<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] 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 2-74785-B
NEXT GENERATION MEDIA CORP.
(Exact name of registrant as specified in its charter)
Nevada 88-0169543
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 N. Stafford Street, Suite 2003
Arlington, VA 22203
(Address of principal executive offices)
(Zip Code)
(703) 516-9888
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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 No X
----- -----
The total number of issued and outstanding shares of the issuer's
common stock, per value $0.01, as of July 31, 1997 was 2,950,899.
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
The following unaudited consolidated financial statements of Next
Generation Media Corp. (the "Issuer") within Item 1 include, in the opinion of
management, all adjustments (consisting only of normal recurring adjustments)
necessary for fair presentation of such consolidated financial statements for
the periods indicated.
BALANCE SHEET AS OF
June 30, 1997
Financial Information
Next Generation Media
<TABLE>
<S> <C>
Assets
Note receivable-Promote It $ 9,000
Accrued interest receivable $ 5,863
Goodwill, less amortization of $2083 $ 47,917
-----------
$ 62,780
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 21,052
Loan payable-officer $ 9,000
Note payable-Sens $ 4,000
Accured interest payable $ 663
-----------
$ 34,715
Stockholders' Equity
Common stock $.01 par value - shares
authorized 50,000,000; outstanding 2,950,889 $ 29,509
Additional paid in capital $ 459,630
Less: Note receivable-shareholder $ (359,050)
Accumulated deficit $ (102,024)
------------
$ 28,065
Net Stockholders' Equity $ 62,780
</TABLE>
1
<PAGE> 3
STATEMENT OF NET LOSS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, 1997 June 30, 1997
<S> <C> <C>
REVENUE
Interest income $ 5,863 $ 5,863
TOTAL REVENUE $ 5,863 $ 5,863
EXPENSES
Professional services $ 12,583 $ 25,052
Amortization of goodwill $ 1,250 $ 2,083
Interest expense $ 663 663
TOTAL EXPENSES $ 14,496 $ 27,798
NET LOSS $ (8,633) $ (21,935)
Deficit, beginning of period $ (93,391) $ (80,089)
Deficit, end of period $ (102,024) $ (102,024)
Loss per share $ (0.003) $ (0.01)
Weighted average common shares outstanding $ 2,950,889 $ 2,019,056
</TABLE>
2
<PAGE> 4
STATEMENT OF CASH FLOWS
For the Six months ended June 30, 1997
<TABLE>
<S> <C>
Cash flows from operating activities
Net loss $ (21,935)
Adjustments to reconcile net loss to net
cash used by operating activities
Amortization $ 2,083
Increase in note receivable $ (9,000)
Increase in accrued interest receivable $ (5,863)
Increase in accounts payable $ 21,052
Increase in note payable $ 4,000
Increase in accrued interest payable $ 663
Net cash used in operating activities $ (9,000)
Cash Flows from financing activities
Proceeds of loan from officer $ 9,000
Net change in cash and cash equivalents $ -
Cash and case equivalents, December 31, 1996 $ -
Cash and cash equivalents, June 30, 1997 $ -
</TABLE>
3
<PAGE> 5
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Management cannot fully assess material changes in the Issuer's
financial condition from the end of the preceding fiscal year to June 30, 1997,
or in the Issuer's results of operations with respect to the 1997 fiscal year
to June 30, 1997 from the corresponding year to date period of the preceding
fiscal year, for the reasons set forth in the Issuer's quarterly report on Form
10-Q for the period ended March 31, 1997.
The following discussion is based on assumptions made by management as
to the Issuer's results of operations and financial condition as of June 30,
1997 and for the period then ended. No assurances can be given as to the
accuracy of such assumptions. However, management has no knowledge of any
information that would make reliance on such assumptions unwarranted.
Management assumes that the Issuer had no assets as of December 31,
1996, the end of its last fiscal year. As of June 30, 1997, the Issuer had
assets totaling $62,780.
Management assumes that the Issuer had no current liabilities as of
December 31, 1996. The Issuer has current liabilities totaling $34,715 from
the end of the preceding fiscal year to date.
The Company had no income from operations during the period covered by
this report and Management assumes that the Issuer had no income during the
comparable period in 1996. On March 6, 1997, Larry Grimes, an officer of
the Issuer, loaned the Issuer $20,000 at a rate of 15% annually. On March 6,
the Issuer in turn loaned these funds to Promote It An Idea Company, a Colorado
corporation ("Promote It") at the same interest rate. As of June 30, 1997,
Promote It has paid a total of $11,000 of the outstanding loan balance to the
Issuer. The Issuer paid Larry Grimes $11,000 during the period covered by this
report, thereby reducing the loan payable to him from the Issuer to $9,000.
Promote It paid the Issuer $5,000 on May 27, 1997 and $6,000 on June 13, 1997.
In each case the funds were used to reduce the loan payable by the Issuer to
Larry Grimes. Management assumes that the Issuer did not have interest income
for either the second fiscal quarter of 1996 or for the six months ended June
30, 1996. The Issuer had interest income of $5,863 for the second fiscal
quarter of 1997 and the same amount for the six months ended June 30, 1997.
As of the end of the fiscal quarter covered by this report, Promote It
owed the Issuer $9,000. Promote It has agreed to repay the $9,000 in two
installment payments in the third fiscal quarter of 1997. Prior to the filing
of this report, but after the fiscal quarter covered by this report, $5,000 has
been repaid to the Issuer by Promote It. The Issuer in turn paid the $5,000 to
Larry Grimes.
The Issuer has goodwill of $49,167 arising from the purchase of the
common stock of the Issuer by Mr. Sens from the Issuer's former controlling
stockholder, less accumulated amortization of $2,083.
Management assumes that the Issuer had no expenses during the second
fiscal quarter of 1996. During the period covered by this report, the Issuer
incurred expenses for professional services of $12,585, and amortization of
goodwill in the amount of $2,083. This resulted in an increase in a net
loss of $8,633, increasing the Issuer's accumulated deficit to $102,024. The
Issuer also incurred $4,000 in liabilities in the form of two loans to the
Issuer by Joel P. Sens to pay for professional services rendered to the Issuer.
Management assumes that the Issuer had no earnings per share during the
second fiscal quarter of 1996 and for the first six months of fiscal 1996.
During the period covered by this report the Issuer had a net loss per share
of $.003 and for the six months ended June 30, 1997 a loss per share of $.01.
<PAGE> 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
There have been no material legal proceeding begun against the Issuer
during the period covered by this report.
Item 2. Changes in Securities.
There have been no material modifications in the rights of the holders
of the common stock of the Issuer during the period covered by this report.
Item 3. Default Upon Senior Securities.
There have been no material defaults in the payment of principal or
interest on any indebtedness of the Issuer during the period covered by this
report.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to stockholders during the period covered by
this report. The stockholders of the Issuer approved the change of the
Issuer's name on March 31, 1997 by a written consent in lieu of meeting which
became effective on April 16, 1997.
Item 5. Other.
On April 1, 1997 the Issuer consummated a transaction with Joel P. Sens
whereby he was issued 2,150,000 shares of common stock, par value $0.01, in
exchange for a secured promissory note in the principal amount of $359,050,
bearing interest at the rate of 5.83%. The principal shall be due in full on
April 1, 2000. Interest shall be due annually on April 1. Mr. Sens' obligations
under this note are secured by a pledge to the Issuer of the purchased shares.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit No. Description
- ----------- -----------
(a) Exhibits:
10(a) Promissory Note and Security Agreement, each dated April 1,
1997
27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the period covered by this
report.
5
<PAGE> 7
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.
<TABLE>
<S> <C> <C>
Date: August 14, 1997 NEXT GENERATION MEDIA CORP.
By: /s/ Larry Grimes
---------------------------------------------------------
Larry Grimes, President
Date: August 14, 1997
By: /s/ Kenneth Brochin
--------------------------------------------------------
Kenneth Brochin, Treasurer
(Principal Financial Officer)
</TABLE>
6
<PAGE> 8
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10(a) Promissory Note and Security Agreement,
each dated April 1, 1997.
27 Financial Data Schedule
7
<PAGE> 1
PROMISSORY NOTE
$359,050.00 Arlington, Virginia
April 1, 1997
FOR VALUE RECEIVED, Joel Sens (the "Borrower") hereby promises
to pay to the order of Micro Tech Industries, Inc. (to become known as Next
Generation Media Corp.), a Nevada corporation (the "Lender"), the principal
sum of Three Hundred Fifty-Nine Thousand Fifty Dollars and No Cents
($359,050.00).
The unpaid principal shall bear interest from the date hereof
until paid at the rate of five point eight three percent (5.83%). Interest shall
be due annually on each anniversary date of this Note. The principal shall be
due on the third anniversary date of this Note. Interest shall accrue at the
rate of ten percent (10%) per annum on any interest or principal not paid when
due. All payments shall be made to Lender or such other person as the holder
shall designate in writing to the Borrower.
Presentment, notice of protest, demand and notice of dishonor
of this Note are waived. The Borrower hereby agrees to pay all reasonable fees
and expenses incurred by the Lender or any subsequent holder, including the
reasonable fees of counsel, in connection with the protection and enforcement of
the rights of the Lender or any subsequent holder under this Note, including
without limitation the collection of any amounts due under this Note and the
protection and enforcement of such rights in any bankruptcy, reorganization or
insolvency proceeding involving the Borrower.
This Note shall be governed by, and construed and interpreted
in accordance with the internal laws of the Commonwealth of Virginia without
regard to any otherwise applicable principles of conflicts of law.
No provision of this Note is intended to or shall require or
permit the Lender, directly or indirectly, to take, collect or receive in money,
goods or in any other form, any interest (including amounts deemed by law to be
interest) in excess of the maximum rate of interest permitted by applicable law.
If any amount due from or paid by the Borrower shall be determined by a court of
competent jurisdiction to be interest in excess of such maximum rate, the
Borrower shall not be obligated to pay such excess and, if paid, such excess
shall be applied against the unpaid principal balance of this Note or, if and to
the extent that this Note has been paid in full, such excess shall be remitted
to the Borrower. The Borrower acknowledges and agrees to the interest rate
stated in this Note and, to the extent that any other amount payable under this
Note is deemed to be interest under applicable law, the Borrower acknowledges
and agrees to pay all of such amounts as additional interest and as part of the
contracted for rate of interest.
\s\ Joel Sens
<PAGE> 2
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT (the "Agreement") dated as of
April 1, 1997, by and between JOEL SENS (the "Pledgor"), as obligor under that
certain promissory note in the principal amount of $359,050 made payable to
Micro Tech Industries, Inc. (the "Note"), and MICRO TECH INDUSTRIES, INC. (the
"Secured Party").
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Pledgor agrees for the benefit
of the Secured Party as follows:
1. DEFINITIONS. As used herein the "Uniform Commercial Code"
shall mean the Uniform Commercial Code, as amended and in effect in the
Commonwealth of Virginia as of the date hereof.
2. SECURITY FOR NOTE. As security for payment of the principal
and interest on the note when due (the "Obligations"), the Pledgor hereby
pledges, assigns and grants to the Secured Party a continuing first priority
lien on and security interest in, upon and to his holdings of two million one
hundred fifty thousand (2,150,000) shares of the common stock of Micro Tech
Industries, Inc. (including all proceeds, additions, substitutions, enlargements
and modifications thereto, the "Collateral"). The Pledgor will take or cause to
be taken any action necessary to perfect the Secured Party's security interest
in such securities, including, in particular, but without limitation, transfer
of such securities to the Secured Party in accordance with Article 8 of the
Uniform Commercial Code.
2.1 SUBSEQUENT DOCUMENTATION. At any time the
Secured Party deems it reasonably necessary, the Pledgor shall execute and
deliver to the Secured Party (all in form and substance satisfactory to the
Secured Party in its sole discretion) agreements, documents, instruments, and
writings deemed reasonably necessary by the Secured Party or as the Secured
Party may otherwise request from time to time to evidence, perfect, or protect
the Secured Party's lien and security interest in the Collateral required
hereunder.
2.2. RELEASE. The Secured Party agrees that, upon
the full discharge of all of the Pledgor's Obligations under the Note, this
Agreement and any other documents related thereto or hereto, it will execute
releases of the Secured Party's security and other interests in the Collateral.
3. SECURED INDEBTEDNESS. This Agreement and the security
interest created hereby shall secure the payment by the Pledgor of his
Obligations including any extensions and renewals thereof, owing by the Pledgor
to the Secured Party in the amount of $359,050 plus the costs of enforcement of
the Note and this Agreement.
4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents,
warrants and covenants to and with the Secured Party that: The Pledgor (i) is
the legal and equitable owner of the Collateral, (ii) holds the same free and
clear of all liens, charges, offsets, defenses, counterclaims, encumbrances and
security interests of every kind and nature, and
<PAGE> 3
(iii) while any portion of the Obligations is outstanding, will take all action
necessary to maintain the Collateral and will not impair the Secured Party's
rights to hold and maintain the Collateral and will make no assignment, pledge,
mortgage, hypothecation or transfer of, or create any other security interest
in, the Collateral adverse to the Secured Party.
5. EVENTS OF DEFAULT. The happening of any of the following
events shall constitute an "Event of Default" pursuant to this Agreement and the
Note and shall permit the Secured Party to declare all Obligations immediately
due and payable:
5.1. NON-PAYMENT. Any default in the payment of the
Note, or any portion thereof, within five (5) days after the date such payment
from the Pledgor is due.
5.2. NON-PERFECTION OF SECURITY INTEREST. Any failure
of the Pledgor to provide to the Secured Party in a timely manner first priority
perfected security interests in and liens upon the Collateral as provided for
herein.
5.3. BREACH OF REPRESENTATION OR WARRANTY. Any
representation or warranty made by the Pledgor in the Note, in this Agreement or
any subsequent documentation hereof proves to have been false in any material
manner.
5.4. BANKRUPTCY. Any filing by the Pledgor of a
petition or answer or consent seeking relief under the United States Bankruptcy
Code, as now constituted or hereafter amended, or any other applicable federal
or state bankruptcy law or other similar law, or the institution of involuntary
proceedings thereunder by creditors of the Pledgor or the appointment or taking
possession of a receiver, liquidator, assignee, trustee, custodian, sequestrator
(or other similar official) of the Pledgor or of any substantial part of his
property, or if the Pledgor fails generally to pay his debts in the normal
course of business, or if action shall be taken by the Pledgor for the purpose
of effecting any of the foregoing.
5.5. ORDERS. An order or decree shall be entered by
any court of competent jurisdiction approving a petition for relief with respect
to the Pledgor, or of all or a substantial part of the Collateral, or appointing
a receiver, liquidator, assignee, trustee, custodian or sequestrator (or similar
official) of the Pledgor, or of any substantial part of his property or ordering
the winding-up or liquidation of his affairs, and such order or decree shall
continue unstayed and in effect for any period of thirty days.
5.6. BREACH OF COVENANT Any default in the due
observance of any covenant, condition or agreement on the part of the Pledgor
contained herein or in the Note.
6. FORECLOSURE. If at any time any Event of Default shall
occur (as defined by Section 5 above), thereupon, unless and to the extent that
the Secured Party shall otherwise elect, the Obligations shall become and be due
and payable forthwith, and the Secured Party
2
<PAGE> 4
shall have all the rights and remedies of a secured party pursuant to the
Uniform Commercial Code. The Secured Party will send the Pledgor reasonable
notice of the time and place of any public sale or other disposition thereof or
of the time after which any private sale or other disposition thereof is to be
made. The requirement of sending reasonable notice shall be met if such notice
is deposited in the U.S. Mail, postage prepaid, addressed to the Pledgor at
least ten (10) days before the time of the sale or disposition of the
Collateral. The Collateral may be sold or otherwise disposed of as an entirety
or in such parcels as the Secured Party may elect, and it shall not be necessary
for the Secured Party to have actual possession of the Collateral or to have it
present when the sale or other disposition is made. The Secured Party may
deliver to the purchasers or transferees of the Collateral a Bill of Sale or
Transfer binding the Pledgor forever to warrant and defend title to such
Collateral. The Pledgor shall remain liable for any deficiency.
6.1. PROCEEDS OF FORECLOSURE. The Secured Party may
apply any net proceeds of any foreclosure (after deducting all reasonable costs
and expenses) towards any of the Obligations then due and payable and shall
retain the balance of such net proceeds in an interest-bearing escrow account as
cash collateral for any of the remaining Obligations under the Note or this
Agreement.
6.2. WAIVER OR REMEDY OF DEFAULT. The Secured Party
may remedy any default and may waive any default without waiving the requirement
that the default be remedied and without waiving any other default. The remedies
of the Secured Party are cumulative, and the exercise or partial exercise of any
one or more of the remedies provided for herein shall not be construed as a
waiver of any of the other remedies of the Secured Party. No delay of the
Secured Party in exercising any power or right shall operate as a waiver
thereof.
7. EXPENSES AND PROCEEDS. The Pledgor shall pay to the Secured
Party all reasonable expenses, including reasonable expenses for legal services,
for, or incidental to, the enforcement of any of the provisions hereof or any
actual or attempted sale, or any exchange, enforcement, collection, compromise
or settlement of any of the Collateral or receipt of any of the proceeds
thereof, and for the care of the Collateral and defending or asserting the
rights and claims of the Secured Party in respect thereof, by litigation or
otherwise, including expenses of insurance. The Secured Party may at any time,
at its option, apply the net cash receipts from the Collateral to the payment of
the Obligations under the Note, in accordance with the Note.
8. OTHER SECURITY, RELEASES AND ASSIGNMENTS. The execution and
delivery of this Agreement in no manner shall impair or affect any other
security (by endorsement or otherwise) for the payment of the Obligations to the
Secured Party and no security taken hereafter as security for payment by any
party of the Obligations to the Secured Party shall impair in any manner or
affect this Agreement. Any of the Collateral may be released from this Agreement
without altering, varying or diminishing in any way the force, effect, lien,
security interest, or charge of this Agreement as to the Collateral not
expressly released, and
3
<PAGE> 5
this Agreement shall continue as a security interest and charge on all of the
Collateral not expressly released until all sums and indebtedness secured hereby
have been paid in full. Any future assignment or attempted assignment or
transfer of the interest of the Pledgor in and to any of the Collateral shall
not deprive the Secured Party of the right to sell or otherwise dispose of or
utilize all of the Collateral as above provided or necessitate the sale or
disposition thereof in parcels or in severalty.
9. MISCELLANEOUS.
Any clause, sentence or provision of this Agreement
held by a court of competent jurisdiction to be invalid, illegal or ineffective
shall not impair, invalidate or nullify the remainder of this Agreement. The
effect thereof shall be confined to the clause, sentence or provision so held to
be invalid, illegal or ineffective. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. This Agreement may not be
amended or supplemented, nor may any provisions hereof waived or terminated,
orally but only by a writing executed by both parties hereto. Any waiver of any
provision hereof shall apply only to the specific circumstance of such waiver
and not to any other or future circumstance. No delay on the part of the Secured
Party in enforcing any aspect of the Note or this Agreement shall be considered
a waiver thereof or hereof. The Note and this Agreement shall bind and inure to
the benefit of each of the signatories hereto and to the heirs, personal
representatives, successors and assigns of each, but no other third party shall
be a beneficiary thereof or hereof. This Agreement and all matters in connection
herewith shall be construed and enforced in accordance with the laws of the
Commonwealth of Virginia without regard to any otherwise applicable principles
of conflicts of laws except insofar as expressly stated herein to the contrary
or as either the Uniform Commercial Code or federal law shall be applicable to
the Agreement and the transactions contemplated hereby. The Pledgor hereby
waives presentment, protest, and notice of dishonor in regard to the delivery,
acceptance, performance, default or enforcement of this Agreement.
[SIGNATURES ON FOLLOWING PAGE]
4
<PAGE> 6
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
JOEL SENS
\s\ Joel Sens
County of Arlington )
) ss:
Commonwealth of Virginia )
Sworn and subscribed to before me
by Joel Sens this 18th day
of April, 1997.
Illegible signature
- ------------------------------
Notary Public
My Commission Expires: April 30, 2000
MICRO TECH INDUSTRIES, INC.
By: /s/ Larry Grimes
-----------------------
Name: Larry Grimes
County of Montgomery )
) ss:
State of Maryland )
Sworn and subscribed to before me
by Larry Grimes
---------------------------
this 21 day of April, 1997.
Scott M. Springman
- ------------------------------
Notary Public
My Commission Expires: May 12, 1998
5
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 14,863
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 62,780
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 62,780
<CURRENT-LIABILITIES> 34,715
<BONDS> 0
0
0
<COMMON> 29,509
<OTHER-SE> 100,580
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 5,863
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 27,798
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (21,935)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,935)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
