----------- -------
1998 1999 1999 2000
---- ---- ---- ----
(Unaudited) (Unaudited)
Revenues 10,632 49,176 6,911 --
Operating Expenses 616,856 495,161 132,626 123,875
Net Loss 606,224 445,985 125,715 123,875
Loss per share 0.15 0.03 0.009 0.005
Weighted average number of
common shares outstanding 3,662,500 14,704,940 13,968,333 23,589,672
March 31, 2000
--------------
(Unaudited)
Balance Sheet Data:
Working capital .............................. (942,445)
Total assets ................................. 1,515,046
Total liabilities ............................ 1,795,138
Shareholders' deficit ........................ (280,098)
RISK FACTORS
An investment in the shares of Common Stock of New Millennium Media
International, Inc. offered hereby involves a high degree of risk. The
prospective investor should consider carefully the following risk factors, in
addition to the other information obtained by the investor in evaluating an
investment in shares of Common Stock offered hereby. The materials provided to
the investor contain forward-looking statements that involve risks and
uncertainties and address, among other things, the Company's acquisition and
expansion strategy, use of proceeds, capital expenditures, liquidity,
third-party contractual arrangements, cost-reduction strategy, integration of
acquired companies, and product demand. Actual results may differ materially
from those discussed in forward-looking statements as a result of various
factors, including those set forth below.
THE COMPANY HAS LIMITED OPERATING HISTORY AND FUTURE REVENUES ARE UNPREDICTABLE.
In July 1999 NASD enacted an eligibility rule that requires any public company
to be in full compliance with all of the financial reporting requirements of the
Securities Act. On January 25, 2000 NMMI received a thirty-day eligibility
symbol because of its failure to timely file the required certified financial
reports. On February 24, 2000 NMMI was "delisted" and placed on the "pink
sheets" National Quotation System. In lieu of filing form 10 and bring current
the needed certified financial statements by certified audit, the Company
elected to reverse merge with a compliant shell corporation. Thus, the Company
completed the process of a reverse merger with Scovel Corporation wherein New
Millennium Media International, Inc. was the surviving entity with the ultimate
result of the Company's Common Stock being traded Bulletin Board. There can be
no assurance that the intended
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result will be achieved. It is not certain that the Company has the technical
capability to support the potential that the Illumisign-Eyecatcher and LED
boards could attract. The Company has just begun to actively sell its
advertising product and it has no operating history available to evaluate its
business and prospects. Potential investors should consider the Company's
prospects in light of the following risks, expenses and uncertainties that may
be encountered by development stage companies, which risks and uncertainties
include:
o an evolving and unproven business model;
o management of an expanding business in a rapidly changing market;
o attracting new advertising customers and maintaining customer satisfaction;
o locating and leasing suitable site locations, indoor and outside, for the
display boards;
o introducing new and enhanced innovative display services, products and
alliances;
o attaining acceptable profit margins notwithstanding competition and rising
wholesale prices; and
o minimizing technical difficulties, display board downtime and the effect of
competition from other media.
As a result of the Company's lack of operating history and the emerging nature
of the media in which it competes, it is unable to accurately forecast its
revenues. The Company's current and future expense levels are based
predominantly on its operating plans and estimates of future revenues. The
Company may be unable to adjust spending in a timely manner to compensate for
any unexpected revenue shortfall. Accordingly, any significant shortfall in
revenues would likely have an immediate material adverse effect on its business,
operating results and financial condition. Further, the Company currently
intends to substantially increase its operating expenses to purchase additional
display boards, indoor and outdoor, as well as develop additional site
locations. It is intended the Company will be innovative in its choice of sites
and the location within the sites.
The Company expects to experience significant fluctuations in its future
operating results due to numerous factors, many of which are outside the
Company's control. Factors that may adversely affect the Company's operating
results include, but are not limited to:
o the Company's ability to attract and retain advertising customers at a
steady rate and maintain customer satisfaction,
o the continued availability of the various size and model display board,
o the Company's ability to locate and lease suitable site locations for
placement of the display boards,
o the announcement or introduction of new sites, services and enhanced
products by competitors,
o general economic conditions and economic conditions specific to the
advertising industry,
o the level of response and consumer acceptance of the display boards for the
purchase of consumer products and services,
o the Company's ability to upgrade and develop its display systems and
infrastructure and to attract and retain personnel in a timely and
effective manner,
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o many cities and states have regulations that prohibit LED signs on the
basis that the signs may be distracting to passing drivers and may lead to
an increase in the number of traffic accidents,
o the amount and timing of operating costs and capital expenditures relating
to expansion of the Company's business, operations and infrastructure.
If the Company does not successfully manage these risks, its business, operating
results and financial condition would be materially adversely affected. The
Company cannot assure you that it will successfully address these risks or that
its business strategy will be successful. If the Company does not become
profitable, you may lose your entire investment.
THE COMPANY HAS INCURRED LOSSES AND EXPECTS TO INCUR SUBSTANTIAL NET LOSSES FOR
THE FORESEEABLE FUTURE.
Since inception, the Company has been operating at a loss and expects that
operating losses and negative cash flow will continue for the foreseeable future
as it invests in marketing and promotional activities, technology and equipment
systems. The Company believes that increasing its revenues will depend in large
part on its ability to:
o develop and lease suitable site locations;
o generate innovative spots within the site locations that are best suited
for effective marketing and other promotional activities;
o develop consumer awareness and recognition for our advertisers
o generate interest in advertisers for our brand display board product;
o continued development of enhancing our existing display boards and
development of newer innovative display boards to stay ahead of competitors
in this market;
o attract suitable talented personnel who are able to recognize potential
customers, advertisers, locations and improvements of the display boards;
o provide its customers, both advertisers and location owners, with a quality
trouble-free product and quality courteous service;
o develop strategic relationships.
The Company's future profitability depends on generating and sustaining high
revenue growth while maintaining reasonable expense levels. Slower revenue
growth than the Company anticipated or operating expenses that exceed its
expectations would adversely affect its business, operating results and
financial condition. The Company cannot be certain when or if it will achieve
sufficient revenues in relation to expenses to become profitable. If the Company
is unable to become profitable, you will lose your entire investment.
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 our financial statement, the Company has initiated several actions to
generate working capital for expected advertising growth.
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There can be no assurance that the Company will be success in implementing its
plans, or if such plans are implemented, that the Company will be successful.
THE COMPANY WILL NEED ADDITIONAL CAPITAL TO FUND ITS BUSINESS.
The Company requires substantial working capital to fund its business and may
need more in the future to:
o fund negative cash flow from operations for the foreseeable future,
o complete additional acquisitions to expand the distribution system,
o acquire additional equipment and to improve and enhance the functionality,
capacity and performance of its display boards.
Based on the its current operating plan, it anticipates that the net proceeds
from this transaction with Swartz Private Equity, LLC, together with Company
available funds, will be sufficient to satisfy its anticipated needs for working
capital, capital expenditures and business expansion for the foreseeable future.
Alternatively, it may need to raise additional funds sooner in order to fund
more rapid expansion, to develop new or enhanced equipment (display boards, both
indoor and outdoor), services, site locations or to respond to competitive
pressures. If the Company raises additional funds by issuing equity or
convertible debt securities, the percentage ownership of its stockholders will
be diluted. Further, any new securities could have rights, preferences and
privileges senior to those of the preferred stock and common stock.
The Company currently does not have any commitments for additional financing. It
cannot be certain that additional financing will be available in the future to
the extent required or that, if available, it will be on acceptable terms. If
adequate funds are not available on acceptable terms, the Company may not be
able to fund its expansion, consummate acquisitions, develop or enhance its
products or services or respond to competitive pressures.
RELIANCE ON ADVERTISING SALES AND LOCATION LEASES; POTENTIAL ADVERSE CHANGES IN
COMMISSION PAYMENTS.
The Company is dependent on selecting the proper display boards in the most
suitable location with the most dynamic advertising material for the particular
needs of the advertiser in order to offer its customers the quality results that
are necessary for a continuing lasting business relationship. The Company
currently has agreements with its display board suppliers that obligate the
Company to purchase display boards and products over an extended period of time.
In addition, the Company currently has agreements with its advertisers and
locations. Accordingly, advertisers could elect to display visual ads with the
site locations directly or through other sales and distribution channels which
could significantly decrease the amount of its business, operating results and
financial condition.
In addition, substantially all of the Company's sales are dependent on the
commissions customarily paid by advertisers for ad placements. Consistent with
industry practices, these advertising sales people are not obligated to direct
their advertising customers to any particular
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agency or media of advertising. Accordingly, advertisers can reduce current
industry commission rates or eliminate such commissions entirely and deal
directly with the locations, which would have a material adverse effect on
Company business, operating results and financial condition. For example, there
can be no assurance that advertisers will chose to deal through an agency with
whom the Company has a relationship or deal directly with the owner of the site
location for the placement of a static visual poster type ad.
CURRENT CONTRACTS OF SIGNIFICANCE.
MultiAdd is a Great Britain based company that manufactures and is patent
licensee in the United States for the "Illumisign-Eyecatcher" indoor display
boards. MultiAdd has signed an agreement giving NMMI the exclusive rights to
operate, distribute and sell the "Illumisign-Eyecatcher" boards in the United
States. Should this contract be terminated it could cause a material adverse
affect to the company and its operations.
THE COMPANY'S BRAND MAY NOT ATTAIN SUFFICIENT RECOGNITION.
The Company believes that establishing, maintaining and enhancing its brand
(NMMI brand) is a critical aspect of its efforts to attract and expand its
advertising customer base. The number of visual billboard advertisers that offer
competing services, many of which already have well-established brands
generally, increase the importance of establishing and maintaining brand name
recognition. Promotion of the Company's NMMI brand name will depend largely on
its success in providing a high quality advertising experience supported by a
high level of customer service, which cannot be assured. To attract and retain
advertiser customers and to promote and maintain its quality site locations, the
Company may find it necessary to increase substantially its financial commitment
to creating and maintaining a strong brand loyalty among customers. This will
require significant expenditures on advertising and marketing its own brand
name. Each display board will display the Company's own brand name, address and
phone number. If the Company is unable to provide high-quality advertisers,
displays and locations and customer support, or otherwise fails to promote and
maintain high quality advertising, or if it incurs excessive expenses in an
attempt to promote and maintain high quality, its business, operating results
and financial condition would be materially adversely affected.
THE ADVERTISING INDUSTRY IS SUBJECT TO ECONOMIC CONDITIONS AND OTHER UNFORESEEN
EVENTS.
The advertising industry, especially visual display media, is dependent on
personal spending levels and habits of the consuming public. It is also
sensitive to changes in economic conditions and tends to increase during general
economic downturns and recessions. The advertising industry is also highly
susceptible to unforeseen events, such as new trend products, regional
necessities, discretionary spending, price fluctuation, weather patterns and
innovative advertising media. Any event that results in economic decline
generally would likely have an ultimate material adverse effect on the
advertising business, its operating results and financial condition.
COMPETITION.
For years the billboard industry has seen several consolidations with large
corporate owners acquiring smaller (fewer than 50 billboards)
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independent operators. The purpose of these consolidations is to provide a
platform for the corporate owners to attract large regional and national
advertisers. Billboard advertising has evolved from painted signs without
lights, to lighted signs, to vinyl covered signs to prism boards (three sided
boards which rotate three ads). Advertisers soon learned that rotating signs
attract the attention of viewers much more effectively than static signs. Today,
the prism sign is second only to LED display signs in popularity with
advertisers. The most prominent LED display sign is in Times Square in New York
City. Despite the effectiveness of LED outdoor advertising, the billboard
industry is slowly moving to the LED display sign because most large companies
have a substantial investment in static signs. The cost to change a traditional
static board to an LED display approximately $1,000.000 to $2,000.000. Another
reason is that LED signs may only be installed in certain traffic areas because
many cities and states have regulations that prohibit LED and prism signs on the
basis that the signs may be distracting to passing drivers and may lead to an
increase in the number of traffic accidents. NMMI has targeted markets where
this may not be an issue.
There are two reasons for the changes in outdoor advertising. First,
technological improvements have made the prism and LED boards affordable.
Second, moving ads have a much greater impact on viewers than static ads. In a
digital society there must be an effective way for advertisers to display their
product in its true form. The competition in indoor advertising is limited. Most
indoor companies sell single poster board advertisements, ranging from all
different sizes and place them in theaters, malls, airports, etc. One competitor
has a board similar to the Illumisign-Eyecatcher board, but it rolls paper ads
form one end to the other. These boards are expensive to maintain and cost much
more for ad production than the "Illumisign-Eyecatcher" board.
The Company needs to keep up with rapid technological changes that affect
movable visual billboard advertising. To remain competitive, the Company must
continue to enhance and improve the customer service, responsiveness, quality of
spot and site locations, visual functionality of the boards and the display ad
and ultimate customer response. Indoor and outdoor billboard advertising are
characterized by:
o Rapid technological change;
o Changes in advertiser requirements and preferences;
o Changes in consumer requirements and preferences
o Frequent new product and service introductions embodying new technologies;
o The emergence of new industry standards and practices.
The evolving nature of the Internet already has a major effect on the presently
existing methods of advertising. This trend is destined to continue to affect
not only visual advertising in general, but also proprietary technology and
systems. The Company's success will depend, in part, on its ability to:
o Stay abreast of leading technologies useful in the Company's business;
o Enhance its existing services;
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o Develop new services and technology that address the increasingly
sophisticated and varied needs of its customers; and
o Respond to technological advances and emerging industry standards and
practices on a cost-effective and timely basis.
The development of the Company's visual display board business entails
significant business risks. The Company might not successfully use new
technologies effectively or adapt its existing capabilities, high technology
equipment and transaction producing efforts to customer requirements or emerging
industry standards. If it is unable, for technical, legal, financial or other
reasons to adapt in a timely manner, in response to changing market conditions
or customer requirements, its business, financial condition and results of
operations could be adversely affected.
THE COMPANY'S PROPOSED GROWTH MAY ADVERSELY AFFECT ITS OPERATING RESULTS.
The Company's proposed growth plan involves a number of special risks including:
o failure of the Company to achieve the results it expects,
o diversion of its management's attention from operational matters,
o its inability to retain key personnel,
o risks associated with unanticipated events or liabilities,
o potential disruption of its business,
o customer dissatisfaction or performance problems at the site locations,
o vandalism or intentional destruction or theft of the display boards.
PURCHASERS OF THE COMMON STOCK IN THIS TRANSACTION WILL EXPERIENCE SUBSTANTIAL
DILUTION.
Based upon the terms of the Investment agreement, purchasers of the common stock
could experience a substantial dilution in net tangible book value of the
Company's Common Stock purchased. The stock issued in connection with this
transaction will be valued at the closing based upon the price per share as
required in the fully executed Investment Agreement. The Company cannot
presently ascertain the number of shares to be issued after the closing. Under
the Investment Agreement this number may be up to 17,181,818 shares, plus any
additional shares as may be registered in the future for SEC purposes.
Consequently, purchasers of the Company's stock may experience substantial
dilution in the future up to the number of shares registered.
NO PUBLIC MARKET FOR STOCK.
The Company's common stock may be deemed a penny stock. Penny stocks generally
are equity securities with a price of less than $5.00 per share other than
securities registered on certain national securities exchanges or quoted on the
Nasdaq Stock Market, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system. The Company's securities may be subject to "penny stock rules" that
impose additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000 or $300,000 together with their spouse). For
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transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
"penny stock rules" require the delivery, prior to the transaction, of a
disclosure schedule prescribed by the Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock rules" may restrict the ability of broker-dealers to sell the Company's
securities. The foregoing required penny stock restrictions will not apply to
the Company's securities if such securities maintain a market price of $5.00 or
greater. As of the date of this report, the trading price of New Millennium's
common stock is in excess of $5.00 per share, although there can be no assurance
that the price of the Company's securities will maintain such a level.
ITEM 4. USE OF PROCEEDS
The net proceeds from the sale of the shares of Common Stock of New Millennium
Media International, Inc. to Swartz Private Equity, LLC at a total gross
aggregate price of up to twenty five million dollars ($25,000,000) is intended
to be used for the following purposes:
o to fund anticipated operating losses, including sales and marketing
expenses;
o to purchase additional equipment and LED Display Boards and indoor
Illumisign-Eyecatcher display boards;
o for working capital and other general corporate purposes; and
o and to fund payment obligations for contemplated acquisitions and corporate
partnering arrangements.
We reserve the right to vary the use of proceeds among the categories listed
above 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.
From time to time we also expect to evaluate possible acquisitions of, or
investment in businesses and technologies that are complementary to our business
and technologies and may use net proceeds from the sale for such purposes. While
we consider potential investments or acquisitions from time to time, we have no
firm plans, commitments or agreements with respect to any such investment or
acquisitions.
Until we use the net proceeds of the offering, we will invest the funds in
investment grade, interest-bearing securities.
ITEM 5. PRICE RANGE OF COMMON STOCK
Subsequent to our delisting on February 24, 2000 our common stock is presently
trading on the "pink sheets"; prior to the delisting the common stock traded on
the OTC. 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 second quarter
of 1998 when the company was incorporated, through the second quarter of 2000.
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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
---- -------- -------
1998
----
Second Quarter .875 .875
Third Quarter 1.000 1.000
Fourth Quarter .437 .406
1999
----
First Quarter .313 .313
Second Quarter .406 .406
Third Quarter .125 .125
Fourth Quarter .120 .120
2000
----
First Quarter .875 .875
Second Quarter 1.000 1.000
Third quarter through August 11, 2000 .700 .700
ITEM 6. DILUTION
At June 30, 2000, we had a net tangible book value of $(1,132,187) or
approximately $(.05) per share of common stock. Net tangible book value per
share represents the amount of our total tangible assets less our total
liabilities, divided by the number of shares of common stock outstanding. After
giving effect to the receipt of the estimated net proceeds from our sale of the
offering price of $.90 per unit (after deducting underwriting discounts and
estimated offering expenses payable by us) the net tangible book value as of
June 30, 2000, would have been approximately $16,237,813 or $.37 per share of
common stock. This would represent an immediate increase in the net tangible
book value per share of common stock of $.42 to existing shareholders and an
immediate dilution of $.63 per share to new investors purchasing our units in
the offering. Dilution is determined by subtracting net tangible book value per
share after the offering from the offering price to investors.
The following table illustrates this per share dilution:
Assumed offering price per share of class A common
stock contained in our unit $ 1.00
Net tangible book value per share of common stock
before the offering $ (.05)
Increase attributable to new investors $ .42
Proforma net tangible book value after the offering $ .37
Dilution to new investors $ .63
Percentage of dilution to new investors 63%
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The following table summarizes the number of shares of common stock newly issued
under this Registration Statement. The table reflects 1,000,000 commitment
warrants at $.30 a share and 19,000,000 shares at $1.00.
The table, with respect to new investors, gives effect to 20,000,000 shares as
if issued June 30, 2000.
Share Purchased Consideration Paid Average Price
Number Percentage Amount Percentage Per Share
------ ---------- ------ ---------- ---------
Existing Shareholders 24,099,462 53.57 $ 963,978 .04
New Investors 20,000,000 46.43 $ 20,000,000 1.00
---------- ----- ------------
Total 44,099,462 100.00% $ 20,963,978 .49
ITEM 7. SELLING SECURITY HOLDERS
The following table provides certain information with respect to the selling
shareholders' beneficial ownership of our common stock as of the date of this
filing and as adjusted to give effect to the sale of all of the shares offered
hereby except Investment Management of America, Inc. Other than Investment
Management of America, Inc., none of the selling shareholders currently is an
affiliate of ours and none of them has had a material relationship with us
during the past three years. None of the selling shareholders are or were
affiliated with registered broker-dealers. See "Plan of Distribution." The
selling shareholders possess sole voting and investment power with respect to
the securities shown.
Shares Beneficially
Owned
Number of Shares After Offering
--------------
Beneficially Owned Number of Number
Name Before Offering Shares Offered of Shares Percentage
---- --------------- -------------- --------- ----------
Swartz Private
Equity, LLC 1,000,000 0,000,000(1) -0-(2) -0-
Investment Management
of America, Inc. 6,632,080(3) 3,000,000 6,632,080 21%
Raymond D. Benedict 20,000 20,000 20,000
Thomas H. Breiter 20,000 20,000 20,000
Alan D. Bridges 10,000 10,000 10,000
Thomas Daley 20,000 20,000 20,000
William L. Gaskins 4,000 4,000 4,000
Kirtinai Jeerapaet 30,000 30,000 30,000
Michael McEnany 30,000 30,000 30,000
John T. Puls 200,000 200,000 200,000
Richard Puls 8,000 8,000 8,000
Barry Rusche 5,000 5,000 5,000
Charles Saulino 100,000 100,000 100,000
Paul Skversky 10,000 10,000 10,000
Bonnie Sonnenfield 10,000 10,000 10,000
Rosalie Stall 5,000 5,000 5,000
HNC Associates, LLC 100,000 100,000 100,000
Gerry Ghini 500,000 500,000 500,000
Russell Wahl 400,000 400,000 400,000
Eric Kennedy 100,000 100,000 100,000
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William H. Simon 500,000 500,000 500,000
William Acquaviva 10,000 10,000 10,000
Robert Colvin 10,000 10,000 10,000
William Long 10,000 10,000 10,000
Timothy Meenan 10,000 10,000 10,000
Randall Willis 3,000 3,000 3,000
Jack Wynn 5,000 5,000 5,000
Peter Jensen 40,000 40,000 40,000
(1) Represents the maximum number of shares of common stock that we may sell to
Swartz pursuant to the Investment Agreement Puts and upon the exercise by Swartz
of Warrants issued or issuable in connection with the Investment Agreement. It
is expected that Swartz will not own beneficially more than 9.9% of our
outstanding common stock at any time.
(2) Assumes that Swartz shares will eventually be resold by Swartz and none will
be held for its own account.
(3) 3,000,000 shares of Series A Convertible Preferred that will convert to
Common stock on a 1:1 ratio. Three of the officers and directors of Investment
Management of America, Inc. serve on the board of directors of NMMI.
ITEM 8. PLAN OF DISTRIBUTION
SWARTZ INVESTMENT AGREEMENT
On May 19, 2000, we entered into an Investment Agreement with Swartz. The
Investment Agreement entitles us to issue and sell our common stock to Swartz
for up to an aggregate of $25 million from time to time during the three-year
period following the date of effectiveness of a registration statement covering
the resale of the shares to be put to Swartz. Each election by us to sell stock
to Swartz is referred to as a "put right".
Put rights. In order to invoke a put right, we must have an effective
registration statement on file with the SEC registering the resale of the shares
of common stock that may be issued as a consequence of the exercise of that put
right. We must also give at least 10, but not more than 20 business days'
advance notice to Swartz of the date on which we intend to exercise a particular
put right and we must indicate the maximum number of shares of common stock that
we intend to sell to Swartz. At our option, we may also designate a maximum
dollar amount of common stock (not to exceed $2 million) that we will sell under
the put and/or a minimum purchase price per common share at which Swartz may
purchase shares under the put. The number of shares of common stock sold to
Swartz in a put may not exceed the lesser of: (i) 15% of the aggregate daily
reported trading volume of our common shares, excluding certain block trades of
our common stock during the twenty business days after the date of our put
notice, excluding trading days in which the common stock trades below a minimum
price, if any, that we specify in our put notice: (ii) 15% of the aggregate
daily reported trading volume of our common shares during the twenty business
days before the put date, excluding certain block trades; or (iii) a number of
shares that, when added to the number of shares acquired by Swartz under the
Investment Agreement during the thirty one days preceding the put date, would
exceed 9.99% of our total number of shares of common stock outstanding (as
calculated under Section 13(d) of the Securities Exchange Act of 1934).
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For each share of common stock, Swartz will pay us the lesser of:
o The market price for such share, minus $.10 or
o 92% of the market price for the share;
provided, however, that Swartz may not pay us less than the designated minimum
per share price, if any, that we indicate in our notice.
Market price is defined as the lowest closing bid price for the common stock on
its principal market during the pricing period. The pricing period is defined as
the 20 business days immediately following the day we exercise the put right.
Warrants. Within five business days after the end of each pricing period, we are
required to issue and deliver to Swartz a warrant to purchase a number of shares
of common stock equal to 10% of the common shares issued to Swartz in the
applicable put. Each warrant will be exercisable at a price that will initially
equal 110% of the market price for that put and thereafter may be reset every
six months. Each warrant will be immediately exercisable and have a term
beginning on the date of issuance and ending five years thereafter.
Limitations and conditions precedent to our put rights. Swartz is not required
to acquire and pay for any shares of common stock with respect to any particular
put for which, between the date we give advance notice of an intended put and
the date the particular put closes:
o we have announced or implemented a stock split or combination of our common
stock;
o we have paid a common stock dividend;
o we have made a distribution of all or any portion of our assets or
evidences of indebtedness to the holders of our common stock; or
o we have consummated a major transaction, such as a sale of all or
substantially all of our assets or a merger or tender or exchange offer
that results in a change of control of NMMI.
Short sales. Swartz and its affiliates are prohibited from engaging in short
sales of our common stock unless Swartz has received a put notice and the amount
of shares involved in the short sale does not exceed the number of shares
specified in the put notice.
Cancellation of puts. We must cancel a particular put between the date of the
advance put notice and the last day of the pricing period if:
o we discover an undisclosed material fact relevant to Swartz's investment
decision;
o the registration statement registering resales of the common shares becomes
ineffective; or
o our shares are delisted from the then primary exchange.
If a put is canceled, it will continue to be effective, but the pricing period
for the put will terminate on the date notice of cancellation of the put is
given to Swartz. Because the pricing period will be shortened, the number of
shares Swartz will be required to purchase in the canceled put will be smaller
than it would have been had the put not been canceled.
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Shareholder approval. Under the Investment Agreement, we may sell Swartz a
number of shares that is more than 20% of our shares outstanding on the date of
this prospectus. If we become listed on The NASDAQ Small Cap Market or Nasdaq
National Market, we may be required to obtain shareholder approval to issue some
or all of the shares to Swartz. As we are currently a Bulletin Board company, we
do not need shareholder approval.
Termination of Investment Agreement. We may terminate our right to initiate
further puts or terminate the Investment Agreement at any time by providing
Swartz with notice of such intention to terminate; however, any such termination
will not affect any other rights or obligations we have concerning the
Investment Agreement or any related agreement.
Restrictive covenants. During the term of the Investment Agreement and for a
period of 6 months after the Investment Agreement is terminated, we are
prohibited from engaging in certain transactions. These include the issuance of
any equity securities, or debt securities convertible into equity securities,
for cash in a private transaction without obtaining the prior written approval
of Swartz. We are also prohibited from entering into any private equity line
type agreements similar to the Investment Agreement without obtaining Swartz's
prior written approval.
Right of first refusal. Swartz has a right of first refusal, subject to another
first refusal obligation for which we are contractually obligated, to
participate in any private capital raising transaction of equity securities that
closes from the date of the Investment Agreement (July 9, 1999) through 6 months
after the Investment Agreement is terminated.
Swartz's right of indemnification. We have agreed to indemnify Swartz (including
its stockholders, officers, directors, employees, investors and agents) from all
liability and losses resulting from any misrepresentations or breaches we make
in connection with the Investment Agreement, our registration rights agreement,
other related agreements, or the registration statement.
ADDITIONAL SECURITIES BEING REGISTERED
NMMI needed three million shares of common stock to satisfy overdue contractual
obligations of two individuals. NMMI did not have available sufficient shares of
common stock to satisfy this requirement, but had available ten million shares
of Preferred Stock. Investment Management of America, Inc. is the owner of
approximately twelve million shares of NMMI Common Stock. The NMMI Board of
Directors passed a resolution creating a Series A Convertible Preferred Stock as
to five million shares of the Preferred Stock. On April 12, 2000 NMMI entered
into an agreement with Investment Management of America, Inc. wherein Investment
Management of America, Inc. traded three million shares of its Common Stock for
three million shares of NMMI's Series A Convertible Preferred Stock with the
contractual requirement that NMMI will authorize at least three million
additional shares of Common Stock and include the three million shares of Common
Stock in this SB-2 filing, thus creating the shares of Common Stock for
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which Investment Management of America, Inc. can convert its Series A
Convertible Preferred Stock.
On July 17, 2000 the shareholders voted to amend the Articles of Incorporation
to increase the number of authorized shares of common stock from 25,000,000 to
75,000,000 to fulfill the requirements of the Swartz Investment Agreement and to
permit conversion of the preferred stock.
The Company is obligated to register, along with the registration of the shares
contemplated by this registration 2,160,000 shares that we sold to accredited
investors.
Each selling shareholder is free to offer and sell his or her common shares at
such times, in such manner and at such prices as he or she may determine. The
types of transactions in which the common shares are sold may include
transactions in the over-the-counter market (including block transactions),
negotiated transactions, the settlement of short sales of common shares or a
combination of such methods of sale. The sales will be at market prices
prevailing at the time of sale or at negotiated prices. Such transactions may or
may not involve brokers or dealers. The selling shareholders have advised us
that they have not entered into agreements, understandings or arrangements with
any underwriters or broker-dealers regarding the sale of their shares. The
selling shareholders do not have an underwriter or coordinating broker acting in
connection with the proposed sale of the common shares.
The selling shareholders may sell their shares directly to purchasers or to or
through broker-dealers, which may act as agents or principals. These
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the selling shareholders. They may also receive compensation
from the purchasers of common shares for whom such broker-dealers may act as
agents or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). Swartz
is, and each remaining selling shareholder and any broker-dealer that assists in
the sale of the common stock may be deemed to be, an underwriter within the
meaning of Section 2(a)(11) of the Securities Act. Any commissions received by
such broker-dealers and any profit on the resale of the common shares sold by
them while acting as principals might be deemed to be underwriting discounts or
commissions.
Because Swartz is and the remaining selling shareholders may be deemed to be
"underwriters" within the meaning of Section 2(a)(11) of the Securities Act, the
selling shareholders will be subject to prospectus delivery requirements.
We have informed the selling shareholders that the anti-manipulation rules of
the SEC, including Regulation M promulgated under the Securities and Exchange
Act, may apply to their sales in the market and has provided the selling
shareholders with a copy of such rules and regulations.
Selling shareholders also may resell all or a portion of the common shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of such Rule.
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We are responsible for all costs, expenses and fees incurred in registering the
shares offered hereby. The selling shareholders are responsible for brokerage
commissions, if any, attributable to the sale of such securities.
ITEM 9. 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. The plaintiff, Joseph Maenza, is seeking to collect
payment of a promissory note in the principal amount of $50,000 plus interest
from February 1999 and attorney fees. The Company filed an Answer and
Affirmative Defenses alleging, among other issues, that the interest stated in
the promissory note is usurious. On August 3, 2000 this case was dismissed
without prejudice. As of the filing of this report, the plaintiff has not
refilled the suit.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following are officers and directors of the Company.
Name Age Position
---- --- --------
Gerald Parker 58 Chairman of the Board
John Thatch 38 Chief Executive Officer,
President and Director
Andrew Badolato 36 Chief Financial Officer, Vice
President/Corporate Finance
and Director
Antonio P. Gomes 37 Vice President/Strategic
Planning
All 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.
GERALD C. PARKER, CHAIRMAN OF THE BOARD OF DIRECTORS
Mr. Parker has been Chairman of the Board of the Company since May 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
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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 May 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 May 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 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of our common stock as of the date of this filing 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 that are currently
exercisable or exercisable within 60 days of August 28, 2000 have been included
in the table.
Name and Address Amount and Nature Percent of Class
of Beneficial of Beneficial
Owner Ownership Before Offering(1) After Offering
------------------ ---------- ------------------ --------------
John Thatch 2,500,000 10% 5%
President/CEO
and Director
Gerald Parker (2) -0- 0% 0%
Chairman
Andy Badolato (2) -0- 0% 0%
Director & Vice
President of Finance
27
<PAGE>
Tony Gomes (2) -0- 0% 0%
Director & Vice President
Of Corporate Marketing
Investment Management 9,632,080 38% 21%
of America, Inc.(2)(3)
Troy Lowrie 2,250,000 9% 5%
(Resigned)(4)
Less than 5%
Officers and Directors 12,132,080 48% 27%
as a Group (4 persons)
(1) Based upon 24,099,462 outstanding shares of common stock.
(2) Parker, Badolato and Gomes are officers, directors and majority
shareholders in Investment Management of America, Inc.
(3) Does not include 3,000,000 shares of Series A Preferred stock that will be
traded with NMMI for 3,000,000 shares of common stock immediately after
this SB-2 registration.
(4) Mr. Troy Lowrie was the past president and director of PMC which was merged
into New Millennium.
ITEM 12. DESCRIPTION OF SECURITIES
COMMON STOCK
Our articles of incorporation authorize us to issue up to 75,000,000 shares of
common stock, par value $.001 per share. Of the 75,000,000 shares of common
stock authorized, 24,099,462 shares are issued and outstanding as of the date of
this prospectus.
Holders of common stock are entitled to receive such dividends as may be
declared by the Board of Directors from funds legally available for such
dividends. We may not pay any dividends on the common stock until cumulative
dividends on the preferred stock have been paid in full. Upon liquidation,
holders of shares of common stock are entitled to a pro rata share in any
distribution available to holders of common stock. The holders of common stock
have one vote per share on each matter to be voted on by stockholders, but are
not entitled to vote cumulatively. Holders of common stock have no preemptive
rights. All of the outstanding shares of common stock are, and all of the shares
of common stock offered for resale in connection with this prospectus will be,
validly issued, fully paid and non-assessable.
PREFERRED STOCK Our articles of incorporation authorize us to issue up to
10,000,000 shares of Preferred stock, par value $.001 per share. Of these
authorized 10,000,000 preferred shares, 5,000,000 have been classified as Series
A Convertible Preferred Stock with voting and liquidation privileges of which
3,000,000 have been issued to Investment Management of America, Inc. in exchange
for 3,000,000 shares of Common Stock owned by Investment Management of America,
Inc. Each share of Series A Convertible Preferred Stock is convertible into 1
share of Common Stock at the option of the holder. Other than the 3,000,000
issued to Investment Management of America, Inc. no other Preferred shares have
been issued.
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WARRANTS
There are outstanding warrants to purchase 1,000,000 shares of our common stock
at a price of $0.30 per share and may be reset every 6 months thereafter. These
warrants were issued to Swartz on May 25, 1999 in consideration of Swartz's
commitment to enter into the Investment Agreement. The warrants expire on May
25, 2004. The holders of the warrants have the right to have the common stock
issuable upon exercise of the warrants included on any registration statement we
file, other than a registration statement covering an employee stock plan or a
registration statement filed in connection with a business combination or
reclassification of our securities.
ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL
The legality of the securities offered hereby has been passed upon by Atlas
Pearlman, P. A., Attorneys at Law, Ft. Lauderdale, Florida.
The balance sheet as of June 30, 2000, statement of operations and statement of
cash flows for the period ended June 30, 2000 in this prospectus have been
included herein in reliance on the report of Richard J. Fuller, C.P.A., P.A.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
An opinion on the validity of the securities being registered will be given by
Atlas Pearlman, Attorneys at Law, Ft. Lauderdale, Florida.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our SEC filings are
available to the public over the Internet at the SEC's web site at
http://www.sec.gov. You may also read and copy any document we file at the SEC's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549, Seven
World Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information about the public reference room.
We have filed herewith with the SEC a registration statement on Form SB-2 under
the Securities Act with respect to the securities offered under this prospectus.
This prospectus, which constitutes a part of the registration statement, does
not contain all of the information set forth in the registration statement,
certain items of which are omitted in accordance with the rules and regulations
of the SEC. Statements contained in this prospectus as to the contents of any
contract or other documents are not necessarily complete and in each instance
reference is made to the copy of such contract or documents filed as an exhibit
to the registration statement, each such statement being qualified in all
respects by such reference and the exhibits and schedules thereto. For further
information regarding NMMI and the securities offered under this prospectus, we
refer you to the registration statement and such exhibits and schedules which
may be obtained from the SEC at its principal office in Washington, D.C. upon
payment of the fees prescribed by the SEC.
29
<PAGE>
ITEM 14. DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Insofar as indemnification for liabilities arising under the federal securities
laws as may be permitted to directors and controlling persons of the issuer, the
issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the law
and is, therefore, unenforceable. In the event a demand for indemnification is
made, the issuer will, unless in the opinion of its counsel that the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the law and will be governed by the final adjudication of
such issue.
ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS
None.
ITEM 16. 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., 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. As a result of these offerings,
there is presently a total of 4,775,000 unrestricted shares of common stock of
NMMI issued and outstanding. On November 3, l997, PMC received clearance from
the NASD to have its common stock listed on the OTC Bulletin Board. The trading
symbol on the OTC Bulletin Board for NMMI's common stock was NMMI.
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. In
connection with the transaction, 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 the exclusive rights to the
IllumiSign-EyeCatcher display system, a special advertising display machine.
NMMI intends to market and sell 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
30
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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.
Pursuant to an Agreement and Plan of Merger dated March 9, 2000 between Scovel
Corporation, a Delaware corporation, all the outstanding shares of common stock
of Scovel were exchanged for 500,000 shares of common stock of NMMI. By virtue
of the merger, NMMI acquired 100% of the issued and outstanding common stock of
Scovel.
New Millennium's common stock was traded on the OTC Bulletin Board operated by
Nasdaq under the symbol NMMI. New Millennium did not file a registration
statement with the Securities and Exchange Commission and has not been a
reporting company under the Securities Exchange Act of 1934. The Nasdaq Stock
Market has implemented a change in its rules requiring all companies trading
securities on the OTC Bulletin Board to be registered as a reporting company.
The Company was required to become a reporting company by the close of business
on February 25, 2000. New Millennium has effected the merger with Scovel and has
become a successor issuer thereto in order to comply with the reporting company
requirements implemented by the SEC.
BUSINESS OVERVIEW
NMMI provides two types of visual advertising: The Illumisign-Eyecatcher movable
display boards and LED display boards. We retain ownership of both types of the
machines and sell the advertising space on a monthly basis.
NMMI has the exclusive United States distribution rights from the patent owner
and Multiadd, a Great Britain based company that manufactures a patented indoor
IllumiSign called the "Illumisign-Eyecatcher" board. 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 filed the necessary
documentation for registration of the trademark, "Illumisign-Eyecatcher" for
electric sign products, which registration is presently pending by 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 customized 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.
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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 manufacturer's 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 the
shortest 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 manufacturing 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 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 five 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.
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ITEM 17. 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 a development stage company as defined in Statement of Financial
Accounting Standards No. 7, "Accounting and Reporting by Development Stage
Enterprises." We have generated out cash needs through equity financings and
loans from officers and stockholders. As a development stage company, we have
devoted substantially all of our efforts in securing and establishing new
businesses. We have engaged in limited 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 the machines and sell the advertising space on a
monthly basis.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
LIQUIDITY AND CAPITAL RESOURCES
To date, our liquidity has been principally supplied by equity financing and
loans from related parties. As of June 30, 2000 equity financing was $ 936,091
and loans was $1,611,012.
On May 19, 2000, we entered into an investment agreement with Swartz Private
Equity, LLC to provide an equity line maximum aggregate amount of $25,000,000
through a series of sales of common stock. In order to sell shares to Swartz,
there must be an effective registration statement with the SEC covering the
resale of the shares by Swartz and certain other conditions must be met. The
agreement is for a period of three years from the effective date of a
registration statement covering the resale of the shares to be put to Swartz.
RESULTS OF OPERATIONS
The discussion and financial statements contained herein are for the six months
ended June 30, 1999 and 2000 and from inception through June 30, 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 six months ended June 30, 2000 decreased $5,867 from six
months ended June 30, 1999 from $6,911 to $1,044, a decrease
33
<PAGE>
of approximately 85%. This is due primarily to our concentration on establishing
new businesses and obtaining the necessary financings.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the six months ended June 30, 2000
increased $98,106 in comparison to the six months ended June 30, 1999 from
$203,283 to $301,389, an increase of approximately 48%. This is the result of
moving corporate headquarters and increasing administrative support for building
operations.
NET LOSS
As a result of the above items, we incurred net loss for the six months ended
June 30, 2000 of ($344,411) compared to ($242,696) for the six months ended June
30, 1999, an increased loss of $101,715 or approximately 42%.
ITEM 18. DESCRIPTION OF PROPERTY
NMMI owns no real estate. It has a one-year lease plus a two-year renewal option
with St. James Properties, Inc. for property located in Safety Harbor, Florida
that expires May 2, 2003 through which it leases office space in a building that
contains 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 will be repaired on-site when ever possible. Those machines that
are not repairable on-site will be repaired in-house at the Safety Harbor,
Florida facility.
ITEM 19. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
New Millennium Media International, Inc. ("NMMI") was originally incorporated
April 21, 1998 in Colorado under the name New Millennium Media International,
Inc. April 30, 1998 Progressive Mailer Corp., a Florida corporation, merged into
NMMI. August 31, 1999 NMMI acquired Unergi, Inc., a Nevada corporation,
("Unergi") by merging Unergi into New Millennium Media, Inc., a Florida
corporation, ("Media") a wholly owned subsidiary of NMMI by way of a tax free
reorganization. As part of this merger 16,566,667 shares of NMMI common stock
were to be distributed prorata among all of the shareholders of Unergi in
exchange for all of the shares of stock of Unergi. As a part of this merger, two
founders and major shareholders of Unergi, Mark Western and Cole Leary, were
each to receive 1,656,672 shares of NMMI common stock. In anticipation of
purchasing these the shares from the two individuals, NMMI conveyed the shares
to another individual. NMMI failed to consummate the purchase contract and
consequently found it necessary to acquire 3,000,000 shares of common stock to
satisfy the obligation to the two individuals. Toward this objective NMMI
exchanged with Investment Management of America, Inc. (hereafter "IMA")
3,000,000 shares of NMMI's Preferred stock for 3,000,000 shares of common stock
owned by IMA with the understanding that the 3,000,000 shares of Preferred stock
will be granted voting rights and be convertible on a 1:1 ratio for shares of
common stock which common stock will be included in the next registration.
34
<PAGE>
On November 2, 1999 NMMI signed an executive employment contract with John
Thatch employing that individual as President and Chief Executive Officer for
three years with a salary of $140,000 for the first year and $120,000 for the
second and third years. As an inducement to encourage the executive to become
employed with NMMI, it was in the best interest of NMMI to include in the
employment package a provision in the executive employment contract giving John
Thatch the option to purchase, at a price of par value, 10% of any and all
additionally authorized and issued shares of stock. To date John Thatch has not
exercised any rights under this option.
ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is traded on the "pink sheets". The table in ITEM 5., PRICE
RANGE OF COMMON STOCK sets forth the high and low bid prices of our common stock
for each quarter for the second, third and fourth quarters of 1998, 1999 and the
first and second quarters of 2000. As of May 19, 2000 there are approximately 67
beneficial holders of record of our common stock.
DIVIDEND POLICY
We have not paid any dividends on our common stock since inception. We expect to
continue to retain all earnings generated by our operations for the development
and growth of our business and do not anticipate paying any cash dividends to
our shareholders in the foreseeable future. The payment of future dividends on
the common stock and the rate of such dividends, if any, will be determined by
our Board of Directors in light of our earnings, financial condition, capital
requirements and other factors.
ITEM 21. 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 $100,000 or more in
1999 and 2000.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------------------------------------
Long Term Compensation
----------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
----------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Restricted Securities
Name and Other Annual Stock Underlying LTIP All Other
Principle Salary Bonus Compensation Award(s) Options/SARs Payouts Compensation
Position Year ($) ($) ($) ($) (#) ($) ($)
----------------------------------------------------------------------------------------------------------
John Thatch, 10% of all Stock option Per month:
Pres./CEO 2000 140,000 10,000 issued to be 500 medical
expenses common determined 500 car
stock by Board 250 celphone
----------------------------------------------------------------------------------------------------------
</TABLE>
DIRECTOR COMPENSATION
The NMMI directors receive no compensation.
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EMPLOYMENT AGREEMENTS
NMMI has one written employment agreement, John Thatch, President and CEO, see
Item 19, above.
ITEM 22. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
REVIEWED FINANCIAL STATEMENTS
Report of Richard J. Fuller, C.P.A., P.A. F-38
Condensed Balance Sheet for December 31, 1999 and
June 30,2000. F-39
Condensed Statements of Operations for six months
June 30, 1999, six months June 30, 2000 and
from inception through June 30, 2000. F-40
Condensed Statements of Cash Flows for six months
June 30, 1999, six months June 30, 2000 and
from inception through June 30, 2000. F-41
Notes to the Condensed Financial Statements,
for six months June 30, 1999, six months
June 30, 2000 and from inception through
June 30, 2000. F-42
AUDITED FINANCIAL STATEMENTS
Report of Richard J. Fuller, C.P.A., P.A. F-43
Balance Sheet for December 31, 1998 and December
31, 1999. F-44
Statements of Operations for year ended December
31, 1998, year ended December 31, 1999 and
from inception through December 31, 1999. F-46
Statement of Stockholders' Deficit for period from
January 1, 1998 through December 31, 1999. F-47
Statements of Cash Flows for year ended December
31, 1998, year ended December 31, 1999 and
from inception through December 31, 1999. F-48
Notes to Financial Statements, December 31, 1998
and 1999. F-49
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
New Millennium Media International, Inc.
(formerly Progressive Mailer Corp.)
Safety Harbor, Florida
We have reviewed the condensed balance sheets of New Millennium Media
International, Inc. (formerly Progressive Mailer Corp.) (a development stage
company) as of December 31, 1999 and June 30, 2000, and the related statements
of operations and cash flows for the six months ended June 30, 1999 and 2000.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
statements consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated interim financial statements for them
to be in conformity with generally accepted accounting principles.
We have previously audited, conducted in accordance with generally accepted
auditing standards, the consolidated balance sheet as of December 31, 1998 and
1999, and the related statements of operations, stockholders' deficit and cash
flows for the years then ended (not presented herein), and in our report dated
June 1, 2000, we expressed a qualified report because of going concern
uncertainty on those consolidated financial statements. In our opinion the
information set forth in the accompanying condensed balance sheet as of December
31, 1999, is fairly stated in all material respects in relation to the condensed
balance sheet from which it has been derived.
Richard J. Fuller, CPA, PA
Clearwater, Florida
August 9, 2000
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NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEET
December 31, June 30,
1999 2000
(Unaudited)
------------ ------------
ASSETS
Current Assets:
Cash $ 2,063 $ 129,544
Inventories 548,862 567,612
------------ ------------
Total Current Assets 550,925 697,156
------------ ------------
Furniture and Equipment-Net 3,964 8,567
------------ ------------
Other Assets
Prepaid expenses-net 417 6,340
Goodwill, net of accumulated amortization
of $22,587and $33,881, respectively 655,007 644,213
------------ ------------
Total Other Assets 655,424 650,553
------------ ------------
$ 1,210,313 $ 1,356,276
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Notes payable - related $ 1,596,012 $ 1,611,012
Accounts payable 85,235 65,609
Accrued expenses payable 129,289 161,289
------------ ------------
Total Current Liabilities 1,810,536 1,837,910
------------ ------------
Long-term Liabilities -- --
Stockholders' Deficit
Common stock, par value $.001; shares
authorized, 25,000,000 shares issued and
outstanding, 24,099,881 and 23,079,462
respectively 24,100 23,080
Preferred stock, par value $.001; shares
authorized, 10,000,000 no shares issued
and outstanding -- --
Additional paid in capital 448,991 452,511
Common stock subscribed, (1,420,000 shares) -- 460,500
Deficit accumulated during the development
stage (1,073,314) (1,417,725)
------------ ------------
Total Stockholders' Deficit (600,223) (481,634)
------------ ------------
$ 1,210,313 $ 1,356,276
============ ============
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NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
For the For the From Inception
six months six months through
06/30/99 06/30/00 06/30/00
------------ ------------ ------------
Income $ 6,911 $ 1,044 $ 60,852
Costs and Expenses:
General and administrative $ 203,283 $ 301,389 $ 1,286,016
Interest expense 45,724 32,000 155,921
Depreciation and amortization 600 12,066 36,640
------------ ------------ ------------
Total costs and expenses 249,607 345,455 1,478,577
------------ ------------ ------------
Loss from Operations (242,696) (344,411) (1,417,725)
Net Loss $ (242,696) $ (344,411) $ 1,417,725
============ ============ ============
Basic Loss Per Common Share $ (0.017) $ (0.015) $ (0.061)
============ ============ ============
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NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
For the For the From Inception
six months six months through
06/30/99 06/30/00 06/30/00
------------ ------------ ------------
Cash Flows from Operating Activities:
<S> <C> <C> <C>
Net loss $ (242,696) $ (344,411) $ 1,417,725
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 600 12,066 36,840
Common stock issued for services 775 -- 24,838
Increase in inventories 198,383 (18,750) (567,612)
Increase in prepaid expenses -- (6,215) (6,215)
Increase (decrease) in accounts payable
and accrued expenses (83,188) 12,374 226,898
------------ ------------ ------------
Total adjustments 116,570 (525) (285,251)
------------ ------------ ------------
Net Cash Used in Operating Activities (126,126) (344,936) 1,702,976
------------ ------------ ------------
Cash Flows from Investing Activities
Purchase of goodwill -- (500) (678,094)
Purchase of fixed assets -- (5,083) (16,542)
------------ ------------ ------------
Net Cash Used in Investing Activities -- (5,583) (694,636)
------------ ------------ ------------
Cash Flows from Financing Activities
Proceeds from notes payable - Related 121,000 15,000 1,611,012
Proceeds from common stock transactions -- 463,000 916,144
------------ ------------ ------------
Net Cash provided by Financing Activities 121,000 478,000 2,527,156
------------ ------------ ------------
Increase in cash and cash equivalents $ (5,126) $ 127,481 $ 129,544
Cash and cash equivalents at beginning of period $ 6,811 $ 2,063 $ --
------------ ------------ ------------
Cash and cash equivalents at end of period $ 1,685 $ 129,544 $ 129,544
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid during the year for interest -- -- --
Cash paid during the year for income taxes -- -- --
</TABLE>
40
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Basis of Presentation
--------------------------------------
New Millennium Media International, Inc. (formerly Progressive Mailer
Corp.) (NMMI or the Company) is in the business of marketing advertising
space in special advertising display machines. The accompanying unaudited
condensed financial 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, in particular, Regulation S-B. 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 years
ended December 31, 1998 and 1999. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the
quarter ended June 30, 2000 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000.
2. Development Stage Enterprise
----------------------------
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board Statement No. 7 (SFAS No. 7). The Company is
devoting substantially all of its efforts in securing and establishing a
new business, and has engaged in limited activities in the advertising
business, but no significant revenues have been generated to date.
3. 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.
There can be no assurance that the Company will be success in implementing
its plans, or if such plans are implemented, that the Company will be
successful.
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.
41
<PAGE>
4. Equity
------
On April 12, 2000, the Company entered into an agreement with Investment
Management of America, Inc. (a major stockholder and financial consultant)
to exchange 3,000,000 shares of Common Stock for 3,000,000 shares of Series
A Convertible Preferred Stock of the 5,000,000 shares created under
resolution of the Board of Directors of the 10,000,000 Preferred Stock.
5. Subsequent Events
-----------------
The Company increased the number of Common Stock authorized to 75,000,000
at a special Meeting of Stockholders on July 17, 2000. In addition, the
Company has secured an agreement with a financial institution to provide an
equity line of $25,000,000 and Plans to file an SB-2 Registration Statement
with the SEC.
42
<PAGE>
REPORT OF RICHARD J. FULLER, C.P.A., P.A.
Board of Directors and Shareholders
New Millennium Media International, Inc.
(formerly Progressive Mailer Corp.)
Safety Harbor, Florida
We have audited the balance sheets of New Millennium Media International, Inc.
(formerly Progressive Mailer Corp.) (a development stage company) as of December
31, 1998 and 1999, and the related statements of operations, stockholders'
deficit 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. The financial
statements of Progressive Mailer Corp. as of December 31, 1997, were audited by
other auditors whose report dated July 16, 1998, expressed an unqualified
opinion on those statements.
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.
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board No. 7. The Company is devoting all of its present
efforts in securing and establishing a new business, and its planned principal
operations have not commenced, and, accordingly, minimal revenue has been
derived during the organizational period.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of New Millennium Media
International, Inc. (formerly Progressive Mailer Corp.) at December 31, 1998 and
1999 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, 1998 and 1999. This condition raises substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 5. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Richard J. Fuller
Richard J. Fuller, CPA, PA
Clearwater, Florida
June 1, 2000
43
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, 1998 and December 31, 1999
1998 1999
------------ ------------
ASSETS
Current Assets:
Cash $ 6,811 $ 2,063
Inventories 481,916 548,862
------------ ------------
Total Current Assets 488,727 550,925
------------ ------------
Furniture and Equipment
Office furniture and equipment 7,210 4,249
Less accumulated depreciation (1,319) (285)
------------ ------------
Furniture and Equipment-Net 5,891 3,964
------------ ------------
Other Assets
Organizational costs, net of accumulated
amortization of $383 and $583 617 417
Goodwill, net of accumulated amortization
of $22,587 -- 655,007
------------ ------------
Total Other Assets 617 655,424
------------ ------------
$ 495,235 $ 1,210,313
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Notes payable - related $ 638,952 $ 1,596,012
Accounts payable 42,119 85,235
Accrued expenses payable 33,068 129,289
------------ ------------
Total Current Liabilities 714,139 1,810,536
------------ ------------
Long-term Liabilities -- --
Stockholders' Deficit
Common stock, par value $.001; shares authorized,
25,000,000 shares issued and outstanding,
5,310,000 and 24,099,881 respectively,
1998 and 1999 5,310 24,100
Preferred stock, par value $.001; shares authorized,
10,000,000 no shares issued and outstanding -- --
Additional paid in capital 403,115 448,991
Deficit accumulated during the development
stage (627,329) (1,073,314)
------------ ------------
Total Stockholders' Deficit (218,904) (600,223)
------------ ------------
$ 495,235 $ 1,210,313
============ ============
44
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
For the For the From Inception
Year Ended Year Ended through
12/31/98 12/31/99 12/31/99
------------ ------------ ------------
<S> <C> <C> <C>
Income $ 10,632 $ 49,176 $ 59,808
Costs and Expenses:
General and administrative $ 586,998 $ 376,707 $ 984,627
Interest expense 28,539 95,382 123,921
Depreciation and amortization 1,319 23,072 24,574
------------ ------------ ------------
Total costs and expenses 616,856 495,161 1,133,122
------------ ------------ ------------
Loss from Operations (606,224) (445,985) (1,073,314)
Net Loss $ (606,224) $ (445,985) $ (1,073,314)
============ ============ ============
Basic and Diluted Loss Per Common Share $ (0.15) $ (0.03) $ (0.08)
============ ============ ============
</TABLE>
45
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
STATEMENT OF STOCKHOLDERS' DEFICIT
For the Period from January 1, 1998 through December 31, 1999
Deficit
Accumulated
Common Stock Additional during the Total
-------------------------- Paid - in development stockholders'
Shares Amount Capital period equity
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance January 1, 1998 2,015,000 $ 2,015 $ 19,907 $ (21,105) $ 817
Shares issued for cash
Pursuant to a private placement
at $.05 per share 1,725,000 1,725 84,525 86,250
Shares issued to a shareholder
as compensation for providing a
$60,000 unsecured loan 775,000 775 -- 775
Shares issued for cash
Pursuant to a private placement
at $.05 per share 795,000 795 116,045 116,840
Shares issued to purchase all
assets of Lufam Technologies, Inc.
(Purchase made in 1998 and stock
issued in 1999) -- -- 182,638 182,638
Net loss for the period ended
December 31, 1998 (606,224) (606,224)
-------------------------------------------------------------------------------
Balance, December 31, 1998 5,310,000 5,310 403,115 (627,329) (218,904)
-------------------------------------------------------------------------------
Shares issued to purchase all
assets of Lufam Technologies, Inc.
(Purchase made in 1998 and stock
issued in 1999) 1,710,000 1,710 -- 1,710
Shares issued to purchase all of
Unergi, Inc. 16,566,667 16,567 -- 16,567
Shares issued for cash 2,223,214 513 45,876 46,389
Net loss for the period ended
December 31, 1999 (445,985) (445,985)
-------------------------------------------------------------------------------
</TABLE>
46
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
STATEMENT OF CASH FLOWS
For the For the From Inception
Year Ended Year Ended through
12/31/98 12/31/99 12/31/99
------------ ------------ ------------
Cash Flows from Operating Activities:
<S> <C> <C> <C>
Net loss $ (606,224) $ (445,985) $ (1,073,314)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 1,519 23,072 24,774
Common stock issued for services 775 5,891 24,838
Increase in inventories (481,916) (66,946) (548,862)
Increase in accounts payable 42,119 43,116 85,235
Increase in accrued expenses 33,068 96,221 129,289
------------ ------------ ------------
Total adjustments (404,435) 101,354 (284,726)
------------ ------------ ------------
Net Cash Used in Operating Activities (1,010,659) (344,631) (1,358,040)
------------ ------------ ------------
Cash Flows from Investing Activities
Purchase of goodwill -- (677,594) (677,594)
Purchase of fixed assets (7,210) (4,249) (11,459)
------------ ------------ ------------
Net Cash Used in Operating Activities (7,210) (681,843) (689,053)
------------ ------------ ------------
Cash Flows from Financing Activities
Proceeds from notes payable - Related 638,952 957,060 1,596,012
Proceeds from common stock issued 385,728 64,666 453,144
------------ ------------ ------------
Net Cash provided by Financing Activities 1,024,680 1,021,726 2,049,156
------------ ------------ ------------
Increase in cash and cash equivalents $ 6,811 $ (4,748) $ 2,063
Cash and cash equivalents at beginning of period $ -- $ 6,811 $ --
------------ ------------ ------------
Cash and cash equivalents at end of period $ 6,811 $ 2,063 $ 2,063
============ ============ ============
Supplemental disclosure of cash flow information:
Cash paid during the year for interest -- -- --
Cash paid during the year for income taxes -- -- --
</TABLE>
47
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998 and 1999
1. Organization and summary of significant accounting policies
-----------------------------------------------------------
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. The Company is in the business of
marketing advertising space in special advertising display machines.
Development Stage Enterprise
----------------------------
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board Statement No. 7(SFAS No. 7). The Company is
devoting substantially all of its efforts in securing and establishing a
new business, and has engaged in limited activities in the advertising
business, but no significant revenues have been generated to date.
Basis of presentation
---------------------
The financial statements have been prepared using the accrual method of
accounting. Revenues are recognized when earned and expenses when incurred.
Fixed assets are stated at cost. Depreciation and amortization using the
straight-line method for financial reporting purposes and accelerated
methods for income tax purposes.
The financial statements have been prepared on a going concern basis that
contemplates the realization of assets and liquidation of liabilities in
the ordinary course of business. As shown in the accompanying financial
statements, the Company has incurred significant losses and at December 31,
1998 and 1999, the Company has a stockholders' deficit of $627,329 and
$1,073,314 respectively.
The financial statements do not include any adjustments that might be
necessary should the Company be unable to continue as a going concern.
48
<PAGE>
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.
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 success in implementing
its plans, or if such plans are implemented, that the Company will be
successful.
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 assets 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
49
<PAGE>
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.
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 advertising machines acquired
substantially from one vendor. These machines are intended to generate
income from revenue for placement of these machines at various locations
and are carried at the lower of cost (first-in, first-out) or market. Once
the machines are placed in service, depreciation is to be recognized. No
depreciation has been recognized for the years ended 1998 and 1999 because
no significant rental activity has yet occurred.
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.
Advertising Costs
-----------------
The Company expenses the cost of advertising as incurred.
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.
50
<PAGE>
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 the same as basic loss
per common share.
Cash Equivalents
----------------
For purposes of the statement of cash flows, 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.
Also, the Company relies principally on one vendor to supply inventory.
Because the vendor is the major manufacturer of this inventory, and located
in the United Kingdom, abrupt changes in economic conditions including
scheduling and shipping disruptions could cause a delay or have an adverse
affect on management's ability to meet rental commitments.
2. Notes Payable - Related
-----------------------
The Company issued notes to related parties. These notes are due on demand.
1998 1999
---- ----
Note due stockholder former officer $ 638,952 $ 641,152
At 10% interest secured by inventories
Notes due stockholders, non-interest
bearing 954,860
$ 638,952 $1,596,012
========== ==========
51
<PAGE>
3. Acquisition
-----------
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. The
unaudited pro forma consolidated balance sheet at December 31, 1998 and the
unaudited pro forma consolidated statements of operations for December 31,
1998 and 1999 have been presented as if the business combinations of New
Millennium Media International, Inc. and Unergi, Inc. had been made at the
beginning of the periods presented. The unaudited pro forma results have
been prepared for comparative purposes only and do no purport to be
indicative of the results of operations which would have actually resulted
had the combinations been in effect on January 1, 1998, or of future
results of operations.
52
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998 and 1999
3. Acquisition - Contd.
PRO FORMA COMBINED BALANCE SHEET
December 31, 1998
New Millennium Pro Forma
Historical Unergi, Inc. Adjustments Pro Forma
-------- -------- -------- --------
ASSETS
Current Assets:
<S> <C> <C> <C> <C>
Cash $ 6,811 $ 1,691 $ $ 8,502
Inventories 481,916 481,916
Stock Subscription Receivable 800 (800) --
Employee Advance 1,000 (1,000) --
-------- -------- -------- --------
Total Current Assets 488,727 3,491 (1,800) 490,418
-------- -------- -------- --------
Furniture and Equipment
Office furniture and equipment 7,210 7,210
Less accumulated depreciation (1,319) (1,319)
-------- -------- -------- --------
Furniture and Equipment-Net 5,891 5,891
-------- -------- -------- --------
Other Assets
Organizational costs, net of accumulated
amortization of $383 617 617
-------- -------- -------- --------
Total Other Assets 617 617
-------- -------- -------- --------
$495,235 $ 3,491 $ $496,926
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Notes payable - related $638,952 $115,000 $ $753,952
Accounts payable 42,119 -- 42,119
Accrued expenses payable 33,068 39,281 72,349
-------- -------- -------- --------
Total Current Liabilities 714,139 154,281 868,420
-------- -------- -------- --------
Long-term Liabilities -- --
Stockholders' Deficit
Common stock, par value $.001; shares
authorized, 25,000,000 shares
issued and outstanding, 5,310,000 5,310 1,000 (1,000) 5,310
Preferred stock, par value $.001; shares
authorized, 10,000,000
no shares issued and outstanding -- --
Additional paid in capital 403,115 403,115
Deficit accumulated during the
development stage (627,329) (151,790) (800) (779,919)
-------- -------- -------- --------
Total Stockholders' Deficit (218,904) (150,790) (1,800) (371,494)
-------- -------- -------- --------
$495,235 $ 3,491 $ (1,800) $496,926
======== ======== ======== ========
</TABLE>
53
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998 and 1999
3. Acquisition - Contd.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
Pro Forma
From Inception
New Millennium Pro Forma through
Historical Unergi, Inc. Adjustments Pro Forma 12/31/98
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Income $ 10,632 $ 23 $ $ 10,655 $ 10,655
Costs and Expenses:
General and administrative $ 586,998 $ 149,796 $ (800) $ 735,994 $ 757,716
Interest expense 28,539 2,017 30,556 30,556
Depreciation and amortization 1,319 -- 1,319 1,502
---------- ---------- ---------- ---------- ----------
Total costs and expenses 616,856 151,813 (800) 767,869 789,774
---------- ---------- ---------- ---------- ----------
Loss from Operations (606,224) (151,790) (800) (758,814) (779,119)
Net Loss $ (606,224) $ (151,790) $ (800) $ (758,814) $ (779,119)
========== ========== ========== ========== ==========
Basic and Diluted Loss $ (0.15) $ (0.18) (0.19)
========== ========== ========== ========== ==========
Per Common Share
</TABLE>
54
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998 and 1999
3. Acquisition - Contd.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Pro Forma
From Inception
New Millennium Pro Forma through
Historical Unergi, Inc. Adjustments Pro Forma 12/31/98
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Income $ 49,176 $ 2 $ $ 49,178 59,833
Costs and Expenses:
General and administrative $ 376,707 $ 140,596 $ $ 517,303 1,275,019
Interest expense 95,382 -- 95,382 125,938
Depreciation and amortization 23,072 -- 23,072 24,574
---------- ---------- ---------- ---------- ----------
Total costs and expenses 495,161 140,596 635,757 1,425,531
---------- ---------- ---------- ---------- ----------
Loss from Operations (445,985) (140,594) (586,579) (1,365,698)
Net Loss $ (445,985) $ (140,594) $ $ (586,579) (1,365,698)
========== ========== ========== ========== ==========
Basic and Diluted Loss $ (0.03) $ (0.05) $ (0.11)
========== ========== ========== ========== ==========
Per Common Share
</TABLE>
55
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998 and 1999
4. Income Taxes
------------
The Company has available net operating loss carryforwards of $870,000,
which expire through 2014.
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:
1998 1999
---- ----
Deferred tax assets:
Net operating loss carryforwards $570,000 $870,000
Valuation allowance for deferred
tax asset (570,000) (870,000)
-------- --------
$ - $ -
======== ========
5. Subsequent Events
-----------------
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. As part of the merger, the Company is considered a successor
issuer in order to comply with reporting requirements implemented by the
NASDAQ stock market. Further, the Company is securing an agreement with a
financial institution to provide an equity line of $25,000,000.
Management's intention is, in part, to provide the necessary capital needed
for the expected growth in the advertising business.
Also, subsequent to year-end, the Company entered into a two year operating
lease, effective April 1, 2000, for its corporate offices with rent expense
of $16,094 and $16,899 annually. The lease has a renewal option and
requires the Company to pay certain common area costs.
On April 12, 2000, the Company entered into an agreement with Investment
Management of America, Inc. (a major stockholder and financial consultant)
to exchange 3,000,000 shares of Common Stock for 3,000,000 shares of Series
A Convertible Preferred Stock. In connection with this agreement, the
Company passed a resolution creating a Series A Convertible Preferred Stock
as to 5,000,000 shares of its Preferred Stock.
In addition, the Company entered into a three-year employment agreement
with its President, as amended June 1, 2000, providing
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for compensation of $140,000 in the first year and $120,000 in the
subsequent two years. The President is to receive 10 percent of all issued
and outstanding Company common stock plus stock options, which shall be
determined by the Board of Directors.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 23. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE None.
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 7-109-101 et seq. of the Colorado Business Corporation Act, as amended
from time to time provides that a corporation may indemnify directors, officers,
employees or agents of the corporation against expenses, including attorneys'
fees, judgments, fines and amounts paid in settlement in connection with
threatened, pending or completed actions, suits or proceedings brought against
them by reason of their service in such capacity, including, under certain
circumstances, actions brought by or in the right of the corporation, and may
purchase insurance or make other financial arrangements on behalf of any such
persons for any such liability.
The Company's By-laws are silent regarding the issue of corporate
indemnification of NMMI officers, directors, agents and employees.
Article VIII of the Company's Articles of Incorporation provides for
indemnification and advance expenses to a director or officer in connection with
a proceeding to the fullest extent permitted or required by and in accordance
with the Colorado Business Corporation Act. This Article permits the
Corporation, as determined by the Board of Directors, in a specific instance or
by resolution of general application to indemnify and advance expenses to an
employee, fiduciary or agent in connection with a proceeding to the extent
permitted or required by and in accordance with the Colorado Business
Corporation Act.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of the estimated amounts of all expenses
payable by the registrant in connection with the registration of the common
stock offered hereby:
SEC filing fee ............................................. $ 4,649.57
Legal fees ................................................. 50,000.00
Accounting fees and expenses ............................... 20,000.00
Miscellaneous .............................................. 3,866.00
----------
Total ................................................. $78,515.57
==========
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ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
In December 1998 the company sold to HNC Associates (an accredited investor)
100,000 shares of common stock at a price of $0.40 per share. The company relied
on Section 4(2) of the Securities Act of 1933 as the basis for an exemption from
registration because the transaction did not involve a public offering.
In February 2000 the company issued an option to purchase 500,000 shares of
common stock, exercisable for two years at a price of $1.00 per share to William
H. Simon in connection with consulting services and negotiations involving
E-Vision LED, Inc. The company relied on Section 4 (2) of the Securities Act of
1933 as the basis for an exemption from registration because the transaction did
not involve a public offering.
In February 2000 the Company sold 400,000 shares of common stock at a price of
$.50 per share to one individual who is an accredited investor. The Company
relied on Rule 506 of Regulation D and Section 4(2) of the Securities Act of
1933 as the basis for an exemption from registration because the transactions
did not involve any public offering.
In March 2000 the company issued 500,000 shares of common stock to Gerry Ghini
in connection with the merger of Scovel Corporation. The company relied on
Section 4 (2) of the Securities Act of 1933 as the basis for an exemption from
registration because the transaction did not involve a public offering.
In March 2000 the company issued an option to purchase 100,000 shares of common
stock, exercisable for two years at a price of $2.25 per share to Eric Kennedy
in connection with consulting services provided to the company. The company
relied on Section 4 (2) of the Securities Act of 1933 as the basis for an
exemption from registration because the transaction did not involve a public
offering.
In March 2000 the Company issued warrants to purchase 1,000,000 shares of common
stock, exercisable for five years at a per share price equal to the lowest
closing bid price for the five trading days immediately preceding March 6, 2000
with reset adjustments to Swartz Private Equity, LLC in consideration for
Swartz's commitment to enter into an investment agreement for the purchase of up
to $25,000,000 of common stock of the Company.
In March, April and May 2000 the Company sold an aggregate of 560,000 shares of
common stock at a price of $.50 per share to twenty individuals, all of whom
were accredited investors. The Company relied on Rule 506 of Regulation D and
Section 4(2) of the Securities Act of 1933 as the basis for an exemption from
registration because the transactions did not involve any public offering.
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ITEM 27. EXHIBITS INDEX
3.1 Articles of Incorporation of NMMI as amended.
3.1(a) Designation of Preferred Stock.
3.2 Bylaws of NMMI.
4.1 Investment Agreement dated May 19, 2000 by and between the Registrant
and Swartz Private Equity, LLC.
4.2 Form of "Commitment Warrant" to Swartz Private Equity, LLC for the
purchase of 1,000,000 shares common stock in connection with the
offering of securities.
4.3 Form of "Purchase Warrant" to purchase common stock issued to Swartz
Private Equity, LLC from time to time in connection with the offering
of securities.
4.4 Warrant Side-Agreement by and between the Registrant and Swartz
Private Equity, LLC.
4.5 Registration Rights Agreement between NMMI and Swartz Private Equity,
LLC related to the registration of the common stock to be sold
pursuant to the Swartz Investment Agreement.
4.6 Letter Agreement between NMMI and Swartz Institutional Finance
relating to the private placement of up to two million dollars of
common stock.
4.7 Employees Stock Option Plan adopted by board of Directors resolution
dated June 26, 2000.
5.1 Legal Opinion of Atlas Pearlman, P.A., Suite 1700, 350 East Las Olas
Boulevard, Ft. Lauderdale, Florida 33301; to be filed with amendment.
10.1 Investment Management of America, Inc. contract with NMMI regarding
the 3,000,000 shares of Preferred stock.
10.2 Agreement of Merger effective April 30, 1998 between Progressive
Mailer Corporation and NMMI in which NMMI was the survivor
corporation.
10.3 Asset Purchase Agreement dated April 8, 1998 whereby PMC acquired the
assets of LuFam Technologies, Inc.
10.4 Amended and Restated Agreement and Plan of Merger dated August 31,
1999 between NMMI and Unergi, Inc. in which NMMI was the survivor
corporation.
10.5 Agreement and Plan of Merger dated March 9, 2000 between NMMI and
Scovel Corporation wherein NMMI acquired all of the shares of stock of
Scovel.
10.6 Exclusive Distribution Contract with Multiadd.
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10.7 Marketing Agreement dated May 10, 2000 wherein NMMI grants to
Carson-Jensen-Anderson Enterprises, Inc. marketing rights for the
Illumisign-Eyecatcher display boards.
10.8 Office Lease Agreement between St. James Properties, Inc. and NMMI.
21.1 List of Subsidiaries.
23.1 Consent of Legal Counsel (included in Exhibit 5.1).
23.2 Consent of Independent Auditors.
99.1 Trademark "registration pending" documentation by the United States
Department of Commerce, Patent and Trademark Office for the name
"Illumisign-EyeCatcher" for electric sign products.
99.2 Employment Agreement between Registrant and John Thatch,
President/CEO.
ITEM 28. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes that it will:
(1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii)To include any additional or changed material information on the
plan of distribution;
(2) For determining liability under the Securities Act of 1933, treat each
post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to
be the initial bona fide offering.
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(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) The undersigned registrant hereby undertakes that it will:
(1) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b) (1)
or (4) or 497 (h) under the Securities Act as part of this
registration statement as of the time the Commission declared it
effective.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the
initial bona fide offering of those securities.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned in the City of Safety
Harbor, Florida on August 28, 2000.
New Millennium Media International, Inc.
By: /s/ John Thatch
-------------------
John Thatch, President/CEO
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Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and as of
the dates indicated.
Signature Title Date
-------------------- -------------------- --------------------
/s/ John Thatch President and Chief August 28, 2000
------------------ Executive Officer
John Thatch (Principal Executive Officer)
/s/ Gerald C. Parker Chairman of Board August 28, 2000
--------------------- of Directors
Gerald C. Parker
/s/ Andrew M. Badolato Director and Treasurer August 28, 2000
---------------------- (Principal Financial)
Andrew M. Badolato
/s/ Tony Gomes Director August 28, 2000
--------------
Tony Gomes
62
