<PAGE> 1
FORM 10-QSB
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 March 31, 1999
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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
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Next Generation Media Corp.
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(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.)
8380 Alban Road
Springfield, VA 22150
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(Address of principal executive offices)
(Zip Code)
(703) 913-0416
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
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<PAGE> 2
The total number of issued and outstanding shares of the registrant's
common stock, par value $0.01, as of November 5, 1999 was 4,260,818.
<PAGE> 3
ITEM 1. FINANCIAL STATEMENTS
NEXT GENERATION MEDIA CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
======================================================================================================
<S> <C> <C>
ASSETS
CURRENT
Cash $ - $ 326
Notes receivable from UNICO 175,500 175,500
Accounts receivable, less allowance for doubtful
accounts of $65,534 162,101 122,443
Accrued interest receivable 2,253 2,253
Deferred loan costs, net of
accumulated amortization of $53,577 49,300 66,423
Due from related parties 41,900 -
Deferred offering costs 139,200 185,520
- -------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 570,254 552,465
PROPERTY AND EQUIPMENT, NET 155,210 170,572
OTHER
Deferred acquisition costs 1,094,167 1,094,167
Intangibles, net of accumulated amortization of $49,312
and $24,561 146,666 155,862
Investment in UNICO 25,537 25,537
- -------------------------------------------------------------------------------------------------------
TOTAL ASSETS $1,991,834 $1,998,603
========================================================================================================
</TABLE>
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NEXT GENERATION MEDIA CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
=================================================================================================
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Checks issued against future deposits $ 66,308 $ 28,919
Notes payable, current portion 251,289 237,153
Current obligations under capital leases 37,793 41,425
Accounts payable and accrued expenses 237,447 236,523
Wages payable 228,480 244,616
Due to related parties 143,892 129,570
Deferred revenue - 15,787
- --------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 965,209 933,993
LONG TERM DEBT
Obligations under capital leases 14,079 18,339
Accrued dividends 136,569 96,569
- --------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,115,857 1,048,901
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REDEEMABLE PREFERRED STOCK SERIES A, par value $.01,
redemption value $6 per share, 500,000 shares
authorized, 250,000 shares issued and outstanding 822,917 782,292
REDEEMABLE PREFERRED STOCK SERIES B, par value $.01,
redemption value $5 per share, 500,000 shares
authorized, 70,000 shares issued and outstanding 320,833 233,333
- --------------------------------------------------------------------------------------------------
COMMITMENTS
STOCKHOLDERS' DEFICIT
Common stock, $.01 par value, 50,000,000 authorized
3,693,318 and 3,629,318 issued and outstanding (Note 1) 36,931 36,291
Additional paid in capital 3,677,656 3,625,363
Accumulated deficit (3,982,360) (3,727,577)
- --------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' DEFICIT (267,773) (65,923)
- --------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $1,991,834 $1,998,603
==================================================================================================
</TABLE>
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NEXT GENERATION MEDIA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended March 31, 1999 1998
==================================================================================================================
<S> <C> <C>
REVENUES:
Advertising revenues $ 368,436 $ 321,869
Classified revenues 51,682 44,302
Commission income 28,005 68,725
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TOTAL REVENUES 448,123 434,896
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OPERATING EXPENSES
Printing costs 81,252 86,994
Postage and delivery 120,786 106,152
Other production costs 44,941 50,687
Selling expenses 48,731 42,876
General and administrative expenses 158,646 160,762
Depreciation and amortization 24,878 13,320
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TOTAL OPERATING EXPENSES 479,234 460,791
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LOSS FROM OPERATIONS (31,111) (25,895)
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OTHER INCOME (EXPENSE)
Other income 300 -
Interest income - 5,161
Interest expense (55,847) (99)
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TOTAL OTHER INCOME (EXPENSE) (55,547) 5,062
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NET LOSS (86,658) (20,833)
Preferred stock dividends (40,000) -
Preferred stock deemed dividends (128,125) -
- --------------------------------------------------------------------------------------------------------------------
Loss applicable to common shareholders $ (254,783) $ (20,833)
====================================================================================================================
BASIC AND DILUTED LOSS PER COMMON SHARE $ (.07) $ (.007)
- --------------------------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 3,651,362 3,113,450
====================================================================================================================
</TABLE>
<PAGE> 6
NEXT GENERATION MEDIA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31, 1999 1998
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<S> <C> <C>
OPERATING ACTIVITIES
Net loss $(86,658) $(20,833)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH USED IN OPERATING ACTIVITIES:
Depreciation and amortization 24,878 13,320
Amortization of deferred loan costs 17,123 -
Amortization of discount on notes payable 14,136 -
(INCREASE) DECREASE IN ASSETS
Accounts receivable (39,658) 15,665
Accrued interest receivable - (5,161)
INCREASE (DECREASE) IN LIABILITIES
Accounts payable 924 77,023
Wages payable (16,136) -
Deferred revenue (15,787) -
Consulting fees payable 18,589 -
Accrued interest payable - 99
- ----------------------------------------------------------------------------------------------
CASH USED IN OPERATING ACTIVITIES (82,590) (80,113)
- ----------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Acquisition of property and equipment (320) (30,617)
Deferred acquisition costs - (39,235)
- ----------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES (320) (69,852)
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FINANCING ACTIVITIES
Checks issued against future deposits 37,389 (21,570)
Proceeds from notes payable - 60,000
Proceeds of loans from share holders - 36,822
Proceeds from issuance of common stock 99,253 -
Net advances from related parties (46,167) -
Payments of capital lease obligation (7,892) -
Repayment of note payable - (5,334)
Repayment of shareholder note payable - (19,342)
Repayment of employee note payable - (60,387)
- ----------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 82,583 (10,261)
- ----------------------------------------------------------------------------------------------
DECREASE IN CASH (327) -
CASH, beginning of period 327 -
- ----------------------------------------------------------------------------------------------
CASH, end of period $ - $ -
==============================================================================================
</TABLE>
<PAGE> 7
NEXT GENERATION MEDIA CORPORATION
SUMMARY OF ACCOUNTING POLICIES
<TABLE>
<CAPTION>
<S> <C>
BUSINESS The Company operates a newspaper publishing business distributing free
DESCRIPTION newspapers, supported by local advertising throughout New Jersey. In 1998
and 1997, the Company operated in one business segment.
BASIS OF The consolidated financial statements include the statements of Next
PRESENTATION Generation Media Corporation (the "Company") and its wholly owned
subsidiary Independent News, Inc. ("INI"). All significant intercompany
transactions have been eliminated.
INTERIM FINANCIAL In the opinion of management, the interim financial information as of
INFORMATION March 31, 1999 and for the three months ended March 31, 1999 and
1998 contains all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for such
periods. Results for interim periods are not necessarily indicative of
results to be expected for an entire year.
LOSS PER COMMON SHARE Loss per share has been computed using the weighted average number of
shares outstanding. The outstanding stock options were not considered in the
computation because their inclusion would have been anti-dilutive.
USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted
IN THE PREPARATION accounting principles requires management to make estimates and assumptions
OF FINANCIAL that affect the reported amounts of assets and liabilities and disclosure of
STATEMENTS contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
RISKS AND The local newspaper publishing industry is highly competitive. Advertising revenue
UNCERTAINTIES generally fluctuates based on local economic conditions. In recent years the local
publishing industry has experienced consolidation of smaller newspaper businesses
into larger, better capitalized companies. These larger newspaper publishing companies
attempt to increase market share by reducing advertising rates which, if successful,
would have an adverse impact on the Company.
</TABLE>
<PAGE> 8
NEXT GENERATION MEDIA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
1. COMMON STOCK During March 1999, the Company issued 64,000
shares of common stock through a private
placement to various individual investors at
$2 per share. Net proceeds from the private
placement after deductions for both cash and
non-cash issuance expenses, amounted to
$52,933. The Company deferred expenses of
$139,200 related to one on these private stock
offerings which was in progress at March 31, 1999.
2. SUBSEQUENT EVENT Between April and June 1999, the Company
issued 267,000 shares at $2 per share through
a private placement to various individual
investors. Net proceeds, after deductions for
both cash and non-cash issuance expenses,
amounted to $390,760.
On April 1, 1999, the Company acquired all of
the outstanding common stock of United for
$336,665 in cash and the assumption of debt
totaling $912,702. United is engaged in the
cooperative direct mail marketing business.
The Company will account for the acquisition
using the purchase method. The following
unaudited pro forma summary presents the
consolidated results of operations as if the
acquisition had been completed on January 1,
1998. These results do not necessarily reflect
what would have occurred had the acquisition
actually been made as of such dates and is not
necessarily indicative of results which may be
obtained in the future.
</TABLE>
<TABLE>
<CAPTION>
Three months ended March 31, 1999 1998
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<S> <C> <C>
Revenues 2,404,763 2,352,895
Net loss (income) (98,077) 36,192
Net loss (income) applicable to
Common shareholders (266,202) 36,192
Basic and diluted loss (income)
Per share attributable to common
shareholders (.07) .01
=================================================================================
</TABLE>
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Total revenues increased 3.04%, to $448,123 in the first quarter of 1999
from $434,896 in the first quarter of 1998. The revenues were derived from the
operations of the issuer's sole operating subsidiary, Independent News, Inc.
("INI").
Total operating expenses increased 4.0% to $479,234 in 1999 from $460,791
in the first quarter of 1998. Printing costs, postage and delivery, other
production costs, selling expenses, and depreciation and amortization, which
aggregate to $320,588, increased 6.8%, from $300,029 in the comparable 1998
period. General and administrative expenses decreased 1.3%, to $158,646 from
$160,762 in the first quarter of 1998.
Interest expense increased to $55,847 in the first quarter of 1999 from $99
in the comparable 1998 period due to borrowings incurred during calendar year
1998.
The Company's principal source of liquidity is proceeds from the issuance
of common stock. In the first quarter of 1999, the Company realized proceeds of
$52,933, after deductions of cash and non-cash issuance expenses, on the sale of
64,000 shares of common stock at a per share price of $2.00.
Cash used by operating activities was $82,590 for the quarter ended March
31, 1999 compared to $80,113 for the quarter ended March 31, 1998. This was
primarily due to the net loss of $86,658 and an increase in accounts receivable,
offset by non-cash charges relating to amortization of deferred loan costs and
discounts on notes payable.
Cash used in investing activities was $320 for the quarter ended March 31,
1999, compared to $69,852 for the quarter ended March 31, 1998, as the Company
made no acquisitions of property and equipment and did not incur any acquisition
costs during the quarter ended March 31, 1999.
Cash provided by financing activities was $82,583 for the quarter ended
March 31, 1999, compared to cash used in financing activities of $10,261 for
the quarter ended March 31, 1998. This increase was primarily due to the
proceeds received from the issuance of common stock.
<PAGE> 10
The Company had a net loss per share, on a basic and diluted basis, during
the first fiscal quarter of 1998 of $.007. During the period covered by this
report, the Company had a net loss per share of $.07 on both a basic and diluted
basis.
The Company has no unused capital resources.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the quarter ended March 31, 1999, the Company issued 64,000 shares
of common stock through a private placement to various accredited investors at
$2.00 per share. The securities were sold pursuant to an exemption from
registration pursuant to Rule 506 of Regulation D promulgated under Section 4(2)
of the Securities Act of 1933, as amended. Net proceeds from the private
placement after deductions for both cash and non-cash issuance expenses, amount
to $52,933. Proceeds were used for operating activities of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 20, 1999, a majority of the shareholders of the registrant
acting by written consent in lieu of a special meeting, adopted amended and
restated bylaws for the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
- ------- ----------- --------
<S> <C> <C>
3.1 Articles of Incorporation (under the name Micro Tech Incorporated by reference in the filing of
Industries Inc.) the Company's annual report on Form 10-KSB
filed on April 15, 1998.
</TABLE>
<PAGE> 11
<TABLE>
<S> <C> <C>
3.2 Amendment to the Articles of Incorporation Incorporated by reference in the filing of
the Company's quarterly report on Form 10-Q
filed on May 15, 1997.
3.3 Amended and Restated Bylaws of the Company Incorporated by reference in the filing of
the Company's annual report on Form 10-KSB
filed on November 12, 1999.
24.1 Power of Attorney Included on the signature page hereto.
27.1 Financial Data Schedule Included herein.
</TABLE>
(b) Reports on Form 8-K:
The Company filed a current on Form 8-K on January 8,1999 concerning the
execution of amended and restated transaction documents to effect its
acquisition of United Marketing Solutions, Inc., which took place as of April 1,
1999.
<PAGE> 12
Pursuant to the requirements of Section 13 or 15(d) 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 17, 1999 By: /s/ Gerard R. Bernier
-----------------------
Gerard R. Bernier, President
and Director (principal
executive officer)
Date: November 17, 1999 By: *
-------------------------
Kenneth Brochin, Secretary,
Treasurer and Director
Date: November 17, 1999 By: *
--------------------------
Leon Zajdel, Director
Date: November 17, 1999 By: *
--------------------------
Peter Collins, Director
Date: November 17, 1999 By: *
--------------------------
Steve Kronzek, Director
Date: November 17, 1999 By: *
--------------------------
Frank A. Miller, Chief
Financial Officer
Date: November 17, 1999 By: /s/ Gerard R. Bernier
-----------------------
Gerard R. Bernier, Attorney-
in-fact
<PAGE> 13
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears
below constitutes and appoints Gerard R. Bernier his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign
this periodic report on Form 10-QSB, and to file the same with all exhibits
thereto, and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Company and the
capacities and on the dates indicated.
Signature Title Date
/s/ Kenneth Brochin Secretary, Treasurer 11/17/99
- ------------------- and Director
Kenneth Brochin
/s/ Leon Zajdel Director 11/17/99
- -------------------
Leon Zajdel
/s/ Peter Collins Director 11/17/99
- -------------------
Peter Collins
/s/ Steve Kronzek Director 11/17/99
- -------------------
Steve Kronzek
/s/ Frank Miller Chief Financial Officer 11/17/99
- -------------------
Frank A. Miller
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE NO.
- ------ ----------- --------
<S> <C> <C>
24.1 Power of Attorney
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 162,101
<ALLOWANCES> 65,534
<INVENTORY> 0
<CURRENT-ASSETS> 570,254
<PP&E> 155,210
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,991,834
<CURRENT-LIABILITIES> 965,209
<BONDS> 0
320,833
822,917
<COMMON> 31,134
<OTHER-SE> (304,704)
<TOTAL-LIABILITY-AND-EQUITY> 1,991,834
<SALES> 448,123
<TOTAL-REVENUES> 448,123
<CGS> 295,710
<TOTAL-COSTS> 479,234
<OTHER-EXPENSES> 55,547
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,547
<INCOME-PRETAX> (86,658)
<INCOME-TAX> 0
<INCOME-CONTINUING> (86,658)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (86,658)
<EPS-BASIC> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
