
<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  June 30, 1998

                                       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]


<PAGE>   2

        The total number of issued and outstanding shares of the registrant's
common stock, par value $0.01, as of July 31, 1998 was 3,183,984.

        Transitional Small Business Disclosure Format (Check one):

Yes  [ ]    No    [x]


<PAGE>   3



ITEM 1.  FINANCIAL STATEMENTS.


<PAGE>   4


                                        

                                                           NEXT GENERATION MEDIA
                                                                     CORPORATION






                                               CONSOLIDATED FINANCIAL STATEMENTS
                                 FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997


<PAGE>   5



                                                           NEXT GENERATION MEDIA
                                                                     CORPORATION



                                               CONSOLIDATED FINANCIAL STATEMENTS
                                 FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997


<PAGE>   6




<TABLE>
<CAPTION>
                                                                             December 31,               JUNE 30,
                                                                                     1997                   1998
--------------------------------------------------------------------------------------------------------------------

ASSETS

CURRENT
<S>                                                                            <C>                     <C>           
   Cash                                                                          $      -               $    289
   Notes receivable current portion (Note 3)                                            -                187,500
   Accounts receivable, less allowance for doubtful
     accounts of $42,560                                                          198,335                173,811
   Accrued interest receivable                                                     15,785                  2,253
   Commissions receivable                                                               -                 11,001
--------------------------------------------------------------------------------------------------------------------

TOTAL CURRENT ASSETS                                                              214,120                374,854
--------------------------------------------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT                                                             71,135                118,773
   Less:  Accumulated depreciation                                                 (3,354)               (11,951)
--------------------------------------------------------------------------------------------------------------------

NET PROPERTY AND EQUIPMENT                                                         67,781                106,822
--------------------------------------------------------------------------------------------------------------------

OTHER
   Intangibles, net of accumulated amortization of $12,529
     and $30,923                                                                  192,648                174,254

   Deferred acquisition costs                                                           -                 39,233

   Investment in UNICO (Note 4)                                                         -                 25,537






TOTAL ASSETS                                                                     $474,549               $720,700
====================================================================================================================
</TABLE>




                                                                               1
<PAGE>   7


                                               NEXT GENERATION MEDIA CORPORATION



                                                      CONSOLIDATED BALANCE SHEET



<TABLE>
<CAPTION>
                                                                             December 31,                JUNE 30,
                                                                                     1997                    1998
--------------------------------------------------------------------------------------------------------------------
<S>                                                                            <C>                   <C>         
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Checks issued against future deposits                                       $   44,821            $     21,773
   Accounts payable                                                               248,666                 282,848
   Wages payable                                                                        -                 248,480
   Notes payable                                                                   25,449                  60,000
   Due to shareholders                                                             10,255                       -
   Accrued interest payable                                                           235                     334
   Note payable employee                                                           11,669                       -
--------------------------------------------------------------------------------------------------------------------

   TOTAL CURRENT LIABILITIES                                                      341,095                 613,435

LONG TERM DEBT

   Note payable - employees                                                        85,027                  33,420
   Due to shareholders                                                             24,400                       -
   Note payable                                                                    27,505                  27,505
--------------------------------------------------------------------------------------------------------------------

   TOTAL LIABILITIES                                                              478,027                 674,360
--------------------------------------------------------------------------------------------------------------------

COMMITMENTS (Note 9)

REDEEMABLE PREFERRED STOCK (Note 5)                                                     -                 339,955
--------------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
   Preferred stock, par value $.01, 930,000 shares authorized, 250,000 shares
     allocated to Series A issued and
     outstanding (Note 6)                                                               -                 934,000
   Common stock, $.01 par value, 50,000,000 authorized
     3,113,450 and 3,330,318 issued and outstanding (Note 7)                       31,134                  33,301
   Additional paid in capital (Note 7)                                            419,616                 502,341
   Accumulated deficit                                                            (95,178)             (1,763,257)
   Less stock subscription receivable (Note 8)                                   (359,050)                      -
--------------------------------------------------------------------------------------------------------------------

TOTAL STOCKHOLDERS' (DEFICIT)                                                      (3,478)               (293,615)
--------------------------------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $ 474,549                $720,700
====================================================================================================================
</TABLE>
                     See accompanying notes to consolidated financial statement.


                                                                               2
<PAGE>   8


                                               NEXT GENERATION MEDIA CORPORATION



                                            CONSOLIDATED STATEMENT OF OPERATIONS



<TABLE>
<CAPTION>
                                                   Three months ended                    Six months ended
                                                        June 30,                             June 30,
                                           -----------------------------------    --------------------------------
                                                     1997               1998                1997            1998
--------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                   <C>              <C>                  <C>      
SALES                                       $           -        $   512,457      $            -       $ 947,353

COST OF GOODS SOLD                                      -            202,244                   -         362,880
--------------------------------------------------------------------------------------------------------------------

GROSS PROFIT                                            -            310,213                   -         584,473
--------------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES
   Selling, general and administrative             12,583            281,977              25,052         888,582
   Forgiveness of stock subscription
     receivable and note receivable
     (Note 8)                                           -            329,996                   -         329,996
   Depreciation and amortization                    1,250             13,674               2,083          26,994
--------------------------------------------------------------------------------------------------------------------

   TOTAL OPERATING EXPENSES                        13,833            625,647              27,135       1,245,572
--------------------------------------------------------------------------------------------------------------------

LOSS FROM OPERATIONS                              (13,833)          (315,434)            (27,135)       (661,099)
--------------------------------------------------------------------------------------------------------------------

OTHER INCOME (EXPENSE)
   Interest income                                  5,868                853               5,863           6,014
   Other income                                         -             19,010                   -          21,648
   Interest expense                                  (663)              (543)               (663)           (642)
--------------------------------------------------------------------------------------------------------------------

   TOTAL OTHER INCOME (EXPENSE)                     5,200             19,320               5,200          27,020
--------------------------------------------------------------------------------------------------------------------

NET LOSS BEFORE EXTRAORDINARY ITEM          $      (8,633)       $  (296,114)        $   (21,935)      $(634,079)

EXTRAORDINARY LOSS ON EXTINGUISHMENT
   OF DEBT (NOTE  10)                                   -          (1,034,000)                  -     (1,034,000)
--------------------------------------------------------------------------------------------------------------------

NET LOSS                                           (8,633)         (1,330,114)           (21,935)     (1,668,079)

BASIC AND DILUTED LOSS PER
   COMMON SHARE BEFORE EXTRAORDINARY
   item                                     $        (.01)       $       (.09)     $      (.003)       $    (.20)

EXTRAORDINARY ITEM                                      -                (.32)                  -           (.33)
--------------------------------------------------------------------------------------------------------------------

BASIC AND DILUTED LOSS PER
   COMMON SHARE                                       (01)               (.41)            (.003)            (.53)

WEIGHTED AVERAGE COMMON
   SHARES OUTSTANDING                           2,950,889            3,230,225         2,019,056      $3,172,160
====================================================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                               3
<PAGE>   9


                                               NEXT GENERATION MEDIA CORPORATION



                                            CONSOLIDATED STATEMENT OF CASH FLOWS



<TABLE>
<CAPTION>
Six months ended June 30,                                                           1997                     1998
--------------------------------------------------------------------------------------------------------------------
<S>                                                                             <C>                   <C>         
OPERATING ACTIVITIES
   Net loss                                                                     $(21,935)             $(1,668,079)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
   CASH USED IN OPERATING ACTIVITIES:
   Extraordinary loss on debt extinguishment                                           -                1,034,000
   Depreciation and amortization                                                  (2,083)                  26,981
   Forgiveness of subscription receivable                                              -                  329,996
   (INCREASE) DECREASE IN ASSETS
     Accounts receivable                                                               -
     Note receivable                                                              (9,000)                  24,524
     Accrued interest receivable                                                  (5,862)                  (6,014)
     Commissions receivable                                                            -                  (11,001)
   INCREASE (DECREASE) IN LIABILITIES
     Accounts payable                                                             21,052                   34,183
     Note payable                                                                  4,000                        -
     Wages payable                                                                     -                  248,480
     Accrued interest payable                                                        663                       99
--------------------------------------------------------------------------------------------------------------------

   CASH PROVIDED BY  OPERATING ACTIVITIES                                         13,168                   13,169
--------------------------------------------------------------------------------------------------------------------

INVESTING ACTIVITIES
   Acquisition of property and equipment                                               -                  (47,628)
   Deferred acquisition costs                                                          -                  (39,233)
--------------------------------------------------------------------------------------------------------------------

   CASH USED IN INVESTING ACTIVITIES                                                   -                  (86,861)
--------------------------------------------------------------------------------------------------------------------

FINANCING ACTIVITIES
   Increase in checks issued against future deposits                                   -                  (23,048)
   Issuance of notes receivable                                                        -                 (275,500)
   Issuance of preferred stock                                                                            339,955
   Net proceeds of loans from shareholders                                         9,000                   61,299
   Proceeds of note payable                                                            -                   60,000
   Repayment of note payable                                                           -                  (25,449)
   Repayments of employee notes payable                                                -                  (63,276)
--------------------------------------------------------------------------------------------------------------------

CASH PROVIDED BY FINANCING ACTIVITIES                                                  -                   73,981
--------------------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS

   CASH AND CASH EQUIVALENTS, beginning of period                           $          -              $         -
--------------------------------------------------------------------------------------------------------------------

   CASH AND CASH EQUIVALENTS, end of period                                 $          -              $       289
====================================================================================================================
</TABLE>

                    See accompanying notes to consolidated financial statements.


                                                                               4
<PAGE>   10


                                               NEXT GENERATION MEDIA CORPORATION



                                                  SUMMARY OF ACCOUNTING POLICIES



BASIS OF                    The consolidated financial statements include the 
PRESENTATION                statements of Next Generation Media Corporation (the
                            "Company") and its wholly owned subsidiary 
                            Independent News, Inc.  All significant intercompany
                            transactions have been eliminated.

BUSINESS                    The Company operates a newspaper publishing business
DESCRIPTION                 distributing free newspapers, supported by local 
                            advertising in New Jersey.  Primarily all of its 
                            customers are located in New Jersey.

INTERIM FINANCIAL           In the opinion of management, the interim financial 
INFORMATION                 information as of June 30, 1998 and for the six 
                            months ended June 30, 1997 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.

RISK AND                    The publishing industry is highly competitive. The 
UNCERTAINTIES               Company's revenue consists of amounts received for 
                            advertising space in the newspaper. Publication of 
                            the newspaper is dependent on future advertising 
                            revenue or obtaining additional outside financing.
                            Management believes that it can continue to meet 
                            working capital requirements as they arrive.

USE OF ESTIMATES            The preparation of financial statements in 
                            accordance with generally accepted accounting 
                            principles requires management to make certain 
                            estimates and assumptions, particularly regarding 
                            valuation of accounts receivable, recognition of 
                            liabilities, and disclosure of contingent assets and
                            liabilities at the date of the financial statements.
                            Actual results could differ from those estimates.

CONCENTRATION               Financial instruments that potentially subject the 
OF CREDIT RISK              Company to concentrations of credit risk consists 
                            primarily of accounts receivable.



                                                                         5
<PAGE>   11

                                         NEXT GENERATION MEDIA CORPORATION



                                            SUMMARY OF ACCOUNTING POLICIES


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.

INCOME TAXES                Income taxes are calculated using the liability 
                            method specified by Statement of Financial 
                            Accounting Standards No. 109, "Accounting for Income
                            Taxes". Deferred income tax reflects the net tax 
                            effect of temporary differences between the carrying
                            amounts of assets and liabilities for financial 
                            purposes and the amounts used for income tax 
                            purposes.  The net deferred tax asset is reduced, if
                            necessary, by a valuation allowance for the amount 
                            of any tax benefits that, based on available 
                            evidence, are not expected to be realized.

RECENT                      In March 1997, the Financial Accounting Standards 
ACCOUNTING                  Board issued Statement of Financial Accounting 
PRONOUNCEMENTS              Standards No. 128, Earnings Per Share (SFAS 128"). 
                            SFAS 128 provides a different method of calculating
                            earnings per share than is currently used in APB 
                            Opin8ion 15. SFAS 128 provides for the calculation
                            of basic and diluted earnings per share. Basic 
                            earnings per share includes no dilution and is 
                            computed by dividing income available to common 
                            stockholders by the weighted average number of 
                            common shares outstanding for the period. Diluted 
                            earnings per share reflects the potential dilution
                            of securities that could share in the earnings of an
                            entity, similar to existing fully diluted earnings 
                            per share.  The Company adopted the provisions for
                            computing earnings per share set forth in SFAS 128 
                            in December 1997.  There is no difference in basic 
                            and diluted earnings per share.

                                                                         6
<PAGE>   12

                                         NEXT GENERATION MEDIA CORPORATION



                                            SUMMARY OF ACCOUNTING POLICIES

                            In June 1997, the Financial Accounting Standards 
                            Board issued Statement of Financial Accounting 
                            Standards No. 130, Reporting Comprehensive Income 
                            ("SFAS 130"), which establishes standards for 
                            reporting and display of comprehensive income, its
                            components, and accumulated balances. Comprehensive 
                            income is defined to include all changes in equity 
                            except those resulting from investments by owners 
                            and distributions to owners. Among other 
                            disclosures, SFAS 130 requires that all items that
                            are required to be recognized under current 
                            accounting standards as components of comprehensive
                            income be reported in a financial statement that is 
                            displayed with the same prominence as other 
                            financial statements. The Company presently has no
                            items considered as comprehensive income. Therefore,
                            adopting SFAS 130 will not impact financial 
                            statement disclosure in 1998.

                            Statement of Financial Accounting Standards No. 131,
                            Disclosure about Segments of a Business Enterprise 
                            ("SFAS 131"), establishes standards for the way that
                            public enterprises report information about 
                            operating segments in interim financial statements 
                            issued to the public. It also establishes standards
                            for disclosures regarding products and services, 
                            geographic areas, and major customers. SFAS 131 
                            defines operating segments as components of an 
                            enterprise about which separate financial 
                            information is available that is evaluated regularly
                            by the chief operating decision maker in deciding
                            how to allocate resources and in assessing 
                            performance. Presently, the Company operates in one
                            business segment.

                                                                         7
<PAGE>   13


                                         NEXT GENERATION MEDIA CORPORATION



                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     PURCHASE OF          On February 6, 1997, an unrelated third party 
       MICROTECH            purchased 85.72% of the outstanding stock of 
       INDUSTRIES           Microtech Industries, Inc., from its majority 
                            shareholder for $50,000 in cash. Effective March 31,
                            1997 Microtech Industries changed its name to Next 
                            Generation Media Corporation. Current management 
                            believes that prior to February 6, 1997, the Company
                            was a "shell" company for at least five years 
                            without assets and liabilities. Current management
                            is unaware of any operating history of the Company 
                            prior to February 6, 1997.  As a result of the
                            transaction, goodwill of $50,000 was recorded and is
                            being amortized on a straight line basis over ten 
                            years. 




2.     ACQUISITION          On September 29, 1997, Pompton Valley Publishing 
       OF POMPTON           Co. (PVP) sold to Independent News, Inc. (INI) all
       VALLEY               of its tangible property, all accounts receivable, 
       PUBLISHING CO.       all intellectual property, certain contracts, and 
                            all other business property. INI assumed certain 
                            liabilities of PVP. In addition to the assumption of
                            certain liabilities, INI also paid PVP 100,000 
                            shares of the Company's common stock and $15,000 in
                            cash for a covenant not to compete. The shares were
                            valued at $16,700 based on a recent stock sale. The
                            acquisition was accounted for as a purchase. In 
                            conjunction with this transaction the Company has 
                            recorded approximately $140,000 of goodwill that is 
                            being amortized on a straight line basis over 5 
                            years.

                            The following unaudited pro forma summary presents 
                            the combined results of operations of the Company 
                            and the acquired business, as if the acquisition had
                            occurred on January 1, 1997. The pro forma amounts 
                            give effect to certain adjustments, including the 
                            amortization of intangibles. This pro forma summary 
                            does not necessarily reflect the results of 
                            operations as they would have been if the businesses
                            had constituted a single entity during such period 
                            and is not necessarily indicative of results which 
                            may be obtained in the future.

<TABLE>
<CAPTION>
                             Six months ended June 30, 1997                                 (Unaudited)
                             --------------------------------------------------------------------------------
<S>                                                                                            <C>     
                             Net sales                                                         $457,605
                             Net loss                                                           (40,575)
                             Loss per common share                                                 (.02)
                             ================================================================================
</TABLE>


                                                                         8
<PAGE>   14
                                         NEXT GENERATION MEDIA CORPORATION



                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


3.     NOTES RECEIVABLE     On May 12, 1998, the Company executed a promissory 
                            note with UNICO, Inc. for $175,500 and assumed an 
                            existing note receivable of $12,000. These notes
                            will be cancelled in conjunction with the proposed
                            acquisition of United Marketing Solutions (Note 11)
                            and have therefore been classified as current 
                            assets.


4.     INVESTMENT IN        On May 12, 1998, the Company purchased 359,931 
       UNICO                shares of common stock of UNICO, Inc. in exchange 
                            for shares in the Company (Note 6). It is intended 
                            that these shares  will be transferred to T.C. 
                            Equities, Ltd. in connection with the proposed 
                            purchase of United Marketing Solutions, Inc. 
                            (Note 10).  Until such transfer, the Company is 
                            accounting for its investment in UNICO, Inc. using 
                            the cost method.

5.     REDEEMABLE           On May 4, 1998, the Company issued 70,000 shares of
       PREFERRED STOCK      Redeemable Cumulative Convertible Series B Preferred
                            Stock par value $.01 with a redemption price of 
                            $5.00 per share to TC Equities Ltd. The holder can 
                            redeem 35,000 shares after November 4, 1998, 17,500
                            shares after February 1998, and the remaining 17,500
                            shares after May 4, 1999. The Company also issued 
                            250,000 warrants to T.C. Equities, Ltd. for the 
                            purchase of one share of common stock in the Company
                            at an exercise price of $.16 per warrant, valid for 
                            five years from May 4, 1998. Gross proceeds from the
                            issuance, net of expenses, were $339,955.

                                                                         9
<PAGE>   15
                                         NEXT GENERATION MEDIA CORPORATION



                                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6.     PREFERRED STOCK      On March 18, 1998, the Company executed an agreement
                            with the holders of certain subordinated debentures
                            of UNICO, Inc. to purchase these debentures totaling
                            in the aggregate $1,034,000, plus all of the 
                            outstanding shares of UNICO's Series C Preferred 
                            Stock which they held in exchange for $100,000 and 
                            250,000 shares of the Company's Convertible 
                            Cumulative Preferred Stock, (the "Series A 
                            Preferred Stock"), par value $.01, with a 
                            redemption price of $5 per share. Each 1 1/2 
                            shares of the Company's Preferred Stock was 
                            accompanied by one stock purchase warrant (subject 
                            to adjustment) which entitles the holder to 
                            purchase one share of the Company's common stock 
                            for $.0.16, valid for five years from May 7, 1998. 
                            The Series A Preferred Stock is callable at the 
                            sole option of the Company at any time. The shares 
                            have a $5 per share preference on liquidation or 
                            dissolution of the Company. An amount of $934,000 
                            was allocated to the Series A preferred stock 
                            based on the dollar value of the subordinated 
                            debentures purchased from the debentureholders.

7.     COMMON STOCK         On May 12, 1998, the Company issued 79,281 shares of
                            common stock in exchange for a note receivable in 
                            the amount of $12,000, plus accrued interest of 
                            $1,400, and 359,931 common shares of UNICO, Inc. 
                            stock valued at $25,537.

                            Also on May 12, 1998, the Company issued 137,587 
                            shares of common stock in exchange for the 
                            cancellation of various notes payable to officers of
                            the Company amounting to $45,954.

                            On May 7, 1998, the Company granted stock options to
                            purchase 150,000 shares of the Company's common 
                            stock at an exercise price of $.50 to a director 
                            and consultants to the Company. The options expire
                            on May 7, 2008.

                                                                        10
<PAGE>   16
                                               NEXT GENERATION MEDIA CORPORATION



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



8.     STOCK SUBSCRIPTION   On May 12, 1998, $156,145 of the stock subscription
       RECEIVABLE           receivable from Joel Sens, a significant 
                            shareholder, was transferred into a promissory note
                            receivable from Gerard Bernier, a director of UNICO,
                            Inc. This note was subsequently cancelled and
                            recorded as compensation expense to Mr. Bernier.
                            Also, the stock subscription receivable was reduced
                            $15,000 to  reflect a reduction in a note payable
                            due Joel Sens. In addition, the Company forgave
                            $152,905, plus  accrued interest of $20,946 due
                            from Joel Sens. These amounts are recorded as
                            compensation expense  to Mr. Sens. Finally, the
                            remaining $35,000 was  transferred to a shareholder
                            in exchange for his  cancellation of a note payable
                            in the same amount.

9.     INCOME TAXES         The Company, based on the information currently 
                            available, does not believe it will generate taxable
                            income, after considering net operating loss 
                            carry-forwards, for the year ending December 31, 
                            1998. Accordingly, the Company did not recognize an
                            income tax benefit for the period ended June 30,
                            1998.

10.    EXTRAORDINARY LOSS   On March 18, 1998, the Company entered into an 
       ON FORGIVENESS       agreement with holders of certain subordinated 
       OF DEBT              debentures of UNICO, Inc., to purchase these 
                            debentures aggregating  $1,034,000 (Note 6). This 
                            transaction was executed on May 7, 1998. Effective 
                            May 8, 1998, the Company canceled UNICO's obligation
                            to the Company arising from the Company's assumption
                            of UNICO'ssubordinated debt. This release is 
                            effective regardless of the ultimate outcome of the
                            proposed Stock Purchase Agreement and Plan of Merger
                            (Note 12). Accordingly, the Company wrote off the
                            receivable from UNICO, Inc. of $1,034,000 and 
                            classified it as an extraordinary item in the 
                            accompanying statement of operations.

11.    COMMITMENTS          On May 1, 1998, the Company entered into a 
                            consulting agreement with Joel Sens, a significant 
                            shareholder. The agreement is for a three year 
                            period and provides for annual compensation of 
                            $120,000. During the first year, amounts due in 
                            excess of $60,000 will be deferred until the 
                            redemption or conversion of the Company's Series A 
                            and Series B preferred stock. If the conversion does
                            not take place by May 1, 1999, the deferred 
                            compensation will be forfeited. After the first 
                            year, the annual compensation will be $60,000 per 
                            year until the conversion is completed.

                                                                        11
<PAGE>   17
                                               NEXT GENERATION MEDIA CORPORATION



                                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



12.    PROPOSED STOCK       The Company is currently negotiating an agreement to
       PURCHASE AGREEMENT   acquire all of the issued and outstanding stock of 
       AND PLAN OF MERGER   United Marketing Solutions, Inc. (UMSI). This 
                            proposed Plan of Merger is scheduled to close in 
                            early 1999. UMSI is engaged in the cooperative 
                            direct mail marketing business and is a subsidiary
                            of UNICO, Inc. In accordance to the proposed plan of
                            merger, UMSI will be merged into a special purpose 
                            subsidiary of the Company with UMSI as the surviving
                            corporation. In exchange for the capital stock of 
                            UMSI, the Company will pay cash of $172,665. In 
                            addition, the Company has agreed to forgive the 
                            indebtedness of UNICO, Inc. in the amount of 
                            $175,500 (Note 3) and to extinguish certain debts of
                            UNICO, Inc. up to $164,000. Further, the Company 
                            will assume a secured loan from Banc First not to 
                            exceed $450,000. In addition, the Company has agreed
                            to provide additional consideration to TC Equities,
                            Ltd., in the form of the Series C Preferred Stock it
                            purchased on March 18, 1998 (Note 5) and the 359,931
                            shares of common stock it purchased on May 12, 1998
                            (Note 4). UMSI had sales of approximately $5,500,000
                            and a net loss of approximately $(600,000) for the 
                            year ended December 31, 1997.

                                                                              12
<PAGE>   18

ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

Quarterly Results of Operations

               Management cannot fully assess material changes in the
registrant's results of operations with respect to the 1998 fiscal year to June
30, 1998 from the corresponding year to date period of the preceding fiscal
year, for the reasons set forth in the registrant'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 registrant's results of operations and financial condition
as of June 30, 1997 and for the period then ended as reported in the
registrant's Quarterly Report on Form 10-Q for that period. 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.

               As of June 30, 1997, the registrant had $62,780 in total assets.
As of June 30, 1998, the registrant had assets totaling $720,700. This increase
is due primarily to the acquisition by the registrant of Independent News, Inc.
("INI") in the third quarter of 1997.

               The registrant had current liabilities as of June 30, 1997 of
$34,715. As of June 30, 1998, the registrant had current liabilities of $613,435
and total liabilities of $674,360. The increase in current liabilities is due
primarily to the assumption of liabilities of INI.

               The registrant had revenues of $512,457 from operations during
the period covered by this report, all of which derived from the operations of
its sole operating subsidiary, INI. INI engages in the community newspaper
publishing business in several townships in northern New Jersey. During the
quarter, the registrant forgave stock subscription receivables and a note
receivable totaling $329,996, resulting in an operating loss of $315,434. The
registrant had revenues of $5,863 in the three month period through June 30,
1997.

<PAGE>   19


               The registrant had a net loss per share during the second fiscal
quarter of 1997 of $0.003 and a cumulative net loss per share during the first
six months of fiscal 1997 of $0.01. During the period covered by this report,
the registrant had a net loss per share of $0.41 on both a basic and diluted
basis and a cumulative net loss per share during the first six months of 1998 of
$0.53. The primary reason for the net loss was an extraordinary loss upon the
cancellation of indebtedness acquired by the registrant from holders of certain
subordinated debt of Unico, Inc. ("Unico").

Liquidity and Capital Resources

               The registrant's principal sources of liquidity are shareholder
loans which amounted to approximately $61,299 for the period covered by this
report. In addition, the registrant sold 70,000 shares of preferred stock during
the second quarter of 1998, as further described below.

               The registrant entered into several transactions in partial
consummation of the acquisition of Unico's sole operating subsidiary, United
Marketing Solutions, Inc. ("UMSI") during the period covered by this report. On
May 12, 1998, Gerard R. Bernier ("Bernier"), Joel P. Sens ("Sens") and all of
the members of the Board of Directors of the registrant entered into a Stock
Purchase and Shareholders Agreement pursuant to which (1) Bernier purchased
935,000 shares of common stock of the registrant from Sens in exchange for a
note in the amount of $156,145 (the "Bernier Note"); (2) Sens transferred the
Bernier Note to the registrant in partial payment of a stock subscription note
payable Sens previously gave to the registrant in the principal amount of
$359,050 (the "Sens Note"); (3) the registrant cancelled the Bernier Note as
compensation to Bernier for acting as a consultant to the registrant in
conjunction with the acquisition by the registrant of UMSI; (4) while the
registrant was still owed $202,905 from Sens on the Sens Note, the registrant
owed Sens $37,198.91 in loans advanced by Sens for working capital, and the
registrant netted indebtedness in the amount of $15,000, resulting in a
remaining balance of $187,905 on the Sens Note; (5) the registrant issued 66,464
shares of common stock at a price of $0.334 per share to Sens in payment of the
registrant's remaining indebtedness to Sens in a private transaction; (6) the
registrant, in recognition of Sens' 



<PAGE>   20


contribution to its business then forgave $152,905 owed on the Sens Note
(leaving $35,000 still owed on the Sens Note); (7) the registrant transferred
the remaining $35,000 debt owed on the Sens note to Kenneth Brochin, a
shareholder and director of the registrant ("Brochin") in satisfaction of a
working capital loan previously extended by Brochin to the registrant; (8) Sens
agreed to assume obligations of the registrant in the amounts of $6,255 and
$17,500 owed to Lawrence Grimes and W.B. Grimes & Co. (collectively, "Grimes"),
respectively, in exchange for 71,123 shares of the registrant's common stock.

               In addition to these transactions, and as a part of the UMSI
acquisition, the registrant sold 70,000 shares of its Series B Preferred Stock
(as defined and discussed below) to T.C. Equities Ltd., a Bahamian investment
company ("T.C. Equities"), for $350,000 in a private sale under Section 3(b) of
the Securities Act of 1933, as amended (the "Securities Act"). The proceeds from
this sale were used to facilitate the UMSI acquisition.

UMSI Transaction and Proposed Merger

               In addition to the transactions described above, the registrant
undertook several other transactions in connection with the UMSI acquisition in
the period covered by this report. On May 8, 1998, the registrant acquired
428,185 shares of the Series C Preferred Stock and certain subordinated debt
totaling $1,034,000 in Unico and cancelled that indebtedness, resulting in an
extraordinary loss to the registrant. In exchange for Unico's preferred stock
and debt, the registrant paid $100,000 and issued 250,000 shares of callable,
cumulative, preferred stock, par value $0.001 per share (the "Series A Preferred
Stock") together with 166,667 stock purchase warrants for the purchase of one
share of common stock each at an exercise price of $0.16 per share and valid for
five years from the date of issue.

               The holders of the Series A Preferred Stock, as a class, shall
alone be entitled to vote for the election of one director of the registrant's
board of directors (the "Board") for the first nine months from the date of
issue and shall be entitled to vote for the election of two directors of the
Board following nine months from the date of issue. Further, in the event that
the registrant proposes to engage in a sale of 



<PAGE>   21

substantially all of its assets, merge with or into another corporation, change
its primary lines of business (those businesses being the direct mail marketing
business and community newspaper business), incur more than $5,000,000 in
indebtedness or acquire property valued in excess of $5,000,000 and not in the
ordinary course of business, such transaction must be approved in advance by at
least a majority of the Series A Preferred Stock issued and outstanding at the
time of such vote in addition to any other requirements for the registrant to
take such action. The Series A Preferred Stock was sold in a private transaction
under Section 3(b) of the Securities Act.

               On May 8, 1998, the registrant and Unico executed a Stock
Purchase Agreement (the "Stock Purchase Agreement") to provide for the
acquisition of all of the issued and outstanding stock of UMSI and the merger of
UMSI into a special purpose subsidiary of the registrant with UMSI as the
surviving corporation, thereby resulting in UMSI becoming a wholly-owned
subsidiary of the registrant (the "Transaction"). Pursuant to the Stock Purchase
Agreement, the registrant shall pay consideration in the form of 200,000 shares
of the registrant's common stock in exchange for 100% of the capital stock of
UMSI. Alternatively, the Stock Purchase Agreement provides that shareholders in
Unico (who must approve the Transaction) may receive $0.10 cash per share of
Unico common stock if such holder so elects at the time of the Unico shareholder
vote on the Transaction in lieu of such Unico common stock holder's
proportionate amount of the 200,000 shares of the registrant's common stock.

               The proposed acquisition by the registrant of UMSI is being
funded in part through the issuance of common stock and/or cash, as described
above. In addition, the registrant agreed, pursuant to the Stock Purchase
Agreement, to extinguish certain debts of Unico up to $150,000, to assume
certain debts of Unico (principally a secured loan from BancFirst, an Oklahoma
banking corporation, in the principal amount of approximately $450,000) and to
provide additional cash to Unico of $210,000 in the form of a loan that will be
transferred by Unico to its subsidiary, UMSI, to be used as working capital. The
cash consideration for the Transaction has been obtained, in part, by the
registrant through the sale, in a separate transaction, of 70,000 shares of
redeemable, cumulative, preferred stock, par value $0.001 per share (the "Series
B Preferred Stock") together with 250,000 



<PAGE>   22


stock purchase warrants for the purchase of one share of common stock each at an
exercise price of $0.16 per share and valid for five years from the date of
issue to T.C. Equities in exchange for $350,000 in cash. The sale of the Series
B Preferred Stock was a private transaction under Section 3(b) of the Securities
Act.

               In exchange for the $350,000, the registrant has agreed to
provide additional consideration to T.C. Equities in the form of the Series C
Preferred stock and certain common stock (described below) of Unico acquired by
the registrant. These transactions would result in the transfer of all of the
registrant's interests in Unico to T.C. Equities and the acquisition of
effective control of Unico by T.C. Equities upon consummation of the
Transaction.

               The registrant has obtained or intends to obtain 13,187, 168,744
and 178,000 shares, respectively, of common stock of Unico (and the cancellation
of any options to purchase shares of Unico) (the "Directors' Unico Shares") held
by Leon Zajdel ("Zajdel"), Bernier and Gerald Bomstad, Jr. ("Bomstad"), members
of Unico's board of directors, for transfer to T.C. Equities, as described
above. The Directors' Unico Shares (and in the case of Bomstad, the acquisition
of a promissory note from Unico to Bomstad in the principal amount of $12,000
and with accrued interest of $1,400 that would be forgiven by the registrant)
has been or will be obtained through the sale of common stock of the registrant
in private transactions to Zajdel, Bernier and Bomstad.

               Certain shareholders of the registrant, contemporaneous with the
above-described transactions, entered into a shareholder agreement whereby they
agreed to vote their shares in order to bring about certain changes in the
registrant's management. As a result of (1) this shareholder agreement, (2) a
resolution of the Board and (3) the terms of the Series A Preferred Stock, the
Board will, upon consummation of the Transaction, be comprised of five
directors: one member of the Board will be nominated and elected by the holders
of the Series A Preferred Stock; two members of the Board will be nominated by
Bernier; one member of the Board will be nominated by Sens; and one member of
the Board will be nominated by the other members of the Board. The composition
of the Board may change in the future based on certain events or the failure of


<PAGE>   23


certain events to occur. The Board intends to appoint Bernier, currently the
President and Chief Executive Officer ("CEO") of Unico and UMSI, as President
and CEO of the registrant and confirm Bernier as President and CEO of UMSI upon
consummation of the Transaction. The registrant has appointed Bernier as a
consultant pending consummation of the Transaction.

               As indicated above, the cash components of the foregoing
transactions were funded in part by the proceeds of the sale of the Series B
Preferred Stock and other consideration to T.C. Equities. The registrant hopes
to engage in other transactions which may include further sales of common stock
and/or loans in order to obtain sufficient funds to complete the Transaction.
However, there can be no assurance that the registrant will be able to engage in
such transactions or obtain such funds. If the registrant is unable to obtain
sufficient additional funds, it will be unable to complete the Transaction, the
registrant will be in breach of its contractual obligations to, among others,
Unico, and the registrant's business, financial condition and results of
operations will be materially adversely affected.

United Marketing Solutions, Inc.

               The registrant will acquire from Unico as part of the
Transaction, all of the capital stock of UMSI. UMSI is engaged in cooperative
direct mail advertising through franchising and production. UMSI's business
involves the design, layout, printing, packaging and distributing of public
relations, marketing materials and promotional coupons for private businesses,
usually involved in retailing goods or providing professional services.
Franchising activities related to this business involve the granting and
administering of independent franchise operations to conduct cooperative direct
mail advertising sales. As of December 31, 1997, UMSI had approximately 65
active franchise operations. UMSI operates its corporate headquarters and its
coupon sales and franchise activities through an office and production facility
at 8380 Alban Road, Springfield, VA 22150. UMSI had approximately 95 employees
as of December 31, 1997. The registrant intends to continue such use of such
property and facilities.


<PAGE>   24


                           PART II - OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES.

Series A Preferred Stock

               On May 8, 1998, the registrant issued 250,000 shares of callable,
cumulative, preferred stock, par value $0.001 per share (the "Series A Preferred
Stock") together with 166,667 stock purchase warrants for the purchase of one
share of common stock each at an exercise price of $0.16 per share and valid for
five years from the date of issue.

               The holders of the Series A Preferred Stock shall be entitled to
receive, prior to the payment of any dividends on the common stock, a cumulative
dividend of $0.30 per share per annum for the first six months and $0.50 per
share per annum thereafter. Dividends will accrue and not be payable until
eighteen months following the date of issue.

               The holders of the Series A Preferred Stock shall be entitled to
vote on equal terms with the holders of the common stock as a single class of
the registrant, that is one vote per share of Series A Preferred Stock.
Notwithstanding the foregoing, the holders of the Series A Preferred Stock, as a
class, shall alone be entitled to vote for the election of one director of the
registrant's Board for the first nine months from the date of issue and shall be
entitled to vote for the election of two directors of the Board following nine
months from the date of issue. In the event that the registrant proposes to
engage in a sale of substantially all of its assets, merge with or into another
corporation, change its primary lines of business (those businesses being the
direct mail marketing business and community newspaper business), incur more
than $5,000,000 in indebtedness or acquire property valued in excess of
$5,000,000 and not in the ordinary course of business, such transaction must be
approved in advance by at least a majority of the Series A Preferred Stock
issued and outstanding at the time of such vote in addition to any other
requirements for the registrant to take such action.

               In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the registrant, the holders of the
Series A Preferred Stock then 



<PAGE>   25



outstanding shall be entitled, for each share of Series A Preferred Stock, to be
paid out of assets of the registrant available for distribution to its
stockholders $5.00 (such amount payable being adjusted appropriately to reflect
any stock split, stock dividend,, reverse stock split, or any transaction with
comparable effect on the capital stock of the registrant) (the "Liquidation
Preference"). This entitlement of the holders of the Series A Preferred Stock,
to the extent equal to $5.00 for each share of Series A Preferred Stock, shall
be satisfied before any similar payment shall be made or any assets distributed
to the holders of the common stock or any other security junior in rank to the
Series A Preferred Stock as to distribution of assets upon such dissolution,
liquidation or winding up (it being understood that the Series B Preferred Stock
ranks equal to the Series A Preferred Stock for purposes of liquidation
preference) and otherwise shall be satisfied on a pari passu basis with the
holders of the common stock.

               The shares of Series A Preferred Stock are convertible into
shares of the common stock of the registrant according to the following
provisions:

       a.      The conversion price for shares of the Series A Preferred Stock
               will be affected by whether or not the registrant has filed a
               preliminary Form S-1 (or other applicable registration statement
               form for an initial public offering) with the Securities and
               Exchange Commission for an offering of the registrant's common
               stock (an "IPO") prior to the expiration of six months after the
               acquisition by the registrant of 100% of the capital stock of 
               UMSI which will result in UMSI becoming a wholly owned 
               subsidiary of the registrant (the "Merger").

       b.      IPO Before Six Months: The Series A Preferred Stock will be
               convertible into common stock, at the holder's option, beginning
               six months after the closing of the Merger at a conversion price
               which is the lesser of (a) $5.00 and (b) 110% of the price for
               common stock issued in a private placement or IPO (a "Corporation
               Stock Sale"). For example, if a Corporation Stock Sale occurs at
               $6.00 per share, the conversion price used will be $5.00 and the
               250,000 shares of Series A Preferred Stock would be convertible
               into 250,000 



<PAGE>   26


               shares of common stock. If a Corporation Stock Sale occurs at
               $4.50 per share, the conversion price would be $4.95 (110%), and
               the 250,000 shares of Series A Preferred Stock would be
               convertible into approximately 252,525 shares of common stock.

       c.      No IPO Before Six Months: The Series A Preferred Stock will be
               convertible into common stock at a conversion price which is the
               lesser of (a) $4.50 and (b) 110% of the price for the stock in a
               Corporation Stock Sale. For example, if a Corporation Stock Sale
               occurs at $5.00 per share of common stock, the conversion price
               used will be $4.50 and the 250,000 shares of Series A Preferred
               Stock would be convertible into approximately 277,778 shares of
               common stock. If a Corporation Stock Sale occurs at $3.00 per
               share, the conversion price would be $3.30 (110%), and the 
               250,000 shares of Series A Preferred Stock would be convertible 
               into approximately 378,789 shares of common stock.

               The conversion price for shares of Series A Preferred Stock is
subject to adjustment in the event of a stock split, stock combination or
similar adjustment in the number of shares of common stock outstanding. All
shares of common stock issued upon conversion of any shares of Series A
Preferred Stock shall be fully paid and nonassessable.

               The Series A Preferred Stock is redeemable, in whole or in part,
at the sole option of the registrant at any time. If the Series A Preferred
Stock is called within the first six months after the Merger, such shares will
have a redemption price of $5.00 per share plus all accrued but unpaid
dividends. If the Series A Preferred Stock is called more than six months after
the Merger, the redemption price will be $6.00 per share plus all accrued but
unpaid dividends. Holders of the Series A Preferred Stock will have an
opportunity to convert their shares following a call by the registrant but prior
to their redemption.

               The Series A Preferred Stock will be redeemable, at the sole
option of the holder, five years from their date of issuance at a price of $6.00
per share plus all accrued but unpaid dividends.


<PAGE>   27

               The registrant shall use part of the proceeds of any private
placement or initial public offering of the registrant's common stock following
the consummation of the Merger (the "NexGen Placement/Offering"). The registrant
shall use 50% of any net proceeds from the NexGen Placement/Offering to redeem
shares of the Series A Preferred Stock.

Series B Preferred Stock

               On May 8, 1998, the registrant issued 70,000 shares of
redeemable, cumulative, preferred stock, par value $0.001 per share (the "Series
B Preferred Stock") together with 250,000 stock purchase warrants for the
purchase of one share of common stock each at an exercise price of $0.16 per
share and valid for five years from the date of issue.

               The Series B Preferred Stock shall be entitled to receive, prior
to the payment of any dividends on the Common Stock, a cumulative dividend of
$0.50 per share per annum. Dividends will accrue and shall only be payable upon
redemption of the Series B Preferred Stock.

               The Holders of the Series B Preferred Stock shall be entitled to
vote on equal terms with the holders of the common stock as a single class of
the registrant, that is one vote per share of Series B Preferred Stock.

               In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the Corporation, the holders of the
Series B Preferred Stock then outstanding shall be entitled to a Liquidation
Preference equal to that of the holders of the Series A Preferred Stock.

               The shares of Series B Preferred Stock are convertible into
shares of the Common Stock of the registrant on the same terms and bases as the
Series A Preferred Stock.

               The Series B Preferred Stock will be redeemable, in whole or in
part, at the sole option of the registrant on the same terms and bases as the
Series A Preferred Stock.

               The Series B Preferred Stock will be redeemable, at the sole
option of the holder, at the following times and in the 


<PAGE>   28


following amounts: (1) 50% redeemable six months from the date of issue; (2) 25%
redeemable nine months from the date of issue; (3) 25% redeemable one year from
the date of issue. The redemption price shall be $5.00 per share plus all
accrued but unpaid dividends upon written notice by the holder to the
registrant.

               If the registrant sells additional shares of common stock after
the consummation of the Merger then (a) if such sale occurs within six months
from May 1, 1998, then the registrant shall cause 50% of the Series B Preferred
Stock issued and outstanding to be redeemed and (b) if another sale occurs
within the six months from November 1, 1998, then the registrant shall cause all
of the remaining issued and outstanding Series B Preferred Stock to be redeemed,
each in connection with the new sale of the registrant's common stock.

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

               On April 17, 1998, a majority of the shareholders of the
registrant acted by written consent in lieu of a special meeting to authorize
1,000,000 shares of a new class of preferred securities, par value $0.001 per
share (the "NexGen Preferred"). See Item 2 of this report and the registrant's
current report filed on Form 8-K on May 26, 1998 for additional information
about the authorization and issuance of NexGen Preferred in two series, the
Series A Preferred Stock and the Series B Preferred Stock.

ITEM 5.        OTHER INFORMATION.

               The registrant has renegotiated the agreements by which the
registrant intends to consummate its acquisition of UMSI from Unico. The details
of the renegotiated terms are explained in a current report filed on Form 8-K on
the same date as the filing of this report.

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K.

        (a)    Exhibits:

               Exhibit 4.1          Written Consent of the shareholders of
                                    the registrant authorizing the creation 

<PAGE>   29

                                    of the NexGen Preferred as of April 17, 1998

               Exhibit 4.2          Board Resolution and Statement of
                                    Designations for the Series A Preferred
                                    Stock and the Series B Preferred Stock as of
                                    May 1, 1998

               Exhibit 27           Financial data schedule.

        (b)    Reports on Form 8-K:

               A report on Form 8-K was filed during the period covered by this
report on May 26, 1998.


<PAGE>   30


               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:  January 7, 1999                      By:   s/s  Larry Grimes
                                               -----------------------------
                                               Larry Grimes, President
                                               (Duly Authorized Officer)

Date:  January 7, 1999                      By:   s/s  Kenneth Brochin
                                               -----------------------------
                                               Kenneth Brochin, Treasurer
                                               (Principal Financial Officer)


<PAGE>   31




                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                        Sequentially
                                                                          Numbered
Exhibit                      Description                                    Page
-------                      -----------                                 -----------

<S>                   <C>                                                      <C>
4.1  --               Written Consent of the shareholders of the registrant
                      authorizing the creation of the NexGen Preferred as of
                      April 17, 1998

4.2  --               Board Resolution and Statement of Designations for the
                      Series A Preferred Stock and the Series B Preferred
                      Stock as of May 1, 1998

27   --               Financial Data Schedule
</TABLE>



