**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549








**FORM
      10-KSB**





ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For
      the
      Fiscal year ended**June 30, 2007**








Commission
      File Number: **333-51880**











(EXACT
      NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)








**NEVADA**
            
            **11-3502174**(STATE
                OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
            
            (I.R.S.
                EMPLOYER IDENTIFICATION NO.)








**Mahesh
      K Jayanarayan, CEO**


**195
      The Vale**


**London
      UK W3 7QS**


**Tel:
      011 44 208 746 2018**


**Fax:
      011 44 208 749 8025**


(Address,
      including zip code and telephone numbers, including area code, of registrant’s
      principal executive offices)








Securities
      registered pursuant to Section 12(b) of the Act:    
**None**




Securities
      registered pursuant to Section 12(g) of the Act:    
**Common Stock,****$0.0001 par value**




Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be
      filed by section 12 or 15 (d) of the securities exchange act of 1934 during
      the
      preceding 12 months (or shorter period that the registrant was required to
      file
      such reports), and (2) has been subject to such filing requirements for the
      past
      90 days.   **Yes****x**  
      No 





Check
      if
      no disclosure of delinquent filers in response to Item 405 of Regulation S-B
      is
      not contained in this form, and no disclosure will be contained, to the best
      of
      registrant’s knowledge, in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-KSB or any amendment
      to
      this Form 10-KSB.





The
      issuer had no revenue for its most recent fiscal year.





As
      of
      September 25, 2007 the aggregate market value of the voting stock held by
      non-affiliates of the registrant was approximately
**$27,610,674.**


Transitional
      Small Business Disclosure Format (Check One):  Yes o**No****x**





Shares
      of
      Common Stock, $0.0001 par value, outstanding as of September 25,
      2007:  **337,954,035**













**NEW
      MEDIUM ENTERPRISES, INC.**


Form
      10-K
      for the Year Ended June 30, 2007







**Table
      of Contents**


**PAGE****PART
                  I**ITEM 1.
              BUSINESS
              3ITEM 2.
              DESCRIPTION
                  OF PROPERTY
              9ITEM 3.
              LEGAL
                  PROCEEDINGS
              13ITEM 4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              13**PART
                  II**ITEM 5.
              MARKET
                  FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER
                  MATTERS
              13ITEM 5A.
              SELECTED
                  FINANCIAL DATA
              15ITEM 6.
              MANAGEMENT
                  DISCUSSION & ANALYSIS OF FINANCIAL CONDITION
              15ITEM 7.
              FINANCIAL
                  STATEMENTS AND SUPPLEMENTARY DATA
              19ITEM 8.
              CONTROLS
                  AND PROCEDURES
              35**PART
                  III**ITEM 9.
              DIRECTORS
                  & EXECUTIVE OFFICERS OF THE REGISTRANT; COMPLIANCE WITH SECTION 16(a)
                  OF THE EXCHANGE ACT
              35ITEM 9A.
              COMPLIANCE
                WITH SECTION 16(A) OF THE EXCHANGE ACT
              38ITEM 10.
              EXECUTIVE
                  COMPENSATION
              38ITEM 11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              39ITEM 12.
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS
              39ITEM 13.
              EXHIBITS
                  INCORPORATED BY REFERENCE
              40ITEM 14.
              PRINCIPAL
                  ACCOUNTANT FEES AND SERVICES
              40SIGNATURE
              41
   -
            2
            -


**CAUTION
      REGARDING FORWARD-LOOKING INFORMATION**





This
      Annual Report on Form 10-K, including the documents incorporated by reference
      in
      this report, includes forward-looking statements within the meaning of Section
      27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
      Exchange Act of 1934, as amended. All statements included or incorporated by
      reference in this report, other than statements that are purely historical
      in
      nature, are forward-looking statements. We have based these forward looking
      statements on our current expectations and projections about future events.
      Certain statements contained in this annual report, including, without
      limitation, statements containing the words "believes," "anticipates," "expects"
      and words of similar import, constitute forward-looking statements. Such
      forward-looking statements involve known and unknown risks, uncertainties and
      other factors that may cause the actual results, performance or achievements
      of
      the registrant, or industry results, to be materially different from any future
      results, performance or achievements expressed or implied by such
      forward-looking statements.





Such
      factors include, among others, the following: international, national and local
      general economic and market conditions; demographic changes; the ability of
      the
      registrant to sustain, manage or forecast its growth; the ability of the
      registrant to successfully make and integrate acquisitions; manufacturing costs
      and availability; new product development and introduction; adverse publicity;
      competition; the loss of significant customers or suppliers; fluctuations and
      difficulty in forecasting operating results; changes in business strategy or
      development plans; business disruptions; the ability to attract and retain
      qualified personnel; the ability to protect technology and other factors
      referenced in this and previous filings.





Given
      these uncertainties, readers of this Form 10-KSB and investors are cautioned
      not
      to place undue reliance on such forward-looking statements. The registrant
      disclaims any obligation to update any such factors or to publicly announce
      the
      result of any revisions to any of the forward-looking statements contained
      herein to reflect future events or developments.




**PART
      I**





**ITEM
      1. BUSINESS**




The
      company was incorporated in Nevada on August 2, 1999 under the name
      Shopoverseas.com Inc. On July 10, 2000 we changed our name to New Medium
      Enterprises, Inc. (“NME” or the “Company”).





On
      January 13, 2004 we acquired the intellectual property rights associated with
      a
      new and emerging DVD format known as Versatile MultiLayer Disc (VMD). At that
      time, we discontinued the internet and wireless businesses in which we had
      been
      engaged, and have since focused all of our resources on developing our
      proprietary VMD prototypes and a related pipeline of products as our core
      business. As a result, we are positioned in the Optical Disc Storage sector,
      a
      substantial and growing segment of the data storage market, in which DVD formats
      comprise the largest segment. We believe this sector of the storage market
      is
      currently undergoing a cycle of change precipitated by the emergence of high
      definition TV into the marketplace.





Our
      VMD
      technology increases the capacity of a conventional DVD by a factor of up to
      5
      allowing much greater storage for data and film content. Because VMD is based
      on
      current DVD 'red laser' technology it means that after a software upgrade,
      VMD
      is compatible with conventional DVD drives containing the correct internal
      chipset. Significantly, VMD discs can be produced by making modifications to
      the
      sputtering and bonding processes of a conventional DVD replication line, thus
      making use of current infrastructure of red-laser based DVD replication
      technology. The Company has negotiated or is in the process of negotiating
      partnerships with production facilities, drive manufacturers and content owners
      to exploit VMD's capabilities. We have contracted with VDL-ODMS, a major
      replicator in The Netherlands to build our first owned replication
      line.   The company expects production of pre-recorded VMDs with
      film content to commence by November 2007.





We
      believe that in the information driven, digitally dependant marketplace,
      controlling, accessing and storing large quantities of data is a fundamental
      requirement. These data storage markets now consume over 7 billion DVDs each
      year, largely pre-recorded with film content. We believe the demand for
      increasing capacity will be a key driver for these markets. We also believe
      VMD
      represents a huge leap in the availability of that capacity, yet based on
      current market products.





As
      the
      desire for ever greater storage capacities rises, we feel consumers will be
      reluctant to adopt new technologies unless there is a clear market leader.
      Blue
      laser technologies are the chief competitors to VMD.  The two emerging
      blue laser technologies, known as Blue-Ray and HD DVD, are competing to become
      the standard blue laser format, but to date no single format has emerged
      successful. We believe this represents a significant market opportunity for
      NME’s VMD technology.





The
      company is centred on further developing innovative storage technologies, along
      with congruous video compression technology, in pursuit of a new generation
      of
      high performance, low cost digital storage devices. We believe the convergence
      of High Definition with VMD technology will provide the company an opportunity
      to leverage its expertise in the development of high definition players,
      recorders and personal video recorders.





During
      the fiscal year ended June 30, 2007, NME began commercialisation of its products
      and made plans for the distribution in France, USA, East Europe, Australia,
      Poland and India.  The company is planning to roll out certain of its
      products by December 2007, with product launches in USA, France, Germany, East
      Europe, Australia, Poland and India.





-
          3
          -






The
      company is organized into three operating divisions:





1.
            Optics
                - This division is responsible for the development of the VMD disc
                in its
                entirety, from mastering, replication, printing to packaging besides
                the
                VMD replication lines in collaboration with a consortium
                partners.





2.
            Electronics
                - This division handles development of High Definition Optical Disc
                players.





3.
            Media
                Division - Authoring Software and Creative Services - This division
                is
                responsible for the development of the HD format for the optical
                discs
                themselves together with authoring tools for the media industry to
                enable
                them to display their film content on our VMD
                discs.





**Optics
      Division**


The
      company has recruited Mr. Sanjay Khar as Sales and Marketing Director to
      spearhead the sales of replication lines besides setting up this global
      operation.





**Electronics
      Division**


The
      Company intends for its primary sales distribution channels to operate through
      its partner, distributor and retail channel network, which we intend to
      establish in the launch markets. The company has released sample products in
      the
      U.S.A., France, Germany, East Europe, Australia, Poland and India. The company
      plans limited sales of its products in certain selected areas in the 3rd Quarter
      of 2007
      and intends to go into full scale production and sales in the 4th quarter
      of
      2007.





**Media
      Division**


The
      Division has two distinctive departments: Authoring Tools development and
      provision of Creative Services. The acquisition of contents is also included
      in
      the responsibilities of this division.





The
      company has successfully developed the Authoring tools for the media industry
      and after running trials, the tools are expected to be launched for commercial
      use by a limited number of Media partners in the 3rd Quarter
      of 2007.
      The company plans on selling a commercial version in early 2008.





**How
      VMD Technology Works**





We
      believe VMD delivers capacity, flexibility and market potential greater than
      what is currently available and is therefore capable of competing with emerging
      technologies in blue laser.





Conventional
      DVDs are either single, or increasingly, dual layer discs which store and
      retrieve digital content (e.g., video) from a data layer or layers within the
      thickness of the DVD. DVDs are usually 0.8mm thick and have a reflective layer
      to bounce the laser back that is used to read or record data.





VMD
      allows data storage on multiple layers within a standard DVD disc. NME’s
      scientific team has patented processes to make this technology viable by
      producing multiple readable layers within the 0.8mm DVD thickness, each capable
      of storing as much data as a conventional DVD.





As
      VMD
      discs can be read by many standard DVD-RW drives once their internal software
      (firmware) has been updated, this enables VMD to be backward compatible with
      many DVD-RW drives. We anticipate the VMD player technology will be delivered
      into a number of other devices, such as PC's, set-top boxes, access devices
      and
      game consoles. We anticipate the software up-grade will be available free to
      download on the internet for PC users, or burnt on a specific track within
      every
      VMD disc.





**Key
      Advantages of VMD**





**Versatile**:
      Inherent backward compatibility with most existing and previous disc formats.
      VMD Drives will be able to read most other standard formats including CD and
      DVD.





**Adaptable**:
      VMD multilayer technology does not function exclusively with red laser, but
      can
      also easily be applied to blue laser technologies. We anticipate that VMD could
      therefore attain even larger storage capacities if employed with blue laser
      technologies.





**Affordable**:
      We anticipate VMD will require only minimal modifications to conventional DVD
      manufacturing equipment. We believe this will translate into lower costs to
      the
      producers and little to no price increases for the end-consumer when compared
      to
      conventional DVD players and discs. VMD technology is based on conventional
      CD/DVD machinery, technologies and inexpensive commercial red lasers, and
      consequently holds the advantage of simplicity in disc and drive
      manufacturing.





We
      believe VMD discs can be produced by standard dual layer DVD type replicator
      lines without significant modification to their facility. The Company intends
      to
      negotiate partnerships with major production facilities, drive manufacturers
      and
      content owners to exploit VMD's capabilities.





As
      conventional DVD discs can work in VMD players, the VMD discs and players
      allow content owners to deliver their material in much higher quality (such
      as
      the new High Definition standard in video). VMD technology also has the unique
      advantage of avoiding the need to persuade consumers to replace their existing
      DVD collection. We believe this is a crucial advantage in terms of VMD's market
      potential.





-
          4
          -






**PRINCIPAL
      PRODUCTS**





**VMD
      DISCS**





We
      anticipate the HD VMD disc will be produced in a number of formats:





·
            READ
                ONLY·
            WRITE
                ONCE·
            RE-WRITABLE·
            READ
                ONLY/RE-WRITABLE COMBINED





We
      anticipate that VMD discs can be mass manufactured at low cost using existing
      dual layer DVD type manufacturing facilities and equipment. The discs also
      employ a self protect feature that protects the disc’s data from analysis after
      manufacture. The disc architecture serves as an additional protection from
      copyright violations. We expect the storage capacity on the first generation
      of
      VMD discs to be up to 20 GB.





**VMD
      REPLICATION LINE**





VMD
      discs
      can be produced by making modifications to the sputtering and bonding processes
      of a dual layer disc replication line, thus making use of the current
      infrastructure of red-laser based DVD replication technology.





We
      expect
      to sell licenses for VMD replication technology pursuant to which we would
      earn
      a licence fee on each line of VMD discs produced by the replicator lines
      producers.





NME
      intends to manufacture through one of its vendors what we anticipate to be
      the
      first commercial line to produce both dual layer and multilayer red laser discs,
      which is scheduled to be completed in October 2007.





**VMD
      PLAYERS**





NME’s
      players contain a chipset that enables HD content on VMD discs to be read by
      a
      red laser DVD player.





The
      drive
      used in a VMD player is very similar to the standard DVD RW drive except for
      modifications to the firmware to instruct the laser to read multiple layers.
      The
      modifications in the software re-calibrate the red laser, enabling it to read
      data on all data layers (not just the top and bottom layers as in conventional
      dual layer DVDs).  We anticipate sales of the players by December
      2007.





We
      also
      anticipate VMD player technology will be used in a number of other devices
      such
      as personal computers (PCs), set-top boxes, access devices and game consoles.
      We
      anticipate making the required software upgrade available free on the internet
      for PC users or burning it onto a specific track within every VMD disc. We
      anticipate a website being ready for this purpose around December 2007 where
      PC
      users would be able to download the software which has already been
      developed.





**AUTHORING
      AND ENCODING SOFTWARE**





NME
      has
      developed its own VMD authoring software which we anticipate being available
      to
      professionals in the market by March 2008. This software is currently used
      by
      NME to author content for conversion into HD VMD for NME use only.





Aided
      by
      our software, we anticipate that vendors will be able to sell HD quality films
      at a premium price, or provide whole collections of films on one disk, thus
      minimizing both disc purchase and packaging prices.





In
      the
      last few months, New Medium Enterprises Inc has been working on building a
      content library. We are in discussions with different film studios and
      independent content distributors in China, Japan, Germany, France, Iceland,
      Poland, Scandinavia, Russia, US, UK, Australia, New Zealand and India. We
      believe the content market could be another revenue source to NME through format
      fees, content conversion, and sale of authoring software.





-
          5
          -








**MARKET
      OPPORTUNITY FOR PRINCIPAL PRODUCTS**





Global
      DVD Market





The
      most
      widely known competing technologies to VMD are blue laser based and although
      offering higher data densities, currently provide less storage capacity than
      VMD
      and require the consumer to buy new content and replace their DVD drive or
      player with expensive new equipment. In many regions of the world, the DVD
      type
      optical disc technologies have, or are gradually becoming, the dominant consumer
      storage medium, primarily due to their low cost of production, ready
      distribution and relative longevity and reliability.





DVD
      disk
      replication worldwide in 2005 was estimated to be over 7 billion units. By
      value, the International market for DVDs is expected to be worth approximately
      $85 billion (USD) by 2010 (Source: Informa Telecomms and Media).





The
      pre-recorded market consists almost exclusively of pre-recorded feature film
      content. This market is dominated by Hollywood film studios in the West and
      equivalents in the East and Far East. It is these content owners who control
      which entity replicates for them, with Hollywood studios being the most
      influential. The result of this is that the majority of the current pre-recorded
      DVD supply chain is concentrated into five replication companies, which between
      them provide a high proportion of the global output.





We
      anticipate that emerging markets are likely to be the most attractive for red
      laser based DVD formats, whilst established DVD markets will be more favourable
      for blue laser technologies and therefore will be the most difficult for us
      to
      compete in. However, we believe that even the established DVD markets will
      likely present a legacy opportunity, where consumers who do not wish to change
      formats or are unwilling to invest in higher priced blue laser equipment will
      provide commercially fertile groups for VMD for some years, provided appropriate
      channels can be found.





Although
      we view Latin America as an emerging DVD market, we believe it is likely to
      follow North American trends due to the prevalence of Hollywood
      content.





Global
      High Capacity Disc Market





The
      markets for DVDs are fast maturing in the US, Europe, and Japan. With increasing
      adoption of HDTV in these markets, as well as other markets around the globe,
      we
      expect the demand for higher storage capacity discs for High Definition content
      to continue to increase.  According to research figures, the demand
      for HD discs is expected to increase from under 500 million discs in 2007 to
      approximately 3500 million in 2011 (Source: Understanding & Solutions). We
      hope to position VMD to gain a sizeable share of this market.





High
      Definition Television (HDTV)





The
      home
      theater industry has been eagerly following the progression of HDTV in all
      of
      its transmission formats since its inception in the fall of 1998. The recent
      introduction of optical high definition storage formats is the latest phase
      of
      the evolution of high definition television entertainment. To address this
      opportunity, NME intends to introduce two models of HD VMD players to the U.S.
      market by December 2007.





We
      expect
      that the fast growing adoption of HDTV in the US, Japan and West European
      countries will boost the market opportunity for VMD products, which we believe
      to be a more natural upgrade from conventional DVD products based on red laser
      technologies, equipment and infrastructure.





The
      following chart shows the historical and projected adoption of HDTV in the
      US,
      Japan and West Europe, which we believe will result in increased demand for
      High
      Definition contents as well as products to store and play it back.





**2003**
            
            **2004**
            
            **2005**
            
            **2006**
            
            **2007**
            
            **2008**
            
            **2009**USA
            3%
            
            6%
            
            15%
            
            25%
            
            38%
            
            55%
            
            81%Japan
            3%
            
            10%
            
            18%
            
            27%
            
            40%
            
            55%
            
            85%Western
                Europe
            1%
            
            2%
            
            4%
            
            9%
            
            17%
            
            27%
            
            35%




(Source:
      Understanding & Solutions)





Above
      figures show how much the household penetration of high definition TVs in
      percentage terms in three major markets.





DVD
      Players





Of
      the
      approximately one billion DVD drives found in most personal computers, game
      consoles and stand alone DVD players/recorders, Understanding and Solution's
      research suggests that approximately 450 million of these are DVD-R drives.
      It
      is these drives that we believe are most suitable for a simple firmware upgrade
      to enable them to read the extra data that HD VMD discs can store.





-
          6
          -






**LAUNCH/DISTRIBUTION/SALES
      OF PRODUCTS**





In
      the
      4th quarter of 2006, in an effort to generate publicity for our HD VMD
      dual-player, we delivered bundles consisting of a HD VMD player and HD Demo
      Disc
      to selected distributors, content owners, replicators, studios, production
      companies, and the press. The launch of our multilayer player in the retail
      market is being planned in France, Scandinavia, East Europe, Australia, Iceland
      and India by December 2007, with our multilayer discs in the first 4 regions
      and
      the dual layer discs in Iceland and India.





We
      anticipate the possibility that we could form alliances for distribution/sales
      of our products with companies that already have existing DVD sales channels.
      We
      are also planning to establish additional regional representative offices or
      relationships with partners in strategic countries to promote distribution/sales
      to the mass market. At present we have representatives in France, Germany,
      Japan, China, Brazil and India. We are also setting up an E-Commerce
      website to sell our products via the web in the future. At the moment
      we are selling online using Amazon.com.





NME
      has
      also established two companies in China, New Medium Enterprises Asia Pacific
      Ltd. (NME Asia Pacific) and New Medium Enterprises China Ltd. (NME China).
      Both
      of these companies are wholly owned subsidiaries of NME and have been formed
      for
      joint ventures, to handle operations, and to work in conjunction with the
      principal existing Chinese market manufacturers and distributors to promote
      our
      products.





On
      30th of May
      2006 we exhibited our discs and VMD line concept to major replicators from
      around the world at the Mediatech show in Frankfurt, Germany. Our participation
      was sponsored by the Mediatech and supported by VDL-ODMS. The focus of attending
      the exhibition was to encourage existing replicators to adopt our VMD
      technology. This show was followed by the Mediatech exhibitions at Barcelona
      in
      Feb 2007, ODS in India in April 2007 and at Long Beach USA in May
      2007.





**OUR
      SALES AND MARKETING STRATEGY FOR ELECTRONICS**





Initially
      our plans are to partner with OEM and ODM manufacturers in China to license
      our
      technology to them. Most OEM manufacturers have their own sales channels and
      we
      intend to tap into that market. We also plan to market and sell directly to
      electronics distributors worldwide independently of the OEMs.





In
      addition, we anticipate selling directly to retailers who have no global
      sourcing arrangements in China and work with leading brands to license our
      technology to them.





**COMPETITION**





The
      market for our technology is very competitive, is subject to rapid technological
      changes and varies for different individual products. We believe that there
      are
      many approaches being pursued in competition to our technology, including some
      by private companies for which information is difficult to obtain. Most of
      our
      competitors have significantly greater resources, and have developed product
      candidates and processes that directly compete with our technology. Our
      competitors may have developed, or could in the future develop, new technologies
      that compete with our technology or even render our technology obsolete. Our
      technology is designed to produce high capacity, next generation discs that
      could effectively compete with the current blue laser products being produced
      by
      companies such as Sony and Toshiba. Even if we are able to demonstrate improved
      or equivalent results, researchers and practitioners may not use our technology
      and we would then suffer a competitive disadvantage. As a result, we may be
      unable to compete successfully in the market place, which could have a material
      adverse effect on the price of our stock.





**Blue
      Laser Based Technology**





The
      USA
      is the biggest global consumer and producer market of pre-recorded DVDs with
      the
      European market being the second largest. The market appears set to change
      significantly with the emergence of two new higher specification technologies:
      Blu-ray and HD DVD, both of which are blue laser based optical disc technologies
      allowing greater storage capacities.





Blu-ray
      is the next-generation optical disc format developed by the Blu-ray Disc
      Association (BDA), a group of leading consumer electronics companies including
      Panasonic, Samsung, Apple, Dell and Hewlett-Packard, but is generally viewed
      as
      a Sony product. The format uses a blue laser rather than a red laser, which
      is
      employed by current DVD players to enable recording, rewriting and playback
      of
      large amounts of data. A single-layer Blu-ray Disc can hold 25GB of data, which
      can record over 2 hours of HD content or approximately 13 hours of standard
      resolution content. HD DVD was developed by Toshiba and NEC, and is supported
      by
      Warner Bros., Paramount and Universal. Like Blu-ray, HD DVD discs are the size
      of a conventional DVD disc, but have much greater storage capacity and can
      hold
      an entire feature-length film at HDTV resolution.  A single-layer HD
      DVD disc has storage capacity of approximately 15GB and dual-layer capacity
      of
      approximately 30GB.





We
      believe the lack of an agreed-upon HD standard will cause indecision in the
      market and aid the case for VMD.





-
          7
          -






**US
      and Europe**





Both
      the
      US and Europe pose significant barriers to entry to the data storage market.
      Many key enterprises within the market place are aligned with one or other
      of
      the blue laser based technologies, making access to these markets difficult
      for
      new entrants.





Consequently,
      we have focused on the other world markets and content vendors such as Eros,
      AP
      International, and Eagle Films, who are content providers for mainly Bollywood
      films, Tsubaraya, Scanbox, Lazy Town, VCL, Seven 7 Sept, BAC Films, Icon
      Pictures and Anthem Pictures. These content vendors distribute worldwide and
      enjoy significant sales in Europe (specifically the UK). We anticipate that
      these partners, who we believe will see VMD as a market-ready, compatible
      technology which enhances their own business development plans will also help
      introducing VMD technology into their markets.





**China**





In
      China,
      VMD technology faces competition from two other developing high definition
      technologies: digital videodisk (HDV) technology and Internet DVD (IDVD)
      technology. We are strongly promoting our Chinese assembled VMD players in
      the
      country at exhibitions like the Shanghai Film Festival.





**SOURCES
      AND AVAILABILITY OF RAW MATERIALS**





Our
      potential principal suppliers and vendors are:





-
            VDL-ODMS
                BV, The Netherlands -  for Engineering and VMD replication
                line-
            AWM
                Switzerland - for mould manufacturing-
            Plasmon,
                France - for optical mastering and stamper
                manufacturing-
            Asus
                International -  for production of drives to be used in
                Players-
            DaTARIUS
                – for offline quality control-
            Ilsemann
                – Packaging-
            Netstal
                Maschinen, Switzerland -  Injection Molding
                systems-
            Dr. Schenk, GmbH - for VMD scanner
              project





Our
      potential service contractors are:





-
            Digital
                Challenge-
            Semilla
                Corporation-
            V2
                Technologies-
            DCA
                - for VMD file format development





We
      are at
      present in discussions with various original equipment manufacturers (OEMs)
      and
      electrical manufacturer suppliers (EMS) in China and Europe to manufacture
      our
      HD VMD player.





**INTELLECTUAL
      PROPERTY**





We
      have
      filed patent and provisional patent applications in various countries to protect
      certain intellectual property we have developed.





We
      have
      obtained licenses from various parties which we deem to be necessary or
      desirable for the manufacture, use or sale of our technologies and
      products.  In general, these licenses require that we pay these
      parties certain fees for the use of their technologies in the development and
      sale of our products.





We
      have
      also reserved figurative trademarks for use in the development and sale of
      our
      technologies and products including figurative trademarks containing the names
      NME and HD VMD.





**GOVERNMENT
      REGULATION**





**CE
      Marking**





CE
      Marking on a product is a manufacturer's declaration that the product complies
      with the essential requirements of the relevant European health, safety and
      environmental protection legislation, in practice by many of the so-called
      Product Directives.





Our
      products must meet the requirements for CE Marking before they can be sold
      in
      the EU.





**RoHS**





We
      also
      have to ensure that all our electrical and electronic products comply with
      the
      RoHS Directive which came into effect on 1st July 2006.
      RoHS
      stands for “the restriction of the use of certain hazardous substances in
      electrical and electronic equipment.” This Directive bans the placing on the EU
      market of new electrical and electronic equipment containing more than agreed
      levels of lead, cadmium, mercury, hexavalent chromium, polybrominated biphenyl
      (PBB) and polybrominated diphenyl ether (PBDE) flame retardants. The HD VMD
      players and other electrical/electronic equipment manufactured by NME would
      have
      to comply with this regulation if they are to be sold in the EU and UK
      markets.





-
          8
          -






**RESEARCH
      AND DEVELOPMENT**





The
      estimated amounts spent on research and development during each of the last
      two
      fiscal years is: **2007 - $12,095,510 and 2006 - $544,663**. Our
      principal research and development activities consist of product development
      of
      VMD discs, VMD players, replication lines and authoring and coding
      software.





**EMPLOYEES**





We
      have
      44 total employees in the company, of whom 40 are full-time
      employees.





**REPORTS
      TO SECURITY HOLDERS**





We
      are
      not required to deliver an annual report to security holders, and we will not
      voluntarily send an annual report to security holders, officers or prospective
      investors. We are required to file reports with the Securities and Exchange
      Commission under section 15(d) of the Securities Act. The reports will be filed
      electronically. The common reports that we are required to file are known as
      Forms 10-KSB, 10-QSB, and 8-K. You may read copies of any materials we file
      with
      the SEC at their Public Reference Room at 450 Fifth Street, NW. Washington,
      D.C., 20549. You may obtain information on the operation of the Public Reference
      Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet
      site at http:www.sec.gov that contains reports, proxy and information
      statements, and will contain copies of the reports that we file
      electronically.





**RISK
      FACTORS**





You
      should carefully consider the risk factors, together with all other information
      in this document and the documents we have incorporated described below by
      reference, before you decide to purchase shares of our common
      stock.





The
      following risks and uncertainties are not the only ones we face. Risks and
      uncertainties which either we do not know about or we currently believe are
      immaterial may also materially impair our business operations. If any of the
      following risks occur, our business, results of operations, financial position
      or cash flows could be adversely affected. In that event, the trading price
      of
      our common stock could decline, and you may lose all or part of your
      investment.





**RISKS
      RELATED TO OUR BUSINESS**





***We
      have no history of revenue, and expect to continue to incur operating losses
      until such time as our first generation products achieve commercial
      acceptance.***





We
      expect
      to continue to incur operating losses for the foreseeable future at least until
      such time the first generation products are commercialized, provided we are
      able
      to generate fees through royalty agreements and joint venture agreements. Any
      fees we could potentially generate would most likely not occur until and unless
      the actual products are produced after validation of the industrial
      prototype.





***Our
      limited operating history makes it difficult to evaluate our business and future
      performance.***





Given
      our
      limited operating history, there are no meaningful period-to-period comparisons
      of our operating results from which to evaluate our performance. The lack of
      performance history of our products, our limited forecasting experience and
      processes and the emerging nature of our target markets makes forecasting our
      future sales and operating results difficult.





***Revenues
      generated in the future, if any, might not be sufficient to finance the complete
      cost of our research and development.***





We
      will
      require significant additional funds before we achieve positive cash flow from
      operations. Our ability to arrange such financing in the future will depend,
      in
      part, upon the prevailing capital market conditions as well as our business
      performance and the success of our prototypes. Our future capital requirements
      and profitability depend on many factors, such as the timely success of product
      development projects, the timeliness and success of joint venture and corporate
      alliance strategies and our marketing efforts. Terms on which we may raise
      additional capital may include restrictions that could create difficulties
      in
      obtaining future financings, limit our options for changing the business and
      cause substantial cash flow problems. If we are unable to secure additional
      sources of capital we will need to substantially curtail our level of research
      and development efforts and other activities. Any equity raises of additional
      stock or convertible debt financing which we obtain, if any, could result in
      substantial dilution to stockholders.





***If
      production costs increase, our products may become too expensive to compete
      with
      other technologies.***





Changes
      might occur in the estimated cost of equipment needed for commercial VMD mass
      production and distribution. An important attribute of our technology is that
      it
      is based on standard red laser technology which we believe will result in
      minimum infrastructure costs as opposed to the competing Blue-Ray products,
      which are believed to require significant infrastructure costs. Potentially
      lower production costs may be the most important competitive edge we enjoy
      over
      other market participants like Sony and the Blu-Ray consortium and Toshiba.
      In
      the event the costs of mass production prove more expensive than anticipated,
      it
      may cause the product to be too expensive and thus, less
      competitive.





***We
      rely heavily on components from foreign countries, and any unfavourable changes
      in currency exchange rates could affect the company’s
      profitability.***





We
      rely
      heavily on components from China, and various other countries around the
      world.  In turn, any unfavourable change in currency exchange rates
      could affect our ability to obtain necessary components and raw materials at
      reasonable prices, and thus, adversely affect our gross margins and
      profitability.





-
          9
          -






***If
      we are unable to secure and protect our intellectual property rights, our
      ability to compete could be harmed.***





Our
      initial patent applications have not yet been fully assessed by a patent office,
      so there is still a possibility that some prior art or similar recent
      application may be found that would significantly reduce the value of
      intellectual property which would have a material adverse effect on our company
      and the price of our stock. We expect to develop trade secrets and may seek
      patent or copyright protection for trade secrets. We cannot assure you that
      we
      will develop trade secrets or seek patent or copyright protection for any or
      all
      of them. We have entered into and intend to enter into confidentiality and
      non-disclosure agreements to protect one or more trade secrets which we or
      our
      employees or independent contractors may develop, but we cannot assure you
      that
      we will do so or that the appropriate parties will maintain the confidentiality
      necessary to protect our trade secrets. A failure to maintain one or more trade
      secrets could have a material adverse impact on us.





We
      may
      offer products in the U.S. and in foreign countries based on our VMD technology.
      However, certain countries in the Pacific Rim, and elsewhere, may not offer
      the
      same degree of intellectual property protection that the U.S., European
      Community and Japan afford. Therefore, even if we are able to obtain
      intellectual property rights in those jurisdictions, we may be unable to enforce
      them.





We
      cannot
      guarantee that any patents, copyrights, trade secrets, trademarks or domain
      names that we develop or obtain will provide sufficient protection to us.
      Furthermore, we cannot be sure that other parties will not challenge the
      validity of our intellectual property results or that other parties will not
      assert affirmative defenses to infringement or dilution. If another party
      succeeds in developing optical data storage technology comparable to VMD without
      infringing, diluting, misusing, misappropriating or otherwise violating our
      intellectual property rights, our financial condition may materially
      suffer.





***We
      may require additional technology in order to successfully develop and license
      our technology, and if we cannot develop or obtain those technologies, our
      business may be affected.***





We
      may
      need to develop or acquire some additional technology in order to produce
      products that are ready for commercial sale or licensing. If we cannot develop
      the additional technology that we need in order to be able to sell the products,
      we may have to purchase technology from others. We cannot promise or accurately
      forecast whether we will succeed in performing these acquisitions.





***We
      depend upon certain key personnel, and we may become unable to maintain or
      attract, knowledgeable and experienced personnel vital to our financial
      success.***





To
      date,
      two key personnel have brought the company to its present status are the CEO,
      Mr. Mahesh K. Jayanarayan, and the CTO, Dr. Eugene Levich. Both are crucial
      for
      taking the company from research and development to commercialization stage.
      The
      risk of losing either or both of them at this crucial stage of the development
      of the company could affect the future success of the company.





Furthermore,
      in order to succeed, we depend upon our ability to attract and retain highly
      qualified technical and management personnel, including experts in the field
      of
      optical storage technology and the sciences underlying such technology. We
      cannot be sure that we will be able to attract and retain the qualified
      personnel we need for the business. We face competition for such personnel
      from
      other companies, research and academic institutions, government entities and
      other institutions.





We
      do not
      currently maintain "key man" insurance for any personnel. We have attempted
      to
      retain our key personnel, including our officers and directors by providing
      them
      with attractive incentive packages, which include competitive salaries and
      stock
      grants, but we cannot be sure that these incentives will guarantee retention
      of
      our key employees.





***We
      may become financially dependent on one or a small number of customers, and
      a
      change in the relationship with those customers could significantly impact
      our
      sales.***





Because
      we are a development stage company, we have not developed a customer base for
      our products. We hope to establish joint ventures and licensing arrangements
      with strategic partners to license VMD technology. In the future, it is possible
      that we, the joint ventures and licensees will have sales to one or a small
      number of customers which equal ten percent or more of our consolidated
      revenues. This dependence on suppliers or joint venture partners could have
      an
      adverse effect on our company and on the price of our shares.





***Provisions
      of corporate law and our certificate of incorporation could deter takeover
      attempts.***





The
      provisions of the corporate law of our state of incorporation and our
      certificate of incorporation could make it more difficult for a third party
      to
      acquire control of us, even if the change of control would benefit the
      stockholders.





***Our
      products may be subject to various legal and regulatory controls, and if we
      do
      not comply, our business could be adversely affected.***





We
      are
      unaware of any particular electrical, telecommunication, environmental, health
      or safety laws and standards that will apply to our products. While we do not
      anticipate special regulations of our products, we cannot assure you that we
      will not have to comply with laws and regulations of domestic, international
      or
      foreign governmental or legal authorities. Compliance with these laws and
      regulations could have a material adverse affect on us.





-
          10
          -






***We
      may be unable to obtain sufficient components on commercially reasonable or
      satisfactory terms, which may have a material adverse impact on our financial
      condition.***





It
      is
      common in the data storage technology manufacturing and assembly industry for
      certain components to be available only from a small number of suppliers. We
      cannot be sure that the key components for future products will be available
      from more than a few suppliers. Therefore, we, our joint venture partners and
      our licensees may experience difficulty in obtaining a sufficient supply of
      key
      components on a timely basis. We hope to develop relationships with qualified
      manufacturers with the goal of securing high-volume manufacturing capabilities,
      thus controlling the cost of current and future models of our future
      products.





The
      potential supply problems could adversely affect our sales of products. The
      inability to obtain sufficient components and equipment, to obtain or develop
      alternative sources of supply at competitive prices and quality or to avoid
      manufacturing delays, could prevent joint venture partners from producing
      sufficient quantities of our products to satisfy market demand. Additionally,
      in
      the case of components purchased exclusively from one supplier, joint venture
      partners could become unable to produce any quantity of the affected products
      until the component becomes available from an alternative source. These problems
      could cause delays to product shipments, thereby increasing the joint venture's
      material or manufacturing costs or causing an imbalance in the inventory levels
      of certain components. Moreover, difficulties in obtaining sufficient components
      could force the modification of the design of our products to use a more readily
      available component. These design modifications may also result in product
      performance problems. Any or all of these problems could result in the loss
      of
      customers, provide an opportunity for competing products to achieve market
      acceptance and otherwise adversely affect our business and financial
      results.





***Due
      to potential intellectual property claims and litigation that parties may
      initiate against us, we may suffer economic losses and become unable to
      research, develop or license the manufacturing and sales of the
      technology.***





The
      data
      storage industry is characterized by the existence of a large number of patents
      and frequent claims and related litigation regarding patent and other
      intellectual property rights. Other parties may in the future notify us of
      claims that may be infringing, diluting, misusing, misappropriating or otherwise
      violating our intellectual property rights. It is impossible to predict the
      outcome of such potential claims, and we cannot be sure that the relevant
      authorities will resolve the potential claims in our favor. We also cannot
      be
      sure that an unfavourable resolution of a claim will not have a material adverse
      effect on our business or financial results. In particular, there has been
      significant litigation in the data storage industry relating to infringement
      of
      patents and other intellectual property rights. If another party were to
      establish infringement, dilution, misuse, misappropriation or any other
      intellectual property rights violation, we or our joint ventures might have
      to
      pay substantial damages, or courts might enjoin us from developing, marketing,
      manufacturing and selling the infringing products in one or more countries.
      In
      addition, the costs of engaging in intellectual property litigation can be
      substantial regardless of outcome. If we seek licensure for intellectual
      property that we cannot otherwise lawfully use, we cannot assure you that we
      will be able to obtain such licensure on satisfactory terms. We might not own
      intellectual property that we believe we own or that we need in order to
      successfully research, develop and license our technology.





**RISKS
      RELATED TO OUR COMMON STOCK**





***Concentration
      of ownership of our common stock among a small number of shareholders, including
      officers and directors of the Company, may prevent current and new investors
      from influencing significant corporate decisions.***





In
      connection with the acquisition of MultiDisk, the Company issued 72,605,776
      shares of its stock to the shareholders of MultiDisk and TriGM. On May 10,
      2005,
      an additional 10,000,000 shares were issued to an affiliate of the company
      in
      exchange for a $200,000 investment. As a result, these stockholders, acting
      together, will have the ability to exert substantial influence over all matters
      requiring approval of our shareholders. This concentration could prove
      disadvantageous to other stockholders whose interests differ significantly
      from
      those of our officers, directors, and principal stockholders.





***The
      market for our common stock may be illiquid, and shareholders might find it
      difficult, or impossible, to sell their shares***





Historically,
      the trading volume of our common stock has been very low. There can be no
      assurance that volumes will increase to a consistently higher level or that
      holders of the shares will be able to sell their shares in a timely manner,
      or
      at all.





***We
      may experience volatility in the price of our common
      stock.***





The
      stock
      market and the stock prices of technology companies have been very volatile.
      This volatility may not be related to the operating performance of the companies
      whose stock prices are affected. In turn, the broad market volatility and
      industry volatility may reduce the price of our common stock without regard
      to
      our operating performance. The uncertainty that results from such volatility
      can
      itself depress the market price of our common stock.





***If
      we cannot obtain sufficient funding to continue development and sale of our
      products, our ability to continue as a “going concern” could be
      jeopardized.***





Given
      our
      current financial condition and requirements for additional funding, our ability
      to continue as a going concern could be in doubt. There can be no assurance
      that
      we will be able to obtain sufficient funds to continue the development of and,
      if successful, to commence the sale of our products and services under
      development. As a result of the foregoing, we anticipate that our auditors
      will
      express substantial doubt about our ability to continue as a going concern.
      If
      we cannot continue as a going concern, then you may lose all of your
      investment.




**DIVIDEND
        POLICY**
 
 We
        have
        not paid dividends to the holders of our outstanding common stock, and we
        do not
        intend to do so in the foreseeable future.




-
          11
          -




**ITEM
      2. DESCRIPTION OF PROPERTY**





In
      the
      second quarter of 2005 we moved our operations from Brooklyn, NY to the UK
      at
      the address of:





195
      The
      Vale


London
      W3
      7QS


United
      Kingdom


Tel:
      +44
      208 746 2018


Fax:
      +44
      208 749 8025





The
      tenancy for the above premises is a Tenancy at Will for an unspecified period
      subject to either the Landlord or the Tenant providing the other party with
      three months written notices or termination by forfeiture (e.g. the Landlord
      may
      forfeit his Tenancy at Will by re-entering the property if payment of any rent
      is 14 (fourteen) days over due whether formally demanded or not). There is
      also
      a Trust Deed with the Landlord for the rent deposit of £12,200 for the two
      floors which is refundable on termination. The area occupied by NME is
      approximately 3,000 sq ft for both floors.





We
      conduct R&D in the following locations:





V-technology,
      Ltd (Silicon Valley Plc).


2027729000880


Address:
      RF, Moscow 117454


Vernadskii
      Prospect, 78, Building 7





Turtle
      Technologies (India) Pvt Ltd


94
      Saint
      Rozario Street


Muthialpet


Puducherry
      605 003


India





VDL-ODMS
      BV


Daalakkersweg
      8


5641
      JA
      Eindhoven


The
      Netherlands





Shenzhen
      office


2802
      Zhongdian Information Building


1
      Xinwen
      Road


Fu
      Tian


Shenzhen,
      China





Beijing
      Office


2nd
      Block 8, Yu Quan
      Wisdom Vale


Tsing
      Hua
      Science Park


3
      Min
      Zhuang Rd.


Hai
      Dian
      District


Beijing,
      China





We
      have
      leased representative offices in the following places:





**USA**


P8
      third
      floor,


8721
      Sunset Boulevard


West
      Hollywood, Los Angeles,


California,
      90069





**India**


B
      103/104, 1st
      Floor, Tower 1,


International
      Infotech Park,


Above
      Vashi Railway Complex,


Vanshi,
      Navi Mumbai 400 703





**China**


Block
      A ,
      Suite 25H,


Taining
      Garden


Ai
      Guo
      Road, Luo Hu


Shenzhen
      China





-
          12
          -






**ITEM
      3. LEGAL PROCEEDINGS**





We
      are
      not currently nor have we ever been a party to any legal
      proceedings.





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE**





During
      the financial year ended June 30, 2007 the following matter was put before
      security holders of the company.





1.
            To
                approve the 2007 Executive Compensation Plan2.
            To
                approve the adoption of the Company’s 2007 Three Year Stock Incentive
                Plan.





The
      Company received written consents from shareholders who exercise voting power
      over an aggregate of approximately 53% of the outstanding common stock of the
      Company, and have consented to the above actions.





Immediate
      issuance, fully paid, validly issued and non-assessable shares of the Common
      Stock $.0001 par value of New Medium Enterprises, Inc. The executive or officer
      will have to serve a minimum of 12 months from the date of issue of the shares
      as an officer of NME. The shares have a vesting period of 3 years, and the
      executive or officer awarded the shares may sell only a third of the awarded
      shares after the end of the first year of award, another one third after the
      second year of award and the remaining third after the third year of award.
      However, the executive or officer will be entitled to such shares should his
      employment be terminated prematurely without cause or in the event of the
      certain change of control transactions.





The
      future disposal of such shares will be subject to US SEC rules and
      regulations.





The
      following are the Officers granted this award:





CEO
      -
      Mahesh Jayanarayan, to be awarded 15 million shares.





CTO
      -
      Eugene Levich, to be awarded 7 million shares.





Scientific
      Team, to be awarded 8 million shares. The Scientific Team consists of the
      following scientists: Sergey Magnitskiy, Zharkyn Tursynov, Vladimir Binyukov,
      Dmitry Malakhov and Tatiana Lisovskaya.





CFO
      -
      Irene Kuan to be awarded 1 million shares.





Senior
      and Middle Management team - each member will be awarded 50,000
      shares.





Non-Executive
      Directors, Barry Williamson and Rupert Stow to be awarded 250,000 shares
      each.





The
      following consultants are to be awarded restricted shares:





a)
            Mr.
                Andrew Danenza will be granted an immediate issuance of Restricted
                Shares
                of 3 million shares. This is in lieu of payment for his services
                to the
                company in the last quarter as well as his ongoing role for the next
                12
                months.b)
            Ethel
                Schwartz will be granted an immediate issuance of Restricted Shares
                of 3
                million shares. These shares are in lieu of payment for her advisory
                work
                during 2005 and 2006.





All
      the
      above consultants will also be subject to the holding period of 1
      year.





**PART
      II**





**ITEM
      5. MARKET FOR REGISTRANT'S COMMON STOCK**





As
      of
      June 30, 2007, the company had issued and outstanding 323,035,700 Common Shares.
      The Company’s authorized capital stock consists of 500,000,000 shares of Common
      Stock (par value $0.0001) and 200,000,000 non-voting Preferred Stock (par value
      $0.0001).





No
      preferred shares have been issued to date.





-
          13
          -






**WARRANTS**





The
      Company has the following Stock Purchase Warrants outstanding as of June 30,
      2007.





**Warrant
                No.**
            
            **Date
                of Grant**
            
            **No
                of Shares Entitled**
            
            **Exercisable
                Price**
            
            **Expiry
                Dates**F102
            
            August
                12, 2005
            
            3,750,000
            
            $0.04
            
            August
                11, 2009F104
            
            April
                21, 2006
            
            16,923,077
            
            $.065
            
            April
                20, 2011F105
            
            January
                09,2007
            
            1,000,000
            
            $0.25
            
            May
                31, 2010F106
            
            September
                01, 2006
            
            100,000
            
            $0.10
            
            August
                31, 2011F107
            
            December
                01, 2006
            
            75,000
            
            N/A
            
            November
                30, 2011F108
            
            October
                17,2006
            
            250,000
            
            $0.2325
            
            October
                16, 2009F109
            
            February
                15,2007
            
            2,500,000
            
            $0.32
            
            February
                15, 2012F110
            
            February
                28, 2007
            
            50,000
            
            N/A
            
            February
                27, 2012F111
            
            February
                28, 2007
            
            387,292
            
            $0.16
            
            February
                27, 2012F112
            
            February
                28, 2007
            
            7,150,000
            
            $0.16
            
            February
                27, 2012F113
            
            April
                30, 2007
            
            50,000
            
            $0.25
            
            April
                29, 2010F114
            
            April
                12, 2007
            
            10,000
            
            $0.25
            
            March
                28, 2008F115
            
            April
                12, 2007
            
            1,500,000
            
            $0.25
            
            May
                31, 2010F116
            
            April
                13, 2007
            
            800,000
            
            $0.25
            
            April
                12, 2012F117
            
            April
                13, 2007
            
            11,000,000
            
            $0.25
            
            April
                12, 2012F118
            
            June
                20, 2007
            
            400,000
            
            $0.30
            
            June
                19, 2012F119
            
            June
                20, 2007
            
            41,667
            
            $0.225
            
            June
                19, 2012F120
            
            April
                30, 2007
            
            555,556
            
            $0.225
            
            April
                29, 2012F121
            
            June  04,
                2007
            
            250,000
            
            $0.225
            
            June
                19, 2012F122
            
            June
                04, 2007
            
            2,400,000
            
            $0.30
            
            June
                19, 2012F123
            
            June
                29, 2007
            
            1,500,000
            
            $0.25
            
            May
                31, 2010F124
            
            July
                03, 2007
            
            7,178,593
            
            $0.30
            
            July
                02, 2010F125
            
            July
                12, 2007
            
            400,000
            
            $0.30
            
            July
                11, 2012F126
            
            July
                12, 2007
            
            41,667
            
            $0.225
            
            July 11,
                2012F127
            
            July17,
                2007
            
            600,000
            
            $0.30
            
            July
                16, 2012F128
            
            July17,
                2007
            
            800,000
            
            $0.30
            
            July
                16, 2012F129
            
            July17,
                2007
            
            1,500,000
            
            $0.30
            
            July
                16, 2012F130
            
            July17,
                2007
            
            400,000
            
            $0.30
            
            July
                16, 2012F131
            
            July17,
                2007
            
            1,000,000
            
            $0.30
            
            July
                16, 2012F132
            
            July17,
                2007
            
            200,000
            
            $0.30
            
            July
                16, 2012F133
            
            July17,
                2007
            
            400,000
            
            $0.30
            
            July
                16, 2012F134
            
            July17,
                2007
            
            200,000
            
            $0.30
            
            July
                16, 2012F135
            
            July18,
                2007
            
            300,000
            
            $0.30
            
            July
                17, 2012F136
            
            July20,
                2007
            
            200,000
            
            $0.30
            
            July
                19, 2012F137
            
            August
                15, 2007
            
            2,000,000
            
            $0.20
            
            August
                14, 2012F138
            
            August  20,2007
            
            400,000
            
            $0.30
            
            August
                19, 2012Total
            
            
            
            66,312,851





**HOLDERS
      OF COMMON SHARES**





As
      of
      June 30, 2007, the Company has **866** shareholders of
      record.




**MARKET
      FOR COMMON SHARES**





On
      April
      20, 2001, the Company's registration statement was rendered effective by the
      SEC. The Company's common stock has been traded on the OTC Bulletin Board with
      the symbol of NMEN. The following table sets forth the range of high and low
      closing sale prices for our common stock for each quarterly period for the
      previous two fiscal years.





FISCAL
      YEAR ENDING June 30, 2007





**Quarter**
            
            **Low**
            
            **High**First
            
            0.08
            
            0.66Second
            
            0.23
            
            0.55Third
            
            0.26
            
            0.45Fourth
            
            0.18
            
            0.32








-
          14
          -






FISCAL
      YEAR ENDING June 30, 2006





**Quarter**
            
            **Low**
            
            **High**First
            
            .04
            
            .11Second
            
            .07
            
            .14Third
            
            .08
            
            .21Fourth
            
            .07
            
            .299





The
      Company has not paid any cash dividends on our common stock and do not
      anticipate paying dividends in the foreseeable future.





**ITEM
      5A. SELECTED FINANCIAL DATA**





The
      selected historical financial data presented below were derived from the
      Company's financial statements, which as of and for the year ended June 30,
      2007
      and June 30, 2006 were Audited by Morgenstern, Svoboda & Baer.





**June
                30, 2007**
            
            
            **June
                30, 2006**Loss
                from Operations
            
            $
            (35,766,474
            )
            
            $
            (6,440,488
            )Total
                Current Assets
            
            
            3,873,059
            
            
            
            3,442,141Total
                Assets
            
            
            5,228,473
            
            
            
            3,629,108Total
                Current Liabilities
            
            
            736,547
            
            
            
            266,390Total
                Stockholders’ Equity
            
            
            2,223,226
            
            
            
            3,362,718




**ITEM
      6. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS**





**Forward
      Looking Statements**





Some
      of
      the information in this 10K Report or the documents we incorporate by reference
      in this 10K Report may contain forward-looking statements. You can identify
      forward-looking statements by the use of forward-looking language such as "will
      likely result," "may," "believes," "is expected to," "is anticipated to," "is
      forecasted to," "is designed to," "plans to," "predicts," "seeks," "estimates,"
      "projects," "intends to" or other similar words. Important factors that could
      cause actual results to differ materially from expectations
      include:





·
            failing
                to produce a workable product;·
            failure
                to raise sufficient capital to fund business operating
                plans;·
            market
                conditions and demand for new optical storage Media development and
                storage technology;·
            our
                competitors' ability to successfully develop new technologies to
                satisfy
                demand for data storage;·
            difficulties
                in achieving sales, gross margin and operating expense targets based
                on
                competitive market factors;·
            difficulties
                in competing successfully in the markets for new products with established
                and emerging competitors;·
            difficulties
                with single source suppliers, product defects or product
                delays;·
            difficulties
                in forming and maintaining successful joint venture
                relationships;·
            difficulties
                in obtaining, maintaining and using intellectual property
                protections;·
            changes
                in data storage technological protocols and standards;·
            difficulties
                in state, federal, foreign and international regulation and licensing
                requirements;·
            litigation
                actions by directors, employees, investors and others;·
            limited
                operation and management history;·
            dependence
                on key personnel;·
            inability
                to conclude the relationship;**·**
            other
                factors discussed in this 10-K
                Report






-
          15
          -






**MAJOR
      JV AGREEMENTS AMENDMENTS AND TERMINATIONS**





MPEG
      JV





**Original
      Contract:**


In
      May
      2006, the company signed a Share Purchase and Investment Agreement with MPEG
      Technology Company Ltd, for 51% of MPEG on the following terms:





a)
            Pay
                15 million fully paid up 1 year restricted shares at time of
                contractb)
            Pay
                a sum of US $1.25 million in cash in
                instalments





**Termination:**


As
      the
      company had opened 2 of its own trading operations in Hong Kong, NME Board
      of
      Directors decided that they will terminate this proposed joint
      venture.





The
      shares held in Escrow were cancelled and no payments were made to MPEG. Contract
      was terminated by mutual consent from both parties in January 2007.





Beijing
      E-World





**Original
      contract:**


On
      June
      25, 2005, New Medium Enterprises, Inc. and Beijing E-World Technology Co Ltd
      (part Chinese Government owned) executed a Memorandum of Intent to form a joint
      R&D program for the production of a disc player which will
      incorporate/combine EVD and VMD technologies, which was terminated in June
      2006.





In
      August
      8 2006, after re-negotiations with Beijing E-World (BEW), the Company then
      formulated a joint venture agreement whereby when signed, the company shall
      issue in total 71.5 million shares in the following manner:





a)
            20
                million fully paid up shares Restricted under Rule 144 at 10 cents
                per
                share on the establishment of the Joint Venture, with a lock-up period
                of
                12 months and a selling limit of 5% per monthb)
            Warrants
                of up to 10 million shares to be exercised over a 3 year period
                i.e.
              3.3
                million @ 20 cents per share - 1st
                year
              3.3
                million @ 25 cents per share - 2nd
                year
              3.4
                million @ 30 cents per share – 3rd
                year





**Termination:**


Due
      to
      the delays in obtaining approval from Chinese authorities on this joint venture,
      NME’s Board decided to terminate the Joint Venture in March 2007. The 20 million
      shares issued held in escrow has since been cancelled.





Payments
      made on behalf of BEW for the LSI chips used in our players for $309,000 under
      a
      letter of Credit and other expenses related to BEW totalled $560,972 were
      payable by them, and have been treated as receivable in 2006.





During
      the year, the Chinese Authorities were restructuring BEW which made it difficult
      to collect the above debt from them. We have used 500-700 LSI chips in our
      Demo
      players which were distributed in 4th Quarter
      of 2006
      and this was expensed to profit and loss account. We are unable to use the
      balance of the LSI Chips in our future players as the manufacturing of the
      LSI
      boards has been superseded. As we are not using these LSI chips any longer
      in
      our players, all the expenses for travel and arrangement fees which are part
      of
      the $560,972 receivable from them are being written off in their respective
      heads, and the amount drawn down by BEW from the Letter of Credit has been
      treated as a Bad Debt.





We
      have
      instructed our attorneys to pursue legal action for its recovery but it is
      highly probable that this debt will need to be written off.





Digital
      Challenge





**Original
      Contract 1:**


In
      November 2006, the company entered into an agreement with Digital Challenge
      for
      the purchase of certain software for development of the Authoring Tools as
      well
      as the tools to develop the HD VMD optical disc software format.





The
      company paid $10,000 on the signing of the agreement, and the company was
      required to issue 10 million shares in lieu of cash on the completion of
      agreement. In June 2007, the 10 million shares issued to Digital Challenge,
      (held in Escrow) were released as the **Alpha****Version of
      Authoring software (which** includes all
      the****patents, patent applications, trademark and know how
      and everything related to said software**)**together with the
      machine readable source code were delivered to the Company.





**Amendment:**


On
      receipt of said software 7 million shares are released to Digital Challenge
      and
      related parties and the 7 million share’s value of $2.1 million had been
      expensed in Research and Development.. The remaining 3 millions shares are
      still
      held in escrow for continuing support from Digital Challenge via Sistech
      Corporation and will be released during next three financial years as per share
      transfer agreement.





-
          16
          -






**Original
      Contract 2:**


In
      November 2006, we also entered into a consultancy and support contract for
      HD
      VMD Authoring tools for a contractual price of $20,000 per month payable in
      advance over one year as per Schedule D of the said contract.





**Amendment
      and termination:**


This
      software support contract was terminated as of April 2, 2007, following the
      establishment of an agreement with V2 Solutions for the development of authoring
      software and the website development at the same time. The Company also
      established its own support team in Beijing for Authoring Tools by that
      time.





On
      termination of the agreement, it was agreed to purchase the HD-NLE system (Super
      Microx6DA8 Quebec 3TB) for $15,000 payable in nine instalments of $1,667 per
      month. We have also agreed to pay Mr. Li Jingjing (Director of Digital
      Challenge) an amount of US$70,000 in nine instalments of $7,778 per month for
      9
      months for his support in developing the HD VMD Authoring software and providing
      continuous consultancy to NME Inc as a consultant.





**RESTATEMENT
      OF FINANCIAL STATEMENTS**





Statement
      of Financial Accounting Standards No 142 addresses financial accounting and
      reporting for acquired goodwill and other intangible assets. An intangible
      asset
      that is acquired either individually or with a group of other assets (but not
      those acquired in a business combination) shall be initially recognized and
      measured based on its **fair value.**General concepts related to
      the initial measurement of assets acquired in exchange transactions, including
      intangible assets, are provided in paragraphs 5–7 of Statement 141. The cost of
      a group of assets acquired in a transaction other than a business combination
      shall be allocated to the individual assets acquired based on their relative
      fair values and shall not give rise to goodwill. Intangible assets acquired
      in a
      business combination are initially recognized and measured in accordance with
      Statement 141.





In
      January 2004, when our company acquired the R&D intellectual property and
      know how from MultiDisc Ltd. and TriGM International S.A., the VMD technology
      was in the pre-prototype stage, we had no planned production schedule, and
      could
      not yet identify customers for an end product that was not yet producible,
      because it existed only as a computer model.





The
      Board
      observed that the useful lives of intangible assets are related to the expected
      cash inflows that are associated with those assets. Accordingly, the Board
      concluded that the amortization periods for intangible assets should generally
      reflect those useful lives and, by extension, the cash flow streams associated
      with them. The Board noted that the useful lives and amortization periods of
      intangible assets should reflect the periods over which those assets will
      contribute to cash flows, not the period of time that would be required to
      internally develop those assets, and that is why it was
      capitalised.





RESTATEMENT





During
      the year ended June 30, 2007, it was determined by the SEC that the correct
      application of accounting principles had not been applied in 2006, 2005 and
      2004
      for the write–off as required under FASB 142. After detailed correspondence with
      the SEC it was concluded that financial statements for those years needed to
      be
      restated to reflect the purchased R&D intellectual property being charged to
      Research and Development costs of $306,351 for 2005, and $14,877,509 for
      2004.




**PLAN
      OF OPERATIONS FOR THE NEXT 12 MONTHS**





The
      Company intends to release its first generation products soon, but will also
      continue its development efforts related to blue laser high capacity optical
      storage discs, the next generation of our proprietary VMD
      technology.





The
      Company plans to accelerate the marketing of its VMD replication lines, and
      is
      in negotiations with various companies regarding the sale of these lines. We
      expect our own first VMD replication line to be in production  in the
      4th quarter of 2007.





The
      Company has produced two 1080p output VMD player models, ML622 and ML777, for
      demonstration at trade shows and conferences.





We
      expect
      to launch our HD authoring software commercially in early 2008





**Commercial
      Activities**





During
      the fiscal year ending June 30th, 2007,
      the Company
      completed various product trials and commenced marketing of its first generation
      product line. The Company's marketing campaign for its HD VMD products is
      organized around 12 regions: Australia, Brazil, Central Europe, China, France,
      Iceland, India, Scandinavia, Japan, the Middle East, Russia and the United
      States. The Company also conducted various market research and product
      demonstrations in these regions, and intends to launch its full scale marketing
      operations in the fourth quarter of this year in the twelve listed regions.
      The
      Company’s intends to focus its marketing initiatives on HD VMD content, HD VMD
      electronic players and authoring tools to production studios.





NME
      plans
      to hire key personnel for further development of business as it grows. However
      we do not expect significant changes in the number of employees, and have hired
      consultants on a contractual basis and intend to form Joint Ventures with
      marketing partners in various regions of the world.





The
      company expects to focus the next 12 months on production and marketing of
      its
      previously developed HD line of products.





-
          17
          -








**Research
      and Development**





The
      company intends to devote financial and engineering resources to continue its
      research and development in the following areas:





1.
            Next
                generation VMD replication lines.2.
            Next
                generation VMD electronic devices.3.
            Anti
                -piracy technology.





Furthermore,
      in the early part of 2008, subject to achieving its set sales targets in 2007,
      the Company plans to enter into the development of products utilizing blue
      laser
      technology. The Company intends to market any resulting products to the high
      end
      business-to-business storage market.





**LIQUIDITY
      AND CAPITAL RESOURCES**





On
      June
      30, 2007, we had available in cash the sum of $308,419 and accrued expenses
      of
      $736,247.





During
      the fiscal year ending June 30, 2007, the Company issued 24,546,651 shares
      to
      various investors for US$5,850,000 in a series of private
      placements.





The
      Company also has certain loans totaling USD $2,269,000 due on August 31,
      2008.





We
      intend
      to meet our long-term liquidity needs through available cash and cash flow
      from
      revenue from the commencement of sales as well as through additional financing
      from outside sources. We anticipate raising additional funds from the possible
      exercise of outstanding warrants or equity financing with private
      investors.





There
      is
      no assurance that funding will be available to the Company at an acceptable
      cost
      of funds. In the event the Company is unable to raise the necessary funds,
      it
      may be forced to significantly reduce its activities in order to preserve its
      capital.







-
          18
          -




**ITEM
      7. FINANCIAL STATEMENTS AND SUPPLEMETARY DATA**










***Morgenstern,
      Svoboda, & Baer Cpa’s P.C.***


*CERTIFIED
      PUBLIC ACCOUNTANTS*


40
      Exchange Place, Suite 1820


New
      York,
      NY 10005


TEL:
      (212) 925-9490


FAX:
      (212) 226-9134


E-mail:
      msbcpas@gmail.com








The
      Board
      of Directors and Stockholders of New Medium Enterprises, Inc.





We
      have
      audited the accompanying consolidated balance sheet of New Medium Enterprises,
      Inc. (A development stage company) as of June 30, 2007 and 2006, and the related
      statements of operations, stockholders’ equity and cash flows for the years
      ended June 30, 2007 and 2006. 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 audits.





We
      conducted our audit in accordance with standards of the Public Company Oversight
      Board (United States). 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 audits provide a reasonable basis
      for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of New Medium Enterprises, Inc. as
      of
      June 30, 2007 and 2006 and the results of its operations and cash flows for
      period from August 2, 1999 through June 30, 2007, in conformity with accounting
      principles generally accepted in the United States.





The
      accompanying financial statements have been prepared assuming that the Company
      will continue as a going concern. As shown in the financial statements, the
      Company is a developing stage company, has had no significant income, has
      incurred net losses since its inception and has experienced severe liquidity
      problems. Those conditions raise substantial doubt about its ability to continue
      as a going concern. The financial statements do not include any adjustments
      that
      might result from the outcome of this uncertainty.








**/s/
      Morgenstern, Svoboda & Baer, CPA’s, P.C.**


Certified
      Public Accountants





New
      York,
      NY


September
      07, 2007








-
          19
          -




**NEW
      MEDIUM ENTERPRISES, INC.**


(A
      development stage company)


**CONSOLIDATED
      BALANCE SHEET**


AT
      JUNE
      30, 2007






**June
                30, 2007**
            
            
            **June
                30, 2006**(As
                restated)**ASSETS****$**
            
            
            
            **$****Current
                Assets**Cash and Cash Equivalents
            
            
            308,419
            
            
            
            665,597Cash receivable for shares issued as at June 30, 2007
            
            
            1,875,000
            
            
            
            0Prepaid Expenses
            
            
            409,752
            
            
            
            414,823Stock held by Third Party
            
            
            72,957
            
            
            
            0Rental Deposits
            
            
            45,595
            
            
            
            26,911Supplier Deposits
            
            
            904
            
            
            
            560,972Other Receivable
            
            
            79,090
            
            
            
            65,968Value Added Tax recoverable
            
            
            31,342
            
            
            
            57,870Escrow Deposits
            
            
            1,050,000
            
            
            
            1,650,000**Total
                Current Assets**
            
            
            3,873,059
            
            
            
            3,442,141Property and Equipment
            
            
            1,492,484
            
            
            
            288,512Less: Accumulated Depreciation
            
            
            (194,072
            )
            
            
            (101,545
            )1,298,412
            
            
            
            186,967Patents
            
            
            57,002
            
            
            
            0**Total
                Other Assets**
            
            
            1,355,414
            
            
            
            186,967**Total
                Assets**
            
            
            5,228,473
            
            
            
            3,629,108**LIABILITIES
                AND STOCKHOLDERS' EQUITY****Current
                Liabilities**Accrued Expenses and amount payable
            
            
            736,247
            
            
            
            266,390Total Current Liabilities
            
            
            736,247
            
            
            
            266,390Long Term Loan
            
            
            2,269,000
            
            
            
            0**COMMITMENTS
                AND CONTINGENCIES****Stockholders’
                Equity**Preferred Stock $.0001 par value, Authorized 200,000,000 shares;none
                issuedCommon Stock, $.0001 par value, Authorized 500,000,000 issued and
                outstanding, 323,035,700 & 205,477,579 shares
            
            
            32,305
            
            
            
            20,448Additional paid in capital
            
            
            63,041,095
            
            
            
            28,424,747Accumulated other comprehensive gain (loss)
            
            
            (38,641
            )
            
            
            (37,418
            )Deficit accumulated during the development stage
            
            
            (60,811,533
            )
            
            
            (25,045,059
            )**Total
                Stockholders' Equity**
            
            
            2,223,226
            
            
            
            3,362,718**Total
                Liabilities & Stockholders' Equity**
            
            
            5,228,473
            
            
            
            3,629,108







The
      accompanying notes are an integral part of these financial
      statements.





-
          20
          -




**NEW
      MEDIUM ENTERPISES, INC.**


(A
      development stage company)


**CONSOLIDATED
      STATEMENTS OF OPERATIONS**





**For
                the year ended June 30, 2007**
            
            
            **For
                the year ended June 30, 2006**
            
            
            **From
                Inception (August 2, 1999) to June 30, 2007**(As
                restated)
            
            
            (As
                restated)**$**
            
            
            
            **$**
            
            
            
            **$**Revenues
            
            
            0
            
            
            
            0
            
            
            
            0**Operating
                Expenses:**Marketing Expenses
            
            
            753,104
            
            
            
            0
            
            
            
            753,104General and Administrative
            
            
            3,155,755
            
            
            
            5,490,338
            
            
            
            10,203,773Research and Development Costs
            
            
            12,095,510
            
            
            
            544,663
            
            
            
            14,174,040IP written Off - Adjustment
            
            
            0
            
            
            
            0
            
            
            
            15,183,860Founders Stock Option 2001 Exercised
            
            
            2,991,719
            
            
            
            0
            
            
            
            2,991,719Staff Compensation Based Stock Issue
            
            
            15,805,973
            
            
            
            0
            
            
            
            15,805,973Officer's Compensation
            
            
            410,757
            
            
            
            397,323
            
            
            
            1,188,126Unrecoverable Debt Written Off
            
            
            431,529
            
            
            
            0
            
            
            
            431,529Loss on Foreign Currency
            
            
            35,694
            
            
            
            15,834
            
            
            
            67,873Depreciation
            
            
            97,311
            
            
            
            36,219
            
            
            
            216,306**Total
                Operating Expenses**
            
            
            35,777,352
            
            
            
            6,484,377
            
            
            
            61,016,303Income
                (Loss) From Operations
            
            
            (35,777,352
            )
            
            
            (6,484,377
            )
            
            
            (61,016,303
            )Other
                Income
            
            
            10,878
            
            
            
            30,990
            
            
            
            41,868Investment
                Income
            
            
            0
            
            
            
            2
            
            
            
            150,405Value
                added tax recovered
            
            
            0
            
            
            
            12,897
            
            
            
            12,897Loss
                Before Income Taxes
            
            
            (35,766,474
            )
            
            
            (6,440,488
            )
            
            
            (60,811,133
            )Income
                Tax
            
            
            (0
            )
            
            
            (200
            )
            
            
            (400
            )Net
                Loss
            
            
            (35,766,474
            )
            
            
            (6,440,688
            )
            
            
            (60,811,533
            )Loss
                Per Common Share - Basic and Diluted
            
            
            (0.14
            )
            
            
            (0.04
            )
            
            N/AWeighted
                Average Number of Shares Outstanding
            
            
            264,256,640
            
            
            
            162,524,462
            
            
            N/A









The
      accompanying notes are an integral part of these financial
      statements.





-
          21
          -




**NEW
      MEDIUM ENTERPISES, INC.**


(A
      development stage company)


**STATEMENT
      OF CASH FLOWS**




**June
                30, 2007**
            
            
            **June
                30, 2006**
            
            
            **From
                Inception**
              **August
                2, 1999  to June 30, 2007****(As
                restated)**$
            
            
            $
            
            
            $**Cash
                flows from operating activities**Net loss
            
            $
            (35,766,474
            )
            
            $
            (6,440,488
            )
            
            $
            (60,811,533
            )Adjustments
                to reconcile net loss to net cash provided by operating
                activities:Depreciation and amortization
            
            
            97,311
            
            
            
            36,219
            
            
            
            198,813Profit on Insurance claim on Screen Broken
            
            
            (3,262
            )
            
            
            0
            
            
            
            (3,262
            )Stock Issued for Intellectual Property R&D bought
            
            
            8,100,000
            
            
            
            0
            
            
            
            22,621,155Write off of web site development costs
            
            
            0
            
            
            
            0
            
            
            
            314,302Stock issued for services rendered
            
            
            20,950,192
            
            
            
            3,370,590
            
            
            
            25,036,543Stock issued for services rendered – Escrow
            
            
            600,000
            
            
            
            (1,650,000
            )
            
            
            (1,050,000
            )Loss on sale of securities
            
            
            0
            
            
            
            0
            
            
            
            (5,044
            )Changes
                in assets and liabilities:Change in current assets
            
            
            505,588
            
            
            
            (1,054,774
            )
            
            
            (564,895
            )Change in Security deposits
            
            
            (18,684
            )
            
            
            (26,911
            )
            
            
            (45,595
            )Change in current liabilities
            
            
            469,857
            
            
            
            129,997
            
            
            
            736,248**Net
                cash used in operating activities**
            
            $
            (5,065,472
            )
            
            $
            (5,635,367
            )
            
            $
            (13,573,268
            )**Cash
                flows from investing activities**Proceeds from Insurance Claim
            
            
            14,039
            
            
            
            0
            
            
            
            14,039Proceeds from the sale of Other Co. securities
            
            
            0
            
            
            
            0
            
            
            
            13,584Purchase of fixed assets (including investments)
            
            
            (1,260,974
            )
            
            
            (109,372
            )
            
            
            (1,370,346
            )Purchase (write off) of fixed assets
            
            
            (15,561
            )
            
            
            0
            
            
            
            (212,151
            )Web site development costs/software asset
            
            
            0
            
            
            
            0
            
            
            
            (261,402
            )Investment purchased – net
            
            
            0
            
            
            
            0
            
            
            
            (20,198
            )**Net
                cash provided from investing activities**
            
            $
            (1,262,496
            )
            
            $
            (109,372
            )
            
            $
            (1,836,474
            )**Cash
                flows from financing activities**Proceeds from sale of A, B, and C units
            
            
            200,000
            
            
            
            103,700
            
            
            
            2,019,950Offering Costs - private placements
            
            
            0
            
            
            
            0
            
            
            
            (69,625
            )Deferred offering costs - registration statement
            
            
            0
            
            
            
            0
            
            
            
            (40,000
            )Purchase of Treasury Stock
            
            
            (9,455
            )
            
            
            0
            
            
            
            (13,205
            )Long Term Loan
            
            
            2,269,000
            
            
            
            0
            
            
            
            2,269,000Proceeds from sale of shares and warrants to various
              officers,
                founders and investors
            
            
            (600,000
            )
            
            
            0
            
            
            
            1,346,670Shares issued for Purchase of  fixed asset
            
            
            137,468
            
            
            
            0
            
            
            
            137,468Proceeds from sale of shares
            
            
            3,975,000
            
            
            
            6,131,544
            
            
            
            10,106,544**Net
                cash provided from financing activities**
            
            $
            5,972,013
            
            
            $
            6,235,244
            
            
            $
            15,756,802Effects
                of Exchange gain on Cash
            
            
            (1,223
            )
            
            
            (21,437
            )
            
            
            (38,641
            )**Net
                increase (decrease) in cash and cash equivalents**
            
            
            (357,178
            )
            
            
            469,068
            
            
            
            308,419Cash
                and cash equivalents, beginning of period
            
            
            665,597
            
            
            
            196,529
            
            
            
            0**Cash
                and cash equivalents, June 30, 2007**
            
            $
            308,419
            
            
            $
            665,597
            
            
            $
            308,419







The
      accompanying notes are an integral part of these financial
      statements.





-
          22
          -


**NEW
      MEDIUM ENTERPISES, INC.**


(A
      development stage company)


**STATEMENT
      OF STOCKHOLDERS’ EQUITY**


For
      the
      period July 1, 2005 - June 30, 2007


**Retained**
                
                
                **Accumulated****Per**
                
                
                
                
                
                
                
                
                **Additional**
                
                
                **Earnings**
                
                
                **Other****Share**
                
                
                **Common**
                
                
                **Stock**
                
                
                **Paid-in**
                
                
                **(Accumulated**
                
                
                **Comprehensive****Amount**
                
                
                **Shares**
                
                
                **Amount**
                
                
                **Capital**
                
                
                **Deficit)**
                
                
                **Loss**
                
                
                **Totals****Balances
                    June 30, 2005****(As
                    restated)**
                
                
                
                
                ****
                **119,570,879**
                
                
                ****
                **11,957**
                
                
                ****
                **18,827,404**
                
                
                ****
                **(18,604,571**
                **)**
                
                ****
                **(15,981**
                **)**
                
                ****
                **218,809**Issuance
                    of shares for servicesAugust
                    18, 2005
                
                
                0.1
                
                
                
                1,000,000
                
                
                
                100
                
                
                
                99,900
                
                
                
                
                
                
                
                
                
                
                
                100,000Issuance
                    of shares for servicesAugust
                    18, 2005
                
                
                0.1
                
                
                
                5,600,122
                
                
                
                560
                
                
                
                559,451
                
                
                
                
                
                
                
                
                
                
                
                560,011Issuance
                    of shares for Pre-AcquisitionShareholders
                    September 15, 2005
                
                
                0.05
                
                
                
                915,080
                
                
                
                92
                
                
                
                45,922
                
                
                
                
                
                
                
                
                
                
                
                46,014Issuance
                    of shares for servicesSeptember
                    20, 2005
                
                
                0.1
                
                
                
                3,750,000
                
                
                
                375
                
                
                
                374,625
                
                
                
                
                
                
                
                
                
                
                
                375,000Issuance
                    of shares for servicesSeptember
                    20, 2005
                
                
                0.1
                
                
                
                250,000
                
                
                
                25
                
                
                
                24,975
                
                
                
                
                
                
                
                
                
                
                
                25,000Issuance
                    of shares for servicesSeptember
                    20, 2005
                
                
                0.1
                
                
                
                2,000,000
                
                
                
                200
                
                
                
                199,800
                
                
                
                
                
                
                
                
                
                
                
                200,000Issuance
                    of shares for servicesSeptember
                    20, 2005
                
                
                0.1
                
                
                
                350,000
                
                
                
                35
                
                
                
                34,965
                
                
                
                
                
                
                
                
                
                
                
                35,000Sale
                    of common stock to investorSeptember
                    20, 2005
                
                
                0.15
                
                
                
                5,000,000
                
                
                
                500
                
                
                
                749,500
                
                
                
                
                
                
                
                
                
                
                
                750,000Sale
                    of common stock to investorOctober
                    13, 2005
                
                
                0.1
                
                
                
                3,000,000
                
                
                
                300
                
                
                
                299,700
                
                
                
                
                
                
                
                
                
                
                
                300,000Sale
                    of common stock to investorNovember
                    14, 2005
                
                
                0.1
                
                
                
                1,500,000
                
                
                
                150
                
                
                
                149,850
                
                
                
                
                
                
                
                
                
                
                
                150,000Sale
                    of common stock to investorDecember
                    14, 2005
                
                
                0.1
                
                
                
                1,500,000
                
                
                
                150
                
                
                
                149,850
                
                
                
                
                
                
                
                
                
                
                
                150,000Sale
                    of common stock to investorDecember
                    15, 2005
                
                
                0.1
                
                
                
                500,000
                
                
                
                50
                
                
                
                49,950
                
                
                
                
                
                
                
                
                
                
                
                50,000Sale
                    of common stock to investorDecember
                    20, 2005
                
                
                0.125
                
                
                
                480,000
                
                
                
                48
                
                
                
                59,952
                
                
                
                
                
                
                
                
                
                
                
                60,000Sale
                    of common stock to investorDecember
                    28, 2005
                
                
                0.1
                
                
                
                1,500,000
                
                
                
                150
                
                
                
                149,850
                
                
                
                
                
                
                
                
                
                
                
                150,000Sale
                    of common stock to investorJanuary
                    20, 2006
                
                
                0.1
                
                
                
                1,500,000
                
                
                
                150
                
                
                
                149,850
                
                
                
                
                
                
                
                
                
                
                
                150,000Warrants
                    exercisedFebruary
                    1, 2006
                
                
                0.1
                
                
                
                100,000
                
                
                
                10
                
                
                
                9,990
                
                
                
                
                
                
                
                
                
                
                
                10,000Sale
                    of common stock to investorMarch
                    9, 2006
                
                
                0.12
                
                
                
                500,000
                
                
                
                50
                
                
                
                59,950
                
                
                
                
                
                
                
                
                
                
                
                60,000Warrants
                    ExercisedMarch
                    10, 2006
                
                
                0.1
                
                
                
                100,000
                
                
                
                10
                
                
                
                9,990
                
                
                
                
                
                
                
                
                
                
                
                10,000Warrants
                    ExercisedMarch
                    22, 2006
                
                
                0.1
                
                
                
                100,000
                
                
                
                10
                
                
                
                9,990
                
                
                
                
                
                
                
                
                
                
                
                10,000Sale
                    of common stock to investorMarch
                    28, 2006
                
                
                0.12
                
                
                
                2,083,334
                
                
                
                208
                
                
                
                249,792
                
                
                
                
                
                
                
                
                
                
                
                250,000Warrants
                    Exercised06-Apr-06
                
                
                0.10
                
                
                
                300,000
                
                
                
                30
                
                
                
                29,970
                
                
                
                
                
                
                
                
                
                
                
                30,000Sale
                    of common shares to investor07-Apr-06
                
                
                0.12
                
                
                
                2,083,334
                
                
                
                208
                
                
                
                249,792
                
                
                
                
                
                
                
                
                
                
                
                250,000Sale
                    of common shares to investor12-Apr-06
                
                
                0.15
                
                
                
                10,000
                
                
                
                1
                
                
                
                1,499
                
                
                
                
                
                
                
                
                
                
                
                1,500Issuance
                    of shares for services13-Apr-06
                
                
                0.17
                
                
                
                1,250,000
                
                
                
                125
                
                
                
                212,375
                
                
                
                
                
                
                
                
                
                
                
                212,500Sale
                    of common shares to investor13-Apr-06
                
                
                0.15
                
                
                
                100,000
                
                
                
                10
                
                
                
                14,990
                
                
                
                
                
                
                
                
                
                
                
                15,000Sale
                    of common shares to investor13-Apr-06
                
                
                0.15
                
                
                
                300,000
                
                
                
                30
                
                
                
                44,970
                
                
                
                
                
                
                
                
                
                
                
                45,000Sale
                    of common shares to investor13-Apr-06
                
                
                0.15
                
                
                
                200,000
                
                
                
                20
                
                
                
                29,980
                
                
                
                
                
                
                
                
                
                
                
                30,000Sale
                    of common shares to investor13-Apr-06
                
                
                0.15
                
                
                
                300,000
                
                
                
                30
                
                
                
                44,970
                
                
                
                
                
                
                
                
                
                
                
                45,000Sale
                    of common shares to investor17-Apr-06
                
                
                0.15
                
                
                
                90,000
                
                
                
                9
                
                
                
                13,491
                
                
                
                
                
                
                
                
                
                
                
                13,500Warrants
                    Exercised17-Apr-06
                
                
                0.10
                
                
                
                200,000
                
                
                
                20
                
                
                
                19,980
                
                
                
                
                
                
                
                
                
                
                
                20,000Sale
                    of common shares to investor18-Apr-06
                
                
                0.14
                
                
                
                1,428,571
                
                
                
                143
                
                
                
                199,857
                
                
                
                
                
                
                
                
                
                
                
                200,000Sale
                    of common shares to investor18-Apr-06
                
                
                0.15
                
                
                
                333,334
                
                
                
                33
                
                
                
                49,967
                
                
                
                
                
                
                
                
                
                
                
                50,000Sale
                    of common shares to investor20-Apr-06
                
                
                0.15
                
                
                
                200,000
                
                
                
                20
                
                
                
                29,980
                
                
                
                
                
                
                
                
                
                
                
                30,000Sale
                    of common shares to investor20-Apr-06
                
                
                0.15
                
                
                
                60,000
                
                
                
                6
                
                
                
                8,994
                
                
                
                
                
                
                
                
                
                
                
                9,000Sale
                    of common shares to investor20-Apr-06
                
                
                0.15
                
                
                
                50,000
                
                
                
                5
                
                
                
                7,495
                
                
                
                
                
                
                
                
                
                
                
                7,500Sale
                    of common shares to investor20-Apr-06
                
                
                0.12
                
                
                
                7,178,593
                
                
                
                718
                
                
                
                860,713
                
                
                
                
                
                
                
                
                
                
                
                861,431Sale
                    of common shares to investor21-Apr-06
                
                
                0.15
                
                
                
                50,000
                
                
                
                5
                
                
                
                7,495
                
                
                
                
                
                
                
                
                
                
                
                7,500Sale
                    of common shares to investor24-Apr-06
                
                
                0.15
                
                
                
                100,000
                
                
                
                10
                
                
                
                14,990
                
                
                
                
                
                
                
                
                
                
                
                15,000Sale
                    of common shares to investor25-Apr-06
                
                
                0.15
                
                
                
                283,334
                
                
                
                28
                
                
                
                42,472
                
                
                
                
                
                
                
                
                
                
                
                42,500Sale
                    of common shares to investor25-Apr-06
                
                
                0.145
                
                
                
                1,666,666
                
                
                
                167
                
                
                
                241,500
                
                
                
                
                
                
                
                
                
                
                
                241,667Sale
                    of common shares to investor25-Apr-06
                
                
                0.145
                
                
                
                1,666,666
                
                
                
                167
                
                
                
                241,500
                
                
                
                
                
                
                
                
                
                
                
                241,667Sale
                    of common shares to investor25-Apr-06
                
                
                0.15
                
                
                
                300,000
                
                
                
                30
                
                
                
                44,970
                
                
                
                
                
                
                
                
                
                
                
                45,000Sale
                    of common shares to investor25-Apr-06
                
                
                0.15
                
                
                
                300,000
                
                
                
                30
                
                
                
                44,970
                
                
                
                
                
                
                
                
                
                
                
                45,000Sale
                    of common shares to investor01-May-06
                
                
                0.15
                
                
                
                90,000
                
                
                
                9
                
                
                
                13,491
                
                
                
                
                
                
                
                
                
                
                
                13,500Sale
                    of common shares to investor03-May-06
                
                
                0.15
                
                
                
                200,000
                
                
                
                20
                
                
                
                29,980
                
                
                
                
                
                
                
                
                
                
                
                30,000Issuance
                    of shares for services (in event of payment default)12-May-06
                
                
                0.1
                
                
                
                3,000,000
                
                
                
                200
                
                
                
                299,800
                
                
                
                
                
                
                
                
                
                
                
                300,000Sale
                    of common shares to investor19-May-06
                
                
                0.15
                
                
                
                266,666
                
                
                
                27
                
                
                
                39,973
                
                
                
                
                
                
                
                
                
                
                
                40,000Sale
                    of common shares to investor19-May-06
                
                
                0.15
                
                
                
                100,000
                
                
                
                10
                
                
                
                14,990
                
                
                
                
                
                
                
                
                
                
                
                15,000Warrants
                    exercised24-May-06
                
                
                0.10
                
                
                
                237,000
                
                
                
                24
                
                
                
                23,676
                
                
                
                
                
                
                
                
                
                
                
                23,700Issuance
                    of shares for services01-Jun-06
                
                
                0.15
                
                
                
                1,000,000
                
                
                
                100
                
                
                
                149,900
                
                
                
                
                
                
                
                
                
                
                
                150,000Issuance
                    of shares for services01-Jun-06
                
                
                0.15
                
                
                
                250,000
                
                
                
                25
                
                
                
                37,475
                
                
                
                
                
                
                
                
                
                
                
                37,500Release
                    of debenture on subsidiary23-Jun-06
                
                
                0.095
                
                
                
                12,500,000
                
                
                
                1,250
                
                
                
                1,186,250
                
                
                
                
                
                
                
                
                
                
                
                1,187,500Issuance
                    of shares for services23-Jun-06
                
                
                0.095
                
                
                
                2,000,000
                
                
                
                200
                
                
                
                189,800
                
                
                
                
                
                
                
                
                
                
                
                190,000Issuance
                    of shares for services23-Jun-06
                
                
                0.095
                
                
                
                1,000,000
                
                
                
                100
                
                
                
                94,900
                
                
                
                
                
                
                
                
                
                
                
                95,000Sale
                    of common shares to investor23-Jun-06
                
                
                0.13
                
                
                
                256,411
                
                
                
                25
                
                
                
                33,308
                
                
                
                
                
                
                
                
                
                
                
                33,333Issuance
                    of shares for services23-Jun-06
                
                
                0.095
                
                
                
                160,256
                
                
                
                16
                
                
                
                15,208
                
                
                
                
                
                
                
                
                
                
                
                15,224Issuance
                    of shares to officer for services23-Jun-06
                
                
                0.095
                
                
                
                667,000
                
                
                
                66
                
                
                
                63,299
                
                
                
                
                
                
                
                
                
                
                
                63,365Issuance
                    of shares to officer for services23-Jun-06
                
                
                0.095
                
                
                
                667,000
                
                
                
                67
                
                
                
                63,298
                
                
                
                
                
                
                
                
                
                
                
                63,365Sale
                    of common shares to investor23-Jun-06
                
                
                0.13
                
                
                
                256,411
                
                
                
                26
                
                
                
                33,307
                
                
                
                
                
                
                
                
                
                
                
                33,333Issuance
                    of shares for services23-Jun-06
                
                
                0.095
                
                
                
                160,256
                
                
                
                16
                
                
                
                15,208
                
                
                
                
                
                
                
                
                
                
                
                15,224Issuance
                    of shares for merger held in Escrow29-Jun-06
                
                
                0.11
                
                
                
                15,000,000
                
                
                
                1,500
                
                
                
                1,648,500
                
                
                
                
                
                
                
                
                
                
                
                1,650,000Comprehensive
                    Loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (21,437
                )
                
                
                (21,437
                )Net
                    Loss for the year to 30 June 2006
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (6,440,488
                )
                
                
                
                
                
                
                (6,440,488
                )**Balances
                    30 June 2006 (As restated)**
                
                
                
                
                
                ****
                **205,477,579**
                
                
                ****
                **20,448**
                
                
                ****
                **28,424,747**
                
                
                ****
                **(25,045,059**
                **)**
                
                ****
                **(37,418**
                **)**
                
                ****
                **3,362,718**Issuance
                    of shares for services17
                    July 2006
                
                
                0.09
                
                
                
                133,333
                
                
                
                13
                
                
                
                11,987
                
                
                
                
                
                
                
                
                
                
                
                12,000Issuance
                    of shares for services05
                    September 2006
                
                
                0.23
                
                
                
                50,000
                
                
                
                5
                
                
                
                11,495
                
                
                
                
                
                
                
                
                
                
                
                11,500Issuance
                    of shares for services05
                    September 2006
                
                
                0.23
                
                
                
                50,000
                
                
                
                5
                
                
                
                11,495
                
                
                
                
                
                
                
                
                
                
                
                11,500Issuance
                    of shares for services05
                    September 2006
                
                
                0.23
                
                
                
                25,000
                
                
                
                3
                
                
                
                5,747
                
                
                
                
                
                
                
                
                
                
                
                5,750Issuance
                    of shares for services13
                    September 2006
                
                
                0.33
                
                
                
                17,000
                
                
                
                2
                
                
                
                5,608
                
                
                
                
                
                
                
                
                
                
                
                5,610Issuance
                    of shares for services19
                    October 2006
                
                
                0.44
                
                
                
                104,167
                
                
                
                10
                
                
                
                45,823
                
                
                
                
                
                
                
                
                
                
                
                45,833Issuance
                    of shares for services19
                    October 2006
                
                
                0.44
                
                
                
                667,000
                
                
                
                67
                
                
                
                293,413
                
                
                
                
                
                
                
                
                
                
                
                293,480Issuance
                    of shares for services19
                    October 2006
                
                
                0.44
                
                
                
                1,000,000
                
                
                
                100
                
                
                
                439,900
                
                
                
                
                
                
                
                
                
                
                
                440,000Issuance
                    of shares for services19
                    October 2006
                
                
                0.44
                
                
                
                100,000
                
                
                
                10
                
                
                
                43,990
                
                
                
                
                
                
                
                
                
                
                
                44,0002001
                    Options exercised --5
                    December 2006
                
                
                0.40
                
                
                
                6,269,641
                
                
                
                627
                
                
                
                2,507,229
                
                
                
                
                
                
                
                
                
                
                
                2,507,856Sale
                    of common shares to investor5
                    December 2006
                
                
                0.25
                
                
                
                800,000
                
                
                
                80
                
                
                
                199,920
                
                
                
                
                
                
                
                
                
                
                
                200,000Sale
                    of common shares to investor5
                    December 2006
                
                
                0.25
                
                
                
                480,000
                
                
                
                48
                
                
                
                119,952
                
                
                
                
                
                
                
                
                
                
                
                120,000Sale
                    of common shares to investor5
                    December 2006
                
                
                0.25
                
                
                
                1,000,000
                
                
                
                100
                
                
                
                249,900
                
                
                
                
                
                
                
                
                
                
                
                250,000Sale
                    of common shares to investor5
                    December 2006
                
                
                0.25
                
                
                
                400,000
                
                
                
                40
                
                
                
                99,960
                
                
                
                
                
                
                
                
                
                
                
                100,000Sale
                    of common shares to investor5
                    December 2006
                
                
                0.25
                
                
                
                100,000
                
                
                
                10
                
                
                
                24,990
                
                
                
                
                
                
                
                
                
                
                
                25,000Sale
                    of common shares to investor5
                    December 2006
                
                
                0.25
                
                
                
                1,000,000
                
                
                
                100
                
                
                
                249,900
                
                
                
                
                
                
                
                
                
                
                
                250,000Sale
                    of common shares to investor5
                    December 2006
                
                
                0.25
                
                
                
                400,000
                
                
                
                40
                
                
                
                99,960
                
                
                
                
                
                
                
                
                
                
                
                100,000Sale
                    of Common Shares to Investor5
                    December 2006
                
                
                0.25
                
                
                
                120,000
                
                
                
                12
                
                
                
                29,988
                
                
                
                
                
                
                
                
                
                
                
                30,000Sale
                    of common shares to investor5
                    December 2006
                
                
                0.25
                
                
                
                800,000
                
                
                
                80
                
                
                
                199,920
                
                
                
                
                
                
                
                
                
                
                
                200,000Sale
                    of common shares to investor5
                    December 2006
                
                
                0.25
                
                
                
                200,000
                
                
                
                20
                
                
                
                49,980
                
                
                
                
                
                
                
                
                
                
                
                50,000Sale
                    of common shares to investor5
                    December 2006
                
                
                0.25
                
                
                
                600,000
                
                
                
                60
                
                
                
                149,940
                
                
                
                
                
                
                
                
                
                
                
                150,000Termination
                    of MPEG Joint Venture29
                    December 2006
                
                
                0.11
                
                
                
                (15,000,000
                )
                
                
                (1,500
                )
                
                
                (1648,500
                )
                
                
                
                
                
                
                
                
                
                
                (1,650,000
                )Adjustment
                    to Opening Balance REF 12 May 06 (200 should be 300)
                
                
                
                
                
                
                
                
                
                
                100
                
                
                
                (100
                )Issuance
                    of share (Held in Escrow)
                  29
                    December 2006
                
                
                0.05
                
                
                
                3,000,000
                
                
                
                300
                
                
                
                149,700
                
                
                
                
                
                
                
                
                
                
                
                150,000Issuance
                    of share (Held in Escrow)
                  29
                    December 2006
                
                
                0.1
                
                
                
                24,000,000
                
                
                
                2,400
                
                
                
                2,397,600
                
                
                
                
                
                
                
                
                
                
                
                2,400,000Issuance
                    of share (Held in Escrow)
                  29
                    December 2006
                
                
                0.30
                
                
                
                10,000,000
                
                
                
                1,000
                
                
                
                2,999,000
                
                
                
                
                
                
                
                
                
                
                
                3,000,000Issuance
                    of shares for Services
                  3January
                    2007
                
                
                0.26
                
                
                
                1,000,000
                
                
                
                100
                
                
                
                259,900
                
                
                
                
                
                
                
                
                
                
                
                260,000Issuance
                    of share to investor
                  3
                    January 2007
                
                
                0.2
                
                
                
                4,000,000
                
                
                
                400
                
                
                
                799,600
                
                
                
                
                
                
                
                
                
                
                
                800,000Issuance
                    of share to investor
                  28
                    February 2007
                
                
                0.2131
                
                
                
                117,316
                
                
                
                12
                
                
                
                24,988
                
                
                
                
                
                
                
                
                
                
                
                25,000Issuance
                    of share for services
                  20
                    March  2007
                
                
                0.30
                
                
                
                40,000,000
                
                
                
                4,000
                
                
                
                11,996,000
                
                
                
                
                
                
                
                
                
                
                
                12,000,000Issuance
                    of share to investor
                  31
                    March  2007
                
                
                0.25
                
                
                
                1,500,000
                
                
                
                150
                
                
                
                374,850
                
                
                
                
                
                
                
                
                
                
                
                375,000Termination
                    of BEW Joint Venture
                  31
                    March 2007
                
                
                0.10
                
                
                
                (24,000,000
                )
                
                
                (2,400
                )
                
                
                (2,397,600
                )
                
                
                
                
                
                
                
                
                
                
                (2,400,000
                )Adjustment
                    to issuance for services
                  1
                    April 2007
                
                
                0.30
                
                
                
                (1,000,000
                )
                
                
                (100
                )
                
                
                (299,900
                )
                
                
                
                
                
                
                
                
                
                
                (300,000
                )Issuance
                    for services
                  3
                    April 2007
                
                
                0.29
                
                
                
                275,000
                
                
                
                28
                
                
                
                79,722
                
                
                
                
                
                
                
                
                
                
                
                79,750Issuance
                    for services
                  3
                    April 2007
                
                
                0.29
                
                
                
                275,000
                
                
                
                28
                
                
                
                79,722
                
                
                
                
                
                
                
                
                
                
                
                79,750Issuance
                    for services
                  4
                    April 2007
                
                
                0.28
                
                
                
                100,000
                
                
                
                10
                
                
                
                27,990
                
                
                
                
                
                
                
                
                
                
                
                28,000Issuance
                    of share to investor
                  11
                    April 2007
                
                
                0.18
                
                
                
                555,422
                
                
                
                56
                
                
                
                99,944
                
                
                
                
                
                
                
                
                
                
                
                100,000Issuance
                    of share to investor
                  24
                    April 2007
                
                
                0.23
                
                
                
                2,173,913
                
                
                
                217
                
                
                
                499,783
                
                
                
                
                
                
                
                
                
                
                
                500,000Issuance
                    for services
                  30
                    April 2007
                
                
                0.23
                
                
                
                2,250,000
                
                
                
                225
                
                
                
                517,275
                
                
                
                
                
                
                
                
                
                
                
                517,500Penalty
                    issuance of share to investors for nonSB2 registration -25
                    May 2007
                
                
                0.26
                
                
                
                668,000
                
                
                
                67
                
                
                
                173,613
                
                
                
                
                
                
                
                
                
                
                
                173,680Penalty
                    issuance of share to investors for nonSB2 registration -25
                    May 2007
                
                
                0.26
                
                
                
                287,000
                
                
                
                29
                
                
                
                74,591
                
                
                
                
                
                
                
                
                
                
                
                74,620Issuance
                    of shares for assets purchased from Semilla 1 June 2007
                
                
                0.27
                
                
                
                30,000,000
                
                
                
                3,000
                
                
                
                8,097,000
                
                
                
                
                
                
                
                
                
                
                
                8,100,000Issuance
                    for services
                  1
                    June 2007
                
                
                0.27
                
                
                
                5,000,000
                
                
                
                500
                
                
                
                1,349,500
                
                
                
                
                
                
                
                
                
                
                
                1,350,000Issuance
                    for services
                  1
                    June 2007
                
                
                0.27
                
                
                
                2,000,000
                
                
                
                200
                
                
                
                539,800
                
                
                
                
                
                
                
                
                
                
                
                540,000Issuance
                    of share to investors
                  7
                    June 2007
                
                
                0.25
                
                
                
                2,400,000
                
                
                
                240
                
                
                
                599,760
                
                
                
                
                
                
                
                
                
                
                
                600,000Issuance
                    for services
                  7
                    June 2007
                
                
                0.18
                
                
                
                250,000
                
                
                
                25
                
                
                
                44,975
                
                
                
                
                
                
                
                
                
                
                
                45,000Warrants
                    exercised
                  7
                    June 2007
                
                
                0.10
                
                
                
                2,000,000
                
                
                
                200
                
                
                
                199,800
                
                
                
                
                
                
                
                
                
                
                
                200,0002001
                    Options exercised
                  14
                    June 2007
                
                
                0.30
                
                
                
                1,612,875
                
                
                
                161
                
                
                
                483,702
                
                
                
                
                
                
                
                
                
                
                
                483,863Issuance
                    of shares to investor
                  20
                    June 2007
                
                
                0.25
                
                
                
                400,000
                
                
                
                40
                
                
                
                99,960
                
                
                
                
                
                
                
                
                
                
                
                100,000Issuance
                    for services
                  20
                    June 207
                
                
                0.18
                
                
                
                41,667
                
                
                
                4
                
                
                
                7,496
                
                
                
                
                
                
                
                
                
                
                
                7,500Issuance
                    of shares to investor
                  29
                    June 2007
                
                
                0.25
                
                
                
                1,500,000
                
                
                
                150
                
                
                
                374,850
                
                
                
                
                
                
                
                
                
                
                
                375,000Issuance
                    of shares to 10 investors
                  29
                    June 2007
                
                
                0.25
                
                
                
                6,000,000
                
                
                
                600
                
                
                
                1,499,400
                
                
                
                
                
                
                
                
                
                
                
                1,500,000Issuance
                    for services Re Jan 07 inv
                  29
                    June 2007
                
                
                0.32
                
                
                
                45,208
                
                
                
                4
                
                
                
                14,463
                
                
                
                
                
                
                
                
                
                
                
                14,467Issuance
                    for services Re Feb 07 inv
                  29
                    June 2007
                
                
                0.35
                
                
                
                59,619
                
                
                
                6
                
                
                
                20,861
                
                
                
                
                
                
                
                
                
                
                
                20,867Issuance
                    for services Re Mar 07 inv
                  29
                    June 2007
                
                
                0.29
                
                
                
                96,092
                
                
                
                10
                
                
                
                27,857
                
                
                
                
                
                
                
                
                
                
                
                27,867Issuance
                    for services Re Apr 07 inv
                  29
                    June 2007
                
                
                0.23
                
                
                
                105,217
                
                
                
                11
                
                
                
                24,189
                
                
                
                
                
                
                
                
                
                
                
                24,200Issuance
                    for services Re May 07 inv
                  29
                    June 2007
                
                
                0.28
                
                
                
                86,429
                
                
                
                8
                
                
                
                24,192
                
                
                
                
                
                
                
                
                
                
                
                24,200Issuance
                    for services Re June 07 inv
                  29
                    June 2007
                
                
                0.30
                
                
                
                86,222
                
                
                
                8
                
                
                
                25,859
                
                
                
                
                
                
                
                
                
                
                
                25,867Issuance
                    for services
                  29
                    June 2007 - Shares last year issued
                
                
                0.095
                
                
                
                1,400,000
                
                
                
                140
                
                
                
                132,860
                
                
                
                
                
                
                
                
                
                
                
                133,000Cancellation
                    of shares buy back
                
                
                0.2198
                
                
                
                (43,000
                )
                
                
                (4
                )
                
                
                (9,451
                )
                
                
                
                
                
                
                
                
                
                
                (9,455
                )Comprehensive
                    Loss
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (1,223
                )
                
                
                (1,223
                )Net
                    Loss for the year to June 30, 2007
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (35,766,474
                )
                
                
                
                
                
                
                (35,766,474
                )**Balances
                    30 June 2007**
                
                
                
                
                
                ****
                **323,035,700**
                
                
                ****
                **32,305**
                
                
                ****
                **63,041,095**
                
                
                ****
                **(60,811,533**
                **)**
                
                ****
                **(38,641**
                **)**
                
                ****
                **2,223,226**


The
      accompanying notes are an integral part of these financial
      statements.


-
            23
            -




**NEW
      MEDIUM ENTERPRISES, INC.**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


JUNE
      30,
      2007








**NOTE
      1 - FORMATION AND BUSINESS OF THE COMPANY**





New
      Medium Enterprises, Inc. (the "Company") was organized on August 2, 1999 in
      the
      State of Nevada under the name Shopoverseas.com, Inc. On July 10, 2000 the
      name
      was changed to New Medium Enterprises, Inc. The Company's original intention
      was
      to operate as an Internet based E-commerce Company. Several web sites were
      formulated whose purpose was the sale of various goods and services to both
      consumers and businesses. During a prior fiscal period, management had decided
      to cease any further expenditure in regard to the web site and had written
      off
      the total cost in the prior period.





On
      January 13th, 2004 the Board of Directors and majority shareholders of the
      Company agreed to restructure the Business and acquired all the intellectual
      property assets pertaining to a new High Storage Optical Disc format with a
      storage capacity of eight times the normal DVD9 disc available today. The
      acquisition of the intellectual property was made from MultiDisk Ltd and TriGM
      International SA. Having assimilated the intellectual property of both
      companies, the Company embarked upon the development of the Versatile Multilayer
      Optical Disc and related products.





**Subsidiaries:**





The
      company incorporated the following subsidiaries.





A)
            New
                Medium Enterprises UK Ltd (formed previously as Prime Discs UK Ltd),
                incorporated on February 18, 2004, under the laws of England and
                Wales.B)
            New
                Medium Management Ltd (formed previously as Wilton Business Services
                Ltd),
                incorporated on May 13, 2004, under the laws of England and
                Wales.C)
            New
                Medium Enterprises Asia Pacific Ltd, incorporated on June 2, 2006
                under
                the laws of China, Peoples Republic of China.D)
            New
                Medium Enterprises China Ltd, incorporated on June 2, 2006 under
                the laws
                of China, Peoples Republic of China.E)
            New
                Medium Entertainment Ltd - incorporated 19 September 2006, under
                the laws
                of England and Wales.F)
            New
                Medium Electronics Ltd - incorporated 19 September 2006, under the
                laws of
                England and Wales.G)
            Intellitain
                Media, Inc. - incorporated 13 July 2000 under NEVADA, USA
                laws.





New
      Medium Enterprises, Inc. owns 100% of A), B), C), E), F), and G).  New
      Medium Enterprises, Asia Pacific owns 51% of (D); the other 49% is owned by
      other parties as at June 30th 2007. As
      of July
      5th 2007 the
      other party transferred all the shares of NME China Ltd to New Medium Asia
      Pacific Ltd. NME Inc. holds 100% of all above companies as of the reporting
      date.


The
      losses, attributed to minority interest, which were incurred by one subsidiary
      company and included in the consolidated statement of operations for the year
      ended June 30 2007 have not been shown separately in financial statements
      because they are considered to be immaterial. The minority interest during
      the
      year was $15,307, but restricted to $627, the value of shares held by minority
      interest.





**NOTE
      2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**





Principles
      of Consolidation





The
      financial statements include the accounts of New Medium Enterprises, Inc. and
      its subsidiaries. Inter-company transactions and balances have been eliminated.
      Equity investments in which we exercise significant influence, but do not
      control and are not the primary beneficiary, are accounted for using the equity
      method. Investments in which we are not able to exercise significant influence
      over the investee are accounted for under the costs method.





Foreign
      Currencies





Assets
      and liabilities recorded in foreign currencies are translated at the exchange
      rate on the balance sheet date. Revenue and expenses are translated at average
      rates of exchange prevailing during the year. Translation adjustments resulting
      from this process are charged or credited to Other Comprehensive Income
      (OCI).





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 amount of assets and liabilities, revenue and expenses
      as
      well as the disclosure of contingent assets and liabilities in the financial
      statement. Actual results could differ from those estimates.





Cash
      and
      Cash Equivalents





Cash
      and
      cash equivalents consists of cash, money market funds and other highly liquid
      investments with a maturity of three months or less from the date of purchase.
      The Company has not experienced any losses on its cash or cash
      equivalents.





-
          24
          -


**NEW
        MEDIUM ENTERPRISES, INC.**
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
        30,
        2007






Investments





Investments
      include marketable common stock traded on the stock exchange. The marketable
      securities are classified as available for sale, and are measured at fair value
      in the balance sheet. Unrealized gains and losses on investments are recorded
      net of tax as a separate component of stockholders' equity. Gains and losses
      on
      securities sold are determined based on the specific identification
      method.





Property
      and Equipment





Property
      and equipment are stated at cost. Expenditures for maintenance and repairs
      are
      charged to earnings as incurred; additions, renewals and settlements are
      capitalized. When property and equipment are retired or otherwise disposed
      of,
      the related cost and accumulated depreciation are removed from the respective
      accounts, and any gain or loss is included in operations. Depreciation of
      property and equipment is provided using the straight-line method for
      substantially all assets with estimated lives of:





Furniture
                and Fixtures and Office Equipment
            3
                yearsPlant
                and Machinery
            3
                yearsOthers
            3
                years




As
      of
      June 30, 2007, and June 30, 2006 Property, Plant & Equipment consist of the
      following:





**2007**
            
            
            **2006**Furniture
                and Fixture
            
            $
            325,865
            
            
            $
            75,392Plant
                and Machinery
            
            
            163,396
            
            
            
            213,120Others
            
            
            1,003,223
            
            
            
            0Total
            
            
            1,492,484
            
            
            
            288,512Accumulated
                depreciation
            
            
            (194,072
            )
            
            
            (101,545
            )Net
                Fixed Asset
            
            $
            1,298,412
            
            
            $
            186,967





Intangible
      Assets





Intangible
      assets are amortized using the straight-line method over their estimated period
      of benefit, ranging from one to ten years. We evaluate the recoverability of
      intangible assets periodically and take into account events or circumstances
      that warrant revised estimates of useful lives or that indicate that impairment
      exists.





On
      June
      21, 2007, in response to a comment raised by the staff of the Securities and
      Exchange Commission (“SEC”) concerning New Medium Enterprises, Inc.’s (the
“Company”) accounting treatment of its acquired intellectual property, and based
      upon our related discussions with the SEC, our management has concluded that
      the
      Company will expense amounts incurred in the acquisition of research and
      development projects from MultiDisk Ltd. and TriGM International SA as of the
      date of the consummation of the acquisition of those projects. Those amounts
      had
      been capitalized as an intangible asset in the fiscal year ending June 30,
      2004
      and were to be amortized over the expected life of the asset. Accordingly,
      the
      Audit Committee and our management concluded that our previously issued audited
      financial statements for the fiscal years ended June 30, 2006, 2005 and 2004
      and
      our previously issued unaudited interim financial statements for the period
      ended September 30, 2006 and all subsequent interim periods are required to
      be
      amended to reflect the above changes as required by FASB141.





Revenue
      Recognition





The
      Company recognizes revenue on the accrual basis as the related services are
      provided to customers and when the customer is obligated to pay for such
      services. Revenue from product sales is recognized when title transfers to
      customers, primarily on shipment. For the years ended June 30, 2007 and 2006
      there were no significant revenues.





Research
      and Development





Research
      and development expenses include payroll, employee benefits, stock-based
      compensation, and other headcount-related costs associated with product
      development. We have determined that technological feasibility for our software
      products is reached shortly before the products are released to manufacturing.
      Costs incurred after technological feasibility is established are not material,
      and accordingly, we expense all research and development costs when
      incurred.





All
      the
      costs incurred on authoring software have been capitalized as technological
      feasibility was established on January 31, 2007.





The
      Company has issued 10 million shares at 30 cents per share to Digital Challenge
      for research and development. During the year, 7 million shares worth $2.1
      million are shown in research and development expense and 3 million balance
      has
      been held in escrow (for release in the next 3 years). The company has also
      acquired software developed by Semilla Corporation for authoring tools and
      has
      paid $125k in cash, $1.125 million in notes payable and 30 million shares at
      0.27 cents per share. The whole amount of $9.35 million is major part of
      research and development expense in the profit and loss account.





-
          25
          -




**NEW
        MEDIUM ENTERPRISES, INC.**
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
        30,
        2007






Loss
      Per
      Share





In
      accordance with Statement of Financial Accounting Standards No. 128, "Earnings
      Per Share", the computation of net loss per share is based upon the weighted
      average number of common shares issued and outstanding for the reporting period.
      Common stock equivalents related to options, warrants and convertible securities
      are excluded from the computation when the effect would be
      anti-dilutive.





New
      Accounting Pronouncements





In
      May
      2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections."
      This statement applies to all voluntary changes in accounting principle and
      requires retrospective application to prior periods' financial statements of
      changes in accounting principle, unless this would be impracticable. This
      statement also makes a distinction between "retrospective application" of an
      accounting principle and the "restatement" of financial statements to reflect
      the correction of an error. This statement is effective for accounting changes
      and corrections of errors made in fiscal years beginning after December 15,
      2005. The company had restated the Financial Statements as required by
      accounting standards. Please see Note 4 on Intellectual property.





In
      February 2006, FASB issued SFAS No. 155, "Accounting for Certain Hybrid
      Financial Instruments". ("SFAS No. 155").  SFAS No. 155 amends SFAS No
      133, "Accounting for Derivative Instruments and Hedging Activities", and SFAF
      No. 140, "Accounting for Transfers and Servicing of Financial Assets and
      Extinguishments of Liabilities".  SFAS No. 155 permits fair value
      re-measurement for any hybrid financial instrument that contains an embedded
      derivative that otherwise would require bifurcation, clarifies which
      interest-only strips and principal-only strips are not subject to the
      requirements of SFAS No. 133, establishes a requirement to evaluate interest
      in
      securitized financial assets to identify interests that are freestanding
      derivatives or that are hybrid financial instruments that contain an embedded
      derivative requiring bifurcation, clarifies that concentrations of credit risk
      in the form of subordination are not embedded derivatives, and amends SFAS
      No.
      140 to eliminate the prohibition on the qualifying special-purpose entity from
      holding a derivative financial instrument that pertains to a beneficial interest
      other than another derivative financial instrument. This statement is effective
      for all financial instruments acquired or issued after the beginning of the
      Company’s first fiscal year that begins after September 15, 2006.





In
      December 2004, the FASB issued FASB Statement No. 123R, "Share-Based Payment,
      an
      Amendment of FASB Statement No. 123" ("FAS No. 123R"). FAS No. 123R requires
      companies to recognize in the statement of operations the grant-date, fair
      value
      of stock options and other equity-based compensation issued to employees. FAS
      No. 123R is effective beginning in the Company's first quarter of fiscal
      2006.The financial statements of New Medium Enterprises Inc has been prepared
      in
      accordance with this new standard.





In
      June
      2005, the EITF reached consensus on Issue No. 05-6, Determining the Amortization
      Period for Leasehold Improvements ("EITF 05-6.") EITF 05-6 provides guidance
      on
      determining the amortization period for leasehold improvements acquired in
      a
      business combination or acquired subsequent to lease inception. The guidance
      in
      EITF 05-6 will be applied prospectively and is effective for periods beginning
      after June 29, 2005. EITF 05-6 is not expected to have a material effect on
      the
      company’s consolidated financial position or results of operations.





In
      June
      2005, the FASB Staff issued FASB Staff Position 150-5 ("FSP 150-5"),
      "Issuers Accounting under FASB Statement No. 150 for Freestanding Warrants
      and Other Similar Instruments on Shares that are
      Redeemable."  FSP 150-5 addresses whether freestanding warrants
      and other similar instruments on shares that are redeemable, either puttable
      or
      mandatorily redeemable, would be subject to the requirements of FASB Statement
      No. 150, "Accounting for Certain Financial Instruments with Characteristics
      of Both Liabilities and Equity," regardless of the timing or the redemption
      feature or the redemption price. The FSP is effective after June 30, 2005.
      The financial statements of the Company have been prepared in accordance with
      this new standard.





On
      February 16, 2006 the Financial Accounting Standards Board (FASB) issued
      SFAS 155, “Accounting for Certain Hybrid Instruments,” which amends SFAS 133,
“Accounting for Derivative Instruments and Hedging Activities,” and SFAS 140,
“Accounting for Transfers and Servicing of Financial Assets and Extinguishments
      of Liabilities.” SFAS 155 allows financial instruments that have embedded
      derivatives to be accounted for as a whole (eliminating the need to bifurcate
      the derivative from its host) if the holder elects to account for the whole
      instrument on a fair value basis. SFAS 155 also clarifies and amends certain
      other provisions of SFAS 133 and SFAS 140. This statement is effective for
      all
      financial instruments acquired or issued in fiscal years beginning after
      September 15, 2006. The Company does not expect its adoption of this new
      standard to have a material impact on its financial position, results of
      operations or cash flows.





In
      March
      2006, the FASB issued FASB Statement No. 156, "Accounting for Servicing of
      Financial Assets," an amendment to FASB Statement No. 140 ("Statement
      156'). Statement 156 requires that an entity recognize a servicing asset or
      servicing liability each time it undertakes an obligation to service a financial
      asset by entering into a service contract under certain situations. The new
      standard is effective for fiscal years beginning after September 15, 2006.
      The
      Company does not expect its adoption of this new standard to have a material
      impact on its financial position, results of operations or cash
      flows.





In
      September, 2006, FASB issued SFAS 157 "Fair Value Measurements". This Statement
      defines fair value, establishes a framework for measuring fair value in
      generally accepted accounting principles (GAAP), and expands disclosures about
      fair value measurements.  This Statement applies under other
      accounting pronouncements that require or permit fair value measurements, the
      Board having previously concluded in those accounting pronouncements that fair
      value is the relevant measurement attribute. Accordingly, this Statement does
      not require any new fair value measurements. However, for some entities, the
      application of this Statement will change current practice. This Statement
      is
      effective for financial statements issued for fiscal years beginning after
      November 15, 2007, and interim periods within those fiscal years. The management
      is currently evaluating the effect of this pronouncement on financial
      statements.





-
          26
          -




**NEW
        MEDIUM ENTERPRISES, INC.**
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
        30,
        2007






In
      September 2006, FASB issued SFAS 158 "Employers Accounting for Defined Benefit
      Pension and Other Postretirement Plans", an amendment of FASB Statements No.
      87,
      88, 106, and 132(R). This Statement improves financial reporting by requiring
      an
      employer to recognize the over-funded or under-funded status of a defined
      benefit postretirement plan (other than a multiemployer plan) as an asset or
      liability in its statement of financial position, and to recognize changes
      in
      that funded statues in the year in which the changes occur through comprehensive
      income of a business entity or changes in unrestricted net assets of a
      not-for-profit organization. This Statement also improves financial reporting
      by
      requiring an employer to measure the funded status of a plan as of the date
      of
      its year-end statement of financial position, with limited exceptions. An
      employer with publicly traded equity securities is required to initially
      recognize the funded status of a defined benefit postretirement plan and to
      provide the required disclosures as of the end of the fiscal year ending after
      December 15, 2006. An employer without publicly traded equity securities is
      required to recognize the funded status of a defined benefit postretirement
      plan
      and to provide the required disclosures as of the end of the fiscal year ending
      after June 15, 2007. However, an employer without publicly traded equity
      securities is required to disclose the following information in the notes to
      financial statements for a fiscal year ending after December 15, 2006, but
      before June 16, 2007, unless it has applied the recognition provisions of this
      Statement in preparing those financial statements.





a)
            A
                brief description of the provisions of this
                Statement;


b)
            The
                date that adoption is required;


c)
            The
                date the employer plans to adopt the recognition provisions of this
                Statement, if earlier.





The
      requirement to measure plan assets and benefit obligations as of the date of
      the
      employer’s fiscal year-end statement of financial position is effective for
      fiscal years ending after December 15, 2008.  The management is
      currently evaluating the effect of this pronouncement on financial
      statements.





In
      February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
      Financial Assets and Financial Liabilities.” SFAS No. 159 permits entities to
      choose to measure many financial instruments, and certain other items, at fair
      value. SFAS No. 159 applies to reporting periods beginning after November 15,
      2007. The adoption of SFAS No. 159 is not expected to have a material impact
      on
      the Company’s financial condition or results of operations





**NOTE
      3 - LIQUIDITY AND PROFITABILITY**





As
      reflected in the accompanying financial statements, the Company incurred losses
      for the current and prior periods and expects to incur a loss in the upcoming
      fiscal period. Based upon the cash utilization rate and in order to maintain
      the
      Company for the following year, management will have to raise additional funds
      through equity and or debt financing. It is management's opinion that it can
      raise the needed capital.





The
      company has written off intellectual property, previously capitalized, that
      has
      severely affected the Profit and Loss account. All figures are restated as
      per
      SEC rules.





**NOTE
      4 - INVESTMENT IN INTELLECTUAL PROPERTY**





On
      January 13, 2004, the Company acquired the business and all the intellectual
      property assets pertaining to a new DVD format from MultiDisk Ltd. and TriGM
      International SA. In connection with the acquisition the Company issued
      72,605,776 shares of its stock to the shareholders of MultiDisk and TriGM.
      These
      shares were valued at $14,521,155, which approximates the fair market value
      of
      the shares. The Company also paid additional fees in funding, legal and
      brokerage fees, which have been capitalized, and part of these funds ($150,000)
      was allocated to Machinery and Equipment.





According
      to the acquisition agreement with MultiDisk Ltd and TriGM International, S.A.,
      the Company was obligated to pay certain milestone payments amounting to $87,000
      each upon the raising of capital in excess of $500,000. To date, $174,000 of
      milestone payments have been made under this agreement.


On
      June
      23, 2005, the Company converted the following outstanding obligations owed
      to
      two of its principal shareholders into the Common stock of the company: May
      Ltd.
      $87,000 debt converted into 1,740,000 Common shares; TriGM Ltd. $87,000 debt
      converted into 1,740,000 Common Shares. This reflects the payment of the
      $174,000.





Additionally,
      the Company offered Series A warrant holders the right to lower the exercise
      price from $1.50 to $.25 a share in return for assigning six out of seven
      warrants to certain parties providing services to the Company in lieu of
      compensation. A total of 1,300,000 warrants were lowered to $.25 exercise price.
      On July 18, 2003 the Board of Directors voted to extend the Series A, B, C,
      D
      and E warrants until July 2005.





On
      June
      21, 2007, in response to a comment raised by the staff of the Securities and
      Exchange Commission (“SEC”) concerning New Medium Enterprises, Inc.’s (the
“Company”) accounting treatment of its acquired intellectual property, and based
      upon our related discussions with the SEC, our management has concluded that
      the
      Company should expense amounts incurred in the acquisition of research and
      development projects from MultiDisk Ltd. and TriGM International SA as of the
      date of the consummation of the acquisition of those projects. Those amounts
      had
      been capitalized as an intangible asset in the fiscal year ending June 30,
      2004
      and were to be amortized over the expected life of the asset.




The Company capitalized certain expenses as Intellectual
      Property in amounts totalling $14,877,509 and $306,351 during fiscal years
      ended
      June 30, 2004 and June 30, 2005, respectively. These costs, which are research
      and development in nature, are required to be expensed under U.S. generally
      accepted accounting principles. The effect of this change is a direct charge
      to
      expense in those periods of all amounts previously capitalized. This change
      in
      accounting treatment will cause our net loss to increase from $156,483 to
      $15,033,992 for the fiscal year ended June 30, 2004 and from $2,073,734 to
      $2,380,085 for the fiscal year ended June 30, 2005.


-
          27
          -


**NEW
        MEDIUM ENTERPRISES, INC.**
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
        30,
        2007




**Financial
        Statement Restatements**


The
      restatements for the year –ended June 30, 2004, June 30, 2005 and June 30, 2006
      are summarized as follows:




**Balance
      Sheet**


**June
                  2004**
              
              
              **June
                  2005**
              
              
              **June
                  2006**
              
              
              **June
                  2007**Previously
                  reported
              
              
              As
                  restated
              
              
              Previously
                  reported
              
              
              As
                  restated
              
              
              Previously
                  reported
              
              
              As
                  restated
              
              
              As
                  stated in June 2007$
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $Total
                  assets
              
              
              15,147,078
              
              
              
              269,569
              
              
              
              15,539,062
              
              
              
              355,202
              
              
              
              18,812,968
              
              
              
              3,629,108
              
              
              
              5,228,473Total
                  liabilities
              
              
              53,314
              
              
              
              53,314
              
              
              
              136,393
              
              
              
              136,393
              
              
              
              266,390
              
              
              
              266,390
              
              
              
              3,005,247Additional
                  paid-in capital
              
              
              16,452,400
              
              
              
              16,452,400
              
              
              
              18,839,361
              
              
              
              18,839,361
              
              
              
              28,445,195
              
              
              
              28,445,195
              
              
              
              63,073,400Accumulated
                  deficit including Comprehensive loss
              
              
              (1,358,636
              )
              
              
              (16,236,145
              )
              
              
              (3,436,692
              )
              
              
              (18,620,552
              )
              
              
              (9,898,617
              )
              
              
              (25,082,477
              )
              
              
              (60,850,174
              )Total
                  shareholders' equity
              
              
              15,093,764
              
              
              
              216,255
              
              
              
              15,402,669
              
              
              
              218,809
              
              
              
              18,546,578
              
              
              
              3,362,718
              
              
              
              2,223,226Total
                  liabilities and shareholders' equity
              
              
              15,147,078
              
              
              
              269,569
              
              
              
              15,539,062
              
              
              
              355,202
              
              
              
              18,812,968
              
              
              
              3,629,108
              
              
              
              5,228,473


**Statement
      of Operations**


**June
                  2004**
              
              
              **June
                  2005**
              
              
              **June
                  2006**
              
              
              **June
                  2007**Previously
                  reported
              
              
              As
                  restated
              
              
              Previously
                  reported
              
              
              As
                  restated
              
              
              Previously
                  reported
              
              
              As
                  restated
              
              
              As
                  stated in June 2007$
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $General,
                  Administrative, Depreciation & Officers Compensation
              
              
              188,086
              
              
              
              188,086
              
              
              
              1,103,801
              
              
              
              1,103,801
              
              
              
              5,939,714
              
              
              
              5,939,714
              
              
              
              23,681,842Research
                  and Development Costs
              
              
              0
              
              
              
              0
              
              
              
              971,290
              
              
              
              971,290
              
              
              
              544,663
              
              
              
              544,663
              
              
              
              12,095,510Purchased
                  IP and R&D Costs Written off
              
              
              0
              
              
              
              14,877,509
              
              
              
              0
              
              
              
              306,351
              
              
              
              0
              
              
              
              0
              
              
              
              0Other
                  Income
              
              
              (31,585
              )
              
              
              (31,585
              )
              
              
              (1,557
              )
              
              
              (1,557
              )
              
              
              (43,889
              )
              
              
              (43,889
              )
              
              
              (10,878
              )Income
                  Tax
              
              
              0
              
              
              
              0
              
              
              
              200
              
              
              
              200
              
              
              
              200
              
              
              
              200
              
              
              
              0Net
                  loss
              
              
              (156,483
              )
              
              
              (15,033,992
              )
              
              
              (2,073,734
              )
              
              
              (2,380,085
              )
              
              
              (6,440,688
              )
              
              
              (6,440,688
              )
              
              
              (35,766,474
              )Loss
                  per share, basic and diluted
              
              
              (0.01
              )
              
              
              (0.30
              )
              
              
              (0.02
              )
              
              
              (0.03
              )
              
              
              (0.03
              )
              
              
              (0.03
              )
              
              
              (0.14
              )


**Statements
      of Cash Flows - yearly**


**June
                  2004**
              
              
              **June
                  2005**
              
              
              **June
                  2006**
              
              
              **June
                  2007**Previously
                  reported
              
              
              As
                  restated
              
              
              Previously
                  reported
              
              
              As
                  restated
              
              
              Previously
                  reported
              
              
              As
                  restated
              
              
              As
                  stated in June 2007$
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $
              
              
              
              $Cash
                  Flow from Operating Activities
              
              
              (46,753
              )
              
              
              (14,924,262
              )
              
              
              (1,523,212
              )
              
              
              (1,829,563
              )
              
              
              (5,635,367
              )
              
              
              (5,635,367
              )
              
              
              (5,065,472
              )Cash
                  Flow from Investing activities
              
              
              (14,928,227
              )
              
              
              (50,718
              )
              
              
              (313,857
              )
              
              
              (7,506
              )
              
              
              (109,372
              )
              
              
              (109,372
              )
              
              
              (1,262,496
              )Cash
                  Flow from financing activities
              
              
              14,521,155
              
              
              
              14,521,155
              
              
              
              1,934,000
              
              
              
              1,934,000
              
              
              
              6,235,244
              
              
              
              6,235,244
              
              
              
              5,972,013Effects
                  of Exchange gain on Cash
              
              
              (139
              )
              
              
              (139
              )
              
              
              (4,332
              )
              
              
              (4,332
              )
              
              
              (21,437
              )
              
              
              (21,437
              )
              
              
              (1,223
              )Net
                  Increase and decrease  in cash and cash
                  Equivalents
              
              
              (453,964
              )
              
              
              (453,964
              )
              
              
              92,599
              
              
              
              92,599
              
              
              
              469,068
              
              
              
              469,068
              
              
              
              (357,178
              )Cash
                  and cash equivalents at the beginning of the period
              
              
              557,894
              
              
              
              557,894
              
              
              
              103,930
              
              
              
              103,930
              
              
              
              196,529
              
              
              
              196,529
              
              
              
              665,597**Cash
                  and cash equivalents at the end of period**
              
              
              103,930
              
              
              
              103,930
              
              
              
              196,529
              
              
              
              196,529
              
              
              
              665,597
              
              
              
              665,597
              
              
              
              308,419
  -
            28
            -
  **NEW
          MEDIUM ENTERPRISES, INC.**
 NOTES
          TO
          CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
          30,
          2007


**Restatement
      of Complete Cash Flow Statements - From Inception to
      Date**


**Inception
                  to**
                **June
                  30, 2006**
                (As
                  Reported)
              
              
              **Adjustment
                  of IP Written Off**
              
              
              **Inception
                  to**
                **June
                  30, 2006**
                (Restated)
              
              
              **Year
                  ended**
                **June
                  30, 2007**
              
              
              **Cash
                  flow from August 2, 1999 to****June
                  2007**
                (Restated)**$**
              
              
              
              **$**
              
              
              
              **$**
              
              
              
              **$**
              
              
              
              **$****Cash
                  flows from operating activities**Net loss
              
              
              (9,861,199
              )
              
              
              (15,183,860
              )
              
              
              (25,045,059
              )
              
              
              (35,766,474
              )
              
              
              (60,811,533
              )Depreciation and amortization
              
              
              101,502
              
              
              
              --
              
              
              
              101,502
              
              
              
              97,311
              
              
              
              198,813Profit on insurance claim on Screen
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (3,262
              )
              
              
              (3,262
              )Stock issued for services rendered - Comp
              
              
              14,521,155
              
              
              
              --
              
              
              
              14,521,155
              
              
              
              8,100,000
              
              
              
              22,621,155Write off of web site development costs
              
              
              314,302
              
              
              
              --
              
              
              
              314,302
              
              
              
              --
              
              
              
              314,302Stock issued for services rendered - Comp
              
              
              4,086,351
              
              
              
              --
              
              
              
              4,086,351
              
              
              
              20,950,192
              
              
              
              25,036,543Stock issued for services rendered – Escrow
              
              
              (1,650,000
              )
              
              
              --
              
              
              
              (1,650,000
              )
              
              
              600,000
              
              
              
              (1,050,000
              )Loss on sale of securities
              
              
              (5,044
              )
              
              
              --
              
              
              
              (5,044
              )
              
              
              --
              
              
              
              (5,044
              )Changes
                  in assets and liabilities
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              -Change in current assets
              
              
              (1,070,483
              )
              
              
              --
              
              
              
              (1,070,483
              )
              
              
              505,588
              
              
              
              (564,895
              )Change in security deposits
              
              
              (26,911
              )
              
              
              --
              
              
              
              (26,911
              )
              
              
              (18,684
              )
              
              
              (45,595
              )Change in current liabilities
              
              
              266,391
              
              
              
              --
              
              
              
              266,391
              
              
              
              469,857
              
              
              
              736,248**Net
                  cash used in operating activities**
              
              
              6,676,064
              
              
              
              (15,183,860
              )
              
              
              (8,507,796
              )
              
              
              (5,065,472
              )
              
              
              (13,573,268
              )**Cash
                  flows from investing activities**Proceed from insurance claim
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              14,039
              
              
              
              14,039Proceeds from the sale of securities
              
              
              13,584
              
              
              
              --
              
              
              
              13,584
              
              
              
              --
              
              
              
              13,584Purchase of fixed assets (including investments)
              
              
              (109,372
              )
              
              
              --
              
              
              
              (109,372
              )
              
              
              (1,260,974
              )
              
              
              (1,370,346
              )Purchase (write off) of fixed assets
              
              
              (196,590
              )
              
              
              --
              
              
              
              (196,590
              )
              
              
              (15,561
              )
              
              
              (212,151
              )Web site development costs/software asset
              
              
              (261,402
              )
              
              
              --
              
              
              
              (261,402
              )
              
              
              --
              
              
              
              (261,402
              )Investment in intellectual property
              
              
              (15,183,860
              )
              
              
              15,183,860
              
              
              
              --
              
              
              
              --
              
              
              
              --Investment purchased – net
              
              
              (20,198
              )
              
              
              --
              
              
              
              (20,198
              )
              
              
              --
              
              
              
              (20,198
              )**Net
                  cash provided from investing activities**
              
              
              (15,757,838
              )
              
              
              15,183,860
              
              
              
              (573,978
              )
              
              
              (1,262,496
              )
              
              
              (1,836,474
              )**Cash
                  flows from financing activities**Proceeds from sale of A to F units
              
              
              1,819,950
              
              
              
              --
              
              
              
              1,819,950
              
              
              
              200,000
              
              
              
              2,019,950Offering costs - private placements
              
              
              (69,625
              )
              
              
              --
              
              
              
              (69,625
              )
              
              
              --
              
              
              
              (69,625
              )Deferred offering costs - registration statement
              
              
              (40,000
              )
              
              
              --
              
              
              
              (40,000
              )
              
              
              --
              
              
              
              (40,000
              )Purchase of Treasury Stock
              
              
              (3,750
              )
              
              
              --
              
              
              
              (3,750
              )
              
              
              (9,455
              )
              
              
              (13,205
              )Notes payable
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              2,269,000
              
              
              
              2,269,000Shares issued for buying asset
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              137,468
              
              
              
              137,468Proceeds from sale of shares and warrants to various officers,
                  founders
                  and investors
              
              
              1,946,670
              
              
              
              --
              
              
              
              1,946,670
              
              
              
              (600,000
              )
              
              
              1,346,670Proceeds from sale of shares
              
              
              6,131,544
              
              
              
              --
              
              
              
              6,131,544
              
              
              
              3,975,000
              
              
              
              10,106,544**Net
                  cash provided from financing activities**
              
              
              9,784,789
              
              
              
              --
              
              
              
              9,784,789
              
              
              
              5,972,013
              
              
              
              15,756,802Effects of Exchange gain on Cash
              
              
              (37,418
              )
              
              
              --
              
              
              
              (37,418
              )
              
              
              (1,223
              )
              
              
              (38,641
              )**Net
                  increase (decrease) in cash and cash equivalents**
              
              
              665,597
              
              
              
              --
              
              
              
              665,597
              
              
              
              (357,178
              )
              
              
              308,419Cash
                  and cash equivalents, beginning of period
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              665,597
              
              
              
              --**Cash
                  and cash equivalents at the end of the period**
              
              
              665,597
              
              
              
              --
              
              
              
              665,597
              
              
              
              308,419
              
              
              
              308,419


-
          29
          -




**NEW
        MEDIUM ENTERPRISES, INC.**
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
        30,
        2007






**NOTE
      5 - INCOME TAXES**





The
      Company accounts for income taxes in accordance with Statement of Financial
      Accounting Standards No. 109 "Accounting for Income Taxes" ("SFAS 109"). Under
      the asset and liability method, deferred income taxes are recognized for the
      tax
      consequences of "temporary differences" by applying enacted statutory tax rates
      applicable to future years to differences between the financial statements
      carrying amounts and the tax bases of existing assets and liabilities. Under
      SFAS 109, deferred tax assets may be recognized for temporary differences that
      will result in deductible amounts in future period. A valuation allowance is
      deferred tax asset will not be realized. As of June 30, 2007 the Company had
      a
      Federal and State tax net operating loss of approximately $55,010,334. The
      Company established a 100% valuation allowance equal to the net deferred tax
      assets, as the Company could not conclude that it was more likely than not
      that
      the deferred tax asset would be realized.





**NOTE
      6 - COMMITMENTS AND CONTINGENCIES**





**Commercial
      Property**





The
      Company rents office space from a third party on a month-to-month basis in
      the
      UK, amounting to $12,200 per month and three month notice is required to cancel
      the contract. The Company also rents office in Los Angeles, California for
      $1,965.50 per month and in China for one year, at $3,387 per month. Space is
      rented in India for 3 years, $2,000 per month from January 2007. Except UK,
      all
      above lease agreements are cancellable at one month notice. The company also
      has
      leasing agreement for approximately $450 per month for computer equipment,
      which
      ends in October 2007. Rent Expense for the year ending June 30 2007 and 2006
      was
      $165,774 and $ 84,900 respectively.





Obligations
      Table:





**Year
                Ending June 30,**
            
            **Obligation**2008
            
            $
            60,795Thereafter
            
            
            0Total
            
            $
            60,795





**Insurance**





Directors
      and Officers Insurance at $2,049 for 10 months starting May 2007.





**Commercial
      Commitments**





1.
            In
                May 2006, the company entered into a contract for Design and Construction
                of a VMD Replication Line with VDL-ODMS. The project was reassessed
                and
                re-priced in July 2007. Under the new deal with VDL-ODMS, the company
                agreed to pay Euros 1,550,000 for the first VMD Line and has paid
                Euros
                240,000 in July. The balance is backed by the Atradius line of credit.
                The
                company will pay the balance in two instalments on completion of
                assembly
                and testing of equipment..





2.
            On
                June 17, 2006, the Company signed an agreement with Doug Carson,
                Inc. to
                develop the VMD file format for VMD Optical Discs for a contractual
                price
                of $500,000. In July 2006, the company approved the security agreement
                with DCA, Inc., and signed a promissory note for $150,000 secured
                by
                3,000,000 shares in NME, Inc. From July to September, a total of
                $250,000
                was paid, leaving $100,000 due in October and a final payment of
                $150,000
                in December 2006. But it is important to note that the project was
                put on
                hold by mutual agreement awaiting certain technical developments
                related
                to the Encryption developed by the Studios - AACS. Since the Encryption
                developed by the Studios faced technical difficulties the integration
                of
                the encryption tool had to be delayed. As the project is yet to be
                completed, these shares are still held **in Escrow** and the
                final amounts are unpaid.
              
              We
                have received from DCA the DDP 3.0 standard for VMD11, VMD22,DDP
                image
                maker software for DDP3.0 and we are waiting for the delivery of
                modified
                software and hardware DDP encoder for
                mastering.





3.
            In
                October 2006, the company appointed COMDRP for communication and
                press
                relation services in France for a monthly fee of Euros 1,800 ($2,440)
                commencing from 1st
                November
                2006. This contract can be terminated at one month written
                notice.





4.
            In
                December 2006, the company entered into a HD playback Software Purchase
                Agreement with SSX for a total purchase price of $22,500. The company
                made
                an initial payment of $11,250 and one instalment of $5,625. The final
                balance of $5,625 was to be paid on delivery and verification of
                the
                software.





5.
            In
                December 2006, the subsidiary, NME Entertainment Ltd signed an agreement
                with HGC Films (JIAHUA LTD) for the acquisition of 5 Chinese titles
                for
                $30,000 in total. The company has paid $15,000 upfront and is committed
                to
                pay $5,000 per year for next three
                years.






-
          30
          -


**NEW
        MEDIUM ENTERPRISES, INC.**
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
        30,
        2007




6.
            In
                December 2006, the company approached V2 Solutions for the design
                and
                development of authoring software and other related assignments
                (E-commerce, Graphic designing, and C++, Java programming). As per
                the
                agreement, the company would pay an estimated amount
                of  $12,000-$20,000 per month  in cash and NME equity
                equivalent to half of the invoice per month at a 25% discounted rate
                (calculated at the closing price of the last working day of the month)
                on
                receipt of invoice from V2 Solutions for one year. This contract
                of
                services was suspended on June 29, 2007 until
                renegotiated.





7.
            In
                February 2007, the company signed its first U.S based distribution
                deal
                with PC Rush to bring its HD Versatile Multilayer Disc (VMD) players
                to
                the U.S. market for the first time. PC Rush will distribute and market
                the
                HD VMD Media Player Duo and HD VMD Media Player Quattro, which will
                allow
                consumers to play their existing standard-definition DVD collections
                up-converted to HD, as well as allow consumers entrance into the
                HD
                playback market with the high quality, and high value VMD disc format.
                There is a monthly marketing plan fee of $10,000 for the first 6
                months,
                and thereafter, the greater of 1% of the monthly sales or $7,500.
                This
                deal is conditional upon the launch of players. The Company is going
                ahead
                with PC Rush in the 4th
                Quarter of
                2007.





8.
            In
                March 2007, the Company entered into an agreement with Mr. Rashid
                Karmastaji, President of Friend Real Estate Co., to represent NME
                and to
                promote VMD Discs and Players to maximize sales and market presence
                in
                Dubai, U.A.E. The company will grant Mr. Rashid Karmastaji 400,000
                share
                warrants in exchange for his services. These warrants have the right
                to be
                exercised at 0.25 cents over next three years. The Company is committed
                to
                pay a 15% commission on royalties earned from the sale of VMD
                products in the region.





9.
            In
                March 2007, the company signed a memorandum of understanding with
                Tsuburaya Dream Factory (TDF) to establish a Joint Venture for sales
                management, promotion, and marketing activities in Japan. The company
                will
                contribute 50% of the Joint Venture Capital calculated as US$42,000
                (YY 10
                Million). Profits from the Joint Venture will be shared equally.
                The JV is
                yet to be validated.





**As
                at March 31,**
            
            **Commercial
                Commitments**2008
            
            $
            160,625Thereafter
            
            
            5,000Total
            
            $
            165,625





Please
      see subsequent events on further acquisitions of film rights as well as forward
      looking statements





**Legal
      Proceedings**





There
      are
      no material legal proceedings to which the Company is a party to, or to which
      any of the Company's properties are subject.





**Related
      Party Transactions**





The
      company paid the following to related parties during the two fiscal years end
      June 30, 2006 and June 30, 2007:





**June
                30, 2007**
            
            
            **June
                30, 2006**May
                Ltd (Travel and certain expenses)
            
            $
            0
            
            
            $
            39,304For
                R&D
              V
                Tech For Labs and Material
            
            $
            162,600
            
            
            $
            175,241For
                Contracted Staff
              Turtle
                Technologies (India) Pvt Ltd  (Sub
                of Silicon Valley Plc)
            
            $
            53,762
            
            
            $
            72,217For
                Contracted Staff
              Onesoft
                Retail and Business Solutions  (Sub
                of silicon Valley Plc)
            
            $
            57,928
            
            
            $
            50,398Silicon
                Valley Plc for use of its staff
            
            $
            0
            
            
            $
            35,846For
                Consultancy
              Andrew
                Danenza, the son of Ann Kallgren for consulting and other
                services
            
            $
            84,167
            
            
            $
            150,518





**NOTE
      6 - LONG TERM LOANS**





On
      February 28, 2007 the Tribal Sarl Loan, (with accrued interest) was repaid
      and
      another long term loan of $1,144,000 was secured with Postie Trading Limited
      for
      13 months through New Medium Enterprise Inc’s subsidiary, New Medium Enterprise
      UK Ltd. A debenture was filed by Postie Trading Ltd on the subsidiary, and
      shares in the parent Company have been offered as collateral for the loan.
      The
      rate of interest as per contract will be payable at maturity and carry an
      interest rate of 13% per annum and this will be paid as follows:





1.
            8
                %
                in cash2.
            5
                %
                in warrant coverage @ 16 cents –already
                issued




The
      Loan
      was renegotiated and the term period of the loan was extended up to August
      31st
      2008.





-
          31
          -




**NEW
        MEDIUM ENTERPRISES, INC.**
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
        30,
        2007






As
      at
      June 30, 2007 the outstanding balance on the loan was $ 1,174,507 (including
      interest).





On
      May
      30th 2007, the
      Company has acquired technology and file format to use with VMD players from
      Semilla Capital Ltd Hong Kong. In return the company has paid $125,000 in cash
      and agreed to pay $1.125 million on August 31, 2008. The Company has issued
      30
      million shares to Semilla Capital Ltd as part of the price.





**NOTE
      7 - STOCKHOLDERS' EQUITY**





The
      Company's authorized capital stock consists of 500,000,000 shares of common
      stock (par value of $.0001) and 200,000,000 shares of non-voting preferred
      stock
      (par value $.0001).





The
      original par value had been $.001 per share. In January 2004 management voted
      to
      reduce the par value to $.0001 per share. The financial statements were restated
      retroactively to recognize the new valuation.





During
      the period to June 30, 2007, 17,046,651 of common stock were issued to investors
      at various prices. The company in return received $3,975,000.





During
      the period to June 30, 2007, 2,000,000 warrants were exercised at a fixed price
      of 10 cents. The company in return received $200,000.





As
      of
      June 30, 2007, subscription documents for 7,500,000 of common stocks were
      received and the company received $1,875,000 during July 2007.





During
      the period to June 30, 2007, 6,000,000 shares of common stock were issued and
      held in escrow for total value of $1,050,000.





During
      the period ended June 30, 2007, 478,787 shares of common stock were issued
      to V2
      solutions, as per the agreement for the production of authoring software. In
      turn, $137,468 was capitalised and included in assets as product development
      cost of authoring software.





During
      the period June 30, 2007, 291,667 shares of common stock were issued to supplier
      in return for services rendered instead of cash.





For
      each
      issuance of equity instruments for services provided, the valuation of the
      issuances represents the fair market value of the shares at the date of issuance
      and has been charged as an expense in the statement of operations. The equity
      issuances to management are in accordance with their own compensation as per
      their service contracts, and the compensation share award which has been
      approved by the 53% majority shareholders.





Summary
      of shares issued during the financial year:





**Description**
            
            **No.
                Of Shares**
            
            
            **Amounts**Opening
                Balance
            
            
            205,477,5792001
                Stock Options Exercised
            
            
            7,882,516
            
            
            $
            2,991,719.00Staff
                Compensation Package
            
            
            40,400,000
            
            
            $
            11,833,000.00Shares
                issued to various Consultants
            
            
            14,001,500
            
            
            $
            3,972,973.00Digital
                Challenge - R&D
            
            
            7,000,000
            
            
            $
            2,100,000.00Johan
                Svard - Consultancy
            
            
            291,667
            
            
            $
            52,500.00As Shown on Cash Flow Statement
            
            
            69,575,683
            
            
            $
            20,950,192.00Semilla-R&D
            
            
            30,000,000
            
            
            $
            8,100,000.00V2
                Solutions - Asset
            
            
            478,787
            
            
            $
            137,468.00Cash
                receivable for shares issued as at June 30th
                2007
            
            
            7,500,000
            
            
            $
            1,875,000.00Cash
                Received From Investment
            
            
            17,046,651
            
            
            $
            3,975,000.00Cash
                received from Warrants
            
            
            2,000,000
            
            
            $
            200,000.00Shares
                in ESCROW
            
            
            6,000,000
            
            
            $
            1,050,000.00Shares
                cancelled held in Escrow
            
            
            (15,000,000
            )
            
            $
            (1,650,000.00
            )Shares
                Cancelled – Bought Back
            
            
            (43,000
            )
            
            $
            (9,455.00
            )Total
            
            
            323,035,700





In
      accordance with FASB issued SFAS No. 123R all "Share-Based Payments," are
      measured and recognized as compensation expense for all stock-based payments
      at
      fair value. The Company has also awarded liability instruments that required
      employee and consultants to provide services over a requisite period. All of
      these issuances were also valued at fair value.





-
          32
          -




**NEW
        MEDIUM ENTERPRISES, INC.**
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
        30,
        2007






No
      preferred shares have been issued. It is within the discretion of the Board
      of
      Directors to determine the preferences of the preferred stock. The Company
      on
      November 1, 2005 determined the preferences of the preferred stock. The
      preferred shares shall be issued from time to time in one or more series, with
      such distinctive serial designations as shall be stated and expressed in the
      resolution or resolutions providing for the issuance of such shares as adopted
      by the Board of Directors; the Board of Directors is expressly authorized to
      fix
      the number of shares of each series, the annual rate or rates of dividends
      for
      the particular series, the dividend payment dates for the particular series
      and
      the date from which dividends on all shares of such series issued prior to
      the
      record date for the first dividend payment date shall be cumulative, the
      redemption price or prices for the particular series, the voting powers for
      the
      particular series, the rights, if any, of holders of the shares of the
      particular series to convert the same into shares of any other series or class
      or other securities of the corporation, with any provisions for the subsequent
      adjustment of such conversion rights, the rights, if any, of the particular
      series to participate in distributions or payments upon liquidation, dissolution
      or winding up of the corporation, and to classify or reclassify any un issued
      preferred shares by fixing or altering from time to time any of the foregoing
      rights, privileges and qualifications.





All
      the
      preferred shares of any one series shall be identical with each other in all
      respects, except that shares of any one series issued at different times may
      differ as to the dates from which dividends thereon shall be cumulative; and
      all
      preferred shares shall be of equal rank, regardless of series, and shall be
      identical in all respects except as to the particulars fixed by the Board as
      herein above provided or as fixed herein.





Deferred
      Share Subscriptions and Outstanding Warrants





**Warrant
                No.**
            
            **No
                of  Outstanding Warrants**
            
            **Exercisable
                Price**
            
            **Issue
                date**
            
            **Expiry
                Dates**F102
            
            3,750,000
            
            $0.04
            
            August
                12, 2005
            
            August
                11, 2009F104
            
            16,923,077
            
            $.065
            
            April
                21, 2006
            
            April
                20, 2011F105
            
            1,000,000
            
            $0.25
            
            January
                09,2007
            
            May
                31, 2010F106
            
            100,000
            
            $0.10
            
            September
                01, 2006
            
            August
                31, 2011F107
            
            75,000
            
            N/A
            
            December
                01, 2006
            
            November
                30, 2011F108
            
            250,000
            
            $0.2325
            
            October
                17,2006
            
            October
                16, 2009F109
            
            2,500,000
            
            $0.32
            
            February
                15,2007
            
            February
                15, 2012F110
            
            50,000
            
            N/A
            
            February
                28, 2007
            
            February
                27, 2012F111
            
            387,292
            
            $0.16
            
            February
                28, 2007
            
            February
                27, 2012F112
            
            7,150,000
            
            $0.16
            
            February
                28, 2007
            
            February
                27, 2012F113
            
            50,000
            
            $0.25
            
            April
                30, 2007
            
            April
                29, 2010F114
            
            10,000
            
            $0.25
            
            April
                12, 2007
            
            March
                28, 2008F115
            
            1,500,000
            
            $0.25
            
            April
                12, 2007
            
            May
                31, 2010F116
            
            800,000
            
            $0.25
            
            April
                13, 2007
            
            April  12,
                2012F117
            
            11,000,000
            
            $0.25
            
            April
                13, 2007
            
            April
                12, 2012F118
            
            400,000
            
            $0.30
            
            June
                20, 2007
            
            June
                19, 2012F119
            
            41,667
            
            $0.225
            
            June
                20, 2007
            
            June
                19, 2012F120
            
            555,556
            
            $0.225
            
            April
                30, 2007
            
            April
                29, 2012F121
            
            250,000
            
            $0.225
            
            June  04,
                2007
            
            June  03,
                2012F122
            
            2,400,000
            
            $0.30
            
            June
                04, 2007
            
            June
                03, 2012F123
            
            1,500,000
            
            $0.25
            
            June
                29, 2007
            
            May
                31, 2010F124
            
            7,178,593
            
            $0.30
            
            July
                03, 2007
            
            July
                02, 2010F125
            
            400,000
            
            $0.30
            
            July
                12, 2007
            
            July
                11, 2012F126
            
            41,667
            
            $0.225
            
            July
                12, 2007
            
            July
                11, 2012F127
            
            600,000
            
            $0.30
            
            July17,
                2007
            
            July16,
                2012F128
            
            800,000
            
            $0.30
            
            July17,
                2007
            
            July16,
                2012F129
            
            1,500,000
            
            $0.30
            
            July17,
                2007
            
            July16,
                2012F130
            
            400,000
            
            $0.30
            
            July17,
                2007
            
            July16,
                2012F131
            
            1,000,000
            
            $0.30
            
            July17,
                2007
            
            July16,
                2012F132
            
            200,000
            
            $0.30
            
            July17,
                2007
            
            July16,
                2012F133
            
            400,000
            
            $0.30
            
            July17,
                2007
            
            July16,
                2012F134
            
            200,000
            
            $0.30
            
            July17,
                2007
            
            July16,
                2012F135
            
            300,000
            
            $0.30
            
            July18,
                2007
            
            July17,
                2012F136
            
            200,000
            
            $0.30
            
            July20,
                2007
            
            July19,
                2012F137
            
            2,000,000
            
            $0.20
            
            August
                15, 2007
            
            August14,
                2012F138
            
            400,000
            
            $0.30
            
            August  20,2007
            
            August
                19,2012Total
            
            66,312,851





For
      each
      issuance of equity instruments for services provided, the valuation of the
      issuances represents the fair market value of the shares at the date of issuance
      and has been charged to the statement of operations. The equity issuances to
      management do not have a compensatory component as the management are employed
      by the company and have their own compensation as per their service contracts.
      These initial issuances are further inducements for management to join a
      non-commercialized product entity and add to their compensation
      packages.





-
          33
          -






**NEW
      MEDIUM ENTERPRISES, INC.**


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


JUNE
      30,
      2007








In
      accordance with FASB issued SFAS No. 123R all "Share-Based Payments," are
      measured and recognized as compensation expense for all stock-based payments
      at
      fair value. The Company has also awarded liability instruments that required
      employee and consultants to provide services over a requisite period. All of
      these issuances were also valued at fair value.





**NOTE
      9 - SUBSEQUENT EVENTS**





On
      July
      01, 2007. the company appointed Mr. Geoffrey Russell as the Designate Chief
      Operational Officer. He will take care of all the operations in the company
      and
      all its subsidiaries.





On
      July
      05, 2007, Sistech Corporation transferred all of its shares in New Medium
      Enterprises China Ltd to New Medium Enterprises Asia Pacific Ltd. New Medium
      Enterprises, Inc. who owns 100% of New Medium Enterprises Asia Pacific Limited
      therefore becomes a 100% holding company of New Medium China Ltd.





On
      July
      12, 2007, the company renegotiated with VDL-ODMS for the purchase of first
      VMD
      replication line for the price of Euros 1,550,000, payable in three
      instalments.





On
      August
      6, 2007 the company entered into a motion picture licensing agreement with
      Monolith Films for titles acquisition at various royalty terms.





On
      August
      13, 2007 the company has appointed Sanjay Khar as a member of the Board of
      Directors. He will manage the Optics Division.





On
      August
      14, 2007 the Company appointed industry veteran, Michael Jay Solomon as Chairman
      of the Company to develop the company on a global scale.





On
      August
      21, 2007 the company appointed Thomas Berglund and Per Bergstrom as Directors.
      Both of them have a wealth of experience in growing and managing successful
      international operations, trading in multiple markets worldwide









-
          34
          -






**ITEM
      8. FINANCIAL CONTROLS & PROCEDURES**




**Evaluation
        of Disclosure Controls and Procedures.**


As
      of
      June 30, 2007, the end of the period covered by this Annual Report, our Chief
      Executive Officer and Chief Financial Officer (the “Certifying Officers”)
      conducted an evaluation of our disclosure controls and procedures. As defined
      under Sections 13a-15(e) and 15d-15(e) of the Exchange Act, the term “disclosure
      controls and procedures” means controls and other procedures of an issuer that
      are designed to ensure that information required to be disclosed by the issuer
      in the reports that it files or submits under the Exchange Act is recorded,
      processed, summarized and reported within the time periods specified in the
      SEC’s rules and forms. Disclosure controls and procedures include, without
      limitation, controls and procedures designed to ensure that information required
      to be disclosed by an issuer in the reports that it files or submits under
      the
      Exchange Act is accumulated and communicated to the issuer’s management,
      including the issuer’s chief executive officer and chief financial officer, to
      allow timely decisions regarding required disclosure. Based on their evaluation,
      the Certifying Officers have concluded that, as of June 30, 2007, our disclosure
      controls and procedures have no material misstatement in financial
      statements.




Our
      management, under the supervision of the Certifying Officers, is responsible
      for
      establishing and maintaining adequate internal control over financial reporting
      as defined in Rule 13a-15(f) under the Exchange Act. An internal control system
      is designed to provide reasonable assurance regarding the preparation and fair
      presentation of published financial statements. Management has assessed the
      effectiveness of our internal control over financial reporting as of June 30,
      2007. Internal control over financial reporting is a process designed to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external purposes in accordance with
      GAAP. Internal control over financial reporting includes those policies and
      procedures that:





1.
            pertain
                to the maintenance of records that, in reasonable detail, accurately
                and
                fairly reflect our transactions and dispositions of the
                assets;


2.
            provide
                reasonable assurance that transactions are recorded as necessary
                to permit
                preparation of financial statements in accordance with GAAP, and
                that our
                receipts and expenditures are being made only in accordance with
                authorizations of our management and Board of Directors;
                and


3.
            provide
                reasonable assurance regarding prevention or timely detection of
                unauthorized acquisition, use, or disposition of our assets that
                could
                have a material effect on the financial
                statements.





A
      material weakness in internal control over financial reporting is a control
      deficiency (within the meaning of the Public Company Accounting Oversight
      Board’s Auditing Standard No. 2), or combination of control deficiencies, that
      results in there being more than a remote likelihood that a material
      misstatement of the annual or interim financial statements will not be prevented
      or detected.




The
      improvement in the control procedures as set out last financial year gave
      management the assurance that the disclosure controls and procedures are
      effective as of the date of the end of the applicable reporting period. As
      a
      result, the principal executive and principal accounting officers conclude
      that
      the controls and procedures are effective to ensure that all information
      required to be disclosed in the Exchange Act reports are accumulated and
      communicated to management in a manner that permits adequate time for
      management, specifically the principal executive and financial officers, to
      consider such information and allow timely decisions of such information
      regarding the required disclosures. Because of its inherent limitations,
      internal control over financial reporting may not prevent or detect
      misstatements. It is also a process that involves human diligence and compliance
      and may be subject to lapses in judgment and breakdowns resulting from human
      judgments. Internal control over financial reporting can also be circumvented
      by
      collusion or management override. Furthermore, projections of any evaluation
      of
      effectiveness to future periods are subject to the risks that controls may
      become inadequate because of changes in condition, or that the degree of
      compliance with the policies or procedures may deteriorate.





**PART
      III**





**ITEM
      9. DIRECTORS AND EXECUTIVE
      OFFICERS**





**Name**
            
            **Age**
            
            **Position**Michael
                Jay Solomon
            
            69
            
            ChairmanMahesh
                Jayanarayan
            
            55
            
            CEO,
                DirectorDr.
                Eugene Levich
            
            59
            
            CTO,
                DirectorIrene
                Kuan
            
            51
            
            CFO,
                DirectorRupert
                Stow
            
            84
            
            DirectorBarry
                Williamson
            
            63
            
            DirectorSanjay
                Khar
            
            44
            
            DirectorPer
                Bergstrom
            
            49
            
            DirectorThomas
                Berglund
            
            55
            
            Director




-
          35
          -






During
      the fiscal year ending June 30, 2007, there were no changes made to the
      management team. On August 13 2007 Mr. Sanjay Khar was appointed to the Board
      of
      Directors to look after the Optics activities in New Medium Enterprises Inc
      and
      its subsidiaries. On August 14, 2007, Mr. Michael Jay Solomon was appointed
      Chairman of the Company. On August 21, 2007 Mr. Per Bergstrom and Thomas
      Berglund were also appointed to the Board of Directors of the
      company.





**INFORMATION
      CONCERNING OFFICERS & DIRECTORS**





**MICHAEL
      JAY SOLOMON, CHAIRMAN**





On
      August
      14, 2007, the Board of Directors appointed Mr. Michael Jay Solomon as Chairman
      of New Medium Enterprises, Inc. Mr. Solomon is a significant financial investor
      and managing partner of “Ancient  Treasures of The Holy Land,”
historical archeological museum-like exhibition.  Solomon's
      illustrious television and film career includes such prestigious positions
      as
      President of Warner Bros. International Television. With extensive experience
      throughout multiple global markets, including EMEA, China and North America,
      Michael will work with the NME Board and senior management team to further
      develop its business on a global scale and promote its HD VMD disc format and
      players. Solomon brings experience in both traditional media companies, and
      start-ups. His expertise includes film and television distribution, as well
      as
      development of online and digital media companies. He co-founded Telepictures
      Corporation, which he grew to become the largest U.S. television syndication
      company and one of the largest international television distribution companies.
      Telepictures became a public company (NASDAQ) after only 14 months under the
      leadership of Mr. Solomon as Chairman and CEO. A landmark deal saw Telepictures
      merge with Lorimar to form Lorimar Telepictures Corp., where Mr. Solomon became
      the new company's President and served on its Board of Directors. When Lorimar
      was acquired by Warner Bros., Mr. Solomon became President of Warner Bros.
      International Television. In recent years, Solomon has spearheaded multiple
      industry advancements through his company, Solomon Entertainment
      Enterprises.





**SANJAY
      KHAR, DIRECTOR**





On
      August
      13, 2007, Mr Sanjay Khar was appointed as a Director on the board of New Medium
      Enterprises Inc, and responsible for all the optics activities within the
      company. He worked as the head of the optics division since March 2007. Before
      joining NME, he served as CEO – Near East, Middle-east & Africa for VDL ODMS
      BV part of the multi billion Euro, VDL Group of companies based in The
      Netherlands.





He
      is a
      qualified mechanical engineer with more then 20 years' industry experience,
      with
      an international business education background. He started his career by
      marketing turnkey projects and technologies in the fields of plastics,
      electronics and building materials throughout the world. He has spent the last
      12 years in the optical disc business employed by leading companies in Europe,
      during which he has managed the start up of several Optical Disc Manufacturing
      units in various countries. Besides setting up regional offices for global
      giants in optical business such as ODME and Toolex International, he was
      instrumental in setting up of qualified after sales organizations as a global
      resource pool for these companies.





**PER
      BERGSTROM, DIRECTOR**





On
      August
      21, 2007, Mr. Per Bergstrom joined the Board of Directors of the Company. He
      will be working closely with CEO on investor relationship matters in the
      company. Mr. Per Bergstrom is a successful technology and telecoms entrepreneur
      and investor, pioneering operations stretching from Scandinavia to the Americas.
      As former CEO and Founder of Cybercom Group, an IT/Telecoms consultant company
      with offices in Denmark, India, Sweden, Singapore, Poland and the UK, Bergstrom
      helped list Cybercom on the Stockholm Stock Exchange O-list in 1999. Currently,
      he is the Chairman of digital advertising solutions provider Timecut AB(Plc)
      and
      Swedish listed IT/Telecoms content provider TeleVoice5 AB.





**THOMAS
      BERGLUND, DIRECTOR**





On
      August
      21, 2007, Mr. Thomas Berglund joined the Board of Directors of the Company.
      Prior to becoming a Director, he was an advisor to the Board of NME in July
      2007. Thomas Berglund has been with Securitas for 22 years, including the last
      14 years as President and CEO and as a Board member of Securitas AB. Under
      his
      management Securitas has became a focused security company in both Europe and
      the USA with sales growing from 7 to 66 billion SEK. With the initiative to
      divide the Group into specialized companies he helped usher in a successful
      era
      of expansion, consolidation and restructuring in the security
      industry.





**MAHESH
      JAYANARAYAN, CEO AND DIRECTOR \**





On
      June
      14, 2005, the Board of Directors appointed Mr. Mahesh Jayanarayan, as President,
      CEO and Member of the Board of Directors of New Medium Enterprises, Inc. Mr.
      Jayanarayan has served as a self employed Business and Technology Consultant
      for
      the past ten years. During that time he consulted and acted as an executive
      advisor to the board of a number of private and public companies. In that role,
      he has been involved in business creation and development, and strategic
      corporate management, tailored to a number of different markets. He has a keen
      understanding on how to effectively control the core business processes of
      a
      company while increasing their market share and profitability at an accelerated
      rate. Due to his long experience of working with and within large investment
      banks and as a Business Consultant to many companies, he has developed expertise
      in Corporate Finance, Marketing, Planning and Corporate Rescue. He has assisted
      technology companies to understand, identify, and evaluate emerging
      technologies; allowing for clear judgment, essential timing and vital maturity
      in delivering a finished product to market. Prior to Mr. Jayanarayan's
      appointment at CEO, he served as a consultant to the company since August
      2004.





-
          36
          -






**PROFESSOR
      EUGENE LEVICH, CHIEF TECHNOLOGY OFFICER (CTO)**





On
      July
      1, 2005, the Board of Directors appointed Professor Eugene Levich as Chief
      Technology Officer, (CTO). From 2002-2005 Dr. Levich had been an independent
      consultant to several companies developing a new generation of optical storage
      based on multilayer concept. In 1999- 2002, Dr. Levich was President and
      Chairman of the Board of Directors of Constellation, Inc. Constellation, a
      NASDAQ company, developed the new generation technology of optical storage
      for
      application in consumer electronics (High Definition TV and Digital Cinema)
      and
      professional storage markets. (From 2002 onward, the development of fluorescent
      based storage has been carried out by US based company, D Data
      Inc.)





From
      1996-1998, Dr. Levich was President and Chief Scientist of Medevi Ltd., where
      he
      helped to develop general principles of new generation optical
      storage-multilayer disks and cards. From 1991-1995 Dr. Levich was Senior Partner
      and Chief Scientist in Orlev Scientific Ltd. – a subsidiary of Ormat Industries
      Ltd., Israel (Orlev integrated US-Israeli team of distinguished scientists
      developing industrial implementations of new technologies for management of
      turbulent flows in pipes and aeronautics. Dr. Levich has discovered, together
      with Professor Lawrence Sirovich of Rockefeller University, previously unknown
      basic principles governing turbulent flows). From 1981-1991, Dr. Levich was
      a
      Professor of Theoretical Physics and Professor of Engineering at the City
      University of New York.





Dr.
      Levich gained M.Sc. in Physics, 1968, from Moscow State University; Ph.D. in
      Theoretical Physics from the Landau Institute of Theoretical Physics,
      1970.





Dr.
      Levich was awarded major research grants by the US Department of Energy for
      seven (7) consecutive years from 1983 to 1991, and by National Science
      Foundation in 1990 and 1991.





Dr.
      Levich has published over 90 papers and book contributions in the fields of
      astrophysics, nonlinear phenomena & chaos, turbulence in fluids and optical
      storage. His main research interest for the last 10 years has been in optical
      storage. Dr. Levich is the author of over 40 patents, supported in the US and
      world wide, in fundamental fields of technology, ranging from managing of drag
      and heat exchange in turbulent flows to new generation of optical storage.
      His
      most recent scientific contributions in the field of turbulence of fluids and
      turbulence control were published in the monograph, "Turbulence Structure and
      Modulation" (Springer, Wien - New York, 2001).





**IRENE
      KUAN, DIRECTOR (CFO)**





On
      June
      14, 2005, Irene Kuan resigned from her position as interim Chairman and interim
      CEO, but retained her role as Treasurer of the company. She was appointed
      interim CFO, and later in April 2006, confirmed as CFO. Irene is a qualified
      accountant and as more than 20 years experience in the accounting profession
      in
      the United Kingdom. She has vast experience in audits of large public limited
      companies and has worked in the insurance, investments, property and retail
      management industries.





From
      November 2003 to the present she has been employed by Visson Technologies U.K
      as
      Finance Director. From May 2003, until November 2003 she was on a sabbatical.
      From August 2, 2002 to May 2003, she was employed as an accountant and financial
      consultant to Euromaz Group. From April 2002 to until August 2002, she was
      self
      employed in real estate renovation. From December 2001 to April 2002 Irene
      was
      employed by Hardy Underwriting Group where she served in a finance operations
      capacity. From April 1991 - November 2001 she was employed by Arig Insurance
      Company Limited in an accounting & operations capacity.





She
      has
      worked at management level in the United Kingdom for the last 8 years and now
      holds several finance directorships of UK companies, including a public company.
      Irene will manage the company's finances and will contribute towards the
      company's future expansion plans. Irene currently hold finance directorships
      in
      the following companies: Silicon Valley Plc, Visson Displays Limited, Siptelcom
      Limited Wilton Business Solutions Limited (renamed New Medium Management Ltd),
      & Wilton Claims Ltd (renamed V-Tech UK Ltd).





**RUPERT
      STOW**





On
      June
      14, 2005, the Board of Directors appointed Mr. Rupert Stow as Chairman and
      Director of New Medium Enterprises, Inc. He resigned as chairman on January
      24,
      2006, but still serves as a Director of NME Inc. For the past five years, Mr.
      Rupert Stow has been a consultant in the fields of digital television and HDTV,
      specializing in production systems analysis, market penetration and ROI. In
      his
      30-year career at CBS, he planned and monitored the introduction of Electronic
      Newsgathering, the Electronic Still Store, and a multi-cassette cartridge
      playback machine for news and commercials. For 20 years, he has been involved
      in
      HDTV program production, its economics, and the development of a single world
      standard for HDTV program production and international exchange. As Chair of
      the
      FCC’s Advisory Committee on Advanced Television Services, Planning Subcommittee,
      Working Party on Economic Factors and Market Penetration, this work led directly
      to the completion of a North American Standard for the terrestrial transmission
      of programs in HDTV and other digital formats. During the space race, Stow
      developed an image dissector for the Lunar Orbiter; during the Cold War, the
      Luxicon camera tube for the USAF, and, during World War II, a bolometric camera
      tube for night time tank battles.





**BARRY
      WILLIAMSON**





Barry
      Williamson was appointed a Director of our company September 13, 2004. Mr.
      Williamson has been the President and principal owner of Williamson & Co., a
      U.K Real estate entity engaged in sales, rentals, construction, and raising
      the
      finance for multimillion pound developments. Mr. Williamson is a Fellow of
      The
      Chartered Management Institute, Fellow of the Institute of Sales & Marketing
      Management, and a Member of The Land Institute. Williamson and Co. also runs
      an
      executive head hunting and recruitment business placing specialized persons
      in
      jobs in the Middle East.





-
          37
          -






**ITEM
      9A. COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT**





There
      have been incidences of late filings of Form 3, 4 and 5 for the officers and
      directors in the schedule set out below:





**Name
                of Filer**
            
            **Incidence
                of Late Filing Form 3**
            
            **Incidence
                of Late Filing Form 4**
            
            **Incidence
                of Late Filing Form 5**Mahesh
                Jayanarayan
            
            0
            
            1
            
            1Eugene
                Levich
            
            0
            
            1
            
            1Irene
                Kuan
            
            0
            
            1
            
            1Rupert
                Stow
            
            0
            
            1
            
            1Sanjay
                Khar
            
            1
            
            0
            
            1Andrew
                Danenza
            
            0
            
            2
            
            1Barry
                Williamson
            
            0
            
            1
            
            1





**ITEM
      10. EXECUTIVE COMPENSATION**





The
      following represents the annual compensation paid to Executive Officers &
Directors:





Compensation
      Table





Name
            
            Title
            
            Annual
                Compensation
            
            Date
                of AppointmentRupert
                Stow
            
            Director
            
            $12,000
            
            6-14-2005Mahesh
                Jayanarayan
            
            CEO,
                Director
            
            $164,617
            
            6-14-2005Dr.
                Eugene Levich
            
            CTO,
                Director
            
            $164,666
            
            6-30-2005Irene
                Kuan
            
            CFO,
                Director
            
            $72,795
            
            8-4-2004Barry
                Williamson
            
            Director
            
            $2,676
            
            9-13-2004





See
      Also
      Subsequent Events related to Shares Issuances to Officers &
Directors:





During
      the fiscal year ending June 30, 2007, the Company did not issue any Stock
      Options.





Executive
      Compensation History





Apart
      from the monetary compensations above, the following executives were also
      awarded shares as follows:





**From:**
            
            **To:**
            
            **FMV**
            
            **Price**
            
            **Shares**Mr.
                Mahesh Jayanarayan
            July06
            
            June07
            
            0.30
            
            0.30
            
            15,000,000Mr.
                Eugene Levich
            July06
            
            June07
            
            0.30
            
            0.30
            
            7,000,000Ms.
                Irene SP Kuan
            July06
            
            June07
            
            0.30
            
            0.30
            
            1,000,000Mr.
                Rupert Stow
            July06
            
            June07
            
            0.30
            
            0.30
            
            250,000Barry
                Williamson
            July06
            
            June07
            
            0.30
            
            0.30
            
            250,000





The
      above
      shares issued includes those held in Trust by New Medium Management Trust as
      part of the Compensation Plan Awarded and approved by Shareholders in February
      2007.





-
          38
          -




**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
      OWNERS**




The
        following table sets forth information known to NME as of September 25, 2007
        regarding the beneficial ownership of NME common stock by:
 
 ·
              persons
                  known by us to beneficially own greater than 5% of our outstanding
                  stock,
 ·
              each
                  director and nominee,
 ·
              our
                  Chief Executive Officer and the other named executive officers,
                  and
 ·
              all
                  of our directors and executive officers as a
                  group.
 
 Beneficial
        ownership is determined in accordance with the rules and regulations of the
        SEC,
        which generally attribute beneficial ownership of securities to persons who
        possess sole or shared voting power or investment power with respect to those
        securities, and includes shares of common stock issuable pursuant to the
        exercise of stock options that are immediately exercisable or exercisable
        within
        60 days after September 25, 2007. Unless otherwise indicated, to NME's knowledge
        the persons or entities identified in this table have sole voting and investment
        power with respect to all shares of common stock shown as beneficially owned
        by
        them, subject to applicable community property laws.
 
 **Identity
                  of Stockholder**
              
              **Percentage
                  of Shares Owned**
              
              
              **Shares
                  and Warrants Owned**Mahesh
                  Jayanarayan
              
              
              4.04
              %
              
              
              16,350,000Dr.
                  Eugene Levich
              
              
              2.89
              %
              
              
              11,667,000Irene
                  Kuan
              
              
              0.47
              %
              
              
              1,917,000Barry
                  Williamson
              
              
              0.06
              %
              
              
              250,000Rupert
                  Stow
              
              
              0.12
              %
              
              
              500,000Per
                  Bergstrom (2)
              
              
              13.70
              %
              
              
              55,382,278Sanjay
                  Khar
              
              
              0.27
              %
              
              
              1,100,000Michael
                  Solomon
              
              
              0.87
              %
              
              
              3,500,000Thomas
                  Berglund
              
              
              0.25
              %
              
              
              1,000,000All
                  Officers & Directors
              
              
              22.67
              %
              
              
              91,666,278New
                  Medium Management (1)
              
              
              9.25
              %
              
              
              37,400,000MetCash
                  Limited (2)
              
              
              8.91
              %
              
              
              36,040,392May
                  Ltd. (3)
              
              
              9.09
              %
              
              
              36,754,249Ann
                  Kallgren (3)
              
              
              16.48
              %
              
              
              66,619,777Semilla
                  Capital Ltd HK
              
              
              7.42
              %
              
              
              30,000,000
 
 (1)
        New
        Medium Management Trust holds 37,400,000 shares on behalf of Company Directors,
        Employees and Consultants which are included in the shares held by Officers
        and
        Directors.
 
 (2)
        Per
        Bergstrom has joined as a Director of the Company on August 21, 2007 and
        is the
        beneficial owner of Tribal Sarl. MetCash is a subsidiary of Tribal Sarl (Cyprus
        registered company).
 
 (3)
        Ann
        Kallgren has a controlling interest in May Ltd., Southwark Properties Ltd,
        and
        Remy Investments Corp.





**ITEM
      12. RELATED PARTY TRANSACTIONS**





MAY
      LTD -
      Affiliate:





May
      Ltd.
      is a private equity offshore investment company established in Nevis. It has
      a
      portfolio of technology, telecommunication, Media and property related
      investments in the UK and abroad.





May
      Ltd.
      is an affiliate of NME which owns 33,004,249 common shares equal to 8.61% of
      the
      outstanding shares of the common stock. Ann Kallgren is the sole shareholder
      of
      May Ltd., Southwark Properties Limited which owns 6,265,528 shares of the
      Company's common stock, and Remy Investment Corporation which owns 11.8 million
      shares. Together they own an aggregate of 15.81% of the Company's outstanding
      common stock.





May
      Ltd.
      is the majority shareholder of the outstanding stock of Triband Global
      Limited.





May
      Ltd.
      also owns 100% of Visson Technology Limited and owned 100% of V Tech (Russia
      ) a
      key R&D facility of the company, which was sold to Silicon Valley Plc in
      September 2005 for £25,000.





May
      Ltd.
      also own 25.53% of Silicon Valley plc which is a public limited company with
      over 2600 shareholders. It is an I.T service provider and specializes in
      business related software and device management software. Global MediaCast
      Ltd
      is a wholly owned subsidiary of Silicon Valley Plc. Andrew Danenza was a
      Director of Global MediaCast Ltd; he resigned in June 2005.




NME
        has
        entered into the following related party transactions:
 
 1.
              In
                  accordance to the acquisition agreement with MultiDisk, the company
                  were
                  required to repay a loan to Visson at closing for the amount of
                  $84,000,
                  which included a loan of $77,500 plus additional expenses incurred
                  by
                  Visson on behalf of MultiDisk prior to the consummation of the
                  acquisition. Furthermore, in accordance to the acquisition Agreement
                  with
                  MultiDisk, a sum of $87,000 owed to May Ltd was converted into
                  1,740,000
                  shares of common stock.2.
              During
                  the annual period ending June 30, 2007 the company paid $162,600
                  to V Tech
                  Uk Ltd, a primary R & D Facility which employs key
                  scientists.3.
              During
                  the year, the Company engaged the services of OneSoft Retail and
                  Business
                  Solutions Ltd, formerly Turtle Retail and Business Solutions Ltd
                  to
                  provide certain consulting services related to the design of its
                  website,
                  and for R&D with its associated company in India. During the annual
                  period ending June 30 2007, the company paid $53,762 to Turtle
                  Technologies (India) Pvt Ltd and $57,928 to OneSoft Retail and
                  Business
                  Solutions Ltd for use of its staff..4.
              During
                  the fiscal year ending June 30, 2007, the Company engaged the services
                  of
                  Andrew Danenza, the son of Ann Kallgren, who is the sole shareholder
                  of
                  May Ltd., the holder of approximately 9% of our shares and Southwark
                  Properties Limited to provide consulting and other services for
                  the
                  Company. Andrew Danenza is a consultant to the company and has
                  received an
                  aggregate of $84,167 in consulting fees, and 5 million shares of
                  common
                  stock of New Medium Enterprises
                  Inc.


-
          39
          -






**Mahesh
      Jayanarayan, CEO - Related Party Transactions:**





Mr.
      Mahesh Jayanarayan is a minority shareholder (less than 5%) in Business Plans
      Ltd. and Silicon Valley Ltd.





**Irene
      Kuan - CFO - Related Parties:**





Irene
      Kuan is a director of the following companies and she is also a minority
      shareholder of Silicon Valley Plc:





·
            Silicon
                Valley, PLC (reappointed October 31, 2006), Triband Global Ltd (resigned
                signed July 31 2007, Triband Ltd (dormant), Wilton Claim Ltd (renamed
                V-Tech UK Ltd )·
            Wilton
                Business Solutions, Ltd (renamed New Medium Management). Visson
                Technologies, UK (dormant), Litecel Ltd. (dormant), Global MediaCast
                Ltd
                and OneSoft Retail & Business Solutions
                Ltd.





**ITEM13. EXHIBITS**





The
      exhibits listed in the accompanying Exhibit Index are filed as a part of this
      Annual Report Form 10-KSB and incorporated by reference herein.





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES & SERVICES**





During
      the fiscal year ending June 30, 2007 we paid approximately $14,400 for
      accounting and auditing. During the fiscal year ending June 30, 2006 we paid
      approximately $18,000 for accounting and auditing. The company estimated the
      current audit will cost approximately $26,000. (2006 - $18,000)





**SUBSEQUENT
      EVENTS**





The
      company has approached its major shareholders to obtain consent for reverse
      stock split and consent to make an application for listing on NASDAQ in the
      future. A 14C statement will be filed when the 51% or more consent has been
      received.





All
      other
      subsequent events are stated above in Note 9.




**Exhibit
      Index**





**Exhibit
                No.**
            
            **Description**3.1
            
            Articles
                of Incorporation of the Company, as amended (filed with 8-K dated
                11/01/05)3.2
            
            By-laws
                of the Company, as amended (filed with 8-K dated
                11/01/05)4.2.i
            
            Loan
                Agreement and Note to Semilla Capital Ltd. dated August 28th
                2007, as
                amended (filed with 8-K on 08/30/07)4.2.ii
            
            Loan
                Agreement and Debenture to Postie Trading Limited dated April 03
                2007, as
                amended (filed with 8-K dated 02/12/07 )10.1
            
            2007
                Three Year Stock Incentive Plan (filed with 14C dated
                02/05/07)10.2
            
            2007
                Executive Compensation Plan (filed with 14C dated
                02/05/07)10.5
            
            Agreement
                for Public Relations Services with Zeno Communications (UK) Ltd (filed
                with 8-K dated 09/22/06)10.6
            
            Content
                Agreement with VCL Communications Gmbh (filed with 8-K dated
                10/10/06)10.7
            
            Agreement
                with Digital Challenge (filed with 8-K dated 11/01/06)10.8
            
            Content
                License and Distribution agreement with Monolith Sp. Z.O.O (filed
                with 8-K
                dated 08/16/07)10.9
            
            Asset
                Purchase Agreement with Semilla Capital Limited dated February 28,
                2007
                (filed with 8-K dated 08/03/07)17
            
            Notification
                of resignation of  former director Philip David filed with 8-K
                dated 09/09/0622
            
            Published
                Report regarding matter disclosed to shareholders filed 14C dated
                02/05/0731.1
            
            Certification
                of Chief Executive Officer (filed herewith)31.2
            
            Certification
                by Chief Financial Officer (filed herewith)32.1
            
            Certification
                by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
                adopted
                pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed
                herewith)32.2
            
            Certification
                by Chief Financial Officer (filed
                herewith)






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**SIGNATURE**
 
 In
        accordance with the requirements of the exchange act, the registrant caused
        this
        report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
 
 
 **NEW
        MEDIUM ENTERPRISES, INC.**
 
 
 September
        13, 2007
 
 BY:
        **/s/ MAHESH JAYANARAYAN**
 Mahesh
        Jayanarayan
 PRESIDENT
        & CHIEF EXECUTIVE OFFICER










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