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EX-32 - EXHIBIT 32 - NEXT GENERATION MANAGEMENT CORP.ex32.htm
EX-31.1 - EXHIBIT 31.1 - NEXT GENERATION MANAGEMENT CORP.ex31-1.htm
EX-31.2 - EXHIBIT 31.2 - NEXT GENERATION MANAGEMENT CORP.ex31-2.htm


UNITED STATES
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 September 30, 2009.
or
 
o   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: 000-28083
     
 
NEXT GENERATION MEDIA CORP.
 
(Exact name of registrant as specified in its charter)
 
 
Nevada
     
88-0169543
 
(State or other jurisdiction of incorporation or
 
(I.R.S. Employer Identification No.)
organization)
   
 
 
7644 Dynatech Court, Springfield, VA
     
22153
 
(Address of principal executive offices)
 
(Zip Code)
     
 
 
703-644-0200
 
(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.      x  Yes  o  No
 
          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
          Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
o Yes  x No
 
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
 
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. o  Yes  o  No
 
APPLICABLE ONLY TO CORPORATE ISSUERS:
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock. As of September 30, 2009 there were 12,373,397 shares of common stock, $0.01 par value issued and outstanding.

 
 

 
 
Part I - Financial Information
   
         
Item 1. Financial Statements
   
         
Condensed Consolidated Balance Sheets:
   
   
September 30, 2009 and December 31, 2008 (Unaudited and Audited)
 
3
         
Condensed Consolidated Statements of Operations:
   
   
Three Months Ended September 30, 2009 and 2008 (Unaudited)
 
4
         
Condensed Consolidated Statements of Operations:
   
   
Nine Months Ended September 30, 2009 and 2008 (Unaudited)
 
5
         
Condensed Consolidated Statements of Cash Flows:
   
   
Nine Months Ended September 30, 2009 and 2008 (Unaudited)
 
6
         
Notes to Condensed Consolidated Financial Statements (Unaudited)
 
7
         
Item 2. Management’s Discussion And Analysis of Financial Condition And Results of Operations  
15
         
Item 3. Controls and Procedures
 
19
         
Part II - Other Information
 
20
         
Item 1. Legal Proceedings  
20
         
Item 2. Changes In Securities And Use Of Proceeds  
20
         
Item 3. Defaults Upon Senior Securities  
20
         
Item 4. Submission Of Matters To A Vote Of Security Holders  
20
         
Item 5. Other Information  
20
         
Item 6. Exhibits And Reports On Form 8-K  
20
         
Signatures
 
21

 
2

 
 
NEXT GENERATION MEDIA CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
         
   
(unaudited)
       
   
September 30,
   
December 31,
 
   
2009
   
2008
 
ASSETS
CURRENT ASSETS:
           
Cash and equivalents
  $ 318,805     $ 466,193  
Accounts receivable, net of allowance of $26,640 and $117,173, respectively
    424,175       367,450  
Prepaid expenses and other current assets
    90,276       95,109  
Total current assets
    833,256       928,754  
                 
Fixed assets, net
    4,039,403       4,246,654  
                 
Total assets
  $ 4,872,659     $ 5,175,406  
                 
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
               
Accounts payable and accrued expenses
  $ 1,344,977     $ 1,125,115  
Obligation under capital leases, current
    25,237       65,763  
Notes payable, current
          9,697  
Deferred revenue
    72,876        
Lines of credit
    650,000       650,000  
Total current liabilities
    2,093,090       1,850,575  
                 
Long term debt, less current maturities:
               
Obligation under capital leases
    107,589       132,505  
Customer deposit
    12,000        
Notes payable
    3,700,000       3,700,000  
Total long term liabilities
    3,819,589       3,832,505  
Total liabilities
    5,912,679       5,683,080  
                 
DEFICIENCY IN STOCKHOLDERS’ EQUITY
               
Common stock, par value $0.01 per share; 50,000,000 shares authorized, 12,373,397 shares issued and outstanding
    123,734       123,734  
Additional paid in capital
    7,379,744       7,379,744  
Accumulated deficit
    (8,543,498 )     (8,011,152 )
Total stockholders’ equity
    (1,040,020 )     (507,674 )
    $ 4,872,659     $ 5,175,406  
See the accompanying notes to the unaudited condensed consolidated financial statements
               
                 

 
3

 
 
NEXT GENERATION MEDIA CORP.
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(unaudited)
 
   
   
Three months ended September 30,
 
   
2009
   
2008
 
REVENUES:
           
Net sales
  $ 472,338     $ 1,211,324  
Cost of sales
    257,865       1,094,126  
Gross profit
    214,473       117,198  
                 
OPERATING EXPENSES:
               
Selling and administrative
    208,998        
Depreciation
    68,808       76,837  
Total operating expenses
    276,906       492,420  
                 
INCOME/(LOSS) FROM OPERATIONS
    (63,333 )     (375,222 )
                 
Gain on sale of equipment
          15,266  
Interest expense, net
    (79,866 )     (87,223 )
                 
Net Income (loss) before income taxes
    (143,199 )     (447,179 )
                 
Income taxes
           
                 
NET INCOME (LOSS) BEFORE MINORITY INTEREST
  $ (143,199 )   $ (447,179 )
                 
Minority interest
    (11,501 )     4,066  
                 
INCOME (LOSS) APPLICABLE TO SHAREHOLDERS
  $ (154,700 )   $ (443,113 )
                 
Net Income (loss) per common share-basic (Note A)
  $ (.01 )   $ (0.04 )
                 
Net Loss per common stock-assuming fully diluted (Note A)
          (see Note A )  
                 
Weighted average number of common shares outstanding-basic
    12,373,397       12,373,397  
                 
                 
Weighted average number of common shares outstanding-fully diluted
          (see Note A )  
                 
See the accompanying notes to the unaudited condensed consolidated financial statements
               

 
4

 
 
NEXT GENERATION MEDIA CORP.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(unaudited)  
       
   
Nine months ended September 30,
 
   
2009
   
2008
 
REVENUES:
           
Net sales
  $ 1,997,923     $ 4,180,361  
Cost of sales
    1,402,162       3,346,991  
Gross profit
    595,761       833,370  
                 
OPERATING EXPENSES:
               
Selling and administrative
    667,860       1,220,104  
Depreciation
    207,250       231,259  
Total operating expenses
    875,110       1,451,363  
                 
INCOME/(LOSS) FROM OPERATIONS
    (279,349 )     (617,993 )
                 
Other income
          30,282  
Gain on sale of equipment
    6,000        
Interest expense, net
    (258,997 )     (250,450 )
                 
Net Income (loss) before income taxes
    (532,346 )     (838,161 )
                 
Income taxes
           
                 
NET INCOME (LOSS) BEFORE MINORITY INTEREST
  $ (532,346 )   $ (838,161 )
                 
Minority interest
    (28,999 )     10,740  
                 
INCOME (LOSS) APPLICABLE TO SHAREHOLDERS
  $ (561,345 )   $ (827,421 )
                 
Net Income (loss) per common share-basic (Note A)
  $ (.05 )   $ (0.07 )
                 
Net Loss per common stock-assuming fully diluted (Note A)
          (see Note A
                 
Weighted average number of common shares outstanding-basic
    12,373,397       12,373,397  
                 
Weighted average number of common shares outstanding-fully diluted
          (see Note A
               
See the accompanying notes to the unaudited condensed consolidated financial statements              
 
 

 
5

 
 
NEXT GENERATION MEDIA CORP.
 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(unaudited)  
             
   
Nine months ended September 30,
 
   
2009
   
2008
 
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net (loss)
  $ (561,346 )   $ (827,421 )
Adjustments to reconcile net loss to net cash provided (used) in operating activities:
               
Minority interest
    28,999       (10,740 )
Adjustments for depreciation
    207,251       231,258  
(Increase) decrease in:
               
Accounts receivable
    (56,725 )     (296,941 )
Inventory
          46,375  
Prepaid expenses and other current assets
    4,833       (56,608 )
Increase (decrease) in:
               
Accounts payable and accrued expenses
    219,863       731,270  
                 
Net cash provided (used) in operating activities
    (157,125 )     (182,807 )
                 
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
           
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Borrowings under line of credit
          440,000  
Deferred revenue
    72,876        
Customer deposit
    12,000        
(Payments)/borrowings on notes payable and capital leases, net
    (75,139 )     (93,710 )
Net cash provided (used) by financing activities
    9,737       346,290  
                 
Net increase/(decrease) in cash and cash equivalents
    (147,388 )     163,483  
Cash and cash equivalents at beginning of period
    466,193       132,909  
Cash and cash equivalents at end of period
  $ 318,805     $ 296,392  
                 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
               
                 
                 
Cash paid during the period for interest
  $ 259,565     $ 87,223  
Cash paid during the period for taxes
  $     $  
                 
See the accompanying notes to the consolidated financial statements                 
 
 
6

 
 
NEXT GENERATION MEDIA CORP.
NOTES TO FINANCIAL STATEMENTS
September 30, 2009
 
NOTE A - SUMMARY OF ACCOUNTING POLICIES
 
General
 
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.
 
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Accordingly, the results from operations for the three and nine month periods ended September 30, 2009 are not necessarily indicative of the results that may be expected for the year ended December 31, 2009. The unaudited consolidated financial statements should be read in conjunction with the consolidated December 31, 2008 financial statements and footnotes thereto included in the Company’s SEC Form 10-K.
 
A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.
 
Business and Basis of Presentation
 
Next Generation Media Corporation was incorporated in the State of Nevada in November of 1980 as Micro Tech Industries, with an official name change to Next Generation Media Corporation in April of 1997. The Company, through its wholly owned subsidiary, United Marketing Solutions, Inc., provides direct marketing products, which involves the designing, printing, packaging, and mailing of public relations and marketing materials and coupons for retailers who provide services. Sales are conducted through a network of franchises that the Company supports on a wholesale basis. At June 30, 2009, the Company had approximately 6 active area franchise license agreements located throughout the United States.
 
The consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, United Marketing Solutions, Inc., and a variable interest entity Dynatech, LLC. All significant inter-company transactions and balances have been eliminated in consolidation.
 
Revenue Recognition
 
The Company recognizes revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”). ASC 605-10 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required. ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arraignments (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing ASC 605-25 on the Company’s financial position and results of operations was not significant.
 
Use of Estimates
 
The preparation of the financial statement in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
 
Cash Equivalents
 
For the purpose of the accompanying financial statements, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents.

 
7

 
 
Property and Equipment
 
Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives as follows:
   
Furniture and fixtures
5 years
Office equipment
3 to 5 years
Manufacturing equipment
3 to 10 years
Buildings
40 years
 
Long-Lived Assets
 
The Company has adopted Accounting Standards Codification subtopic 360-10, Property, plant and equipment (“ASC 360-10”). The Statement requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.
 
Income Taxes
 
The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.
 
Research and Development
 
The Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and developments costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company did not incur expenditures on research and product development for the nine month periods ended September 30, 2009 and 2008.
 
Advertising
 
The Company follows the policy of charging the costs of advertising to expenses as incurred. The Company charged to operations $6,544 and $48,952 as advertising costs for the three months ended September 30, 2009 and 2008, respectively.
 
Comprehensive Income
 
The Company adopted Accounting Standards Codification subtopic 220-10, Comprehensive Income (“ASC 220-10”) which establishes standards for the reporting and displaying of comprehensive income and its components. Comprehensive income is defined as the change in equity of a business during a period from transactions and other events and circumstances from non-owners sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. ASC 220-10 requires other comprehensive income (loss) to include foreign currency translation adjustments and unrealized gains and losses on available for sale securities. The Company does not have any items of comprehensive income in any of the periods presented.
 
 
8

 
 
Segment Information
 
Accounting Standards Codification subtopic Segment Reporting 280-10 (“ASC 280-10”) which establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. ASC 280-10 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions how to allocate resources and assess performance. The Company applies the management approach to the identification of our reportable operating segment as provided in accordance with ASC 280-10. The information disclosed herein materially represents all of the financial information related to the Company’s principal operating segment.
 
Stock Based Compensation
 
Effective for the year beginning January 1, 2006, the Company has adopted Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”). The Company made no employee stock-based compensation grants before December 31, 2005 and therefore has no unrecognized stock compensation related liabilities or expense unvested or vested prior to 2006. There was not any stock based compensation in the periods presented.
 
Net income (loss) per share
 
The weighted average shares outstanding used in the basic net income per share computations for the three and nine month periods ended September 30, 2009 and 2008 was 12,373,397. In determining the number of shares used in computing diluted loss per share for the three and nine month periods ended September 30, 2009 and 2008, common stock equivalents derived from shares issuable from the exercise of stock options are not considered in the calculation of the weighted average number of common shares outstanding because they would be anti-dilutive, thereby decreasing the net loss per share.
 
Liquidity
 
As shown in the accompanying financial statements, the Company had a net loss from operations of ($63,333), during the three month period ended September 30, 2009. The Company’s total liabilities exceeded its total assets by $1,040,020 as of September 30, 2009.
 
Concentration of Credit Risk
 
Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit. The Company periodically reviews its trade receivables in determining its allowance for doubtful accounts. At September 30, 2009 and September 30, 2008, allowance for doubtful account balance was $26,640 and $31,255 respectively.
 
Fair Values
 
In the first quarter of fiscal year 2008, the Company adopted Accounting Standards Codification subtopic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”). ASC 820-10 defines fair value, establishes a framework for measuring fair value, and enhances fair value measurement disclosure. ASC 820-10 delays, until the first quarter of fiscal year 2009, the effective date for ASC 820-10 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The adoption of ASC 820-10 did not have a material impact on the Company’s financial position or operations.
 
Reclassifications
 
Certain reclassifications have been made in prior year’s financial statements to conform to classifications used in the current year.
 
Recent Accounting Pronouncements
 
With the exception of those stated below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the nine months ended September 30, 2009, as compared to the recent accounting pronouncements described in the Annual Report that are of material significance, or have potential material significance, to the Company.
 
In May 2009, the FASB issued SFAS No. 165, “Subsequent Events”, which is included in ASC Topic 855, Subsequent Events. ASC Topic 855 established principles and requirements for evaluating and reporting subsequent events and distinguishes which subsequent events should be recognized in the financial statements versus which subsequent events should be disclosed in the financial statements. ASC Topic 855 also required disclosure of the date through which subsequent events are evaluated by management. ASC Topic 855 was effective for interim periods ending after June 15, 2009 and applies prospectively. Because ASC Topic 855 impacted the disclosure requirements, and not the accounting treatment for subsequent events, the adoption of ASC Topic 855 did not impact our results of operations or financial condition.
 
 
9

 
 
Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.
 
In August 2009, the FASB issued ASU No. 2009-05, Measuring Liabilities at Fair Value, which provides additional guidance on how companies should measure liabilities at fair value under ASC 820. The ASU clarifies that the quoted price for an identical liability should be used. However, if such information is not available, an entity may use, the quoted price of an identical liability when traded as an asset, quoted prices for similar liabilities or similar liabilities traded as assets, or another valuation technique (such as the market or income approach). The ASU also indicates that the fair value of a liability is not adjusted to reflect the impact of contractual restrictions that prevent its transfer and indicates circumstances in which quoted prices for an identical liability or quoted price for an identical liability traded as an asset may be considered level 1 fair value measurements. This ASU is effective October 1, 2009. The Company is currently evaluating the impact of this standard, but would not expect it to have a material impact on the Company’s consolidated results of operations or financial condition.
 
In September 2009, the FASB issued ASU No. 2009-12, Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), that amends ASC 820 to provide guidance on measuring the fair value of certain alternative investments such as hedge funds, private equity funds and venture capital funds. The ASU indicates that, under certain circumstance, the fair value of such investments may be determined using net asset value (NAV) as a practical expedient, unless it is probable the investment will be sold at something other than NAV. In those situations, the practical expedient cannot be used and disclosure of the remaining actions necessary to complete the sale is required. The ASU also requires additional disclosures of the attributes of all investments within the scope of the new guidance, regardless of whether an entity used the practical expedient to measure the fair value of any of its investments. This ASU is effective October 1, 2009. The Company is currently evaluating the impact of this standard, but would not expect it to have a material impact on the Company’s consolidated results of operations or financial condition.
 
In October 2009, the FASB issued ASU No. 2009-13, Multiple-Deliverable Revenue Arrangements—a consensus of the FASB Emerging Issues Task Force, that provides amendments to the criteria for separating consideration in multiple-deliverable arrangements. As a result of these amendments, multiple-deliverable revenue arrangements will be separated in more circumstances than under existing U.S. GAAP. The ASU does this by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. A vendor will be required to determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. This ASU also eliminates the residual method of allocation and will require that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the overall arrangement proportionally to each deliverable based on its relative selling price. Expanded disclosures of qualitative and quantitative information regarding application of the multiple-deliverable revenue arrangement guidance are also required under the ASU. The ASU does not apply to arrangements for which industry specific allocation and measurement guidance exists, such as long-term construction contracts and software transactions. ASU No. 2009-13 is effective beginning January 1, 2011. The Company is currently evaluating the impact of this standard on its consolidated results of operations and financial condition.
 
 
10

 
 
In October 2009, the FASB issued ASU No. 2009-14, Certain Revenue Arrangements That Include Software Elements—a consensus of the FASB Emerging Issues Task Force, that reduces the types of transactions that fall within the current scope of software revenue recognition guidance. Existing software revenue recognition guidance requires that its provisions be applied to an entire arrangement when the sale of any products or services containing or utilizing software when the software is considered more than incidental to the product or service. As a result of the amendments included in ASU No. 2009-14, many tangible products and services that rely on software will be accounted for under the multiple-element arrangements revenue recognition guidance rather than under the software revenue recognition guidance. Under the ASU, the following components would be excluded from the scope of software revenue recognition guidance: the tangible element of the product, software products bundled with tangible products where the software components and non-software components function together to deliver the product’s essential functionality, and undelivered components that relate to software that is essential to the tangible product’s functionality. The ASU also provides guidance on how to allocate transaction consideration when an arrangement contains both deliverables within the scope of software revenue guidance (software deliverables) and deliverables not within the scope of that guidance (non-software deliverables). ASU No. 2009-14 is effective beginning January 1, 2011. The Company is currently evaluating the impact of this standard on its consolidated results of operations and financial condition.
 
NOTE B - PROPERTY, PLANT, AND EQUIPMENT
 
Property, plant and equipment at September 30, 2009 and December 31, 2008 are as follows:
             
   
September 30,
 2009
   
December 31,
 2008
 
Furniture and fixtures
  $ 24,585     $ 24,585  
Land
    565,270       565,270  
Building
    3,108,989       3,108,989  
Equipment
    313,229       313,229  
Vehicles
    9,200       9,200  
Leasehold improvements
    107,300       107,300  
Software development
    411,391       411,391  
Computer equipment
    339,275       339,275  
      4,879,239       4,879,239  
                 
Less: Accumulated depreciation
    839,836       632,585  
Net property and equipment
  $ 4,039,403     $ 4,246,654  
 
The total depreciation expense for the nine months ended September 30, 2009 and 2008 amounted to $207,250 and $231,259, respectively.
 
NOTE C - NOTES PAYABLE
 
Notes payable at September 30, 2009 and December 31, 2008 consists of the following:
             
   
September 30,
2009
   
December 31,
2008
 
Note payable-Virginia Commerce Bank, bearing interest at 6.625% per annum, the loan is payable in three hundred monthly installments with a minimum payment consisting of the accrued interest amount for the first three years and amortized thereafter, collateralized by the property located at 7644 Dynatech Court. The note is held by the variable interest entity Dynatech, LLC.
    3,700,000       3,700,000  
                 
Note payable-Obligation to Bank of America, bearing interest at 6.4% per annum, the loan is payable in forty-eight monthly installments of $2,395, including interest, and is collateralized by the equipment financed.
          9,697  
      3,700,000       3,709,697  
Less: current maturities:
          (9,697 )
                 
Long term portion
  $ 3,700,000     $ 3,700,000  
 
 
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NOTE D – OPTIONS
 
Non-Employee Stock Options
 
The following table summarizes the changes in options outstanding and the related prices for the shares of the Company’s common stock issued at September 30, 2009:
                                 
           
Options Outstanding
   
Options Exercisable
 
                     
Exercise
Price Range
   
Number
Outstanding
   
Weighted Average
Remaining Contractual
Life (Years)
   
Weighed Average
Exercise Price
   
Number
Exercisable
   
Weighted Average
Exercise Price
 
$ 0.1232 to $0.50      480,000      1.92     $0.26      480,000     $0.26  
 
 
There were not any stock options transactions for the nine month period ended September 30, 2009
 
NOTE E - RELATED PARTY TRANSACTIONS
 
The Company leases its office and warehouse space from Dynatech, LLC, here-after referred to as the “Lessor”. The Lessor is owned 65% by the Company President and 35% by the Company’s wholly owned subsidiary United Marketing Solutions, Inc. The Lessor is charging a market rate per square foot for the lease and the local lease market will be evaluated on a continual basis to ensure that a market rate is maintained. The current lease payment is $25,585 per month and the lease end date is January 31, 2012.
 
NOTE F - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
 
Accounts payable and accrued liabilities at September 30, 2009 and December 31, 2008:
             
   
September
30, 2009
   
December
31, 2008
 
Accounts payable
  $ 993,167     $ 777,215  
Pension payable
    5,050       103,046  
Accrued liabilities
    346,760       244,854  
    $ 1,344,977     $ 1,125,115  
 
NOTE G - INCOME TAXES
 
The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes are insignificant. A management estimates that at September 30, 2009, the Company has available for federal income tax purposes a net operating loss carry forward of approximately $28,500,000, expiring in the year 2024, that may be used to offset future taxable income. Due to significant changes in the Company’s ownership, the future use of its existing net operating losses may be limited.

 
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The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized.
 
Components of deferred tax assets as of September 30, 2009 and December 31, 2008 are as follows:
 
Non current:
             
   
September 30,
2009
   
December 31,
2008
 
Net operating loss carryforward
  $ 3,061,370     $ 3,061,370  
Valuation allowance
  $ (3,061,370 )   $ (3,061,370 )
Net deferred asset
  $ 0.00     $ 0.00  
 
 
NOTE H - COMMITMENTS AND CONTINGENCIES
 
The Company has entered into various employment contracts. The contracts can be terminated without cause upon written notice. The Company is party to various legal matters encountered in the normal course of business. In the opinion of management and legal counsel, the resolution of these matters will not have an adverse effect on the Company’s financial position or the future results of operations.
 
NOTE I - SEGMENT INFORMATION
 
The Company has two reportable segments for the three month period ended September 30, 2009.
 
United Marketing Solutions. United was acquired on April 1, 1999. The entity is a wholly owned subsidiary. United operates a direct mail marketing business and is the Company’s primary line of business.
 
Dynatech, LLC. Dynatech, LLC began operations on June 22, 2007. The entity is a variable interest entity. Dynatech, LLC is a commercial real estate business.
 
The accounting policies of the reportable segments are the same as those set forth in the Summary of Accounting Policies. Summarized financial information concerning the Company’s reporting segments for the periods ending September 30, 2009 and December 31, 2008 are presented below:
 
Quarter Ended
September 30, 2009
                               
   
United
   
Dynatech
   
NGMC
   
Eliminating
Entries
   
Total
 
                                         
Revenue
    428,338       120,755       45,000       (121,755 )     472,338  
                                         
Segment profit/(loss)
    (131,269 )     32,859       (44,789 )           (143,199 )
                                         
Total Assets
    2,104,203       3,788,116       382,758       (1,402,418 )     4,872,659  

 
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Year Ended
December 31, 2008
                               
   
United
   
Dynatech
   
NGMC
   
Eliminating
Entries
   
Total
 
                                         
Revenue
    5,121,946       307,021       142,500       (415,381 )     5,156,086  
                                         
Segment profit/(loss)
    (839,715 )     (21,384 )     (1,003,964 )           (1,865,063 )
                                         
Total Assets
    2,290,758       3,691,290       394,773       (1,262,657 )     5,114,164  
 
 
NOTE J - LINES OF CREDIT
 
The Company has two lines of credit in the amounts of $500,000 and $150,000 secured by the Company’s accounts receivable.
 
The first line of credit for $500,000 matures on 11/26/09 and calls for interest of 7.25% per annum. The balance outstanding at September 30, 2009 was $500,000.
 
The second line of credit of $150,000 matures on 11/01/10 and calls for interest of 8.25% per annum. The balance outstanding at September 30, 2009 was $150,000.
 
NOTE K – GOING CONCERN MATTERS
 
The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements for the three and nine month periods ended September 30, 2009, the Company has incurred operating losses of $279,349 and $617,993, respectively. In addition, the Company has a deficiency in stockholder’s equity of ($1,040,019) and ($507,674) at September 30, 2009 and December 31, 2008, respectively. These factors among others may indicate that the Company will be unable to continue as a going concern.
 
NOTE L – SUBSEQUENT EVENTS
 
Management has evaluated all subsequent events after the balance sheet date and through the financial statement issuance date of November 18, 2009 and concluded that no subsequent events have occurred that would require recognition in the Financial Statement or disclosure in the Notes to the Financial Statements.

 
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ITEM II.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
 
When used in this Form 10-Q and in our future filings with the Securities and Exchange Commission, the words or phrases will likely result, management expects, or we expect, will continue, is anticipated, estimated or similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Readers are cautioned not to place undue reliance on any such forward-looking statements, each of which speak only as of the date made.  These statements are subject to risks and uncertainties, some of which are described below.  Actual results may differ materially from historical earnings and those presently anticipated or projected.  We have no obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect anticipated events or circumstances occurring after the date of such statements.
 
General Overview
 
The Company acquired United on April 1, 1999. Originlly founded in 1981 as United Coupon Corporation, United has operated within the coperative direct mail industry for twenty years. United has diversified and expanded its product lines and markets to evolve from a coupon company to a full-service marketing provider specializing in two communication mediums: direct mail and direct marketing. United offers advertising and marketing products and services through a network of franchises, with the largest concentration being in the northeast United States. United provides full-service design, layout, printing, packaging, and distribution of marketing products and promotional coupons sold by the franchise network to local market buinesses, services providers, and professionals as resources to help them generate “trial and repeat” customers. United’s core product, the cooperative coupon envelope, reaches in excess of ten million mailboxes per year.
 
Results of Operations
 
The Company’s revenues are difficult to forecast and may vary significantly from quarter to quarter and year to year due to the attrition of franchisees. In addition, the Company’s expense levels for each quarter are, to a significant extent, fixed in advance based on the Company’s expectation as to the net revenues to be generated during that quarter. The Company therefore is generally unable to adjust spending in a timely manner to compensate for any unexpected shortfall in net revenues. Further as a result of these factors any delay in product introductions, whether due to internal delays or delays caused by third party difficulties, or any significant shortfall in demand in relation to the Company’s expectations, would have an almost immediate adverse impact on the Company’s operating results and on its ability to maintain profit in a quarter.
 
During the three months ended September 30, 2009 the Company experienced a decrease in total revenues with sales of $472,338 as compared to $1,211,324 for the three months ended September 30, 2008.  Production and revenues realized from the core product client base continue to fall; in addition, various factors have caused a number of franchisees to disband their operations.  The coupon average per envelope increased from 17.96 in the third quarter of 2008 to 19.60 in the third quarter of 2009. The mailing area insertion average for for the third quarter of 2009 decreased  to 15.70 from  16.47 for the comparable three months in 2008. In-home marketing reach dropped from 2,520,000 homes in the third quarter of 2008 to 830,000 homes in the third quarter of 2009.
 
Total operating expenses as a percentage of sales, for the three month period ended September 30, 2009, were 75.76%, up from 48.17% during the same period in 2008. Fixed operating expenses prevent a corresponding drop in expenses when production and revenues decline significantly.
 
The Company realized a Net Loss for the three months ended September 30, 2009 of $(143,199) as compared to a Net Loss of $(447,179) for the three months ended September 30, 2008, which is an expected outflow from the  decline in core product revenues generated through its franchise network.
 
Total assets decreased from $5,175,406 at December 31, 2008 to $4,872,659 at September 30, 2009. Total current liabilities increased from $1,850,575 at December 31, 2008 to $2,093,090 at September 30, 2009, due, in part, to additional draws on various lines of credit to make up for the shortfall in production revenues. The Company uses credit to manage cash flow.
 
 
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While the Company has raised capital to meet its working capital and financing needs in the past, additional financing may be required in order to meet the Company’s current and projected cash flow requirements. As previously mentioned, the Company has obtained financing in the forms of equity as well as commercial financing to provide the necessary working capital. The Company currently has no other commitments for financing. There are no assurances the Company will be successful in acquiring additional financing.
 
The Company has issued shares of its common stock from time to time in the past to satisfy certain obligations, and expects in the future to also acquire certain services, satisfy indebtedness, and/or make acquisitions utilizing authorized  shares of the capital stock of the Company.
 
Introduction

Next Generation Media Corporation was incorporated in the State of Nevada in November of 1980 as Micro Tech Industries, with an official name change to Next Generation Media Corporation in April of 1997.  The Company, through its wholly owned subsidiary, United Marketing Solutions, Inc., provides direct marketing products, which involves the designing, printing, packaging, and mailing of public relations and marketing materials and coupons for retailers who provide services.  Sales are conducted through a network of franchises that the Company supports on a wholesale basis.
 
PROPERTIES

Corporate

The Company’s principal executive and administrative offices are located at 7644 Dynatech Court, Springfield, VA 22153.

ACQUISITION OR DISPOSITION OF PLANT AND EQUIPMENT

Other than as provided within this Form 10-Q and other filings, we do not anticipate the acquisition of any significant property, plant or equipment during the next 12 months.

NUMBER OF EMPLOYEES
 
The Company currently has 5 employees. The Company does not have any collective bargaining agreements covering any of its employees, has not experienced any material labor disruption and is unaware of any efforts or plans to organize its employees. The Company considers relations with its employees to be good.
 
Forward Looking Statements.

The foregoing Management’s Discussion and Analysis of Financial Condition and Results of Operations “forward looking statements” within the meaning of Rule 175 under the Securities Act of 1933, as amended, and Rule 3b-6 under the Securities Act of 1934, as amended, including statements regarding, among other items, the Company’s business strategies, continued growth in the Company’s markets, projections, and anticipated trends in the Company’s business and the industry in which it operates. The words “believe,” “expect,” “anticipate,” “intends,” “forecast,” “project,” and similar expressions identify forward-looking statements. These forward-looking statements are based largely on the Company’s expectations and are subject to a number of risks and uncertainties, including but not limited to, those risks associated with economic conditions generally and the economy in those areas where the Company has or expects to have assets and operations; competitive and other factors affecting the Company’s operations, markets, products and services; those risks associated with the Company’s ability to successfully negotiate with certain customers, risks relating to estimated contract costs, estimated losses on uncompleted contracts and estimates regarding the percentage of completion of contracts, associated costs arising out of the Company’s activities and the matters discussed in this report; risks relating to changes in interest rates and in the availability, cost and terms of financing; risks related to the performance of financial markets; risks related to changes in domestic laws, regulations and taxes; risks related to changes in business strategy or development plans; risks associated with future profitability; and other factors discussed elsewhere in this report and in documents filed by the Company with the Securities and Exchange Commission. Many of these factors are beyond the Company’s control. Actual results could differ materially from these forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this Form 10-KSB will, in fact, occur. The Company does not undertake any obligation to revise these forward-looking statements to reflect future events or circumstances and other factors discussed elsewhere in this report and the documents filed or to be filed by the Company with the Securities and Exchange Commission.
 
 
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Inflation

In the opinion of management, inflation has had a material effect on the operations of the Company.  Costs of raw materials and the fuel surcharges to ship the materials continue to rise but the Company is continuing its cost cutting measures and negotiations with vendors to minimize the effect.

Cautionary Factors that may Affect Future Results

We provide the following cautionary discussion of risks, uncertainties and possible inaccurate assumptions relevant to our business and our products. These are factors that we think could cause our actual results to differ materially from expected results. Other factors besides those listed here could adversely affect us.

Trends, Risks and Uncertainties

The Company has sought to identify what it believes to be the most significant risks to its business as discussed in “Risk Factors” above, but cannot predict whether or to what extent any of such risks may be realized nor can there be any assurances that the Company has identified all possible risks that might arise. Investors should carefully consider all of such risk factors before making an investment decision with respect to the Company’s stock.

Uncertainty of future results

Potential fluctuations in quarterly operating results may fluctuate significantly in the future as a result of a variety of factors, most of which are outside the Company’s control, including:  the demand for the Company’s products and services; seasonal trends in demand and pricing of products and services; the amount and timing of capital expenditures and other costs relating to the expansion of the Company’s operations; the introduction of new services and products by the Company or its competitors; price competition or pricing changes in the industry; political risks and uncertainties involving the world’s markets; technical difficulties and general economic conditions.  The Company’s quarterly results may also be significantly affected by the impact of the accounting treatment of acquisitions, financing transactions or other matters.  Due to the foregoing factors, among others, it is possible that the Company’s operating results may fall below the expectations of the Company and/or investors in some future quarter.

Liquidity and Working Capital Risks; Need for Additional Capital to Finance Growth and Capital Requirements

We have had limited working capital and we may rely upon notes (borrowed funds) to operate. We may seek to raise capital from public or private equity or debt sources to provide working capital to meet our general and administrative costs until net revenues make the business self-sustaining.  We cannot guarantee that we will be able to raise any such capital on terms acceptable to us or at all. Such financing may be upon terms that are dilutive or potentially dilutive to our stockholders. If alternative sources of financing are required, but are insufficient or unavailable, we will be required to modify our growth and operating plans in accordance with the extent of available funding.
 
Potential fluctuations in quarterly operating results

Our quarterly operating results may fluctuate significantly in the future as a result of a variety of factors, most of which are outside our control, including: the demand for our products; seasonal trends in purchasing, the amount and timing of capital expenditures and other costs relating to the development of our products; price competition or pricing changes in the industry; technical difficulties or system downtime; general economic conditions, and economic conditions specific to the healthcare industry. Our quarterly results may also be significantly impacted by the impact of the accounting treatment of acquisitions, financing transactions or other matters. Particularly at our early stage of development, such accounting treatment can have a material impact on the results for any quarter. Due to the foregoing factors, among others, it is likely that our operating results will fall below our expectations or those of investors in some future quarter.

Limitation of Liability and Indemnification of Officers and Directors

Our officers and directors are required to exercise good faith and high integrity in our Management affairs. Our Articles of Incorporation provide, however, that our officers and directors shall have no liability to our shareholders for losses sustained or liabilities incurred which arise from any transaction in their respective managerial capacities unless they violated their duty of loyalty, did not act in good faith, engaged in intentional misconduct or knowingly violated the law, approved an improper dividend or stock repurchase, or derived an improper benefit from the transaction. Our Articles and By-Laws also provide for the indemnification by us of the officers and directors against any losses or liabilities they may incur as a result of the manner in which they operate our business or conduct the internal affairs, provided that in connection with these activities they act in good faith and in a manner that they reasonably believe to be in, or not opposed to, the best interests of the Company, and their conduct does not constitute gross negligence, misconduct or breach of fiduciary obligations. To further implement the permitted indemnification, we have entered into Indemnity Agreements with our officers and directors.
 
 
17

 
 
Limited Market Due To Penny Stock
 
The Company’s stock differs from many stocks, in that it is a “penny stock.” The Securities and Exchange Commission has adopted a number of rules to regulate “penny stocks.” These rules include, but are not limited to, Rules 3a5l-l, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6 and 15g-7 under the Securities and Exchange Act of 1934, as amended. Because our securities probably constitute “penny stock” within the meaning of the rules, the rules would apply to us and our securities. The rules may further affect the ability of owners of our stock to sell their securities in any market that may develop for them. There may be a limited market for penny stocks, due to the regulatory burdens on broker-dealers. The market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all. Stockholders should be aware that, according to the Securities and Exchange Commission Release No. 34- 29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. These patterns include:- - Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; -Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; - “Boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons; - Excessive and undisclosed bid-ask differentials and markups by selling broker- dealers; and - The wholesale dumping of the same securities by promoters and broker- dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses. Furthermore, the “penny stock” designation may adversely affect the development of any public market for the Company’s shares of common stock or, if such a market develops, its continuation. Broker-dealers are required to personally determine whether an investment in “penny stock” is suitable for customers. Penny stocks are securities (i) with a price of less than five dollars per share; (ii) that are not traded on a “recognized” national exchange; (iii) whose prices are not quoted on the NASDAQ automated quotation system (NASDAQ-listed stocks must still meet requirement (i) above); or (iv) of an issuer with net tangible assets less than $2,000,000 (if the issuer has been in continuous operation for at least three years) or $5,000,000 (if in continuous operation for less than three years), or with average annual revenues of less than $6,000,000 for the last three years. Section 15(g) of the Exchange Act, and Rule 15g-2 of the Commission require broker-dealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account. Potential investors in the Company’s common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be “penny stock.” Rule 15g-9 of the Commission requires broker- dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for the Company’s stockholders to resell their shares to third parties or to otherwise dispose of them.
 
 
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ITEM 3. CONTROLS AND PROCEDURES
 
CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, management carried out an evaluation, under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act).  Based upon the evaluation, the Company’s principal executive/financial officer concluded that its disclosure controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.  In addition, the Company’s principal executive officer and principal financial officer concluded that its disclosure controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be or have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, and/or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, and/or the degree of compliance with the policies and procedures may deteriorate.  Because of the inherent limitations in a cost-effective internal control system, misstatements due to error or fraud may occur and not be detected.

Changes in Disclosure Controls and Procedures.

There were no changes in the Company’s disclosure controls and procedures, or in factors that could significantly affect those controls and procedures since their most recent evaluation.
 
 
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PART II.
 
ITEM 1.  LEGAL PROCEEDINGS.

Other than as set forth below, the Company is not a party to any material pending legal proceedings and, to the best of its knowledge, no such action by or against the Company has been threatened. The Company is subject to legal proceedings and claims that arise in the ordinary course of its business.  Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters will not have material adverse effect on its financial position, results of operations or liquidity.  As indicated in the cases below, the Company intends to aggressively pursue any franchisees that violate their franchise agreements. The Company is awaiting notice of service on additional suits filed against franchisees and Company anticipates additional suits will be filed in the future.

In the Circuit Court of Fairfax County Virginia, filed on August 1, 2008, United Marketing Solutions, Inc. sued Geoff and Fran Blair for breach of contract in that the Defendant has failed to pay to Plaintiff $11,041.82 and has also sought $75,000 in punitive damages. The case No. is CL2008-9914 and trial date has been set for June 2009.
 
In the United States District Court, Southern District of Iowa, filed on February 2, 2009, COLORFX sued United Marketing Solutions, Inc. for breach of contract in that the Defendant has failed to pay to Plaintiff $128,409.73. The case No. is 4:09-C-00039. United Marketing Solutions, Inc. intends to defend itself against COLORFX.
 
In the Iowa District Court for Polk County, filed on February 3, 2009, in Case No. CL 111876, Rees Associates, Inc. sued United Marketing Solutions, Inc. for breach of contract in failing to pay to the Plaintiff $161,587.69. United Marketing Solutions, Inc. intends to defend itself against Rees Associates, Inc.
 
In the Circuit Court of Fairfax County, filed in April 2009, in Civil Action No: 2009-6401, United Marketing Solutions, Inc. sued Roger Homan for breach of contract, statutory business conspiracy and tortious interference in an amount of no less than Three Hundred Thousand Dollars ($300,000).  United Marketing Solutions, Inc. has received a judgment against Roger Homan in this case.
 
In the Circuit Court of Fairfax County, filed in April 2009, in Civil Action No: 2009-6410, United Marketing Solutions, Inc. sued Sheila D. Callo and Fernando A. Callo for breach of contract in an amount of no less than Forty-Five Thousand Dollars ($45,000) plus an amount of no less than Seventeen Thousand ($17,000) for prejudgment interest.
 
ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

Sales of Unregistered Securities.

The Registrant had no sales of unregistered securities during the three-month period ending September 30, 2009 other than disclosed within this Form 10Q..

Use of Proceeds.

Not Applicable.
 
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

Not Applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There were not any matters submitted requiring a vote of security holders during the three-month period ending June 30, 2009 other than as disclosed herein.
 
ITEM 5.  OTHER INFORMATION.

Not applicable.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.
 
          (a)           Reports on Form 8-K.  No reports on Form 8-K were filed during the three-month period covered in this Form 10-Q other than disclosed below.
 
          (b)          Exhibits.  Exhibits included or incorporated by reference herein: See Exhibit Index.
 
 
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EXHIBIT INDEX
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the date indicated:
 
       
 
Next Generation Media Corp.
       
Dated: November 18, 2009
 
By: 
/s/ Darryl Reed
   
Darryl Reed, CEO

 
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