<PAGE>   1
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                       -----------------------------------

                                   FORM 10-QSB

                       -----------------------------------

             QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED                  COMMISSION FILE NUMBER:
         MARCH 31, 2001                                 333-49279

                          NEXT GENERATION NETWORK, INC.
        (Exact name of small business issuer as specified in its charter)

               DELAWARE                                     41-1670450
  (State or other jurisdiction of                       (I.R.S. Employer
  incorporation or organization)                       Identification No.)

                      11010 PRAIRIE LAKES DRIVE, SUITE 300
                          MINNEAPOLIS, MINNESOTA 55344
                    (Address of principal executive offices)

                                  (952) 944-7944
                           (Issuer's telephone number)

                            -------------------------

       Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.

                             Yes    X       No
                                  -----        -----

       Number of shares of Common Stock outstanding as of May 3, 2001: 8,919,641

       Transitional Small Business Disclosure Format  (Check one):

                             Yes            No   X
                                  -----        -----




================================================================================





<PAGE>   2
                          NEXT GENERATION NETWORK, INC.

                                   FORM 10-QSB

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                    ----
<S>                                                                                                 <C>
Part I.   Financial Information

     Item 1. Financial Statements.

        Consolidated Balance Sheets as of March 31, 2001 and December 31, 2000 .................    3

        Consolidated Statements of Operations for the Three Months Ended
          March 31, 2001 and 2000...............................................................    4

        Consolidated Statement of Stockholders' Equity for the Three Months
          Ended  March 31, 2001.................................................................    5

        Consolidated Statements of Cash Flows for the Three Months
          Ended March 31, 2001 and 2000.........................................................    6

        Notes to Consolidated Financial Statements .............................................    7-8

     Item 2. Management's Discussion and Analysis or Plan of Operations ........................    9-13

Part II.  Other Information.

     Item 2.   Changes in Securities ...........................................................    13

     Item 4.   Submission of Matters to a Vote of Security Holders .............................    14

     Item 6.   Exhibits and Reports on Form 8K .................................................    14
</TABLE>







                                                                               2
<PAGE>   3
                                     Part I
                              FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS

                          NEXT GENERATION NETWORK, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 MARCH 31,       DECEMBER 31,
                                                                                   2001              2000
                                                                               -------------    --------------
<S>                                                                            <C>              <C>
ASSETS
              Current Assets:
                       Cash and cash equivalents                               $   9,237,880    $  19,619,410
                       Accounts receivable, net                                      619,506        1,014,270
                       Other current assets (Note 4)                               1,548,512        1,594,814
                                                                               -------------    -------------

                       Total current assets                                       11,405,898       22,228,494
                                                                               -------------    -------------

              Property and Equipment, net                                         16,985,326       16,713,918
              Deferred Financing Costs, net                                          833,193          943,430
              Other Assets                                                           120,096          270,902
                                                                               -------------    -------------

                                                                               $  29,344,513    $  40,156,744
                                                                               =============    =============

LIABILITIES AND STOCKHOLDERS' DEFICIT
              Current Liabilities:
                       Current maturities of long-term debt                    $     634,380    $     618,377
                       Accounts payable                                            1,217,265        1,718,529
                       Accrued expenses  (Note 3)                                  3,421,780        5,743,974
                                                                               -------------    -------------

                       Total current liabilities                                   5,273,425        8,080,880
                                                                               -------------    -------------

              Long-term Debt (Note 2)                                             42,209,144       39,320,796
                                                                               -------------    -------------
              Mandatory Redeemable Preferred Stock
              8% Series D, voting; authorized 7,500,000 shares
                  issued and outstanding 3,550,296 shares being accreted
                  to liquidation value plus accrued dividends
                  (aggregate liquidation value $30,953,333 and $30,353,333,
                  respectively)                                                   27,868,712       27,110,222
                                                                               -------------    -------------

              Stockholders' Deficit  (Note 5)
              8.25% Series A cumulative preferred stock,
                   nonvoting; authorized 20,000 shares; issued and
                   outstanding 2,960 shares, stated, at liquidation value,
                   excluding cumulative unpaid dividends
                   of $1,098,900                                                   1,480,000        1,480,000
              Common stock, $0.01 par value; authorized 25,000,000
                   shares; issued and outstanding 8,919,641 shares                    89,196           89,196
              Additional paid-in capital                                          70,078,745       70,837,235
              Accumulated deficit                                               (117,591,552)    (106,727,465)
              Foreign currency exchange                                              (63,157)         (34,120)
                                                                               -------------    -------------
                                                                                 (46,006,768)     (34,355,154)
                                                                               =============    =============
                                                                               $  29,344,513    $  40,156,744
                                                                               =============    =============
</TABLE>


See notes to condensed consolidated financial statements.




                                                                               3
<PAGE>   4

                          NEXT GENERATION NETWORK, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED
                                                                MARCH 31,
                                                       ----------------------------
                                                           2001            2000
                                                       ------------    ------------
Revenues:
<S>                                                   <C>             <C>
         Advertising revenue (Note 4)                 $   1,100,817   $   2,329,268
         Less agency commissions                            (20,913)        (46,653)
                                                       ------------    ------------

         Net advertising revenue                          1,079,904       2,282,615
         Network operating revenue                             --               210
                                                       ------------    ------------
                     Total revenues                       1,079,904       2,282,825
                                                       ------------    ------------

Costs and expenses:
         Network operating expenses                       2,396,626       2,130,680
         Selling expenses                                 2,685,123       2,933,899
         General and administrative expenses              2,957,511       1,960,939
         Corporate overhead                                 826,915         928,806
         Depreciation and amortization                    1,364,586         918,632
                                                       ------------    ------------
                     Total costs and expenses            10,230,761       8,872,956
                                                       ------------    ------------
         Operating loss                                  (9,150,857)     (6,590,131)

Non operating income (expense):
         Interest expense                                (1,923,135)     (1,977,894)
         Interest income                                    210,731         226,884
         Other expense                                         (826)        (70,220)
                                                       ------------    ------------

Net loss                                                (10,864,087)     (8,411,361)
Preferred stock dividends                                   758,490         209,720
                                                       ------------    ------------
Net loss applicable to common stockholders            $ (11,622,577)  $  (8,621,081)
                                                       ------------    ------------
Basic and diluted net loss per common share           $       (1.30)  $       (1.33)
                                                       ============    ============
Weighted average number of common shares outstanding      8,919,641       6,492,269
                                                       ============    ============
</TABLE>





See notes to condensed  consolidated financial statements.


                                                                              4
<PAGE>   5

                 NEXT GENERATION NETWORK, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
                                  Series A                            Additional                   Foreign
                                 Cumulative                            Paid In     Accumulated     Currency
                               Preferred Stock       Common Stock      Capital       Deficit       Exchange       Total
                               ---------------       ------------      -------       -------       --------       -----
                             Shares     Amount     Shares    Amount
                             ------     ------     ------    ------
<S>                          <C>      <C>         <C>        <C>      <C>         <C>              <C>         <C>
Balance, December 31, 2000     2,960  $1,480,000  8,919,641  $89,196  $70,837,235 $(106,727,465)   $(34,120)   $(34,355,154)
Accrued dividends on
  Mandatory redeemable
  Preferred stock                  -           -          -        -    (600, 000)            -           -        (600,000)
Accretion of Series D
  preferred stock to
  liquidation
  value (Note 5)                   -           -          -        -     (158,490)            -           -        (158,490)
Foreign currency exchange          -           -          -        -            -             -     (29,037)        (29,037)
Net loss                           -           -          -        -            -   (10,864,087)          -     (10,864,087)
                               --------------------------------------------------------------------------------------------
Balance, March 31, 2001        2,960  $1,480,000  8,919,641  $89,196  $70,078,745 $(117,591,552)   $(63,157)   $(46,006,768)
                               =====  ==========  =========  =======  =========== ==============   =========   ============
</TABLE>




See notes to condensed financial statements.




                                                                               5
<PAGE>   6
                         NEXT GENERATION NETWORK, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 THREE MONTHS ENDED
                                                                                     MARCH 31,
                                                                             ----------------------------
                                                                                2001             2000
                                                                             ------------    ------------
<S>                                                                         <C>              <C>
OPERATING ACTIVITIES:
           Net Loss                                                          $(10,864,087)   $ (8,411,361)
           Adjustments to reconcile net loss to net cash used in
                    operating activities:
                    Accretion of long term debt discounts                         349,175         392,958
                    Non cash interest on PIK Notes                              1,216,910       1,453,304
                    Amortization of deferred financing costs                      110,237         126,684
                    Depreciation and amortization                               1,364,586         918,632
                    Compensation element of stock options forfeited                   ---         (26,411)
                    Other                                                             ---          70,220
           Changes in assets and liabilities:
                    Receivables                                                   399,981        (338,276)
                    Other current assets                                           46,302          11,333
                    Accounts payable                                             (501,264)       (838,886)
                    Accrued expenses                                             (977,105)       (475,362)
                                                                             ------------    ------------

                    Net Cash Used In Operating Activities                      (8,855,265)     (7,117,165)
                                                                             ------------    ------------

INVESTING ACTIVITIES:
           Purchase of equipment and furnishings                               (1,633,337)     (2,163,265)
           Deposits and other assets                                              142,933         (12,833)
           Proceeds from sale of equipment                                            ---           1,950
                                                                             ------------    ------------

                    Net Cash Used in Investing Activities                      (1,490,404)     (2,174,148)
                                                                             ------------    ------------

FINANCING ACTIVITIES:

           Proceeds from common stock sales and option exercise                       ---      29,785,311
           PIK Note redemption                                                        ---      (2,927,579)
           Deferred financing costs                                                   ---         (44,125)
           Principal payments on long-term debt and capital leases                 (6,824)         (3,899)
                                                                             ------------    ------------

                    Net Cash Provided by (Used in) Financing Activities            (6,824)     26,809,708
                                                                             ------------    ------------

FOREIGN CURRENCY EXCHANGE                                                         (29,037)            ---
                                                                             ------------    ------------

Net increase (decrease) in cash and cash equivalents                          (10,381,530)     17,518,395
Cash and cash equivalents
           Beginning                                                           19,619,410         403,435
                                                                             ------------    ------------
           Ending                                                            $  9,237,880    $ 17,921,830
                                                                             ============    ============

Supplemental Cash Flow Information
           Cash payments for interest                                        $    246,774    $      4,916
           Non cash activities:
              Increase in mandatory redeemable preferred stock and
               decrease in paid-in capital from accrued dividends
               and accretion                                                      758,490         209,720
             Accrued interest converted to long term debt                       2,562,000       3,194,000
             Increase in long term debt resulting from interest accretion         349,175         392,958
             Exchange of preferred stock for common stock                             ---      20,986,670
             Additional paid in capital resulting from PIK Note redemption            ---      13,125,421
</TABLE>


See notes to condensed consolidated financial statements.



                                                                               6

<PAGE>   7

                          NEXT GENERATION NETWORK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1.  Basis of Presentation

     The condensed consolidated balance sheet as of March 31, 2001, the
condensed consolidated statements of operations, condensed consolidated
statement of changes in stockholders' deficit, and condensed consolidated
statements of cash flows for the three month periods ended March 31, 2001 and
2000, have been prepared by the Company without audit. In the opinion of
management, all adjustments (consisting only of normal recurring accruals)
necessary to present fairly the consolidated financial position, results of
operations and cash flows at and for all periods presented have been made. The
operating results for the period ended March 31, 2001 are not necessarily
indicative of the operating results to be expected for the full fiscal year. In
addition comprehensive loss is not separately reported since it is not
significantly different than the reported net loss for the periods ended March
31, 2001 and 2000.

     In accordance with the requirements of Form 10-QSB, certain information
and footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. Accordingly, the reader of this Form 10-QSB should refer to the
Company's Form 10-KSB for the year ended December 31, 2000 for further
information.


Note 2. Long Term Debt

       Long-term debt: A summary of the Company's long-term debt is as follows:

<TABLE>
<CAPTION>
                                                                                          MARCH 31,       DECEMBER 31,
                                                                                             2001             2000
                                                                                      ------------------------------------
<S>                                                                                         <C>              <C>

         12% and 14% Senior Secured PIK Notes ("PIK Notes") due February 2003
            (net of $2,125,834 and $2,415,197 of unamortized discount
            attributed to warrants issued in connection with PIK Notes)                     $41,130,166      $38,278,803
         Noninterestbearing note payable, discounted at 15%, total of
            $700,000 payable based on certain cash flows, if any, with
            balance due December 2001, secured by equipment                                     631,521          608,694
         Noninterestbearing note payable, discounted at 15%, total of
            $1,500,000 payable August 2003, plus 10% of certain net
            revenues, if any, secured by equipment                                            1,078,978        1,041,993
         Other debt - capital lease obligations                                                   2,859            9,683
                                                                                      ------------------------------------


                                                                                             42,843,524       39,939,173
         Less current maturities                                                                634,380          618,377
                                                                                      ------------------------------------

                                                                                            $42,209,144      $39,320,796
                                                                                      ====================================
</TABLE>


         Amendment to Senior Secured PIK Notes. On January 31, 2001, the Company
amended the Indenture related to the 12% Series B Senior Secured PIK Notes due
2003, (the "Series B Notes") as the result of a consent solicitation. The
amendment to the Indenture created 14% Series C Senior Secured PIK Notes due
2003 (the "Series C Notes"). The Series C Notes are identical to the Series B
Notes except as follows: the optional redemption price premium was extended
until January 31, 2003; the period during which the Company may pay interest on
the Series C Notes in the form of additional notes was extended until the
maturity date of February 1, 2003; and the interest rate on the Series C Notes
was increased from 12% to 14% for interest payments made after August 1, 2000.
Noteholders holding $36,662,000 of Series B Notes at






                                                                               7
<PAGE>   8

December 31, 2000 consented to the amendment and now hold Series C Notes. A
total of $4,032,000 of Series B Notes remain outstanding.

         In February 2001 the Company issued additional notes in payment of
$2,562,000 of accrued interest on the aforementioned PIK Notes.

         The long term debt excluding capital lease obligations and assuming
full accretion of the related discounts is payable as follows: $700,000 in 2001
and $44,756,000 in 2003.


Note 3. Accrued Expenses

       The components of accrued expenses are as follows:

<TABLE>
<CAPTION>
                                March 31,        December 31,
                                  2001              2000
                                -----------------------------
<S>                             <C>              <C>
         Site agreement fees    $1,336,575       $2,105,467
         Interest                  996,000        2,341,090
         Compensation              373,899          647,031
         Other                     715,306          650,386
                                -----------------------------
                                $3,421,780       $5,743,974
                                -----------------------------
</TABLE>


Note 4.  Barter Transactions

         Barter revenues were $229,104 and $8,974 for the three months ended
March 31, 2001 and 2000, respectively. Barter credits of $1,394,737 and
$1,397,555 are included in other current assets as of March 31, 2001 and
December 31, 2000, respectively.

Note 5.  Contingent Warrant Issuance

         On November 7, 2000, the Company issued 3,550,296 shares of 8% Series D
preferred stock to a private investor at $8.45 per share, which is also the
redemption value. If the Company consummates an IPO prior to December 31, 2001
that does not yield at least a 100% annualized return to the Series D holders,
the Company has agreed to issue to each Series D holder, warrants to purchase
additional shares of preferred stock at $.001 per share such that the holder
would yield a 100% return based on the price of the Company's common stock
thirty days after the IPO. In addition, if the Company fails to consummate a
qualifying IPO prior to December 31, 2001, the Company has agreed to issue
warrants to purchase additional shares of preferred stock at $.001 per share
such that the effective initial price per share of the preferred stock could be
adjusted down to $7.60 per share. The per share liquidation value would not
change with the issuance of any additional shares. Management is periodically
evaluating the probability of the issuance of the aforementioned contingent
warrants during 2001. At such a time as the Company believes any such warrants
are probable of issuance the value ascribed to such warrants will be accreted to
Series D preferred stock by periodic charges to additional paid in capital to
November 6, 2005, the mandatory redemption date of the Series D preferred stock.
The periodic accretion will be reflected in the computation of earnings or loss
per share.





                                                                               8
<PAGE>   9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.

                           FORWARD-LOOKING STATEMENTS


         The forward-looking statements in this report involve known and unknown
risks, uncertainties and other important factors that could cause the actual
results, performance or achievements of the Company, or industry results, to
differ materially from any future results, performance or achievements expressed
or implied by such forward-looking statements. Such risks, uncertainties and
other important factors include, among others: the Company's ability to secure
additional financing; advertising rates; the ability to secure advertising
contracts; the ability to secure new sites; the loss of key existing site
agreements; changes in the political and regulatory climate; out-of-home
advertising industry trends; competition; changes in business strategy or
development plans; availability of qualified personnel; changes in, or the
failure or inability to comply with, government regulations; and other factors
referenced in this report. Many of these factors have been previously identified
in filings or statements made by or on behalf of the Company, including filings
with the Securities and Exchange Commission on Form 10-KSB.


         The Company does not undertake to update forward-looking information
contained herein or elsewhere to reflect actual results, changes in assumptions
or changes in other factors affecting such forward-looking information.





GENERAL





         We are a leader in the emerging digital out-of-home media industry. We
are currently implementing a rapid build out of the world's largest network of
digital video advertising displays. Since our inception, we have developed our
proprietary technology platform to deliver digital advertising and other media
across our growing network of flat panel screens in the U.S. and
internationally.


         We have organized our network rollout strategy on a market by market
basis, concentrating on major U.S. advertising markets. As of March 31, 2001, we
have installed screens in 6,894 sites. The historic build out of our network is
illustrated in the following table.


                         INSTALLED NGN SCREEN LOCATIONS

<TABLE>
<CAPTION>
   DMA                                  DEC 31, 1999    MARCH 31, 2000    DEC 31, 2000   MARCH 31, 2001
   RANK              MARKET             ------------    --------------    ------------   --------------
   ----              ------
<S>         <C>                         <C>             <C>               <C>            <C>
  1         New York                     1,317            1,482             1,814          1,744
  2         Los Angeles                    578              596               614            628
  3         Chicago                        172              218               281            287
  4         Philadelphia                   307              327               391            564
  5         San Francisco                  245              300               380            381
  6         Boston                         241              259               297            289
  7         Dallas                         306              320               364            363
  8         Washington DC                  519              517               521            524
  12        Seattle                          -                -               161            163
  14        Tampa                          165              168               170            170
  16        Miami                          117              130               146            145
  18        Denver                           -                -               156            160
  20        Sacramento                      64               67                70             71
  22        Orlando                        257              259               253            256
  24        Baltimore                      204              201               210            148
  26        San Diego                      157              162               165            163
  40        Norfolk                        237              238               239            237
  44        West Palm Beach                 67               72                97             96
</TABLE>





                                                                               9
<PAGE>   10

<TABLE>
<S>         <C>                         <C>              <C>              <C>            <C>
  60        Austin                           -                -                38             41
  61        Richmond                         -                -                54             74
  83        Ft. Myers                       54               55                57             57
            Sydney, Australia                                                  95            129
            Paris, France                                                      80            144
            Other                           24               28                39             60
                                            --               --                --             --

            TOTAL SITES                  5,031            5,399             6,692          6,894
                                         =====            =====             =====          =====
</TABLE>






         Our current geographic expansion is primarily focused on the 11 largest
U.S. markets, with the intention of having a significant presence in the 25
largest U.S. markets by 2003.


         We generate revenues principally through the sale of advertising on our
network. Our screens present repeating sequences, or loops, of advertising and
programming. As currently configured, the loops consist of eight 15-second
advertising slots and eight 10-second programming slots, which currently provide
our network with more than 55,000 advertising slots available for sale on a
daily basis. We charge a fixed daily rate for advertising slots which averages
approximately between $3.00 and $4.00. Advertising rates are based upon the
availability of space on the network for the desired location, the size and
demographic makeup of the market served by the screens and the availability of
alternative advertising media in the area. Most advertising contracts are
short-term, typically for periods of one to three months, and are with local,
regional and national advertisers. As the number and geographic diversity of our
sites increases, we believe we will be able to attract more national advertisers
to our network, thereby increasing the contribution of national advertising
revenue to our total advertising revenue in the future.

         We recognize advertising revenues at the time the advertisement appears
on our network. We bill advertisers monthly for contracts that exceed one month
in length and on the first day of the month during which the advertisement
appears on our network for contracts for shorter periods. When advertising
agencies are involved, they deduct a commission, which typically is 15% of gross
revenue, and remit only the net amount to us.

         Installation costs for a new site include the cost of acquiring
hardware and the cost to install the equipment, which are capitalized and
depreciated over five years. The fully installed average per site cost for a
typical site with a single flat panel screen is approximately $2,500. At some
sites, more than one flat panel screen is installed; at those sites, we may
receive higher advertising rates.

         Network operating expenses are costs associated with the daily
operation, maintenance and depreciation of our screens as well as the site
agreement fees paid to site owners. Most network operating expenses generally
increase proportionally with the number of installed sites. On a site by site
basis, telecommunications and maintenance costs remain relatively fixed,
averaging approximately $55 to $65 per month. Accordingly, we expect that these
telecommunications and maintenance expenses as a percentage of advertising
revenues will decrease as our advertising revenues increase. In addition, site
agreements generally provide the site operator with a percentage of the
advertising revenues (typically 10% per site) derived from the screens at the
particular site. Some site agreements provide for a minimum annual site fee.
Based on the number of screens installed on March 31, 2001, we are committed to
minimum site agreement fees of approximately $3.8 million annually through 2005.
We incur network operating expenses in connection with our screens prior to
generating revenues from the sites.


                                                                              10
<PAGE>   11

        Selling expenses include all costs associated with operating our sales
offices. The majority of these expenses are related to compensation and related
benefits for sales personnel. We pay our sales personnel fixed salaries and
sales commissions. During the first quarter of 2001 and 2000, the commission
portion of the compensation was 10.2% and 14.7% of net revenues, respectively.

         General and administrative expenses include rent for our headquarters
and compensation and related benefits for personnel involved in corporate
development, field operations, network operations, marketing, creative services,
management information systems and accounting.

         Corporate overhead includes compensation and related benefits for
senior management and administrative personnel, legal, accounting and other
professional fees, travel, insurance and telecommunications.

         Costs of acquiring hardware and installing it in new sites are
capitalized and depreciated over five years. Other equipment and furnishings are
depreciated over their lives of three to seven years. Leasehold improvements are
amortized over the terms of the respective leases.


RESULTS OF OPERATIONS

Three Months Ended March 31, 2001 compared to Three Months Ended March 31, 2000

          Total Revenues. Total revenues decreased to approximately $1.1 million
for the three months ended March 31, 2001, from approximately $2.3 million for
the three months ended March 31, 2000, or 52.7%. The decrease was attributable
to decreased occupancy levels of advertising slots sold which we believe to be
the result of the transition from primarily local sales to concentration on
regional and national accounts as well as effects of the slowing economy and
acute softness in the advertising market in general. We estimate that the sales
cycle to close many of these regional and national accounts may reach 12 to 18
months from the initial presentation.

         Network operating expenses. Network operating expenses increased to
approximately $2.4 million for the three months ended March 31, 2001, from
approximately $2.1 million for the three months ended March 31, 2000, or 12.5%.
Major components of network operating expenses for the respective periods were:



<TABLE>
<CAPTION>

                                          Three Months ended March 31,
                                          ----------------------------

                                          2001                  2000
                                          ----                  ----

<S>                                  <C>                  <C>
Site agreement expense                  $997,000             $1,068,000
Telecommunications expense             1,036,000                787,000
Maintenance expense                      363,000                275,000
</TABLE>


         The increase in telecommunications and maintenance expense was due
primarily to the increase in the average number of installed sites, which
increased 30.3% from 2000 to 2001. The decrease in site agreement expense was
due to the reduction in sales revenues in 2001 compared to 2000.

         Selling expenses. Selling expenses decreased to approximately $2.7
million for the three months ended March 31, 2001, from approximately $2.9
million for the three months ended March 31, 2000, or 8.5%. The decrease
resulted primarily from lower compensation costs due to





                                                                              11
<PAGE>   12
a reduction of sales office staff (average 2001 headcount of 80 compared to 2000
average of 95) and lower commissions due to decreased sales.

         General and administrative expenses. General and administrative
expenses increased to approximately $3.0 million for the three months ended
March 31, 2001, from approximately $2.0 million for the three months ended March
31, 2000, or 50.8%. The increase was primarily attributable to increased
advertising, sales promotion and trade show expense, which increased to
approximately $716,000 in 2001 compared to approximately $55,000 in 2000.
Employee compensation and related costs, the largest component of general and
administrative expense, increased to $1.4 million in 2001 compared to $1.2
million in 2000. Research and development costs increased slightly to $46,000 in
2001 compared to $41,000 in 2000. We capitalized $17,000 of software costs
developed or obtained for internal use during the first quarter of 2001 compared
to $110,000 in the comparable 2000 period.

         Corporate overhead. Corporate overhead decreased to approximately
$827,000 for the three months ended March 31, 2001, from approximately $929,000
for the three months ended March 31, 2000, or 11.0%. This decrease was primarily
due to a reduction in legal, accounting, and other professional fees, offset by
an increase in compensation and related costs.

         Depreciation and amortization. Depreciation and amortization increased
to approximately $1.4 million for the three months ended March 31, 2001, from
approximately $919,000 for the three months ended March 31, 2000, or 48.5%.
Depreciation expense relating to our flat panel screens was $1.0 million in 2001
compared to $711,000 in 2000.

         Operating loss. As a result of the above factors, operating loss
increased to approximately $9.2 million for the three months ended March 31,
2001, from approximately $6.6 million for the three months ended March 31, 2000,
or 38.9%.

         Net interest expense. Net interest expense decreased to approximately
$1.7 million for the three months ended March 31, 2001, from approximately $1.8
million for the three months ended March 31, 2000, or 2.2%. The decrease was
primarily attributable to the repurchase of $18.1 million face amount of PIK
notes in February 2000 resulting in a reduction of average borrowings for the
period.

         Net loss. As a result of the above factors, the net loss attributable
to common stockholders increased to approximately $11.6 million for the three
months ended March 31, 2001, from approximately $8.6 million for the three
months ended March 31, 2000, or 34.8%.

          The Company expects to incur additional costs to install additional
flat panel screens and for operating costs to expand. As a result, the Company
expects its expenses to continue to exceed its revenues and to incur a net loss
for 2001. The Company expects to continue to operate at a net loss for the
foreseeable future.


LIQUIDITY AND CAPITAL RESOURCES


         Through March 31, 2001, our primary source of liquidity has been
proceeds from the sale of equity and debt securities.


         As of March 31, 2001, total cash and cash equivalents were $9.2 million
compared to $19.6 million as of December 31, 2000. The decrease in cash was a
result of $8.9 million of cash



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used in operating activities (due primarily to the loss from operations) and
$1.5 million of cash used in investing activities (primarily for capital
expenditures related to the expansion of our network).

         Interest on the Series C Notes is payable either in cash or additional
senior secured notes, at our option, until the maturity date of February 1,
2003. We expect to pay interest on the Series C Notes by issuing additional
senior secured notes. Our semi-annual cash interest requirements on the Series B
Notes will be $242,000 until the notes mature on February 1, 2003.

         Our primary uses of cash are capital expenditures for flat panel
screens and for our working capital requirements. We anticipate capital
expenditures of approximately $20 million related to the purchase and
installation of our flat panel screens over the next two years. To the extent we
are successful at securing more sites than anticipated, our capital expenditures
and working capital requirements could be significantly larger than anticipated.
Our cash flow is dependent on our ability to increase advertising revenues and
is subject to financial, economic and other factors, some of which are beyond
our control. We will need to raise additional capital during the second half of
2001 to satisfy our obligations and to attain our current business plan. We may
also need to reduce operating and capital expenditures. We cannot assure you
that the additional funds will be available, or if available, will be available
on terms acceptable to us.

SEASONALITY

         Our business is in a growth phase as we continue to expand our
footprint. Consequently, we have not experienced any material seasonal factors
which have affected our advertising revenues to date. We do expect, however,
that seasonal revenue fluctuations caused by variations in advertising
expenditures by local, regional and national advertisers, may effect our
revenues in the future as we achieve a larger installed base of sites.

MARKET RISK AND IMPACT OF INFLATION

         We do not believe we have any significant risk related to interest rate
fluctuations since we have only fixed rate debt. We believe that inflation has
not had a material impact on our results of operations for the quarters ended
March 31, 2001 and 2000. We cannot assure you that future inflation will not
have an adverse impact on our operating results and financial condition.


PART II. OTHER INFORMATION

ITEM 2.  Changes in Securities

         Amendment to Senior Secured PIK Notes. On January 31, 2001, the Company
amended the Indenture related to the Series B Notes as the result of a consent
solicitation. The amendment to the Indenture created the Series C Notes. The
Series C Notes are identical to the Series B Notes except as follows: the
optional redemption price premium was extended until January 31, 2003; the
period during which the Company may pay interest on the Series C Notes in the
form of additional notes was extended until the maturity date of February 1,
2003; and the interest rate on the Series C Notes was increased from 12% to 14%
for interest payments made after August 1, 2000. Noteholders holding $36,662,000
of Series B Notes at December 31, 2000 consented to the amendment and now hold
Series C Notes. A total of $4,032,000 of Series B Notes remain outstanding.




                                                                              13
<PAGE>   14

ITEM 4.  Submission of Matters to a Vote of Security Holders.

         See Item 4 of the Company's Annual Report on Form 10-KSB, which is
incorporated herein by reference, for a discussion of the solicitation of
consents from the holders of the Senior Secured PIK Notes.


ITEM 6. Exhibits and Reports on Form 8-K:


         a)  Exhibits
         None



         b)  Reports on Form 8-K
         None











                                   SIGNATURES


         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on behalf by the undersigned, thereto duly
authorized.


                               NEXT GENERATION NETWORK, INC.


Date:  May 12, 2001            By:      /s/  Thomas M. Pugliese
                                  ------------------------------------------
                                  Thomas M. Pugliese
                                  Chief Executive Officer



Date:  May 12, 2001            By:     /s/  Michael R. Robinson
                                  ------------------------------------------
                                  Michael R. Robinson
                                  Chief Financial Officer
                                  (principal financial and accounting officer)






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