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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

[Mark One]

For the quarterly period ended September 30, 2002

OR

For the transition period from                      to                     

Commission File Number: 0-24087

MediaBin, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Registrant’s Telephone Number, Including Area Code:
(404) 264-8000

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days
Yes x No o

The number of shares of the Registrant’s capital stock as of September 30, 2002, the latest practicable date, is as follows: 88,906,702 shares of common stock, $.01 par value.

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MEDIABIN, INC.

FORM 10-Q

QUARTER ENDED SEPTEMBER 30, 2002

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PART I
FINANCIAL INFORMATION

MediaBin, Inc.
Condensed Consolidated Balance Sheets

See accompanying notes.

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MediaBin, Inc.
Condensed Consolidated Statements of Operations
(unaudited)

See accompanying notes.

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MediaBin, Inc.
Consolidated Statements of Cash Flows
(unaudited)

See accompanying notes.

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MediaBin, Inc.
Notes to Condensed Consolidated Financial Statements
September 30, 2002
(unaudited)

1. Presentation of Interim Information

         The accompanying condensed consolidated financial statements include all adjustments consisting of normal recurring adjustments that MediaBin, Inc. and its wholly owned subsidiary, Iterated Systems, Limited (collectively, the “Company” or “we”) consider necessary for a fair presentation of its unaudited results of operations for the nine months ended September 30, 2002 and 2001. Results for the nine months ended September 30, 2002 are not necessarily indicative of the results for the year.

2. Basis of Presentation

         The consolidated financial statements include the accounts of our wholly owned United Kingdom subsidiary, Iterated Systems, Limited (“ISL”). Significant intercompany accounts and transactions have been eliminated in consolidation. In December 2000, we decided to cease operations in the United Kingdom and close down ISL and have recorded all expected costs as of December 31, 2000. We do not expect to incur material costs in the future relating to this disposal.

3. Loan Agreements/ Loan Conversion

         During the period 2000 through September 2002, we entered into loan agreements with Venturos AS (a shareholder controlled by Mr. Terje Mikalsen who is a member of our Board of Directors), Glastad Holdings, Ltd., and Gezina AS, all shareholders of the Company (the “Lenders”). The balance owed under these loan agreements immediately prior to September 30, 2002 was $14,275,419. The terms of the loans called for us to pay interest at the rate of prime plus 1%. Principal payments were to begin January 2003 and to be paid in quarterly installments through 2005. In the event that we successfully completed a private placement or public offering of common stock raising funds greater than a specified minimum amount, the Lenders would convert the loans into shares of common stock at a price equal to 75% of the private placement or public offering price. On September 30, 2002, the Lenders converted these loans into an aggregate of 71,377,095 shares of the Company’s common stock.

         In September 2002, Venturos AS advanced the Company $400,000 at no interest. The advance is repayable in January 2003 and is secured by our accounts receivable.

         In December 2001, we entered into a loan agreement with Nordea Bank Norge ASA providing a credit facility under which we can draw up to $3,350,000. The loan is guaranteed by three of our major shareholders and is secured by our intellectual property. Interest is calculated at the rate of 1.75% above the bank’s base rate for debit call loans (currently 1.79%). Principal and interest is due December 2002 and will have a significant impact on our liquidity and capital resources if it is not renewed. As of September 30, 2002, this credit facility has been fully utilized.

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Forward-Looking Statements

         This Report contains forward-looking statements within the meaning of the Securities Exchange Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts but are the intent, belief or current expectations, of our business and industry, and the assumptions upon which these statements are based. Words such as ‘anticipates,’ ‘expects,’ ‘intends,’ ‘plans,’ ‘believes,’ ‘seeks,’ ‘estimates’ and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Forward-looking statements that were true at the time made may ultimately prove to be incorrect or false. Readers are cautioned to not place undue reliance on forward-looking statements, which reflect our management’s view only as of the date of this report. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results. For further information about these and other factors that could affect our future results, please see Exhibit 99.1 to this Report.

Overview

         We derive revenue from licensing fees (the licensing of software), services (installation and training assistance and the development of custom software) and from maintenance and support for our software.

         We recognize software license fee revenue in accordance with AICPA Statement of Position No. 97-2, “Software Revenue Recognition” (“SOP 97-2”). Accordingly, we do not recognize revenue from software license agreements unless the product has been delivered, persuasive evidence of an arrangement exists, the license fee amount is fixed and determinable and collection of the fee is probable. We generally sell our products under multiple element arrangements together with services and software maintenance. In cases where services are not considered essential to the functionality of the software, and where we have vendor specific objective evidence of fair value of all the undelivered elements, we use the residual method to account for the value of the delivered elements. Where services are considered essential to the functionality of the software, we use the percentage of completion to account for the services and license fees using labor hours as the indicator of completeness. Revenue from license fees subject to customer acceptance clauses are not recognized until formal acceptance has been received or rights related to customer acceptance clauses have expired. Revenue from services is recorded as the services are performed. Revenue from software maintenance contracts is recorded ratably over the term of the support contract, which is typically one year.

         Deferred revenues arise primarily as a result of annual billings of software maintenance fees at the beginning of maintenance terms, and billings of software license fees that do not meet the criteria for recognition under SOP 97-2 as of the balance sheet date.

         During the quarter ended June 30, 2002, the Company undertook a program to materially reduce our costs to attempt to more closely align our costs with revenues. These measures included reduction of both personnel and non-personnel costs and affected all departments. We anticipate that these actions will result in cost savings of almost $1,000,000 during this year.

Financial Condition

         Accounts receivable of $765,410 reported in the Balance Sheet include $52,222 of unbilled receivables that reflect services we have provided and for which revenue has been recognized but for which the customer has not yet been invoiced due to the terms of the agreements. All of these unbilled receivables are expected to be invoiced prior to December 31, 2002. $221,000 in accounts receivable outstanding as of September 30, 2002, were collected in October 2002.

         During the period 2000 through September 2002, we entered into loan agreements with Venturos AS (a shareholder controlled by Mr. Terje Mikalsen who is a member of our Board of Directors), Glastad Holdings, Ltd., and Gezina AS, all shareholders of the Company (the “Lenders”). The balance owed under these loan agreements immediately prior to September 30, 2002 was $14,275,419. The terms of the loans called for us to pay interest at the rate of prime plus 1%. Principal payments were to begin January 2003 and to be paid in quarterly installments through 2005. In the event that we successfully completed a private placement or public offering of common stock

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raising funds greater than a specified minimum amount, the Lenders would convert the loans into shares of common stock at a price equal to 75% of the private placement or public offering price. On September 30, 2002, the Lenders converted these loans into an aggregate of 71,377,095 shares of the Company’s common stock.

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