FORM 8-K12G3A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
March 9, 2000
Date of Report
(Date of Earliest Event Reported)
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(Exact Name of Registrant as Specified in its Charter)
NEW MILLENNIUM MEDIA
INTERNATIONAL INC.
Suite 300 101 Philippe Pkwy.
Safety Harbor, Florida 34695
(Address of principal executive offices)
(727) 797-6664
(727) 797-7770 Fax
Registrant's telephone number and telefax
SCOVEL CORPORATION
128 April Rd.
Port Moody, British Columbia
Canada V3H-3M5
(Former name and former address)
Colorado 0-29195 84-1463284
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
<PAGE>
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Agreement and Plan of Merger (the "Merger Agreement") dated
as of March 9, 2000 between Scovel Corporation, a Delaware corporation
("Scovel"), and New Millennium Media International, Inc., a Colorado corporation
("New Millennium"), New Millenium acquired all of the issued and outstanding
shares of Scovel from Gerald Ghini as owner of all the outstanding shares of
common stock of Scovel in exchange for 500,000 shares of restricted common stock
of New Millenium in a transaction in which New Millennium will be the surviving
company. New Millennium will issue the 500,000 New Millennium restricted shares
to Gerald Ghini.
The Merger Agreement was adopted by the unanimous consent of the Board of
Directors of Scovel and approved by the unanimous consent of the shareholders of
Scovel on March 9, 2000. The Merger Agreement was adopted by the unanimous
consent of the Board of Directors of New Millennium on March 9, 2000. The
transaction is intended to qualify as a reorganization within the meaning of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended ("IRC").
Prior to the merger, Scovel had 5,000,000 shares of common stock outstanding
which shares will be exchanged for 500,000 shares of restricted common stock of
New Millennium. By virtue of the merger, New Millennium will acquire 100% of the
issued and outstanding common stock of Scovel.
The officers of New Millennium will continue as officers of the successor
issuer. See "Management" below. The officers, directors and by-laws of New
Millennium will continue without change as the officers, directors and by- laws
of the successor issuer.
A copy of the Merger Agreement was filed as an exhibit to the original Form 8-K
and is incorporated in its entirety therein. The foregoing description is
modified by such reference.
(b) The following table contains information regarding the shareholdings of New
Millennium's current directors and executive officers and those persons or
entities who beneficially own more than 5% of its common stock (giving effect to
the exercise of the warrants held by each such person or entity):
Name and Address Amount and Nature Percent of Common
of Beneficial of Beneficial stock owned
Owner(1) Ownership
---------------- ----------------- -----------------
John Thatch 2,500,000 10%
President/CEO
and Director
Gerald Parker (2) -0- 0%
Chairman
Andy Badolato (2) -0- 0%
Director & Vice
President of Finance
Tony Gomes (2) -0- 0%
Director & Vice President
Of Corporate Marketing
Investment Management 9,632,080 38%
of America, Inc.(2)
Troy Lowrie 2,250,000 9%
(Resigned)(3)
Less than 5%
Officers and Directors 12,132,080 48%
as a Group (4 persons)
(1) Based upon 24,500,000 outstanding shares of common stock (subsequent to the
effectiveness of the merger and the issuance of 500,000 shares to Gerald
Ghini).
(2) Parker, Badolato and Gomes are officers, directors and majority
shareholders in Investment Management of America, Inc.
(3) Mr. Troy Lowrie was the past president and director of PMC which was merged
into New Millennium.
The Directors named above will serve until the next annual meeting of the
shareholders of the Company in the year 2001. Directors will be elected for
one-year terms at each annual shareholder's meeting. Officers hold their
positions at the appointment of the Board of Directors.
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to the Merger Agreement, New Millenium acquired all of the issued and
outstanding shares of Scovel from Gerald Ghini as owner of all the outstanding
shares of common stock of Scovel in exchange for 500,000 shares of restricted
common stock of New Millenium in a transaction in which New Millennium will be
the surviving company. New Millennium will issue the 500,000 New Millennium
restricted shares to Gerald Ghini. In evaluating New Millennium as a candidate
for the proposed merger, Scovel used criteria such as the value of the assets of
New Millennium and its subsidiaries, the anticipated operations and
acquisitions, material contracts, business name and reputation, quality of
management, and current and anticipated operations. Scovel determined that the
consideration for the merger was reasonable. No material relationship exists
between the selling shareholders of Scovel or any of its affiliates, any
director or officer, or any associate of any such director or officer of Scoval
and New Millennium. The consideration exchanged pursuant to the Merger Agreement
was negotiated between Scovel and New Millennium in an arm's-length transaction.
History
New Millennium Media International, Inc. is a Colorado corporation organized on
April 21, 1998. New Millennium's principal place of business is located at Suite
300 101 Philippe Pkwy., Safety Harbor, Florida 34695. New Millennium is the
successor to Progressive Mailer Corp. ("PMC"), a corporation organized in
Florida on February 5, l997. 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 and Mr. Lowrie was
elected the President and Director of PMC. In connection with the transaction,
the principal offices of PMC were relocated to Denver, Colorado. Effective April
30, l998, PMC was merged into New Millennium in order to effect a change in
domicile of PMC from Florida to Colorado 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.
On November 3, l997, PMC received clearance from the NASD to have its common
stock listed on the OTC Electronic Bulletin Board pursuant to PMC's application
submitted to the NASD pursuant to NASD Rule 6740 and Rule 15c2-11 under the
Securities Exchange Act of l934. The current trading symbol on the OTC
Electronic Bulletin Board for New Millennium's common stock is NMMI.
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
promulgated under the Securities Act of l933, as amended. As a result of these
offerings, there are presently 2,055,000 unrestricted shares of common stock of
New Millennium issued and outstanding.
<PAGE>
Effective, April 14, 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. New Millennium
intends to market and sell these machines.
Business
New Millennium Media International
The outdoor advertising business reported earnings of 2.330 billion in 1998, an
increase of 9.1% over the previous year. The first quarter of 1999 revenues were
up 7.5% over the same period in 1998, according to the Outdoor Advertising
Association of America, Inc. This continued growth reflects the popularity and
effectiveness of outdoor and indoor advertising from both existing and new
advertisers. New Millennium Media International, Inc. intends to capitalize on
the demand for display advertising in two ways. New Millennium will install LED
outdoor displays in high traffic areas, and form joint ventures with strategic
partners to place a large number of indoor "patented" Eye Catcher boards. New
Millennium intends to provide the most highly visible sites throughout the world
and superior service within the industry. The Out of Home advertising industry
has continually grown year after year and shows no signs of waning. The new
millennium will demand the highest digital quality and the most cost efficient
LED advertising boards available. We believe New Millennium already has the
product available and subject to available financing we are ready to introduce
the product. New Millennium (OTC Electronic Bulletin Board trading symbol:
"NMMI") has a unique opportunity to become an industry leader in the indoor and
outdoor advertising industry. We intend to change the way the industry markets
and generates ad revenues by setting a whole new standard of doing business. New
Millennium 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 runs two minutes. Illumisigns can generate
revenues up to $5,000 a month per display.
New Millennium has another product from a manufacturer of LED boards. New
Millennium has teamed up with E-Vision, a U.S. based company who's affiliates
manufactures one of the highest quality LED displays in the world. 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 New Millennium 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. We also have teamed up with E Ventures Group, a
large dotcom advertising and Media company. This enables us to sell
advertisements on a national level that will benefit us in placing boards
throughout the U.S.
E-Vision has the capability to distribute any size board including boards for
Sport Events. These LED boards can run any commercial format on any sized board.
This gives New Millennium a strong competitive advantage over other display
boards for which the
<PAGE>
advertisement 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. Color quality and clarity are very important to a national advertiser
who wants its colors and logos the same on all boards. E-Vision will assist New
Millennium with training and support from the first board and will provide New
Millennium with ongoing assistance in all aspects of programming, technical and
software support. As a manufacturing partner, E-Vision and its affiliates will
supply New Millennium, free of charge software upgrades as they become
available. New Millennium also has an agreement for the U.S. distribution rights
from Multiadd, an English based company. Multiadd manufactures a patented indoor
IllumiSign, which is called the "Eyecatcher" board. This board is steel incased,
front lighted, and displays poster type ads. The "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 3 seconds to 24 hours. This
is a significant advantage over other indoor boards, as the competitive boards
only display one to three poster ads at a time.
Capital Requirements
New Millennium, with minimal overhead and revenues needs to raise the following
capital to fulfill its business plan.
Working capitol $ 500,000
Purchase of LED Displays $ 3,000,000
Purchase of "Eyecatcher" Displays $ 500,000
TOTAL CAPITAL $ 4,000,000
We have teamed up with a select group of strategic partners that will enable New
Millennium to achieve its goals. We have a commitment from Investment Management
of America, Inc., a leading venture capital firm based in Clearwater, Florida.
IMA provides funding and business development services and support for companies
like New Millennium. Its principals have founded companies such as Inktomi,
Milcom, Consortio, LiquidGolf.com, ByeByeNow.com, PublicAccess.com and several
others.
Management
John "JT" Thatch Age 37
John "JT" Thatch serves as Director, Chief Executive Officer and President of
New Millennium Media 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 leadership and integrity to New Millennium. His experience
and enthusiasm will provide us with the ability to expand our growth within the
outdoor/indoor advertising arena.
<PAGE>
Gerald Parker Age 55
Gerald Parker serves as Chairman of the Board. He has founded several companies,
and was one of the five original founders of Inktomi Corporation (Nasdaq NMS
trading symbol: "INKT"). Gerry also serves as the President of Investment
Management of America (IMA). IMA is a leading venture capital firm that provides
funding and business strategies to growing companies. He has been instrumental
in raising over $300 million of venture capital for companies. These companies
have a combined market valuation of over $7.5 billion. Mr. Parker's experience
will bring knowledge and stability to enable us to achieve our goals set forward
in this business plan.
Andrew Badolato Age 39
Andrew Badolato serves as a Director and Vice President of Corporate Finance. He
has successfully managed the mergers of several public companies as CEO and
founder of Investment Management of America (IMA). Mr. Badolato is an NASD
registered representative and a registered principal. He holds series 7, 24 and
63 license classifications, which currently are in inactive status.
Anthony Gomes Age 37
Anthony Gomes serves as a Director and Vice President of Corporate Marketing.
Mr. Gomes has over 12 years of corporate marketing experience with fortune 100
companies. He was the Director of Marketing at Tropicana and managed the $1.6
billion Dole juice, twister beverage and Tropicana Orange Juice accounts. His
vision turned around the Twister Juice franchise where sales increased 40% with
profits increasing 112%. Prior to Tropicana Mr. Gomes was the Brand Manager of
Gatorade and was instrumental in signing Michael Jordan as their national
spokesman. Tony will be very instrumental in our national marketing strategies.
DESCRIPTION OF SECURITIES
New Millennium has an authorized capitalization of 25,000,000 shares of common
stock, $.001 par value per share of which 23,079,000 shares are issued and
outstanding and 10,000,000 shares of preferred stock, $.001 par value per share,
of which no shares have been designated or issued.
CURRENT TRADING MARKET FOR NEW MILLENNIUM'S SECURITIES. New Millennium's common
stock was traded on the OTC Electronic Bulletin Board operated by the NASD 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
Electronic Bulletin Board to be registered as a reporting company. New
Millennium 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 OTC Electronic Bulletin Board.
<PAGE>
PENNY STOCK REGULATION. New Millennium'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. New Millennium'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 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 New
Millennium's securities. The foregoing required penny stock restrictions will
not apply to New Millennium's securities if such securities maintain a market
price of $5.00 or greater.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
No court or governmental agency has assumed jurisdiction over any substantial
part of the company's business or assets.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
New Millennium retains its certifying accountants.
ITEM 5. OTHER EVENTS
SUCCESSOR ISSUER ELECTION.
Upon effectiveness of the Merger, pursuant to Rule 12g-3(a) of the General Rules
and Regulations of the Securities and Exchange Commission, New Millennium became
the successor issuer to Scovel for reporting purposes under the Securities
Exchange Act of 1934 and elects to report under the Act effective February 28,
2000.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
The President and sole director of Scovel Management Inc., Gerald Ghini,
resigned such offices as a result of the merger with New Millennium. The
officers and directors of New Millennium will continue as the officers and
directors of the successor issuer.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
The audited financial statements for the years ending December 31, 1999 and 1998
and reviewed financial statements for the quarter ending March 31, 2000 are
filed herewith.
ITEM 8. CHANGE IN FISCAL YEAR
New Millennium has a December 31 year end.
Exchange Act of 1934.
New Millennium 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 OTC Electronic Bulletin Board
administered by the NASD.
<PAGE>
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 March 31, 2000 and the related statements
of operations and cash flows for the quarters ended March 31, 1999 and March 31,
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 opnion.
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 principals.
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 is has been derived.
Richard J. Fuller, CPA, PA
Clearwater, Florida
June 22, 2000
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash $ 2,063 $ 285,081
Inventories 548,862 567,612
----------- -----------
Total Current Assets 550,925 852,693
----------- -----------
Furniture and Equipment-Net 3,964 7,216
----------- -----------
Other Assets
Prepaid expenses-net 417 5,271
Goodwill, net of accumulated amortization
of $22,587 and $28,234, respectively 655,007 649,860
Total Other Assets 655,424 655,131
----------- -----------
$ 1,210,313 $ 1,515,040
----------- -----------
LIABILITIES AND
STOCKHOLDERS' DEFICIT
Current Liabilities
Notes payable - related $ 1,596,012 $ 1,611,012
Accounts payable 85,235 38,837
Accrued expenses payable 129,289 145,289
----------- -----------
Total Current Liabilities 1,810,536 1,795,138
----------- -----------
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 0 0
Additional paid in capital 448,991 452,511
Common stock subscribed (1,382,000 shares) -- 441,500
Deficit accumulated during the development stage (1,073,314) (1,197,189)
----------- -----------
Total Stockholders' Deficit (600,223) (280,098)
----------- -----------
$ 1,210,313 $ 1,515,040
=========== ===========
</TABLE>
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
For the For the From Inception
quarter ended quarter ended through
3/31/99 3/31/00 3/31/00
------- ------- -------
Income $ 6,911 $ -- $ 59,808
Costs and Expenses:
General and administrative $ 109,106 $ 101,877 $ 1,086,504
Interest expense 23,190 16,000 139,921
Depreciation and amortization 330 5,998 30,572
----------- ----------- -----------
Total costs and expenses 132,626 123,875 1,256,997
----------- ----------- -----------
Loss from Operations (125,715) (123,875) (1,197,189)
Net Loss $ (125,715) $ (123,875) $(1,197,189)
----------- ----------- -----------
Basic Loss Per Common Share $ (0.009) $ (0.005) $ (0.052)
----------- ----------- -----------
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the For the From Inception
Quarter Ended Quarter Ended through
3/31/99 3/31/00 3/31/00
Cash Flows from Operating Activities:
<S> <C> <C> <C>
Net loss $ (125,715) $ (123,875) $(1,197,189)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 330 5,998 30,772
Common stock issued for services 775 -- 24,838
Increase in inventories (481,916) (18,750) (567,612)
Increase in prepaid expenses -- (5,000) (5,000)
Increase (decrease) in accounts payable
and accrued expenses 532,943 (30,398) 184,126
Total adjustments 52,132 (48,150) (332,876)
----------- ----------- -----------
Net Cash Used in Operating Activities (73,583) (172,025) (1,530,065)
----------- ----------- -----------
Cash Flows from Investing Activities
Purchase of goodwill -- (500) (678,094)
Purchase of fixed assets -- (3,457) (14,916)
----------- ----------- -----------
Net Cash Used in Investing Activities -- (3,957) (693,010)
----------- ----------- -----------
Cash Flows from Financing Activities
Proceeds from notes payable - Related 70,000 15,000 1,611,012
Proceeds from common stock transactions -- 444,000 897,144
----------- ----------- -----------
Net Cash provided by
Financing Activities 70,000 459,000 2,508,156
----------- ----------- -----------
Increase in cash and cash equivalents $ (3,583) $ 283,018 $ 285,081
Cash and cash equivalents at
beginning of period $ 6,811 $ 2,063 $ -0-
----------- ----------- -----------
Cash and cash equivalents at
end of period $ 3,228 $ 285,081 $ 285,081
----------- ----------- -----------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest 0 0 0
Cash paid during the year
for income taxes 0 0 0
</TABLE>
<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 March 31, 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.
4. Subsequent Events
----------------------
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. In addition, the
Company plans to increase the number of Common Stock authorized to 75,000,000 at
a special Meeting of Stockholders on July 17, 2000. Further, the Company is
securing an agreement with a financial institution to provide an equity line of
$25,000,000.
Proforma financial information is presented for the current interim period and
corresponding prior interim period for the Scovel Corporation merger on March 9,
2000.
<PAGE>
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 pro forma adjustments reflecting the event described in
Note 1 and the application of those adjustments to the historical amounts in the
accompanying statement of operations for the quarter ended March 31, 2000 of New
Millennium Media International, Inc. (formerly Progressive Mailer Corp.) (a
development stage company). The historical financial statements are derived from
the March 31, 2000 historical financial statements of New Millennium Media
International, Inc., which were reviewed by us, and the audited financial
statements of December 31, 1999, which were audited by us. 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 a going concern uncertainty on those
financial statements. Our review of the March 31, 2000 historical financial
statements was conducted in accordance with standards established by the
American Institute of Certified Public Accountants.
A review is substantially less in scope than an examination, the objective of
which is the expression of an opinion on management's assumptions, the pro forma
adjustments, and the application of those adjustments to historical information.
Accordingly, we do not express such an opinion.
The objective of this pro forma financial information is to show what the
significant effect is on the historical information might have been had the
event described in Note 1 had occurred at an earlier date. However, the pro
forma financial statements are not necessarily indicative of the results of
operations or related effects on financial position that would have been
attained had the above mentioned event actually occurred earlier.
Based on our review, nothing came to our attention that caused us to believe
that management's assumptions do not provide a reasonable bases for presenting
the significant effects directly attributable to the above mentioned event
described in Note 1, that the related pro forma adjustments do not give
appropriate effect to those assumptions, or that the pro forma column does not
reflect the proper application of those adjustments to the historical financial
statement amounts in the statement of operations for the quarter ended March 31,
2000.
Richard J. Fuller, CPA, PA
Clearwater, Florida
June 22, 2000
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
PRO FORMA CONDENSED COMBINED
STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1999
<TABLE>
<CAPTION>
Pro Forma
From
Inception
New Millennium Scovel Pro Forma through
Historical Corporation Adjustments ProForma March 31, 1999
<S> <C> <C> <C> <C> <C>
Income $ 6,911 $ $ $ 6,911 $ 17,566
Costs and Expenses:
General and
administrative $ 109,106 $ $ 33 $ 109,139 $ 866,855
Interest expense 23,190 23,190 53,746
Depreciation and
amortization 330 330 1,832
--------- --------- --------- --------- ---------
Total costs and
expenses 132,626 -- 33 132,659 922,433
--------- --------- --------- --------- ---------
Loss from
Operations (125,715) -- (33) (125,748) (904,867)
Net Loss $(125,715) $ -- $ (33) $(125,748) $(904,867)
--------- --------- --------- --------- ---------
Basic and Diluted Loss Per
Common Share $ (0.009) $ (0.009) $ (0.14)
--------- --------- ---------
</TABLE>
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
Pro Forma
From
Inception
New Millennium Scovel Pro Forma through
Historical Corporation Adjustments Pro Forma March 31, 2000
<S> <C> <C> <C> <C> <C>
Income $ $ $ $ $ 59,808
Costs and Expenses:
General and
administrative $ 101,877 $ $ 33 $ 101,910 $ 1,086,537
Interest expense 16,000 16,000 139,921
Depreciation and
amortization 5,998 5,998 30,572
----------- ----------- ----------- ----------- -----------
Total costs and
expenses 123,875 -- 33 123,908 1,257,030
----------- ----------- ----------- ----------- -----------
Loss from
Operations (123,875) -- (33) (123,908) (1,197,222)
Net Loss $ (123,875) $ -- $ (33) $ (123,908) $(1,197,222)
----------- ----------- ----------- ----------- -----------
Basic and Diluted Loss
Per Common Share $ (0.005) $ (0.005) $ (0.052)
----------- ----------- -----------
</TABLE>
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
NOTE TO THE PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
For the quarter ended March 31, 2000
1. Basis of Presentation
--------------------------
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. This
statement is based on the transaction having taken place on January 4, 2000, the
date of Scovel Management, Inc.'s incorporation and utilizes the reviewed
historical financial statements. The resulting pro forma statement reflects the
effect on historical financial statements.
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS DECEMBER 31, 1998 and 1999
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 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.
Richard J. Fuller, CPA, PA
Clearwater, Florida
June 1, 2000
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, 1998 and December 31, 1999
<TABLE>
<CAPTION>
1998 1999
----------- -----------
ASSETS
<S> <C> <C>
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 0 655,007
----------- -----------
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 0 0
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 0 0
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
=========== ===========
</TABLE>
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
For the For the From Inception
Year Ended Year Ended through
12/31/98 12/31/99 12/31/99
----------- ----------- -----------
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)
=========== =========== ===========
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
For the Period from January 1, 1998 through December 31, 1999
<TABLE>
<CAPTION>
Deficit
Accumulated
Additional during the Total
Common Stock Paid - in development stockholders'
Shares Amount Capital period equity
------------ ------------ ------------ ------------ ------------
<S> <C> <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 0 775
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 of
the assets of Lufam Technologies, Inc.
(Purchase made in 1998 and stock
issued in 1999) 0 0 182,638 182,638
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 of
the assets of Lufam Technologies, Inc.
(Purchase made in 1998 and stock
issued in 1999) 1,710,000 1,710 0 1,710
Shares issued to purchase all of
Unergi, Inc. 16,566,667 16,567 0 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)
------------ ------------ ------------ ------------ ------------
Balance, December 31, 1999
25,809,881 $ 24,100 $ 48,991 $ (1,073,314) $ (600,223)
============ ============ ============ ============ ============
</TABLE>
<PAGE>
NEW MILLENNIUM MEDIA INTERNATIONAL, INC.
(FORMERLY PROGRESSIVE MAILER CORP.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the For the From Inception
Year Ended Year Ended through
12/31/98 12/31/99 12/31/99
-------- -------- --------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
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 0 (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 $ 0 $ 6,811 $ 0
----------- ----------- -----------
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 0 0 0
Cash paid during the year for income taxes 0 0 0
</TABLE>
<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.
<PAGE>
The financial statements do not include any adjustments that might be necessary
should the Company be unable to continue as a going concern.
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 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.
<PAGE>
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.
<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 at 10% interest $ 638,952 $ 641,152
secured by inventories
Notes due stockholders, non-interest bearing -- 954,860
---------- ----------
$ 638,952 $1,596,012
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.
<PAGE>
PRO FORMA COMBINED BALANCE SHEET
December 31, 1998
<TABLE>
<CAPTION>
New Millennium Pro Forma
Historical Unergi, Inc. Adjustments Pro Forma
------------------------------------------------
ASSETS
<S> <C> <C> <C> <C>
Current Assets:
Cash $ 6,811 $ 1,691 $ 8,502
Inventories 481,916 481,916
Stock Subscription Receivable 800 (800) 0
Employee Advance 1,000 (1,000) 0
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 0 42,119
Accrued expenses payable 33,068 39,281 72,349
------------------------------------------------
Total Current Liabilities 714,139 154,281 868,420
------------------------------------------------
Long-term Liabilities 0 0
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 0 0
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>
<PAGE>
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<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>
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 0 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 Per
Common Share $ (0.15) $ (0.18) (0.19)
=============================================================
</TABLE>
<PAGE>
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 12/31/99
----------------------------------------------------------------------
<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 0 95,382 125,938
Depreciation and amortization 23,072 0 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
Per Common Share $ (0.03) $ (0.05) $ (0.11)
======================================================================
</TABLE>
<PAGE>
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 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.
Index to Exhibits
2.1 Agreement and Plan of Merger dated as of March 9, 2000 between Scovel
Corporation, a Delaware corporation ("Scovel"), and New Millennium Media
International, Inc., a Colorado corporation ("New Millennium")*
3.1 Articles of Incorporation of New Millennium Media International, Inc.
3.2 By-Laws of New Millennium Media International, Inc.
17.1 Resignation Letter of Gerald Ghini
27.1. Financial Data Schedule
* - Filed with 8-K filing on March 9, 2000 (SEC File No. 0-29195)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Current Report on Form 8-K12G3A to be signed on
its behalf by the undersigned hereunto duly authorized.
NEW MILLENNIUM MEDIA INTERNATIONAL INC.
BY: /s/ John Thatch
----------------------------
John Thatch
President and Chief Executive Officer
Dated: July 20, 2000
