UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: September 30, 2000
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( ) 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: 000-28427
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NXGEN NETWORKS, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 870621120
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1700 LINCOLN STREET, SUITE 1920, DENVER, COLORADO 80203
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(Address of principal executive offices)
Issuer's telephone number, including area code: 303-839-9150
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OLD NIGHT, INC.
GLOBAL TECH CENTER, DON JUAN ROAD, P.O. BOX 218, HERTFORD, NORTH CAROLINA 27944
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(Former name, former address, and former fiscal year, if changed since last
report.)
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the last practicable date:
Class Outstanding as of September 30, 2000
----- ------------------------------------
Common Stock, $0.001 21,544,908
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X ]
<PAGE>
PART I. FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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<TABLE>
<CAPTION>
NxGen Networks, Inc.
(a development stage company)
Consolidated Condensed Balance Sheets
September 30, December 31,
2000 1999
(unaudited) (audited)
------------ -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 101,927 $ -
Accounts receivable-net 56,079 101,181
Accounts receivable-officers - 84,060
Prepaid expenses and other assets 523,685 -
---------- ---------
Total current assets 681,691 185,241
Property and equipment, net 6,060,345 2,779,256
Other assets:
Deferred finance charges 391,347 322,187
Investment 85,000 -
Deposits and other assets 29,809 44,559
---------- ---------
Total assets $ 7,248,192 $ 3,331,243
=========== ==========
Liabilities and shareholders' (deficit)
Current liabilities
Accounts payable 1,543,824 2,528,020
Accrued liabilities 1,696,078 151,445
Short-term convertible debenture 2,100,000 -
Short-term notes payable 1,787,395 1,837,188
Current portion of capital lease obligations 767,639 123,715
Deferred revenue and other 73,361 55,000
---------- ---------
Total current liabilities 7,968,297 4,695,368
Capital lease obligations, less current portion 181,928 255,490
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Total liabilities 8,150,225 4,950,858
Shareholders (deficit):
Common Stock, par value $.001, 100,000,000 shares
authorized, issued and outstanding 21,544,908
and 10,920,800 shares as of September 30, 2000
and December 31, 1999, respectively 21,545 10,920
Subscription agreements 925,000 6,055,164
Additional paid-in capital 12,732,721 -
Deficit accumulated during the
development stage (14,581,299) (7,685,699)
---------- ---------
Total shareholder's (deficit) (902,032) (1,619,615)
---------- ---------
Total liabilities and shareholders' (deficit) $ 7,248,192 $ 3,331,243
=========== ==========
See accompanying notes to consolidated condensed financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NxGen Networks, Inc.
(a development stage company)
Consolidated Condensed Statements of Operations
Three months ended Nine months ended March 20, 1998
September 30, September 30, (inception) to
2000 1999 2000 1999 Sept 30, 2000
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Sales, net $ 418,559 $ 10,000 $ 1,071,447 $ 10,000 $ 1,244,911
Cost of sales 590,088 179,632 1,633,373 361,713 2,595,047
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(171,529) (169,632) (561,926) (351,713) (1,350,136)
Operating expenses:
Selling, general and administrative expenses 1,060,626 374,094 3,936,664 2,726,930 5,235,728
Research and development 159,783 -- 288,316 -- 429,227
Consulting compensation 86,000 -- 86,000 -- 86,000
Impairment of property and equipment 420,017 -- 420,017 -- 699,088
Valuation allowance for investments 50,000 -- 50,000 -- 50,000
Loss on investment in affiliate -- -- -- 1,085,448 1,085,448
Loss on failed venture -- -- -- 2,011,396
Depreciation and amortization 536,427 209,928 1,101,348 629,786 2,934,167
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Total operating expenses 2,312,853 584,022 5,882,345 4,442,164 12,531,054
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Loss from operations (2,484,382) (753,654) (6,444,270) (4,793,877) (13,881,189)
Other income (expense):
Interest and penalty expense, net (275,715) -- (463,303) (34,665) (713,113)
Other income 1,555 266 11,973 266 13,003
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Total other income (expense) (274,161) 266 (451,331) (34,399) (700,111)
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Net loss $ (2,758,542) $ (753,388) $ (6,895,601) $ (4,828,276) $(14,581,300)
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Net loss per share-basic and diluted (0.23) $ (0.07) $ (0.46) $ (0.44) $ (1.29)
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Weighted average shares-basic and diluted 12,248,352 10,920,800 14,874,596 10,920,800 11,313,618
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See accompanying notes to consolidated condensed financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nxgen, Inc.
Consolidated Statements of Cash Flows
Nine months ended September 30,
2000 1999
(unaudited) (unaudited)
-------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net loss $(6,895,601) (4,828,276)
Adjustments to reconcile net loss to net cash used in
operating Activities:
Depreciation and amortization 1,101,348 629,786
Loss on disposal and impairment of property and equipment 956,560
Bad debt writeoffs of accounts receivable and notes receivable 234,414
Conversion of receivable to investment 135,000
Valuation allowance on investments 50,000
Loss on investment in affiliate 917,560
Stock compensation expense 86,000
Changes in operating assets and liabilities:
Accounts receivable (330,456) 1,317,412
Deferred finance charges (50,000) (150,000)
Prepaid expenses and other assets (508,935) (30,000)
Accounts payable and other liabilities 578,798 817,663
Short-term notes payable 464,241 --
------------- ------------
Net cash used in operating activities (4,178,631) (1,325,855)
Cash Flows From Investing activities
Cash acquired as part of merger 937,627
Purchase of property and equipment (2,722,837) (604,589)
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Net cash used in investing activities (1,785,210) (604,589)
Cash Flows from Financing activities
Proceeds from issuance of Common Stock, net of issuance costs 4,814,528 1,456,334
Proceeds from short-term notes payable 2,214,586 346,000
Repayments of capital leases and short-term notes payable (963,346) --
------------- ------------
Net cash provided by financing activities 6,065,768 1,930,444
Net increase (decrease) in cash 101,927 --
Cash and cash equivalents, beginning of period -- --
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Cash and cash equivalents, end of period $ 101,927 $ --
==============================
Supplemental Disclosure of Other Cash and Non-cash
Investing and Financing Activities:
Interest paid $ 274,681 $ 34,665
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Common Stock issued for services performed $ -- $ --
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Conversion of convertible notes payable to Common Stock $ 1,500,000 $ --
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Acquisition of property and equipment utilizing obligations
under capital leases $ 625,849 $ --
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Deferred Finance charges included in convertible debenture $ 95,000 $ --
------------- ------------
Purchases of property and equipment with short-term notes
payable and convertible debentures $ 1,684,239 $ --
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Acquisition of private shares in exchange for trade receivables $ 135,000 $ --
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See accompanying notes to consolidated condensed financial statements
</TABLE>
<PAGE>
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Generally Accepted Accounting Principles in the
United States for interim financial information and with the instructions to
Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include
all of the information and footnotes required by Generally Accepted Accounting
Principles in the United States for complete financial statements. In the
opinion of management, all adjustments considered necessary for a fair
presentation have been included. For further information, refer to the financial
statements and footnotes thereto included in NxGen Networks, Inc. ("The Company"
or "NxGen") Annual Report on Form 10-KSB for the year ended December 31, 1999
and to the Company's Current Report on Form 8-K.
Operating results for the three and nine month periods ended September 30, 2000
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2000 or any future period.
Note 2. Consolidation Policy
The accompanying unaudited consolidated condensed financial statements include
the accounts of NxGen Networks, Inc. ("NxGen") formerly Old Night Inc. , the
legal acquirer, and International Long Distance Corporation ("ILDC"), the
accounting acquirer. This transaction has been accounted for as a reverse
acquisition, whereby the transaction was recorded using the purchase method with
ILDC as the acquirer. Prior to the merger, NxGen was a non-operating public
shell company for which no goodwill was recorded. Equity of the combined Company
has been "recapitalized" to reflect the legal par value of NxGen (See Note 3).
Note 3. Acquisitions/Merger
On June 30, 2000, the shareholders approved a share exchange agreement between
Old Night, Inc., an inactive public shell, and ILDC. Under this agreement, Old
Night exchanged 9,078,108 shares of its Common Stock for 9,078,108 or 82.53% of
the issued and outstanding shares of Common Stock of ILDC. This Merger was
accounted for as a reverse acquisition and was closed on August 31, 2000.
Old Night was a dormant public shell, which had been originally formed to engage
in investment and business development operations related to mineral research
and exploration. Old Night became dormant in 1994, after several failed attempts
to enter this field were made. Since 1994, Old Night has had no operating assets
or ongoing business and has been engaged in searching for an appropriate
business opportunity. In conjunction with the merger with ILDC, Old Night was
renamed to NxGen.
ILDC was incorporated in North Carolina in 1998 as a long distance service
provider dedicated to utilizing state of the art technology to provide premier
long distance telephony service both domestically and internationally. In the
spring of 2000 management of ILDC was seeking additional equity funding in order
to fully implement its business and marketing plan for the expansion of its
business.
The following unaudited pro-forma summary presents the consolidated results of
operations of the Company as if the merger had occurred at the beginning of 1999
and does not purport to be indicative of what would have occurred had the merger
been made as of the beginning of 1999 or of results of operations which may
occur in the future.
2000 1999
-----------------------------
Net sales $ 1,071,447 $ 10,000
Net (loss) $(6,923,024) $(4,829,876)
(Loss) per share $ (.63) $ (.44)
Note 4. Stock Options
Consultants were issued options to purchase 1,000,000 shares of stock at $2.50,
the majority vesting within one year. Of the 1,000,000 shares, 300,000 shares
vested immediately. Directors and executives who do not meet the definition of
an employee, were issued 1,710,000 options with a strike price ranging from
$2.50 to $3.75. In general, these options vest within 12 months. Certain shares
vesting are based on performance. Expense of $86,000 has been recorded in the
accompanying financial statements related to these options. The fair value of
these options was calculated utilizing the Black-Scholes method with the
following assumptions, risk free interest rate of 3%, dividend rate of 0%,
expected life of one year and an expected volatility rate of 0.001.
Employee options totaled 800,850 with a strike price ranging from $2.50 to
$4.00. Vesting periods range from six months to 36 months.
Note 5. Commitments and Contingencies
The Company has settled litigation with vendors. Under the terms of the first
settlement an immediate payment of $650,000 was made on September 28, 2000. Six
equal payments of $285,438 are due commencing October 1, 2000. In addition,
51,692 shares of Common Stock (post split) will be issued in payment of legal
fees. Prior to payment in full, StarTouch may convert any remaining amounts due
into shares of Common Stock of NxGen at a conversion rate of $4.00 per share. If
NxGen fails to cure any default of any term of the settlement agreement within
10 days of notice the full amount of the remaining indebtedness will be
immediately accelerated and a late penalty equal to 10% of the entire
accelerated amount will apply.
NxGen, to settle all claims, has agreed to make payments to a vendor totaling
$175,000 on or before December 27, 2000 and to return to Compaq approximately
$903,000 worth of equipment to this vendor.
Note 6. Going Concern
Continuation of the Company as a going concern is dependent upon obtaining
sufficient working capital. Management of the Company has developed a strategy,
which it believes will accomplish this objective through equity funding and
long-term debt financing, and will enable the Company to fund its operations and
capital investments. The Company is currently negotiating other credit
facilities with key vendors to finance the acquisition of additional telecom and
back office systems. Based on the Company's business plan and projected cash
burn rate, the Company will need to seek additional capital through the issuance
of equity securities and/or debt facilities within the next 12 months.
There can be no assurance that the Company will be successful in this effort.
Note 7. Convertible Subordinated Debenture
On September 18, 2000, the Company issued a Series 2000 One-Year 10% Convertible
Subordinated Debenture to Winton Capital bearing interest at the rate of ten
(10%) per annum, payable quarterly in arrears on the last day of December,
March, June and September, the entire principal balance being due and payable
September 30, 2001. The proceeds were used for working capital and equipment
purchases. The convertible debenture was issued to Winton Capital in exchange
for its interest in an equipment lease agreement dated July 27, 2000.
The holders of this Debenture may, at any time prior to maturity hereof, convert
the principal amount of this Debenture into Common Stock at the conversion ratio
of $3.75 (post split) of debenture principal and/or accrued but unpaid interest
for one share of Common Stock of the Company.
Note 8. Equity Transactions
The Company completed a private placement of its Common Capital Stock in May of
2000. That private placement was later amended on September 1, 2000 through
creation of an Offering Memoranda which provided for separate unit and share
offerings. The Company raised an aggregate total of $3,865,000 under this
offering. In addition, as of September 30, 2000, $925,000 in subscription
agreements has been received pending issuance of share certificates.
The private placement provided for an offering of 2,400,000 units, which
consists of Common Stock and warrants, at $ 2.50 per unit. Each warrant is
exercisable for one share of Common Stock of NxGen for $ 2.50 any time within
three years from the date of the purchase. Under this private placement,
1,046,000 common shares and 1,046,000 warrants were issued to twelve (12)
investors.
The placement consists of 500,000 shares of Common Stock at $ 2.50. To date,
$1,250,000 has been received on this issue. In connection with each placement
NxGen has agreed to provide a commission of 8% to the selling agent and the
agent may elect to receive up to 50% of its commission in the form of shares at
$ 2.50 per share. Elections have been for commissions in the form of shares.
As part of the initial purchase transaction of ILDC by Old Night, the Company
raised an additional $1,500,000 through a promissory note with BDR Consulting,
Inc. Per the terms of the note, the debt was automatically converted into equity
of NxGen on August 31, 2000 (date of merger).
Note 9. Commitments and Contingencies
The Company is committed to monthly lease payments on its various office
locations in Denver, Colorado, Hertford, North Carolina and Atlanta, Georgia.
These leases expire on March 2002, October 2001 and June 2005 respectively.
The Company has a number of small capital leases associated with the legacy
network that will be paid out in 2001.
Note 10. Subsequent Events
Subsequent to September 30, 2000, NxGen has received funds totaling
approximately $398,000 from eleven (11) investors under a private placement
dated October 31, 2000. The October 31, 2000 placement authorizes placement of
4,050,000 shares at a price of $3.75. NxGen has reason to believe that these
investors are accredited investors, capable of evaluating the merit and risk of
this investment, and who have acquired the shares for investment purposes. NxGen
intends to provide the information required by Regulation D, Rule 506 in the
form of an offering memorandum to all investors. The board has resolved on
December 7, 2000 to reduce the offering price from $3.75 to $2.50 per share
following the board discussion on this issue.
On October 27, 2000 NxGen agreed to assume a liability of Prepaid Cellular, a
former business partner of ILDC totaling $119,830. In so doing, ILDC, through a
letter agreement, has entered into a payment plan through which the total amount
owing will be paid in six equal installments.
The Company declared a 2 for 1 split of its Common Stock, effective for all
holders of record as of December 13, 2000 and payable to those record holders on
December 14, 2000. Earnings per share computations and issued and outstanding
shares in the accompanying financial statements have been restated to give
effect to the split for all periods presented. The par value of the Company's
Common Stock remains at $.001 per share, and accordingly, Common Stock and
Additional Paid-In Capital have been restated for all periods presented in the
accompanying financial statements.
Note 11. Recent Accounting Pronouncements
During 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (as amended by SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133 and SFAS No. 138, Accounting for Certain Derivative
Instruments and Hedging Activities), which is effective for all fiscal years
beginning after June 15, 2000. SFAS No. 133 establishes a comprehensive standard
for the recognition and measurement of derivative instruments and hedging
activities. The Company does not expect the adoption of the new standard to have
a material effect on our consolidated financial position, liquidity, or results
of operations.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) 101, Revenue Recognition in Financial Statements, as amended,
which summarizes the staff's views in applying Generally Accepted Accounting
Principles to revenue recognition in financial statements. SAB 101 is effective
no later that the fourth quarter for fiscal years beginning after December 15,
1999. The Company does not expect the adoption of SAB 101 to have a material
effect on its financial statements.
Financial Accounting Standards Board Interpretation No. 44 (FIN No. 44)
Accounting for Certain Transactions Involving Stock Compensation, an
interpretation of Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, is effective for financial statements beginning after
July 1, 2000. The adoption of this new standard did not have a material effect
on the Company's financial statements.
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ITEM 2 MANAGEMENT DISCUSSIONS AND ANALYSIS
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Overview
--------
NxGen was incorporated in the State of Nevada on November 26, 1980, under the
name Avery, Armstrong and Associates, Architects and Engineers. The Avery,
Armstrong and Associates, Architects and Engineers name was changed to Old
Night, Inc. on December 2, 1998. The name was then changed to NxGen Networks,
Inc. on August 31, 2000, in connection with the merger with International Long
Distance Corporation ("ILDC"). ILDC was incorporated in North Carolina in 1998
under the name International Long Distance Corporation. The business focus of
ILDC since its inception has been Internet Protocol Telephony network and
application services. ILDC is considered a development stage company with
offices in Hertford, North Carolina and Atlanta, Georgia.
In the spring of 2000, management of ILDC was seeking additional equity funding
in order to fully implement its business and marketing plan for the expansion of
its business. On May 18, 2000, NxGen, and ILDC signed an agreement and plan of
merger and reorganization. The parties subsequently terminated the
reorganization agreement and decided to conduct a two-step transaction instead
for timing purposes. The first step of the proposed two-step transaction
consisted of the acquisition of 82.53% of the issued and outstanding shares of
Capital Stock of ILDC through a share exchange agreement dated June 30, 2000
(the "Share Exchange Agreement"). In the share exchange, NxGen issued 9,078,108
shares of its Common Stock in exchange for 9,078,108 or 82.53%, of the
outstanding Capital Stock of ILDC. The second step of acquiring the remaining
outstanding shares of ILDC through redemption or other transaction is planned to
occur later this calendar year or early in 2001. All references to NxGen in this
section include ILDC where applicable. The ILDC Stockholders as a result of the
Share Exchange now hold approximately 63% of the Company's total issued and
outstanding share capital. The definitive information statement on Form 14C
dated July 28, 2000 filed by NxGen with the Securities and Exchange Commission
contains a copy of the Agreement and details about the transaction and the
business of ILDC.
NxGen directly and through its merger with ILDC provides third generation
telecommunications services using Internet Protocol and a high speed data
network that creates a suite of advanced networking solutions, including Voice
over Internet Protocols (VoIP) and Virtual Private Networks (VPN). NxGen is
rapidly deploying both network and corporate infrastructure. IP telephony is the
real time transmission of voice communications in the form of digitized
"packets" of information over the public Internet or a private network, similar
to the way in which e-mail and other data is transmitted. By outsourcing
domestic and international communications services to NxGen, customers are able
to lower costs, generate new revenue and extend their business into
Internet-based services quickly while maintaining service quality comparable to
that of traditional voice networks. These customers include traditional, local,
international and wholesale long distance companies and competitive local
exchange carriers, as well as new telecommunications service providers.
NxGen currently holds an FCC License 214 issued by the Federal Communications
Commission, which effectively categorizes NxGen as an interexchange carrier
"IXC" for telecommunication services. IXC's include the largest communications
companies, such as MCI WorldCom and Sprint. NxGen is in the process of obtaining
licenses to carry traffic on its network in the domestic and international
markets. NxGen believes that it is in compliance with all regulatory and
governmental authorities as they relate to the operation of the network.
Results of Operations
---------------------
Three months ended September 30, 2000 and 1999
----------------------------------------------
Revenue
-------
The Company's primary source of revenue currently is the prepaid fees that it
received from customers for completing calls over the network. This revenue is
dependent on the volume of voice carried over the network, which is measured in
minutes. The Company charges its customers fees per minute of traffic that are
dependent on the length and destination of the call and recognize this revenue
in the period in which the call is completed. The Company also derives revenue
from supplying the underlying services, including value-added applications and
the use of the Company's network to issuers of prepaid phone cards. The
Company's current business strategy is to phase out this prepaid calling
business and focus on building out the newly developed voice over IP ("VoIP")
platform.
Net revenue for the three months ended September 30, 2000 totaled $418,559 and
was $408,559 or 4086% higher than net revenue for the three months ended
September 30, 1999. The increase in revenue for the three months ended September
30, 2000 was primarily due to the increase in number of customers as well as the
increase of the traffic from existing customers.
Cost of Sales-Telecommunications
--------------------------------
Telecommunications costs are comprised primarily of termination costs, purchased
minutes, and other expenses associated with telecommunications. Termination fees
are paid to local service providers to terminate calls received from the
Company's network. This traffic is measured in minutes, and the per minute rates
charged for terminating calls are negotiated with the local service provider and
included in the Company's contract with its local service provider.
Telecommunications costs for the three months ended September 30, 2000 totaled
$590,088 and were $410,456 higher than the three months ended September 30,
1999. This increase resulted primarily from a significant increase in traffic
(consistent with the increased revenue discussed above), which in turn increased
the termination costs and purchased minutes. As discussed above, the Company's
management has determined the most beneficial strategy for the Company going
forward is to close down the prepaid calling business and focus its resources on
building out the newly developed voice over IP (VoIP) platform.
The Company had a negative margin for the third quarter of 2000 of ($171,529) an
increase of 1.1% compared to the negative margin of ($169,632) for the same
period last year. The margins for the second quarter were adversely affected by
the negative margins in the prepaid card business that resulted from a change in
third party suppliers for the prepaid card program and increasing network costs.
Research and Development
------------------------
Research and Development expenses include the expenses incurred in the
development, expansion, operation and support of the Company's global IP network
and switching platform. Expenses consist primarily of VoIP and VPN (virtual
private network) platform development, the fixed monthly costs of the leased
network facilities, salary and payroll related expenses of the employees
directly involved in the development and operation of the network. Expenses
incurred in the development and support of the Company's proprietary application
programming software is being capitalized.
Research and Development expenses were $159,783 for the three months ended
September 30, 2000. The Company did not have research and development expenses
in 1999. The increase in Research and Development expenses is primarily due to
the increase in personnel and the necessary systems required to develop the
Company's new network architecture.
Selling, General and Administrative Expenses
--------------------------------------------
Selling, general and administrative expenses of $1,060,626 increased by $686,532
from $374,094 for the three months ended September 30, 2000 as compared to the
corresponding period in 1999. Selling expenses include the expenses incurred in
the development and promotion of the Company's image, website, marketing
collaterals and the development of product and service descriptions and
brochures. Selling expenses also include the salaries, payroll taxes, benefits
Webmaster contracting, and production of promotional materials. The Company
began the hiring of its key sales and marketing personnel during the three
months ended September 30, 2000.
General and Administrative expenses include the expenses incurred for general
corporate functions, including administration, finance and accounting,
facilities, human resources, and professional services as well as the costs
addressed in the selling and marketing. These expenses increased as a result of
building the head office in Denver, engaging professional legal, accounting and
executive search firms as well as the procurement of director and officer
liability insurance and the expansion of the Company's IP network. Additional
legal and administrative costs were also incurred as a result of the Company
becoming publicly traded on Sept 27, 2000.
Depreciation and Amortization
-----------------------------
Depreciation and amortization expenses were $536,427 for the three months ended
September 30, 2000. The increase in depreciation expense is due to the
acquisition of additional network equipment, computers and leasehold
improvements.
Non-Cash Stock Compensation
---------------------------
The non-cash stock compensation expense resulted from the issuance of options to
a consultant who engaged in assisting the Company in raising private placement
funding and to independent contractors who are in the senior management
positions of the Company.
Interest Expense
----------------
Interest expense of $275,715 was incurred for the three months ended September
30, 2000. The interest expense relates to the capital leases and a debenture
used by the Company to finance the acquisition of new network equipment and to
pay down the liabilities associated with the historical operations of ILDC. The
Company has a number of small capital leases associated with the legacy network
that will be paid out in 2001. The Company is currently negotiating other credit
facilities to finance the acquisition of additional equipment and to refinance
its current capital leases on favorable terms.
Impairment of Property and Equipment
------------------------------------
Management has estimated that certain of its equipment associated with the soon
to be discontinued prepaid cellular business is not fully realizable.
Accordingly, the Company has taken an impairment reserve amounting to $420,017.
Valuation Allowance Investment
------------------------------
The Company's investment in a privately held company has been reduced from the
initial investment of $135,000 to $85,000 to reflect a permanent impairment in
the value of this investment.
Nine Months Ended September 30, 2000 and 1999
Revenue
-------
Net revenue increased by $1,061,447 from $10,000 for the nine months ended
September 30, 1999 to $1,071,447 for the nine months ended September 30, 2000.
The increase in net revenue is primarily due to the increase in the number of
customers and the increase in the traffic from existing customers (See Revenue
discussion above.).
Cost of Sales-Telecommunications
--------------------------------
Telecommunications costs increased from $361,713 for the nine months ended
September 30, 1999 to $1,633,373 for the nine months ended September 30, 2000.
This increase resulted primarily from a significant increase in traffic
(consistent with the increased revenue discussed above), which in turn increased
the termination costs and purchased minutes. As discussed above, management has
determined the most beneficial strategy for the Company going forward is to
close down the prepaid calling business and focus our resources on building out
the newly developed voice over IP (VOIP) platform. The margins for the second
quarter were adversely affected by the negative margins in the prepaid card
business that resulted from a change in third party suppliers for the prepaid
card program and increasing network costs.
Research and Development
------------------------
Network research and development expenses were $288,316 for the nine months
ended September 30, 2000. The Company did not have any research and development
expenditures in 1999. The increase in network research and development expenses
is primarily due to the increase in the personnel and the necessary systems
needed to develop the Company's new network architecture.
Selling, General and Administrative Expenses
--------------------------------------------
Selling, general and administrative expenses increased by $1,209,734 from
$2,726,930 for the nine months ended September 30, 1999 to $3,936,664 for the
nine months ended September 30, 2000. General and administrative expenses
increased as a result of building the head office in Denver, engaging
professional legal, accounting and executive search firms as well as the
procurement of director and officer liability insurance and the expansion of the
Company's IP network. Additional legal and administrative costs were also
incurred as a result of the Company becoming publicly traded on Sept 1, 2000.
Selling expenses include the expenses incurred in the development and promotion
of the Company's image, website, marketing collaterals and the development of
product and service descriptions and brochures. Selling expenses also include
the salaries, payroll taxes, benefits Webmaster contracting, and production of
promotional materials. The Company continued to hire key sales and marketing
personnel during 2000.
Depreciation and Amortization
-----------------------------
Depreciation and amortization expenses of $1,101,348 for the nine months ended
September 30, 2000 were $471,562 higher than those of the corresponding period
in 1999. The increase in depreciation expense is due to the acquisition of
additional network equipment, computers and leasehold improvements.
Non-Cash Stock Compensation
---------------------------
The non-cash stock compensation expense resulted from the issuance of an option
for 300,000 shares to a consultant who engaged in assisting the Company in
raising private placement funding and to independent contractors who are in the
senior management positions of the Company.
Interest Expense
----------------
Interest expense of $463,303 was incurred for the nine months ended September
30, 2000 compared to $34,665 for the corresponding period in 1999. The interest
expense relates to the capital leases and a debenture used by the Company to
finance the acquisition of new network equipment and to pay down the liabilities
associated with the historical operation of ILDC. The Company has a number of
small capital leases associated with the legacy network that will be paid out in
2001. The Company is currently negotiating other credit facilities to finance
the acquisition of additional equipment and to refinance its current capital
leases on favorable terms.
Liquidity and Capital Resources
-------------------------------
The Company issued approximately 1,546,000 shares in conjunction with the sale
of units to investors in two private placement transactions resulting in net
proceeds of $3,865,000. The Company is currently finalizing negotiations with a
major leasing company to establish a $10 million credit facility to complete its
build out requirements for 2001. The Company is currently negotiating other
credit facilities with key vendors to finance the acquisition of additional
telecom and back office systems. Based on the Company's business plan and
projected cash burn rate, the Company will need to seek additional capital
through the issuance of equity securities and/or debt facilities within the next
12 months.
Cash Flow for the nine months ended September 30, 2000 and 1999
----------------------------------------------------------------
During the nine months ended September 30, 2000, net cash used in operating
activities totaled $4,178,631, as compared to net cash used in operating
activities totaling $1,325,855 in the corresponding period of 1999. The increase
in cash used in operating activities in 2000 was primarily the result of net
losses, and acquisition and deployment of its global IP network and switching
platform. The Company also paid down liabilities and debt associated with the
historical operations of ILDC.
During the nine months ended September 30, 2000, net cash used in investing
activities amounted to approximately $1,785,210 as compared to $604,589 in the
corresponding period in 1999. The increase resulted from the purchase of office
and computer equipment and telecom equipment required to support the increase in
staffing requirements and build out its network facilities. The Company is in
the process of financing the majority of all its purchases of telecommunications
equipment through capital leases.
During the nine months ended September 30, 2000, net cash provided by financing
activities of $6,065,768 as compared to $1,930,444 in the same period in 1999
consisted principally of $4,814,528 in private placements and proceeds of
short-term notes payable and capital leases of $2,214,586 net of $963,346
payments on capital leases and term loan obligations, respectively.
Recently Issued Accounting Standards
------------------------------------
During 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities (as amended by SFAS No. 137, Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133 and SFAS No. 138, Accounting for Certain Derivative
Instruments and Hedging Activities), which is effective for all fiscal years
beginning after June 15, 2000. SFAS No. 133 establishes a comprehensive standard
for the recognition and measurement of derivative instruments and hedging
activities. The Company does not expect the adoption of the new standard to have
a material effect on our consolidated financial position, liquidity, or results
of operations.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin (SAB) 101, Revenue Recognition in Financial Statements, as amended,
which summarizes the staff's views in applying generally accepted accounting
principles to revenue recognition in financial statements. SAB 101 is effective
no later that the fourth quarter for fiscal years beginning after December 15,
1999. The Company does not expect the adoption of SAB 101 to have a material
effect on its financial statements.
Financial Accounting Standards Board Interpretation No. 44 (FIN No. 44)
Accounting for Certain Transactions Involving Stock Compensation, an
interpretation of Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, is effective for financial statements beginning after
July 1, 2000. The adoption of this new standard did not have a material effect
on the Company's financial statements.
"Safe Harbor" Statement Under Private Securities Litigation Reform Act of 1995
-------------------------------------------------------------------------------
This report includes "forward-looking statements" within the meaning of various
provisions of the Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical facts, included in this report
that address activities, events or developments that the Company expects or
anticipates will or may occur in the future, future capital expenditures
(including the amount and nature thereof), business strategy and measures to
implement strategy, including any changes to operations, goals, expansion and
growth of the Company's business and operations, plans, references to future
success and other such matters are forward-looking statements and involved a
number of risks and uncertainties. Among the factors that could cause actual
results to differ materially are the following: the availability of sufficient
capital to finance the Company's business plan on terms satisfactory to the
Company, competitive factors, changes in costs, including termination and
transmission costs, general business and economic conditions and other risk
factors described herein or from time to time in the Company's reports filed
with the Securities Exchange Commission. Consequently, these cautionary
statements qualify all of the forward-looking statements made in this report,
which speak only as of the date made.
The statements contained in this document and other statements which are not
historical facts are forward looking statements that involve risks and
uncertainties, including, the success of newly implemented sales strategies; the
continued existence of agreements with product providers; market acceptance of
NxGen's products and services; the ability to obtain a larger number and size of
contracts; the timing of contract awards; work performance and customer
response; the impact of competitive products and pricing; technological
developments by NxGen's competitors or difficulties in NxGen's research and
development efforts; and other risks as detailed in NxGen's Securities and
Exchange Commission filings.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk exposure is that of interest rate risk on
borrowings under our financing facility, which are subject to interest rates
based on the banks' prime rate, and a change in the applicable interest rate
that would affect the rate at which we could borrow funds or finance equipment
purchases. Although all of our transactions are on our results of operations are
currently denominated in United States dollars, we are currently evaluating the
impact of foreign currency exchange risk on our results of operations as we
continue to expand globally.
PART II OTHER INFORMATION
--------------------------------------------------------------------------------
ITEM 1 LEGAL PROCEEDINGS
--------------------------------------------------------------------------------
NxGen is not a party to any litigation and, to the best of its knowledge, none
is threatened or anticipated. ILDC, however, has recently settled two claims.
In the Matter of StarTouch International Ltd.
---------------------------------------------
On or about February 5, 2000 StarTouch International, Ltd. instituted an action
in the Superior Court of Fulton County, State of Georgia, seeking repayment of a
$2,067,407 promissory note which ILDC had issued to StarTouch that was due on
June 5, 2000.
On October 3, 2000, a Notice of Filing of Consent Judgment was entered with the
Court through which the case was settled. Under the terms of the settlement
agreement, NxGen agreed to pay $650,000 on September 28, 2000 to StarTouch plus
a late payment fee of $41,348.16 per month for three months plus simple interest
at 10% per annum as accrued each month from the effective date of the final
Note. NxGen agreed to issue six equal payments of $285,438.71 commencing October
1, 2000 and to issue 51,692 shares of Common Stock of NxGen to StarTouch. Prior
to payment in full, StarTouch may convert any remaining amounts due into shares
of Common Stock of NxGen at a conversion rate of $4.00 per share. If ILDC fails
to cure any default of any term of the settlement agreement within 10 days of
notice the full amount of the remaining indebtedness will be immediately
accelerated and a late penalty equal to 10% of the entire accelerated amount
will apply.
In the Matter of Compaq Computers Ltd.
--------------------------------------
On or about December 8, 1999, Compaq Computer Corporation filed suit against
ILDC in the State Court of Dekalb County, State of Georgia seeking to recover
$679,071.39 under an alleged contract between Compaq and ILDC, plus accrued
interest in the amount of $141,321.26, plus costs.
As of September 30, 2000, the parties were in the process of settlement
negotiations. Since September, the parties have agreed to settlement terms in
which ILDC has agreed to make payments totaling $175,000 to Compaq on or before
December 27, 2000 and to return to Compaq approximately $903,000 worth of
equipment.
No New Matters
--------------
To NxGen's knowledge, no lawsuits were commenced against NxGen or
International Long Distance Corporation during the quarter ended September 30,
2000, nor did NxGen commence any lawsuits during the same period.
--------------------------------------------------------------------------------
ITEM 2 CHANGES IN SECURITIES
--------------------------------------------------------------------------------
Recent Sales of Unregistered Securities
---------------------------------------
During the quarter ended September 30, 2000, NxGen issued the following
securities, none of which were registered under the Securities Act of 1933 (the
"1933 Act"):
1. Share Exchange Transaction. In September 2000 in connection with the
acquisition of approximately 82.53% of the issued and outstanding common
share capital of ILDC, the stockholders of International Long Distance
Corporation were issued 9,078,108 (post split) shares of NxGen in a
transaction exempt from registration pursuant to Regulation D Rule 506
under Section 4(2) of the Securities Act of 1933.
2. Private Placements. NxGen commenced a private placement of its Common Stock
and units through an offering issued in May of this year. That private
placement was later amended on September 1, 2000 through creation of two
separate Offering Memoranda which provided for separate unit and share
offerings. The original Placement consisted of both a unit and a share
offering. To date an aggregate total of $ 3,865,000 has been raised under
this offering. The unit offering of 2,400,000 units at $ 2.50 per unit.
Each unit consists of one share and one warrant and is exercisable for one
share of Common Stock of NxGen for $ 2.50 any time within three years from
the date of the purchase. The share offering consists of 800,000 share of
Common Stock at $ 2.50. There is no minimum sale requirement. In connection
with each placement NxGen has agreed to provide a commission of 8% to the
selling agent and the agent may elect to receive up to 50% of its
commission in the form of common shares of NxGen at $ 2.50 per share. All
commissions will be taken in the form of shares.
<PAGE>
To date, NxGen has issued 1,046,000 common shares and 1,046,000 warrants under
the unit offering to twelve (12) investors. NxGen has reasonable grounds to
believe that these investors are accredited investors, capable of evaluating the
merit and risk of this investment and who have acquired the shares for
investment purposes. NxGen has provided the information required by Regulation D
in the form of an offering memorandum to all investors. Accordingly, NxGen
issued the shares relying on Rule 506 of Regulation D of the 1933 Act to the
following:
<TABLE>
<CAPTION>
DATE
ISSUED NAME OF SUBSCRIBER AMOUNT PAID/DATE SHARES/WARRANTS ACQUIRED
--------------- ----------------------------- ------------------------ --------------------------------
<S> <C> <C> <C> <C> <C>
07/21/00 Aberdeen Holdings Limited $250,000 05/05/00 100,000 CS & 100,000 W
--------------- ----------------------------- ------------------------ --------------------------------
07/21/00 Bank Sal Oppenheim Jr. and $500,000 05/10/00 200,000 CS & 200,000 W
Cie (Schweiz) Ag
--------------- ----------------------------- ------------------------ --------------------------------
08/16/00 Bay Shore Enterprises, LLC $500,000 07/11/00 200,000 CS & 200,000 W
--------------- ----------------------------- ------------------------ --------------------------------
07/21/00 Joe Bluff $50,000 05/02/00 20,000 CS & 20,000 W
--------------- ----------------------------- ------------------------ --------------------------------
07/21/00 M. Donnie Dutton $75,000 05/02/00 30,000 CS & 30,000 W
--------------- ----------------------------- ------------------------ --------------------------------
07/21/00 George Knight $25,000 05/03/00 10,000 CS &10,000 W
--------------- ----------------------------- ------------------------ --------------------------------
07/21/00 M R Media, Inc. $50,000 05/02/00 20,000 CS & 20,000 W
--------------- ----------------------------- ------------------------ --------------------------------
07/21/00 P & W Investments, Inc. $75,000 05/03/00 30,000 CS & 30,000 W
--------------- ----------------------------- ------------------------ --------------------------------
07/21/00 Sandy Regenbogen-Weiss $50,000 05/24/00 20,000 CS & 20,000 W
--------------- ----------------------------- ------------------------ --------------------------------
10/30/00 Dan Sampson $90,000 05/15/00 36,000 CS & 36,000 W
--------------- ----------------------------- ------------------------ --------------------------------
07/21/00 Mark Sampson $200,000 05/15/00 80,000 CS & 80,000 W
--------------- ----------------------------- ------------------------ --------------------------------
07/21/00 United Markets Ltd. $750,000 05/12/00 300,000 CS & 300,000 W
--------------- ----------------------------- ------------------------ --------------------------------
Total for Unit Offering: $2,615,000 1,046,000 CS & 1,046,000 W
--------------- ----------------------------- ------------------------ --------------------------------
</TABLE>
To date, NxGen has issued 500,000 common shares under the second private
placement to six (6) investors. NxGen has reasonable grounds to believe that the
majority of these investors are accredited investors, capable of evaluating the
merit and risk of this investment and who have acquired the shares for
investment purposes. NxGen has provided the information required by Regulation D
in the form of an offering memorandum to all investors. Accordingly, NxGen
issued the shares relying on Rule 506 of Regulation D of the 1933 Act to the
following:
<TABLE>
<CAPTION>
DATE
ISSUED NAME OF SUBSCRIBER AMOUNT PAID/DATE SHARES ACQUIRED
--------- ----------------------------------- ------------------------ ----------------
<S> <C> <C> <C> <C>
09/01/00 3024777 Nova Scotia Company $500,000 08/28/00 200,000 CS
--------- ----------------------------------- ------------------------ ----------------
08/24/00 Adam Rankin-Wilson $250,000 07/27/00 100,000 CS
--------- ----------------------------------- ------------------------ ----------------
07/21/00 Andrew Kyle $100,000 06/23/00 40,000 CS
--------- ----------------------------------- ------------------------ ----------------
08/24/00 Elinora Investments Pty. Ltd. $100,000 08/08/00 40,000 CS
--------- ----------------------------------- ------------------------ ----------------
07/21/00 Michael Marcus $200,000 05/18/00 80,000 CS
--------- ----------------------------------- ------------------------ ----------------
07/21/00 RKC Investments, LLC $100,000 06/22/00 40,000 CS
--------- ----------------------------------- ------------------------ ----------------
Total for Share Offering: $1,250,000 500,000 CS
--------- ----------------------------------- ------------------------ -----------------
</TABLE>
<PAGE>
3. Stock Options. NxGen has entered into Stock Option Agreements with the
following directors, officers or key employees of NxGen:
Number of Options to
Name of Optionee Purchase Common Shares Exercise Price $ Expiration Date
-------------------- ----------------------- ------------------- ---------------
Mark Sampson 1,350,000 2.50 Sept. 1, 2003
-------------------- ----------------------- ------------------- ---------------
Darren Dumba 300,000 2.50 Sept. 1, 2003
-------------------- ----------------------- ------------------- ---------------
William R. Neale 200,000 2.50 Sept. 1, 2003
-------------------- ----------------------- ------------------- ---------------
Ralph Proceviat 200,000 2.50 Sept. 1, 2003
-------------------- ----------------------- ------------------- ---------------
Richard Wafer 200,000 2.50 Sept. 1, 2003
-------------------- ----------------------- ------------------- ---------------
Reggie Ibison 200,000 2.50 Sept. 1, 2003
-------------------- ----------------------- ------------------- ---------------
Victoria Aguilar 110,000 4.00 Sept. 1, 2003
-------------------- ----------------------- ------------------- ---------------
3.75
Don Spears 50,000 Sept. 1, 2003
-------------------- ----------------------- ------------------- ---------------
Rick Coleman 50,000 3.75 Sept. 1, 2001
-------------------- ----------------------- ------------------- ---------------
Tim Robertson 50,000 3.75 Sept. 1, 2001
-------------------- ----------------------- ------------------- ---------------
Arthur Steinberger 150,000 4.00 Oct 1, 2003
-------------------- ----------------------- ------------------- ---------------
4. Convertible Debentures. NxGen has also entered into a convertible debenture
agreement under which a total of 560,000 shares on the conversion of warrants
attached to one of the convertible debenture instruments. The parties are as
follows:
<TABLE>
<CAPTION>
Principal # Of Shares on Conversion
Debenture Holder Debenture Date Balance Conversion* Price $ Expiry Date
--------------------------- --------------- ------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Winton Capital Holdings, Sept. 30, 2000 $ 2,100,000 560,000 CS 3.75 Sept. 30, 2001
Ltd.
--------------------------- --------------- ------------ --------------- ------------ ---------------
TOTAL: 560,000 CS
--------------------------------------------
* Plus Accrued but Unpaid Interest
</TABLE>
5. Settlement Agreement. NxGen has agreed to issue 51,692 shares of Common Stock
to StarTouch as part of a settlement agreement between International Long
Distance Corporation, NxGen and Anthony Overman. StarTouch may also elect to
convert any amounts outstanding and due by the parties to StarTouch any time at
a conversion price of $4.00 per share.
Use of Proceeds
---------------
The net proceeds of the funds received to date from the two private placements
have been or will be utilized approximately as follows:
AMOUNT PERCENTAGE
------------------------------------------------ ----------------- -----------
Offering Expenses Including Commissions $ 329,200 8%
------------------------------------------------ ----------------- -----------
Payment to StarTouch as part of settlement $ 935,438.71 24.20%
------------------------------------------------ ----------------- -----------
General Corporate Purposes $ 2,600,361.29 67.8%
------------------------------------------------ ----------------- -----------
TOTAL: $ 3,865,000.00 100.00%
------------------------------------------------ ----------------- -----------
--------------------------------------------------------------------------------
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
--------------------------------------------------------------------------------
Not applicable.
--------------------------------------------------------------------------------
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------------------------------------
At June 30, 2000 (the "Record Date"), NxGen had 10,920,800 shares of Common
Stock, par value $0.001 outstanding. These are the securities that would have
been entitled to vote if a meeting was required to be held. On June 30, 2000, a
majority action of ten stockholders (the "Action") of NxGen was taken, in
accordance with sections 78.315 and 78.320, respectively of the Nevada Revised
Statutes. As of the Record Date, these ten persons collectively owned 5,869,600
shares of Common Stock or 53.75% of the outstanding shares which exceeded the
required majority of the outstanding voting securities of NxGen necessary for
the adoption of the Action. The following matters were approved:
o amending the Articles of Incorporation of NxGen to change its name from
"Old Night", Inc., to "NxGen Networks, Inc."
o adoption of NxGen's 2000 Stock Plan with 6,000,000 shares available under
the stock plan,
o approval of the share exchange agreement dated as of June 30, 2000 among
the Company, and the ILDC Stockholders (as defined in the attached share
exchange agreement) which provided for, among other things, the issuance by
the Company of 9,078,108 shares of its Common Stock in exchange for
9,078,108 or 82.53% of the issued and outstanding shares of Common Stock of
ILDC, and the election of Messrs. Mark Sampson, Anthony Overman and Don
Spears as directors of NxGen on closing the share exchange transaction and
to hold office until the next annual general meeting.
--------------------------------------------------------------------------------
ITEM 5 OTHER INFORMATION
--------------------------------------------------------------------------------
Name Change
-----------
On August 31, 2000, NxGen changed its name from Old Night, Inc. to NxGen
Network, Inc.
Share Exchange Agreement with International Long Distance Corporation Closed
----------------------------------------------------------------------------
On August 31, 2000, NxGen issued 9,078,108 shares of the Common Stock of NxGen
to certain stockholders of ILDC ("ILDC Stockholders") to acquire approximately
an 82.53% of the issued and outstanding shares of Common Stock of ILDC, a North
Carolina corporation. NxGen had entered into a share exchange agreement dated as
of June 30, 2000 with ILDC and the ILDC Stockholders (the "Agreement") which
provided for, among other things, the issuance by the Company of 9,078,108
shares of NxGen's Common Stock in exchange for 9,078,108 or 82.53% of the issued
and outstanding shares of Common Stock of ILDC (the "Share Exchange"). The
second step of acquiring the remaining outstanding shares of ILDC through a
merger, redemption or other transactions will occur later this year or early in
2001. All references to NxGen in this section include ILDC when applicable
Changes to Board of Directors
-----------------------------
Messrs. Anthony Overman, Mark Sampson, and Don Spears were elected and appointed
as directors of NxGen on closing the Share Exchange with ILDC. Mr. Xenios
Xenopoulos has retired as an officer and director of NxGen. Information about
Messrs Overman, Sampson and Spears is contained in the definitive information
statement on Form 14C dated July 28, 2000 filed by NxGen with the Securities and
Exchange Commission.
--------------------------------------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------------
Exhibits
(a) Exhibits
2 Share Exchange Agreement dated June 30, 2000 by and among Old
Night, Inc., International Long Distance Company ("ILDC") and
Certain Shareholders of ILDC1
3(i) Articles of Incorporation 2
Amendment to Articles of Incorporation 3
3(ii) Bylaws of the Company4
6 Voting Trust Agreement between Anthony Overman and Certain
Shareholders5
10 NxGen Networks, Inc. 2000 Stock Option Plan6
11 Statement regarding computation of per share earnings7
27 Financial Data Schedule
Reports on Form 8-K
On September 5, 2000, the Company filed a current report on Form 8-K to announce
our acquisition of approximately 80% of the issued and outstanding shares of
International Long Distance Corporation.
On November 14, 2000, the Company filed an amended current report on Form 8-K to
amend the current report on Form 8-K we filed on September 5, 2000 to include
the required financial statements under Item 7.
-------------------------
1 Incorporated by reference to Exhibit 2 of the Form 8-K/A of the Company
filed with the SEC on November 15, 2000.
2 Incorporated by reference to Exhibit 3.1 of the Form 10SB12G of the Company
filed with the SEC on December 9, 1999.
3 Incorporated by reference to Exhibit 3.1 of the Definitive Information
Statement on Form DEF14C of the Company filed with the SEC on July 31,
2000.
4 Incorporated by reference to Exhibit 3.2 of the Form 10SB12G of the Company
filed with the SEC on December 9, 1999.
5 Incorporated by reference to Schedule 4.2 appended to the Share Exchange
Agreement in the Definitive Information Statement on Form DEF14C of the
Company filed with the SEC on July 31, 2000
6 Incorporated by reference to Exhibit 10.2 of the Definitive Information
Statement on Form DEF14C of the Company filed with the SEC on July 31,
2000.
7 Incorporated by reference to Note 3 of the Financial Statements.
--------------------------------------------------------------------------------
SIGNATURES
--------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NXGEN NETWORKS, INC.
/s/ Ralph Proceviat
Date: December 15, 2000
Per: Ralph Proceviat
Chief Financial Officer
