<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 St., 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, par value $0.01, as of September 30, 1997 was 3,050,950.
<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<S> <C>
BALANCE SHEET
September 30, 1997
Assets
Accrued interest receivable $10,509
Deferred acquisition costs 41,562
Goodwill, less accumulated amortization of $3,333 46,667
$98,738
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $79,267
Note payable - Sens 4,000
Accrued interest payable 134
Total current liabilities 83,401
Stockholders' equity
Common stock $0.01 par value - shares
authorized 50,000,000; outstanding 2,950,889 29,509
Additional paid-in capital 459,630
Accumulated deficit (114,752)
Less: note receivable - shareholder (359,050)
Net stockholders' equity 15,337
$98,738
</TABLE>
2
<PAGE> 3
STATEMENT OF NET LOSS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30,1997 September 30, 1997
<S> <C> <C>
Revenue
Interest income $5,580 $11,443
Total revenue 5,5801 1,443
Expenses
Professional services 16,653 41,705
Amortization of goodwill 1,250 3,333
Interest expense 405 1,068
Total expenses 18,308 46,106
Net loss (12,728) (34,663)
Deficit, beginning of period (102,024) (80,089)
Deficit, end of period $(114,752) $(114,752)
Loss per share $(0.004) $(0.02)
Weighted average 2,950,889 2,234,222
common shares outstanding
</TABLE>
3
<PAGE> 4
STATEMENT OF CASH FLOWS
For the Nine Months Ended September 30, 1997
<TABLE>
<S> <C>
Cash flows from operating activities
Net loss $(34,663)
Adjustments to reconcile net loss to net
cash used by operating activities
Amortization 3,333
Increase in accrued interest receivable (10,509)
Increase in deferred acquisition costs (41,562)
Increase in accounts payable 79,267
Increase in note payable - Sens 4,000
Increase in accrued interest payable 134
Net cash used in operating activities -
Cash and cash equivalents, December 31, 1996 -
Cash and cash equivalents, September 30, 1997 $ -
</TABLE>
4
<PAGE> 5
NOTE TO FINANCIAL STATEMENTS
1. Business On September 29, 1997, Next Generation Media Corp.
Combination (the "Company") purchased all of the assets of
Pompton Valley Publishing, Inc. The purchase price was
$350,000 consisting of 100,000 shares of the
Company's common stock plus assumption of
liabilities of approximately $177,000. The
Company used the fair value of the assets acquired
to help determine the value of the common stock
since it was more readily determinable. As of
November 13, 1997, financial data for 1996 and
1997 for Pompton Valley Publishing, Inc. was
unavailable. Consequently, the Company cannot
provide acquisition accounting adjustments or the
pro forma disclosures of revenues and net income
(loss) required by APB Opinion No. 16. The
Company will include such pro forma disclosures in
an amendment to this Quarterly Report on form 10-Q
to be filed promptly after the Company files its
amendment to the Form 8-K filed on October 8, 1997
reflecting the above-referenced transaction.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management cannot fully assess material changes in the issuer's
financial condition from the end of the preceding fiscal year to September 30,
1997, or in the issuer's results of operations with respect to the 1997 fiscal
year to September 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 September
30, 1996 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 September 30, 1997, the Issuer
had assets totaling $98,738.
Management assumes that the issuer had no current liabilities as of
December 31, 1996. The issuer has current liabilities totaling $83,401 from
the end of the preceding fiscal year to date.
The issuer 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, President and a
director of the issuer, loaned the issuer $20,000. Also as of March 6, the
issuer loaned these funds to Promote It An Idea Company, a Colorado corporation
("Promote It"), in anticipation of being able to reach definitive agreements
with Promote It for certain licenses from Promote It to the issuer and certain
services to be provided by the issuer to Promote It, pursuant to a letter of
intent between Promote It and the issuer. The issuer and Promote It were
unable to reach such agreement, and the issuer declared the note from Promote
It due and payable.
As of September 30, 1997, Promote It had paid the entire outstanding
balance of the note owed to the issuer. More specifically, Promote It paid the
issuer $5,000 on July 17, 1997, and the issuer used this payment to repay
$5,000 of the note from Larry Grimes. On August 19, 1997, Promote It made a
final payment of $5,933.99 to the issuer which represented the remaining
principal balance on the note, including interest and late payment fees. The
issuer used this $5,933.99 payment to pay the entire outstanding balance of the
loan from Mr. Grimes.
6
<PAGE> 7
The issuer has goodwill of $46,667 arising from the purchase of the
common stock of the issuer by Mr. Joel Sens from the issuer's former
controlling stockholder, less accumulated amortization of $3,333.
Management assumes that the issuer had no expenses during the third
fiscal quarter of 1996. During the period covered by this report, the issuer
incurred expenses for professional services of $16,653.
In addition to costs for professional services, the issuer incurred
expenses for the amortization of goodwill in the amount of $1,250. This
resulted in an increase in a net loss of $(12,728), increasing the issuer's
accumulated deficit to $(114,752).
Management assumes that the issuer had no earnings per share during
the third fiscal quarter of 1996 and for the first nine months of fiscal 1996.
During the period covered by this report, the issuer had a net loss per share
of $(0.004) and for the nine months ended September 30, 1997 a loss per share
of $(0.02).
As reported in a Current Report on Form 8-K filed on October 8, 1997
(the "8-K"), on September 29, 1997, Independent News, Inc. ("INI"), a Delaware
corporation and a wholly-owned subsidiary of the issuer, pursuant to an Asset
Purchase Agreement dated as of September 29, 1997 among INI, Pompton Valley
Publishing Company, Inc. ("Pompton Valley"), Joseph Pellegrino, and Joseph
Nicastro (the "Agreement"), assumed certain liabilities and contracts of
Pompton Valley, and purchased all of those assets of Pompton Valley, including
accounts receivable and computer and office equipment and supplies, relating
to, or used by Pompton Valley in connection with, Pompton Valley's community
newspaper publishing business (the "Transaction").
The Transaction was funded with cash, with common stock of the issuer,
and by means of INI's assumption of certain of Pompton Valley's liabilities.
The cash portion of the purchase price was funded by means of a loan of
$15,000, from Joel Sens, a director of the issuer and of INI, to the issuer.
The issuer also issued 100,000 shares of common stock, par value $.01, to the
shareholders of Pompton Valley in connection with the Transaction. INI assumed
approximately $257,600 of Pompton Valley's liabilities.
INI received from Pompton Valley as part of the Transaction, among
other assets, all of the tangible personal property, including computer and
office equipment and supplies, used by Pompton Valley in its community
newspaper publishing business. The issuer intends to continue such use.
7
<PAGE> 8
In accordance with rules of the Securities and Exchange Commission,
financial statements reflecting the Transaction were not filed with the 8-K,
but will be filed in an amendment to the 8-K (the "8-K Amendment") within sixty
days of the date on which the 8-K was required to be filed. The Transaction is
not yet reflected in the financial statements included in this Quarterly Report
on Form 10-Q. Such financial statements will be updated in an amendment to
this Quarterly Report on Form 10-Q to be filed promptly after the 8-K
Amendment.
8
<PAGE> 9
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit 2.1 Asset Purchase Agreement dated as of
September 29, 1997 among INI, Pompton Valley,
Joseph Nicastro, and Joseph Pellegrino
(incorporated by reference from the issuer's
Current Report on Form 8-K filed October 8,
1997)
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the period covered by this
report. A report on Form 8-K was filed on October 8, 1997, reflecting the
Transaction.
9
<PAGE> 10
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.
NEXT GENERATION MEDIA CORP.
Date: November 14, 1997 By: s/s Larry Grimes
-----------------------------
Larry Grimes, President
(Duly Authorized Officer)
Date: November 14, 1997 By: s/s Kenneth Brochin
-----------------------------
Kenneth Brochin, Treasurer
(Principal Financial Officer)
10
<PAGE> 11
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit Description Page
- ------- ----------- -------------
<S> <C> <C> <C>
2.1 -- Asset Purchase Agreement dated
as of September 29, 1997 among
INI, Pompton Valley, Joseph Nicastro,
and Joseph Pellegrino (incorporated
by reference from the issuer's
Current Report on Form 8-K filed
October 8, 1997)
27 -- Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 10,509
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,509
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 98,738
<CURRENT-LIABILITIES> 84,401
<BONDS> 0
0
0
<COMMON> 29,509
<OTHER-SE> (14,172)
<TOTAL-LIABILITY-AND-EQUITY> 98,738
<SALES> 0
<TOTAL-REVENUES> 5,580
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,903
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 405
<INCOME-PRETAX> (12,728)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,728)
<EPS-PRIMARY> (0.004)
<EPS-DILUTED> (0.004)
</TABLE>
