Back to GetFilings.com

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

x           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2002

o            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ______________

Commission File Number: 0-24087

MEDIABIN, INC.

(Exact Name of Registrant Specified in Its Charter)

Registrant’s telephone number, including area code: (404) 264-8000

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

Securities registered pursuant to Section 12(g) of the Act:

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not 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-K or any amendment to this Form 10-K. x

Indicate by checkmark whether registrant is an accelerated filer (as defined in Exchange Act Rule 12(b-2). Yes o No x

The aggregate market value of the voting stock held by non-affiliates of the Registrant, based upon the closing price for the Registrant’s common stock on March 15, 2003 as reported by the Oslo Stock Exchange, was approximately $4,021,200. The shares of the Registrant’s common stock held by each officer and director and by each person known to the Registrant who owns 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of March 15, 2003, the Registrant had outstanding 8,890,695 shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s Annual Report to Shareholders for the fiscal year ended December 31, 2002 are incorporated by reference in Parts II and IV of this Form 10-K to the extent stated herein.

PART I

Forward-Looking Statements - Cautionary Statements

The information in this report contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, and Section 21E of 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 “may”, “will”, “should”, “potential”, “continue”, “strategy”, “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. Examples of such statements in this report include discussions of the length of time our sources of liquidity will be sufficient to support our operations, our ability to raise additional cash, and descriptions of our plans. We believe these forward-looking statements are reasonable: however, you should not place undue reliance on such 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. The forward-looking statements should be read in light of these factors and the factors identified in “Item 1. Business” and in “Item 7. Financial Information--Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All references to year periods refer to our fiscal year ended December 31, 2002.

ITEM 1.         BUSINESS.

Introduction

MediaBin, Inc. (the “Company”) was organized under the laws of the State of Georgia on May 28, 1987, as Iterated Systems, Inc. and develops innovative, standards-based enterprise brand management solutions for Global 2000 corporations. The Company’s next generation Digital Asset Management (DAM), or Brand Asset Management, system is a solution developed for global marketing, enabling marketing and eCommerce teams to promote their brands while protecting brand integrity. DAM systems have existed for several years but have historically been focused on market niches, such as the printing and broadcast industries, and have been correspondingly designed for use by specialists. Recently, DAM systems have moved into mainstream use by non-specialist users at Global 2000 corporations as part of a set of solutions that encompasses Web Content Management and Document Management systems.

The MediaBin suite of products was built expressly to help companies manage, produce, share, and deliver volumes of digital assets, including product photographs, advertisements, brochures, presentations, video clips, and other marketing collateral. It frees marketing professionals from manually completing these processes and allows them to focus on more strategic initiatives. It speeds time-to-market for new products and marketing campaigns, giving companies more opportunities to capture market share. A significant part of MediaBin’s value—and a source of competitive differentiation—is that MediaBin software works out of the box and delivers a rapid return on investment. The Company’s MediaBin clients include the Ford Division of Ford Motor Company, National Semiconductor, Lear Corporation, Georgia-Pacific, W.W. Grainger, Delta Air Lines, Microsoft, Samsonite, John Deere, Johnson & Johnson, Binney & Smith, Sara Lee Corporation, Reebok International, Progressive Casualty Insurance, Cole Haan, and many others.

Our Business

The Company develops commercial software that helps large corporations protect and manage the use and deployment of their single most valuable asset—their brand. MediaBin software combines ease of use and simplicity of operation with the ability to integrate with other software infrastructure. It provides companies with the ability to store all their core brand-building assets on a single, protected Net-native platform. MediaBin provides organizations with the ability to:

•          Manage and protect the distribution of these assets via a Web browser

•          Empower marketing partners or agencies to update new or re-formed assets

•          Expand their brand awareness through faster go-to-market activities

•          Share and collaborate around the brand

•          Focus their marketing personnel on high-value, brand-building activities rather than mundane marketing administration and distribution functions

Brand Management Challenges

There are many established and emerging trends that present branding challenges to today’s global corporations:

•          The growth of digital images represents a significant challenge to corporations: analyst firm IDC estimates that there were 10 billion corporate digital photographs in 2002 and that number will grow to more than 33 billion by 2005;

•          The necessity for cross-media (print, television, Web, wireless, etc.) marketing makes it difficult for corporations to create and maintain different formats and to ensure brand integrity across channels;

1

•          The demand for faster and wider distribution of brand assets is increasing due to the need to launch campaigns and products faster; synchronize global brand activities; and keep distributed employees, suppliers, partners, and resellers updated.

Traditionally, companies have outsourced the control of their brand assets to service bureaus and ad agencies. As a result, early DAM vendors focused on optimizing the tactical operations for these service groups. However, in this model corporations often pay heavy fees for content creation, have limited access rights to their own investments, and have limited control over the full range of their brand content. The first DAM systems do not meet the requirements of Global 2000 corporations who need solutions designed for today’s marketing groups. MediaBin’s next generation DAM solution:

•          Gives authorized users (employees, partners, resellers, vendors) self-service Web access to a complete catalog where they can search, view, and download the assets they need when they need them, rather than going through an agency or service bureau.

•          Enables the use and reuse of brand assets for multi-national, cross-media campaigns, which lowers costs and promotes brand consistency.

•          Is focused on marketing and eBusiness processes to speed product launches and marketing campaigns while protecting brands.

•          Is a scalable solution that delivers value out of the box for workgroup applications up through divisions, enterprises, and to the extended network of supply chain partners and vendors.

There is a major discontinuity between the tactical needs of support agencies (printers, service bureaus, etc.) and the strategic imperative of providing a global, brand content infrastructure. It is in this newly mandated strategic imperative that MediaBin aims to become the Digital Asset Management vendor of choice for global brand companies.

The MediaBin suite of products does not target support agencies, but instead serves a horizontal market, addressing the needs of three classes of users within a broad range of industries. These users share a common need for automation tools to support the management and production of marketing assets, and a concern with the integrity of brand representations. They are:

•          Marketing professionals

•          Corporate photography groups

•          eBusiness, catalog, and distribution groups

Our Value

Our customers can speak best as to why MediaBin is now a strategic component of their marketing infrastructure.

Ford Division of Ford Motor Company

The Ford Division of Ford Motor Company is the world’s largest producer of trucks and the second largest producer of cars and trucks combined.

“Working with close to 50 ad agencies on multiple vehicle lines, we needed a way to store, analyze, locate, and repurpose thousands of costly digital assets. MediaBin’s Digital Asset Management (DAM) system was a natural fit for the Ford Division. Now in its third full year of production, it has saved Ford over $2 million per year through productivity gains, asset repurposing, tighter brand control, elimination of CD-ROM creation, and ad agency Web self-service. We see the current system as just the beginning of a continuously evolving business process.”

Steve Lyons, President
Ford Division

W.W. Grainger

W.W. Grainger, Inc., with 2002 sales of $4.64 billion, is the leading North American provider of maintenance, repair, and operating (MRO) supplies and related information to businesses and institutions.

“At Grainger, we receive thousands of images from many different suppliers in many different sizes and formats that traditionally need to be ‘normalized’ to meet the catalog requirements. Through MediaBin’s automation, the images will now be available for print or Web much faster, an advantage that speeds time-to-market for new products. Equally compelling is the fact that the platform is scalable to meet our company’s future growth.”

Len Kazmer, Electronic Imaging Manager
W.W. Grainger, Inc.

Delta Air Lines

Delta Air Lines, Inc. provides air transportation for passengers and freight throughout the world.

2

“MediaBin has allowed us to manage all of our corporate photography online. We can quickly access images that used to take hours to even locate, and download them within minutes. As long as I have access to the Internet, I have access to all Delta images. MediaBin has allowed us to establish a self-serve image library for both our internal and external customers.”

Terri Hanson, Manager of Photography
Delta Air Lines

Cole Haan

A wholly owned subsidiary of Nike, Inc., Cole Haan manufactures and sells artisan quality leather goods in more than 70 Cole Haan branded stores and through upscale retailers like Nordstrom, Neiman Marcus, and many others.

“We paid for our system in the first few months. It used to take 15 to 20 minutes just to locate an image on a CD. Just the time alone, not including repurposing the images, we’ve already broken even [on our MediaBin purchase].”

Buzz Morley, eCommerce Project Manager
Cole Haan

Samsonite

Samsonite is one of the world’s largest manufacturers and distributors of luggage and markets luggage, casual bags, business cases, and travel-related products under brands such as SAMSONITE^®, AMERICAN TOURISTER^®, LARK^®, HEDGREN^® and SAMSONITE^® BLACK LABEL, with 2002 sales in excess of $736 million.

“We saw an immediate return on our investment in MediaBin by producing all of the graphics for our U.S. Web site two weeks ahead of schedule. I have seen nothing like MediaBin—it is intuitive to use, and I believe it has huge potential for any business that is concerned about the integrity of its brands.”

Nick Macera, Director of Information Technology
Samsonite

National Semiconductor

National Semiconductor is a leading manufacturer of specialty semiconductor products. National’s chips are found in technology products ranging from mobile and cordless phones to TV set-top boxes and DVD players and displays. With revenues of $1.49 billion in 2002, the company employs 10,000 worldwide.

“We’ve probably seen a 75 percent increase in the productivity of our staff since they’re spending much less time searching for image. Searches that could take hours now take about a minute.”

Andy Aronson, Project Manager
National Semiconductor

MediaBin is built to take the complexity out of sharing and producing product images, logos, documents, presentations and other digital brand assets. For large corporations, MediaBin supports two basic value propositions:

1)        Corporate wide, self-service, Web browser access to brand assets

2)        High-volume image production automation to deliver images to eBusiness Web sites and to share marketing content (including descriptive data) with supply chain partners

Self-service access empowers the users who need assets to get exactly what they need, when they need it, through a MediaBin Web browser—without having to be experts in graphic arts. Brand managers get control over their brand assets and at the same time they achieve the speed of the Internet to get up-to-date marketing materials into the market immediately—without adding people.

Production automation allows corporations to rapidly expand their business through MediaBin’s patented image automation. MediaBin takes a single, high quality copy of a product image and automatically produces all the different versions of that image needed for use on Web sites or in printed materials. When images change or the formats change, MediaBin can create new versions automatically.

The Market Opportunity

All corporations managing brands require Digital Asset Management systems at the enterprise level as functions throughout the organization converge on the need to coordinate global brand activities. Independent projections by Frost & Sullivan indicate the worldwide market for DAM systems will exceed $1 billion in 2004, with a cumulative average growth rate (CAGR) of 54% between 2000 through 2007 – more than doubling revenues to $2.5 billion by the end of the forecast period. This represents a tremendous business opportunity for widespread deployment for vendors who can grasp it.

The broader Enterprise Content Management market breaks down into three major segments corresponding to legacy, specialized applications that are beginning to combine to build enterprise solutions. ECM suppliers focus on developing solutions for

3

one or more of these functions as well as providing integration points to enable connectivity with solutions that address other functions. The three segments are as follows:

•          Digital Asset Management from companies like MediaBin, Artesia, WebWare, and North Plains Systems

•          Document Management from companies like Documentum

•          Web Content Management from companies like Interwoven, Microsoft, and Vignette

Within this broad market, MediaBin has chosen to develop products that address the Digital Asset Management function. As the above figures for the DAM segment suggest, it is currently an attractive market space, and MediaBin is emerging as the industry leader with unmatched software capabilities and more than 50 blue-chip customers.

Our Products

MediaBin offers a true Net-native Digital Asset Management platform that is both user-friendly and easily extensible. Its features include:

•          Software that can be deployed and can begin delivering value in just days

•          The ability to “push” and “pull” content from any location

•          Enabling users to view files in any format without installing additional applications or requiring downloads and plug-ins

•          The storage of a core asset with new file formats rendered on demand

•          Full role-based security including multiple roles within the brand building process

MediaBin manages all kinds of rich media assets, but has specific strengths in the delivery of image automation services. These are analogous to “just-in-time” manufacturing methods that have been deployed with such great success in the manufacturing marketplace, and enable users or other systems to get image assets in precisely the form required. Other assets, such as video and audio files, presentation slides, Microsoft Office documents, Adobe Portable Document Format (PDF) files, QuarkXPress files, and so on can be stored in the repository and viewed via the Web browser without the need for user to have the application software that created them.

The MediaBin platform is built on open, industry standards such as HTTP (Web browser) and TCP/IP (file transfer) protocols, and the Windows NT/2000 operating system. MediaBin uses either Microsoft SQL Server 2000 or Oracle 8/9i as the underlying database. Application Programming Interfaces (APIs) are available, which allow easy integration and customization of MediaBin using COM automation, C++, and Java. MediaBin is also able to import and export data using XML (eXtensible Mark-up Language). Future versions of the product will support emerging standards such as WebDAV (Distributed Authoring and Versioning) and XMP.

As well as supporting the self-service model for the distribution of marketing assets, MediaBin Asset Manager, the core product, can be combined with add-on applications to provide workflow automation in several critical areas:

•          Automation of image production

•          Automated pushing of content to other systems

•          Integration with third party applications

•          Tracking and revision management

•          Automated order processing for electronic and hardcopy assets

•          Collaboration for geographically-dispersed workgroups

These add-on applications include MediaBin Deployment Agent, MediaBin Order Fulfillment, MediaBin Project Manager, and MediaBin WorkPlace.

Automation of Image Production

Today, a significant amount of post-creative work is required to prepare images for use in the print and Web environment. These tasks include time-consuming operations that take a digital image that is artistically complete and prepare that image for use in another medium.

Creative professionals, whose time is both valuable and expensive, can spend up to 70 percent of their time doing this post-creative work that does not require their creative skills. As corporations move rapidly to place their product images on the Web, the need for multiple copies of the same images, some suited for print, some suited for the Web, becomes costly and very time consuming. MediaBin relieves the creative professional of post-creative work and moves it to automated processes on the MediaBin server. Organizations can perform post-creative operations using a fraction of the time and effort.

MediaBin enables a highly efficient single image asset approach, wherein a single image is captured, stored, and automatically processed, so it can be used and then re-formatted for any use—on the Web, in print ads, for store merchandising displays, and on billboards. This approach, now sometimes called COPE (Create Once, Publish Everywhere) was pioneered by MediaBin and is automated through the MediaBin platform.

Automated Pushing of Content to Other Systems

MediaBin Deployment Agent adds a powerful automated scheduler to the core MediaBin functions. It lets an administrator set up rules to perform instructions such as this: “Every Friday at 2am, check the MediaBin database for changes to product images, and process all changed images to create 3 Web-ready images for each and deploy them to the Web staging serve, and to all distributors’

4

FTP sites.” MediaBin Deployment Agent performs functions that require days or weeks of custom programming to accomplish with competing products.

Integration with Third Party Applications

MediaBin Deployment Agent is also used to facilitate integration with commerce servers and Web Content Management systems. As it is scriptable, it can be readily customized to fit with particular workflows.

Tracking and Revision Management

One of the largest challenges facing organizations with many brand assets is tracking usage and ensuring that the assets in use are the most current versions. MediaBin provides intelligent revision management, so that users of the system are provided with the latest version of an asset by default, but administrators can always revert to an earlier saved version. For image assets, MediaBin features a method for which we are currently seeding patent protection that provides automated tracking and revision of derivative images. Derivative images are images created from a single image original (core asset) that are slightly different from the original to serve different purposes. MediaBin keeps track of the relationships between the assets and derivatives, so that updates can be made automatically throughout an entire collection of derivatives, simply by updating their common core asset. Similarly, derivative images are tagged such that their parent core image source can be located on MediaBin servers located anywhere—on a local network or on the other side of the world across the Internet.

Automated Order Processing for Electronic and Hardcopy Assets

MediaBin Order Fulfillment enables MediaBin users to place orders for assets in the MediaBin catalog and receive those assets in a variety of electronic and hardcopy formats. For example, resellers may want to order printed brochures and point-of-purchase materials for to support their local sales initiatives. With MediaBin Order Fulfillment users simply select the assets they want via the MediaBin Web browser interface and order exactly what they need online. The order can then be priced, tracked, fulfilled, and reported.

Collaboration for Workgroups

As the global reach of brands and brand companies expands, the need to rapidly and efficiently share brand assets is increasing dramatically. MediaBin WorkPlace provides a collaborative workspace online for team members to view, comment on and approve marketing assets. MediaBin Project Manager is a complete online project management tool designed to help marketers track all ongoing projects, from initial concept and design through to printing and fulfillment.

Sales Channels

The primary business model for MediaBin involves the license of MediaBin directly to end-users. The provision of MediaBin as a hosted service (Application Service Provider or ASP model) is not a significant part of the Company’s activities at this time. MediaBin is sold via a direct sales force and through a reseller channel. Current resellers include Interwoven, Kerridge Media Services, and PMG. Interwoven sells complementary Web Content Management software and needed leading Digital Asset Management capabilities to deliver a complete Enterprise Content Management solution. MediaBin anticipates significant sales accruing from these relationships due to the value MediaBin software adds to marketing and eBusiness initiatives.

The sale of MediaBin is sometimes bundled with consulting and integration services. These integration services are designed to ensure that MediaBin fits well with the customer’s existing workflows and software infrastructure. A select group of system integration partners adds value in the sale of MediaBin through services including integration into existing systems, training, installation, and, potentially, total system support. In many cases, the system integrators will sell the product directly to end users, but they may in some cases act as aggregators and recommenders for the use of MediaBin to end users in the market. Currently, we have working relationships with integrators such as Dell Professional Services, Interflow, Meritage Technologies, SBI, and The Rookwood Group.

Other partners include vendors of complementary technology solutions such as Microsoft (eBusiness infrastructure), Vignette (Web Content Management systems), Virage (video technology), and Adobe (imaging technologies). Adobe Graphics Server is included in the core MediaBin Asset Manager product, giving customers seamless access to a complete set of asset repurposing tools.

Competition

MediaBin’s target market is defined as marketing and eBusiness groups within Global 2000 companies. The marketing segment has only recently become a target for Digital Asset Management system vendors, who have historically focused on vertical markets such as broadcasting and print/publication. This Media and Entertainment (M&E) market has become saturated (and is therefore not part of our market focus), so some DAM system vendors have turned to the corporate market – the market where MediaBin, Inc. has been focused from the start.

There are approximately 200 vendors of DAM systems, but only a few have positioned themselves explicitly as having solutions for the corporate market; we call these solutions next generation DAM to fulfill a need we describe as Brand Asset Management. Another class of software vendors is emerging to provide related marketing management functions such as: project management for major events like product launches; lead-tracking, and cost analysis to judge the effectiveness of marketing campaigns; and collaboration tools to improve the proofing and approvals cycle for marketing collateral. Many of these systems incorporate some degree of asset management functionality, and can therefore be considered peripherally competitive.

Thus, MediaBin has two categories of competitors in addressing the needs of Global 2000 marketing executives: traditional DAM vendors who are moving into the corporate market, and entrants to the new field of marketing management software.

5

Leading competitors in the corporate marketing segment are listed below:

•          Artesia: Formed from the publishing arm of Thomson Media and supported by investments from Goldman Sachs, Vignette, and others, Artesia is privately held with estimated FY2002 revenues of $15 million with approximately 100 employees.

•          Documentum: Documentum is a Document Management vendor that is making the transition to an Enterprise Content Management supplier. It has competed against Interwoven in Web Content Management and acquired DAM vendor Bulldog in December 2001. The company had 2001 revenues of $186 million (FY2000 revenues were $218 million). For the first three quarters of 2002, revenues were $160.9 million. Headquartered in California, it has 940 employees, 30 offices worldwide, and 1,500 customers.

•          eMotion: eMotion had FY2001 revenues of $2 million and have approximately 20 employees. Original investors included Kodak, Sun Microsystems, Young & Rubicam, and GE Capital.

•          North Plains Systems: North Plains’ Telescope product, now on version 7.0, is one of the original DAM systems, sold to printing and pre-press companies and to some corporate accounts. The company is privately-financed, claims more than 400 installations, and employs about 40 people, mainly in Toronto.

•          WebWare: WebWare is a private company headquartered in California and founded in 1996 with 35 employees. WebWare was the first company to position itself as offering “brand resource management” software. Revenues for the first half of 2001 were $3.2 million and they have approximately 60 employees.

Summary

The concept Brand Asset Management was pioneered by MediaBin and is designed for marketing and eBusiness applications in horizontal industries, is aimed at generalist users, and focuses on asset distribution. Even the earliest DAM vendors are now touting marketing applications and brand management benefits because they recognize the tremendous opportunity for growth in the corporate sector. MediaBin’s differentiation is the software’s ease of use, ease of customization, speed of implementation (works out-of-the-box), tightly integrated asset repurposing, rich technology history (over 20 issued patents), and knowledgeable staff. In head to head competitive product evaluations at companies including Sara Lee, Reebok, John Deere, AstraZeneca, and Johnson & Johnson, MediaBin was chosen as the best solution. By capitalizing on the latest technology trends, such as Microsoft .NET and Web services, MediaBin is expanding from workgroup and departmental solutions to true enterprise solutions in which a corporation’s kiretsu of partners (agencies, dealers, suppliers, etc.) adopts MediaBin software to better manage the flow of assets between and among people and systems. Through strategic partnerships and technology innovation, MediaBin is positioned for future growth.

Major Customers

During 2002 no single customer provided more than 10% of the Company’s revenues.

Research and Development/Patents

During 2002, 2001 and 2000, we have spent $2,940,502, $3,841,540 and $3,504,161, respectively, in research and development of new technologies, refining and improving existing technologies and customizing technologies to the needs of specific customers. We expect that continued significant expenditures in this area will be necessary to successfully introduce new products and improve our core technology and no assurances can be made that these development efforts will be successful.

Consistent with our emphasis on research and development, we maintain an aggressive patent filing program. To date, we hold 23 issued U.S. patents expiring in the period from 2009 through 2019 and hold an exclusive license to an additional issued U.S. patent expiring in 2007 and have two applications pending.

Our patents and patent applications are intended to provide a degree of patent protection of our technology as used in our MediaBin and associated products. The markets for these products are highly competitive, and we believe that our research and development efforts and resulting patents are essential to an effective market presence.

Employees

As of December 31, 2002, we have 47 full time employees, most of whom are based in our offices in Atlanta, Georgia. We also make use of independent contractors to fulfill short term specialized needs. None of our employees is subject to a collective bargaining agreement. We consider our relations with our employees to be good.

ITEM 2.         PROPERTIES.

6

We lease approximately 19,000 square feet of office space in Atlanta, Georgia for our corporate, sales and development operations. The lease expires on July 31, 2005. We also lease approximately 3,000 square feet of office space near Reading, England. Because we have decided to discontinue operations of our subsidiary located in England effective December 31, 2000, we have sublet all 3,000 square feet of our Reading, England property through June 2007, when the lease provides us with an option to terminate.

The aggregate net monthly rental for these leased offices and facilities is currently approximately $44,000, and our management believes that these facilities are adequate for our intended activities in the foreseeable future.

ITEM 3.         LEGAL PROCEEDINGS.

The nature of our business exposes it to the risk of lawsuits for damages or penalties relating to, among other things, breach of contract, employment disputes and copyright, trademark or patent infringement. We are not currently a party to any pending material litigation.

ITEM 4.         SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

(a)       A Special Meeting of Shareholders (the “Special Meeting”) of the Company was held on December 20, 2002. There were present at the Special Meeting, in person or by proxy, holders of 77,895,273 (before 1:10 reverse stock split) shares (or 87%) of the common stock entitled to vote.

(b)       The proposal to approve (a) a capital restructuring proposal to permit the Board of Directors, at its sole discretion, to effect a reverse stock split of issued and outstanding common stock at a ratio of 1-for-10 and (b) the form of the Articles of Amendment to our Amended and Restated Articles of Incorporation by which the Board of Directors may consummate such action, was approved with 77,895,273 (before 1:10 reverse stock split) affirmative votes cast, no negative votes cast and no abstentions. The affirmative vote of the holders of a majority of the outstanding shares of common stock represented at the Special Meeting was required to approve the amendment.

PART II

ITEM 5.         MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS.

Our common stock has been traded on the Oslo Stock Exchange (OSE) since October 1, 1997. Prior to that time there was no established market for the shares. We have not registered the offer or sale of any securities with the United States Securities and Exchange Commission other than pursuant to our Form S-8 Registration Statements filed on December 9, 1998 and May 24, 1999. Our securities may not be offered for sale or sold in the U.S. or to or for the account or benefit of any U.S. person unless the securities are registered or an exemption from registration requirements is available.

Our ticker symbol on the OSE is MBN.

The price per share reflected in the table below represents the range of low and high closing sale prices in U.S. Dollars for our common stock as reported by the Oslo Stock Exchange for the periods indicated:

7

The closing sale price of our common stock as reported by the Oslo Stock Exchange on December 31, 2002, was U.S. $0.61. Prices have been restated to reflect the 1:10 reverse split of our Common Stock effected December 20, 2002.The number of shareholders of record of our common stock as of December 31, 2002, was approximately 1,800.

We currently have outstanding options and warrants to acquire 487,533 shares of our common stock, of which options and warrants to acquire 372,383 shares are currently exercisable.

We have never paid cash dividends on our capital stock and currently intend to retain any earnings for use in the business and do not anticipate paying any cash dividends in the foreseeable future.

ITEM 6.         SELECTED FINANCIAL DATA.

The following selected financial data are qualified by reference to, and should be read in conjunction with, our financial statements and the notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this annul report on Form 10-K. The statement of operations data presented below for the years ended December 31, 2000, 2001 and 2002, and the selected balance sheet data as of December 31, 2001 and 2002 are derived from our audited financial statements included elsewhere in this annual report on Form 10-K. The statement of operations data presented for the years ended December 1998 and 1999, and the selected balance sheet data as of December 31, 1998, 1999 and 2000 are derived from our audited financial statements that are not included in this annual report on Form 10-K.

Summary Consolidated Financial Data
(in thousands except per share data)

The following table sets forth certain unaudited quarterly results of operations for the Company for the years ended December 31, 2001 and 2002. In the opinion of management, this information has been prepared on the same basis as the audited financial statements and all necessary adjustments, consisting of only normal recurring adjustments, have been included in the amounts stated below to present fairly, in all material respects, the quarterly information when read in conjunction with the audited financial statements and notes thereto included elsewhere in this annual report on From 10-K. The quarterly operating results below are not necessarily indicative of those of future periods.

Selected Quarterly Operating Results
(unaudited)
(in thousands except per share data)

ITEM 7.         MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

8

Financial Condition

Accounts receivable of $1,179,993 reported in the Balance Sheet include $56,391 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 March 31, 2003.

During the period March 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”). During 2002 a total of $1,793,722 was repaid. The balance owed under these loan agreements immediately prior to September 30, 2002 was $14,275,419. On September 30, 2002, the Lenders converted these loans into an aggregate of 71,377,095 shares of the Company’s Common Stock.

Between September 2002 and December 2002 Venturos AS advanced the Company $1,210,000 at no interest. The advance is repayable in May 2003 and is unsecured.

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 (1.35% as of December 31,2002). Principal and interest are due in June 2003. As of December 31, 2002, this credit facility has been fully utilized.

As shown in the financial statements, we incurred a net loss of $6,826,354 in 2002 and have an accumulated deficit of $51,300,365 at December 31, 2002.

Liquidity and Capital Resources

During 2002 and 2001, we used cash in operating activities of $5,812,545 and $7,974,066, respectively. Our cash balance is $14,397 and our current ratio is 0.19:1. The funding for our operations in 2001 and 2002 has been generated primarily by the proceeds from bank financing and shareholders, which have enabled us to meet our obligations despite negative cash flows. To fund operations in 2003 and to repay outstanding debt, we have been seeking and will continue to seek additional investment capital. We cannot be certain whether we can obtain such additional capital and upon what terms such capital may be obtained. We are also aggressively seeking strategic partners to accelerate sales growth, and we have undertaken cost-cutting measures, including personnel reductions, which could slow down our sales and product development efforts. It is not possible to predict the outcome of our efforts. As they have been doing for the last three years, our three major shareholders are currently funding our short-term cash requirements on a month-to-month basis with no ongoing commitment to do so. We currently have $2.1 million in repayment obligations to these shareholders due in 60 days. Should our capital raising activities prove unsuccessful, and should these shareholders decide to exercise their right to repayment and/or to cease providing necessary operating capital, the Company’s cash reserves would be depleted within approximately one month and the Company would need to consider ceasing operations or declaring bankruptcy.

Between September 2002 and December 2002 Venturos AS advanced the Company $1,210,000 at no interest. The advance is repayable in May 2003 and is unsecured.

We are currently a party to a loan agreement with Nordea Bank Norge ASA which provides us 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 intellectu