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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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.

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934.

The number of shares of the Registrant’s capital stock as of May 8, 2003, the latest practicable date, is as follows: 8,890,695 shares of common stock, $.01 par value.

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MEDIABIN, INC.

FORM 10-Q

QUARTER ENDED MARCH 31, 2003

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PART I
FINANCIAL INFORMATION

Item 1.  Financial Statements.

MediaBin, Inc.
Condensed Balance Sheets

See accompanying notes.

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Item 1.  Financial Statements (continued).  

MediaBin, Inc.
Condensed Statements of Operations

See accompanying notes.

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Item 1.  Financial Statements (continued).

MediaBin, Inc.
Condensed Statements of Cash Flows

See accompanying notes.

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MediaBin, Inc.
Notes to Condensed Financial Statements
March 31, 2003
(unaudited)

1.  Presentation of Interim Information

          The accompanying condensed financial statements include all adjustments consisting of normal recurring adjustments that MediaBin, Inc. (the “Company” or “we”) consider necessary for a fair presentation of its unaudited results of operations for the three months ended March 31, 2003 and 2002.  Results for the three months ended March 31, 2003 are not necessarily indicative of the results for the year.

2.  Loan Agreements

          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”).  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.

          During the period September 2002 through March 2003 three major shareholders of the Company have advanced the Company $2,075,000 at no interest.  Imputed interest of $28,600 was recorded during the three months ended March 31, 2003, relating to these advances.  The advance is repayable May 30, 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.  Interest is calculated at the rate of 1.75% above the bank’s base rate for debit call loans (currently 1.35%).  Principal and interest are due June 30, 2003, and will have a significant impact on our liquidity and capital resources if it is not renewed.  As of March 31, 2003, this credit facility has been fully utilized. The loan is guaranteed by three of our major shareholders, for which they are paid a guarantee fee of 2.5%, and is secured by our intellectual property.

          In February 2003 we entered into an agreement with The Hamilton Group (“Hamilton”) whereby we will be able to factor with Hamilton certain accounts receivable as selected by us.  Under this agreement Hamilton will advance to us up to 80% of the accounts receivable.  Interest is 0.0948% per day.  The balance, including accrued interest, under this agreement as of March 31, 2003 is $63,646.

3.  Reverse Stock Split

          At a special meeting of shareholders held on Friday December 20, 2002, the shareholders approved a reverse stock split at a ratio of 1-for-10 to be effective at the end of trading on December 20, 2002.  After taking effect for the reverse split, there were 8,890,695 shares with a par value of $.01.  

4.  Stock-Based Compensation

          The Company accounts for stock-based compensation based on the provisions of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”), which states that no compensation expense is recorded for stock options or other stock-based awards to employees that are granted with an exercise price equal to or above the estimated fair value per share of the Company’s common stock on the grant date. In the event that stock options are granted at a price lower than the fair market value at that date, the difference between the fair market value of the Company’s common stock and the exercise price of the stock option is recorded as unearned compensation. Unearned compensation is amortized to compensation expense over the vesting period of the stock option. The Company has adopted the disclosure requirements of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), as it relates to stock options granted to employees, which requires pro forma net losses be disclosed based on the fair value of the options granted at the date of the grant.

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     Fair Value Disclosures

          Had compensation cost for the Company’s stock-based compensation plans been determined as prescribed by SFAS No. 123, the Company’s net pro forma loss would have been as follows:

5.  Subsequent Event

          On May 12, 2003, MediaBin filed the following announcement with the Oslo Stock Exchange. “MediaBin has entered into a letter of intent with a U.S. company regarding an acquisition of all outstanding shares in MediaBin against cash. The anticipated price per share is approximately 0.52 USD. In connection with the negotiations the potential acquirer will be allowed to conduct a detailed due diligence investigation of MediaBin. Since MediaBin is a U.S. company, the Norwegian Securities Trading Act’s provisions regarding mandatory offer obligation and voluntary offer in connection with a buy out (Chapter 4) will not apply if the transaction should be consummated.”

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 earn 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.

Recent Developments

          On May 12, 2003, the Company filed a Current Report on Form 8-K discussing the issuance of an announcement to the Oslo Stock Exchange which reported a letter of intent in connection with a proposed sale of the Company.  The announcement was required by and prepared in accordance with the rules of the Oslo Stock Exchange, and a copy of the announcement was attached as Exhibit 99.1 to that certain 8-K.

Financial Condition

          Accounts receivable of $574,610 reported in the Balance Sheet includes $167,680 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 June 30, 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”).  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.

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          During the period September 2002 through March 2003 three major shareholders of the Company have advanced the Company $2,075,000 at no interest.  Imputed interest of $28,600 was recorded during the three months ended March 31, 2003, relating to these advances.  The advance is repayable May 30, 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.  Interest is calculated at the rate of 1.75% above the bank’s base rate for debit call loans (currently 1.35%).  Principal and interest are due June 30, 2003, and will have a significant impact on our liquidity and capital resources if it is not renewed.  As of March 31, 2003, this credit facility has been fully utilized. The loan is guaranteed by three of our major shareholders, for which they are paid a guarantee fee of 2.5%, and is secured by our intellectual property.

          In February 2003 we entered into an agreement with The Hamilton Group (“Hamilton”) whereby we will be able to factor with Hamilton certain accounts receivable as selected by us.  Under this agreement Hamilton will advance to us up to 80% of the accounts receivable.  Interest is 0.0948% per day.  The balance, including accrued interest, under this agreement as of March 31, 2003 is $63,646.

          We have not registered any securities with the U.S. Securities and Exchange Commission under the Securities Act of 1933, as amended, 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” (as defined in the Securities Act), unless the securities are registered under the Securities Act or an exemption from such registration requirements is available.

Liquidity and Capital Resources

          In the first three months of 2003 and 2002, we used cash in operating activities of $844,929 and $1,342,605, respectively.  Our cash balance is $16,878 and our current ratio is 0.09:1. The funding for our operations in 2002 and 2003 has been generated primarily from advances from our shareholders, which have enabled us to meet our obligations despite negative cash flows.  To fund operations for the remainder of 2003 and to repay outstanding debt, we have been seeking additional investment capital and/or a strategic partner for the purpose of a business combination or similar transaction.  For further discussion of recent developments relating to the possibility of such a transaction, see “Recent Developments” above.   We cannot be certain whether we can obtain such additional capital and upon what terms such capital may be obtained, nor can we be certain whether we will be able to consummate any business combination or similar strategic transaction.  We are also aggressively seeking strategic partners to accelerate sales growth, and we have undertaken significant 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 $2.6 million in repayment obligations to these shareholders due on May 30, 2003.  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.

          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.    Interest is calculated at the rate of 1.75% above the bank’s base rate for debit call loans (currently 1.35%).  As of March 31, 2003, this credit facility has been fully utilized.  The entire principal amount and all accrued interest are due June 30, 2003, and could have a significant impact on our liquidity and capital resources if it is not renewed.  The loan is guaranteed by three of our major shareholders, for which they are paid a guarantee fee of 2.5%, and is secured by our intellectual property.

          In the first three months of 2003 and 2002, investing activities used cash of $17,590 and $35,423, respectively.  These funds were used primarily for the purchase of computer equipment.

          In the first three months of 2003 and 2002, financing activities, primarily from shareholder advances, provided funds of $865,000 and $652,638, respectively.

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Results of Operations

Three Months Ended March 31, 2003, Compared to Three Months Ended March 31, 2002

          Revenue increased by 14% to $929,429 in the three months ended March 31, 2003, from $811,771 in the same period in 2002. This represents an increase of 9% in revenue from MediaBin licenses and services (to $866,243 from $790,771) and an increase of 201% (to $63,186 from $21,000) in revenue from our non-core products.  During this quarter the Company added three new customers and had repeat orders from twelve existing customers.  During this period average order size for new customers increased by 32% to $120,000 over the same period last year due to increased features available to license and an increase in value of services provided.  

          Cost of revenue in absolute dollars increased by 30% to $262,293 in the three months ended March 31, 2003, from $202,043 in the same period in 2002.  As a percentage of revenue cost of revenue increased to 28.2% from 24.9%.  This increase was due to increased software royalty costs paid to include other companies’ software in our products. 

          Sales and Marketing expenses decreased by 16% to $812,386 in the three months ended March 31, 2003, from $965,560 in the same period in 2002.  This decrease resulted primarily from a decrease in personnel and promotional costs related to our marketing efforts, partially offset by increases in personnel costs assigned to the development of our strategic partners programs. 

          Research and Development expenses decreased by 14% to $822,348 in the three months ended March 31, 2003, from $961,505 in the same period in 2002.  This decrease reflects a reduction in both development staffing levels and our use of outside consultants.  In our development process we maintain a constant backlog of product modifications and enhancements designed to improve our products.  The time frame in which these can be accomplished is directly affected by the funds available, and a reduction in funding extends the time by which these enhancements can be completed.

          General and Administrative expenses increased by 17% to $720,509 in the three months ended March 31, 2003, from $616,929 in the same period in 2002.  This increase resulted primarily from an increase in legal and professional services fees relating to our efforts to raise investment capital.

          Stock Based Compensation expense of $15,246 was recorded during the quarter ended March 31, 2003, for 1,463,620 options granted to employees having an exercise price less than market price on the date of issue.

          Interest Income decreased by 94% to $115 in the three months ended March 31, 2003, from $1,836 in the same period in 2002.  The decrease is due to our lower balances held of cash and cash equivalents.

          Interest Expense decreased by 71% to $56,989 in the three months ended March 31, 2003, from $197,240 the same period in 2002.  The decrease is primarily due to the reduction in outstanding debt due to the conversion of loans from shareholders into equity in September 2002.

Impact of Recently Issued Accounting Standards

          In December 2002, the FASB issued SFAS 148, “Accounting for Stock Based Compensation- Transition and Disclosure- an Amendment to SFAS 123.”  SFAS 148 provides two additional transition methods for entities that adopt the preferable method of accounting for stock based compensation.  Further, the statement requires disclosure of comparable information for all companies regardless of the whether, when, or how an entity adopts the preferable, fair value based method of accounting.  These disclosures are now required for interim periods in addition to the traditional annual disclosure.  The amendments to SFAS 123, which provides for additional methods, are effective for periods beginning after December 15, 2003 although earlier application is permitted.  The amendments to the disclosure requirements are required for financial reports containing condensed financial statements for interim periods beginning after December 15, 2002.

Inflation

          The effects of inflation on our operations were not significant during the periods presented in the financial statements, and the effects thereof are not anticipated to be of significance in the future. Generally, throughout the

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periods discussed above, the changes in revenue have resulted primarily from fluctuations in sales levels, rather than price changes.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

          Financial instruments that potentially subject us to significant concentrations of market risk consist principally of trade accounts receivable, accounts payable, short-term debt and loans from shareholders.  We believe that the potential effects of market risk are not material to our operations.

Item 4.  Controls and Procedures

          Within the 90-day period prior to the filing of this report, the Company carried out an evaluation of the effectiveness of the Company’s disclosure controls and procedures (as defined by Rule 13a-14(c) of the Securities Exchange Act of 1934) under the supervision and with the participation of the Company’s chief executive officer and chief financial officer.  Based on and as of the date of such evaluation, the aforementioned officers have concluded that the Company’s disclosure controls and procedures were effective. There were no significant changes in our internal controls or other factors that could significantly affect internal controls subsequent to the date of their evaluation.

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PART II
OTHER INFORMATION

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SIGNATURES

          Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Form 10-Q report for the period ended March 31, 2003, to be signed on its behalf by the undersigned thereunto duly authorized. 

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CERTIFICATE OF CHIEF EXECUTIVE OFFICER

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CERTIFICATE OF CHIEF FINANCIAL OFFICER