SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1999
Commission file number 000-24623
New Generation Plastic, Inc.
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(Exact name of small business issuer as specified in its charter)
Delaware 13-4056896
--------------------------------- ----------------------------
(State or other jurisdiction (IRS Employer Identification
of incorporation or organization) Number)
245 Park Avenue, 39th Floor
New York, New York 10167
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(Address of principal executive offices)
(212) 792-4104
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(Issuer's telephone number, including area code)
SW Ventures, Inc.
455 East 400 South, Suite 100
Salt Lake City, Utah 84111
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(Former name, former address and former
fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports) Yes [x] No [ ], and (2) has been subject to such filing requirements
for the past 90 days. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of June 30, 1999 the issuer had 11,842,768 shares of its
Common Stock, $0.001 par value, outstanding.
<PAGE>
New Generation Plastic, Inc.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited condensed financial statements of New Generation Plastic, Inc., a
Delaware corporation (the "Company"), as of June 30, 1999 and for the three
month period beginning April 1, 1999 and ending June 30, 1999 were prepared by
Management and commence on the following page. In the opinion of Management, the
condensed financial statements include all adjustments which are necessary in
order to make the financial statements not misleading and fairly present the
financial condition of the Company.
<PAGE>
New Generation Plastic, Inc.
Index to Condensed Financial Statements
Page No.
--------
Condensed Balance Sheets at June 30, 1999 and
December 31, 1998.....................................................
Condensed Statement of Operations for the six
months ended June 30, 1999 and June 30, 1998..........................
Condensed Statement of Operations for the three
months beginning April 1, 1999 and ended June 30,
1999 and the three months beginning April 1, 1998
and ended June 30, 1998...............................................
Condensed Statement of Cash Flows for the six
months ended June 30, 1999 and the six months
ended June 30, 1998...................................................
<PAGE>
New Generation Plastic, Inc.
Condensed Balance Sheets
For the Six Months Ended June 30, 1999
and the Year Ended December 31, 1998
<TABLE>
<CAPTION>
For the six months For the year
ended Ended
June 30, 1999 December 31, 1998
------------- -----------------
(unaudited)
<S> <C> <C>
Assets:
Cash 43,227 8,900
Accounts Receivable 0 3,748
Inventory 0 292
Fixed Assets 0 128,258
Prepaid Expenses 86,455 0
Other Assets 1,934,376 0
------------- -------------
Total Assets 2,064,058 141,198
============= =============
Liabilities & Stockholders' Equity:
Accounts Payable 415,000 4,125
Due to Shareholder (Note 3) 1,426,192 8,889
------------- ------------
Total Liabilities 1,841,192 13,014
Stockholders' Equity:
Common Stock, $0.001 par value; 50,000,000 11,843 3,416
authorized, 11,842,768 and 3,416,066 issued and
outstanding on June 30, 1999 and on December 31,
1998, respectively.
Preferred Stock; 1,000,000 authorized, 0 issued and 0 N/A
outstanding on June 30, 1999.
Add'l Paid in Capital 847,190 167,268
Retained Earnings(Deficit) (636,167) (42,500)
------------- -------------
Total Stockholders' Equity 222,866 128,184
Total Liabilities &
Stockholders' Equity 2,064,058 141,198
============= =============
</TABLE>
<PAGE>
New Generation Plastic, Inc.
Condensed Statement of Operations for the six months
ended June 30, 1999 and June 30, 1998
<TABLE>
<CAPTION>
Six months Six months
Ended Ended
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Operating Expenses
General and Administrative 580,016 6,750
Depreciation, Depletion and Amort. 286 313
----------- -----------
580,302 7,063
----------- -----------
Income(Loss) from Continuing
Operations (580,302) (7,063)
Income(Loss) from Discontinued
Operations (Note 5) 9,114 18,588
Income(Loss) on Sale of Discontinued
Operations (22,479) 0
------------ -----------
Income(Loss) before Taxes
Operations (593,667) 11,525
------------ -----------
Taxes 0 0
------------ -----------
Net Income(Loss) After Taxes (593,667) 11,525
============ ===========
Earning per Share from Continuing
Operations (0.0490) (0.0021)
Earnings per Share from Discontinued
Operations (0.0011) 0.0054
</TABLE>
<PAGE>
New Generation Plastic, Inc.
Condensed Statement of Operations for the three months beginning
April 1, 1999 and ended June 30, 1999 and the three
months beginning April 1, 1998 and ended June 30, 1998
<TABLE>
<CAPTION>
Three months Three months
beginning beginning
April 1, 1999 April 1, 1998
Ended Ended
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Operating Expenses
General and Administrative 573,679 4,761
Depreciation, Depletion and Amort. 72 313
----------- -----------
Total 573,751 5,074
Income(Loss) from Continuing
Operations (573,751) (5,074)
Income(Loss) from Discontinued
Operations (Note 5) 5,673 7,075
(Loss) on sale of Discontinued
Operations (22,479) 0
------------ -----------
Net Income(Loss) before Taxes (590,557) 2,001
------------ -----------
Taxes 0 0
------------ -----------
Net Income After Taxes (590,557) 2,001
============ ===========
Earnings per Share from Continuing (0.0484) (0.0015)
Operations
Earning per Share from Discontinued (0.0014) 0.0021
Operations
</TABLE>
<PAGE>
New Generation Plastic, Inc.
Condensed Statement of Cash Flows for the six months ended
June 30, 1999 and the six months ended June 30, 1998
<TABLE>
<CAPTION>
Period Ended Period Ended
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Cash flows from operating
activities:
Net Income (Loss) (593,667) 11,525
Adjustments to reconcile net income
to net cash provided by operating
activities:
Deprec., deplet. and amort. 286 8,528
Changes in assets and
liabilities:
Accounts receivable 3,748 (4,267)
Inventories 292
Other current assets (86,455)
Other assets (1,934,376)
Accounts payable and accrued 410,875 (4,161)
expenses ----------- -----------
Net cash provided by
operating activities (2,199,296) 11,355
Cash Flows from Investing
Activities (Purchase) of Mineral
Interests and Fixed Assets 0 72,213)
----------- -----------
Cash flows from financing
activities:
Shareholder Loans 1,417,303 0
Purchase of Common Stock 688,349 52,540
Sale of Fixed Assets 127,971 0
----------- -----------
Net cash provided by 2,223,623 52,540
financing activities
Net increase in cash and cash 34,327 (8,318)
equivalents
Cash and cash equivalents, 8,900 8,424
beginning of period
Cash 43,227 106
============ ===========
</TABLE>
<PAGE>
New Generation Plastic, Inc.
Notes to Condensed Financial Statements
1. ORGANIZATION
New Generation Plastic, Inc. (the "Company") was organized on April 14,
1999 under the laws of the State of Delaware. On June 10, 1999, SW Ventures Inc.
("SWV") was merged into the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
The interim statements are unaudited, but include all adjustments,
which consist of only normal recurring accruals, that management considers
necessary to fairly present the results for the interim periods. Results for
interim periods are not necessarily indicative of results for a full year. The
year end balance sheet data was derived from audited financial statements, but,
as presented here, does not include all disclosures required by generally
accepted accounting principles.
a. USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities, the disclosure of contingent assets and liabilities at
end of the period and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
b. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with
maturities of less than three months to be cash equivalents.
c. INVENTORIES
Inventories are stated at the lower of cost (first-in,
first-out) or market.
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d. RESEARCH AND DEVELOPMENT COSTS
The Company is currently expensing all costs incurred in
connection with the development and creation of a 150kg/hour pilot
plant.
e. INTANGIBLE ASSETS
Intangible assets consist of the cost associated with the
purchase of the patents, which patents and related tangible and
intangible assets and liabilities were contributed to the Company in
exchange for stock. No amortization deductions have been claimed.
f. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Costs of major
additions and improvements are capitalized and replacements,
maintenance and repairs, which do not improve or extend the life of the
respective assets, are charged to operations as incurred.
When an asset is sold, retired or otherwise disposed of, the
cost of the property and equipment and the related accumulated
depreciation are removed from the respective accounts, and any
resulting gains or losses are reflected in operations.
Depreciation is computed using the straight-line method over
the estimated useful lives of the assets, which range from five to
seven years. Leasehold improvements are amortized over the term of the
lease.
g. INCOME TAXES
As there can be no reasonable assurance that the Company will
generate sufficient income to utilize the net operating loss, no
benefit has been claimed.
3. LIABILITIES
The Accounts Payable consists of $225,000 for consulting fees due to
BAMI (as defined below) and $190,000 for unbilled legal fees.
Bachkine & Meyer Industries, S.A. ("BMI"), the majority shareholder of
the Company, has been advancing monies to the Company pursuant to a Line of
Credit Agreement. The balance of such advances as of June 30,
<PAGE>
1999 is $1,426,192. Presently, no interest has been charged on these amounts.
BMI has indicated that these amounts will not be due for at least 12 months,
unless the Company wishes to prepay. Effective July 1, 1999, BMI will begin
charging interest on the advances to the Company at commercially reasonable
interest rates.
4. RELATED PARTY TRANSACTIONS
In addition to the Line of Credit Agreement discussed above, B.A.M.I.
Consulting, S.A. ("BAMI"), a British Virgin Islands corporation, and an
affiliate of BMI is entitled to receive a monthly management consulting fee of
$75,000. For the period ended June 30, 1999, $225,000 (three months' fees) of
such fee has been accrued as general and administrative expense, but has not yet
been paid. B.A.M.I. Consulting, S.A. has agreed that it will not seek payment
until the Company has sufficient cash to meet its needs.
In the event that the Company raises in excess of $10,000,000 in
capital, BMI may seek reimbursement of certain costs incurred by BMI prior to
1999 associated with the NGP Assets, which amount may exceed $750,000.
5. DISCONTINUED OPERATIONS
On June 10, 1999, SWV contributed all of its assets and liabilities
relating to its oil and gas activities to a then wholly owned subsidiary, SW Oil
& Gas Company, a Nevada corporation ("SWV Oil"). Mr. Guido Cloetens, the then
majority shareholder of SWV purchased all of the outstanding shares of SWV Oil
from the Company in exchange for a promissory note in the total principal amount
of $90,000, plus assuming certain debt of the Company in the amount of $15,880,
for a total purchase price of $105,880.
<PAGE>
New Generation Plastic, Inc.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
PLAN OF OPERATION
The Company is the successor to SW Ventures, Inc., a Nevada corporation
("SWV"). As a result of the Oil Asset Disposition (as defined below) and the
Reorganization (as defined below), the Company is no longer involved in the oil
and gas business and those operations are being accounted for as a discontinued
operation. The Company's business is now solely focused on the commercialization
of a patented process for processing two or more discrete plastic polymers (the
"NGP Process"). The NGP Process is believed to be capable of producing
commercially usable plastic polymers from a mixed stream of discrete virgin
polymers or waste plastic. To date the Company has not realized any revenue from
any business or operations relating to the NGP Process.
Change of Control. In April, 1999, SWV and Mr. Guido Cloetens, its then
majority stockholder, entered into an agreement (the "Asset Contribution
Agreement") with Bachkine & Meyer Industries, S.A., a British Virgin Islands
corporation ("Bachkine" or "BMI") whereby SWV acquired from BMI all of the
assets and related liabilities (the "NGP Assets") pertaining to the NGP Process
in exchange for an approximately 98% equity interest in the resultant
reorganized and reincorporated company, renamed New Generation Plastic, Inc.
(the "Company" or "NGP")
SWV also agreed, as a condition precedent to the Asset Contribution
Agreement that it would (a) effect a disposition and/or distribution of all of
its oil and gas assets and the satisfaction of all of its liabilities related
thereto (the "Oil Asset Disposition"); (b) effect (i) a one-for-fifteen reverse
stock split of the SWV common stock, (ii) the reincorporation of SWV as a
Delaware corporation, and (iii) a name change of SWV to New Generation Plastic,
Inc. (the "Reorganization"); and (c) solicit its shareholders' approval of the
foregoing as well as the issuance of shares of Common Stock to BMI representing
98% of the then issued and outstanding shares of Common Stock in exchange for
the NGP Assets.
On June 10, 1999, the proposed transactions were consummated and (a)
the corporate existence of SWV as a
<PAGE>
Nevada corporation ceased and it merged into and became part of the Company, and
(b) the officers and directors of SWV resigned and the present officers and
directors of the Company were elected. In addition, for every 15 shares of SWV
Common Stock owned of record, each then existing holder of SWV Common Stock
became a holder of one share of Common Stock. On June 11, 1999, trading in the
common stock of the Company commenced on the OTCBB under the new symbol "NGPX."
The Oil Asset Disposition was accomplished by the contribution by SWV
of all of its oil and gas related assets and liabilities to a wholly owned
subsidiary, SW Oil & Gas Company ("SW Oil"), a Nevada Corporation. Mr. Guido
Cloetens, the former President and majority shareholder of SWV purchased all of
the stock of SW Oil from the Company in exchange for a promissory note (the
"Note") of Mr. Cloetens in the principal amount of $90,000. The Note is due on
December 8, 1999 and the Company holds 15,000 shares of the common stock of the
Company as security for the payment of the Note.
Currently, a 30 kg/hr NGP Process prototype unit (the "BT-30" unit) is
being tested by Pole Europeen de Plasturgie ("PEP"), an independent French
plastics research group. The scope of the research and testing activities
coordinated with PEP will include the testing of the relevant parameters of the
NGP Process, the BT-30 unit, and the resulting compounds from mixed plastic
waste, as well as mixed virgin plastic. The Company estimates that the research
program with the PEP will require the expenditure of approximately $175,000 in
the next twelve months.
Assuming sufficient funding is available in the next twelve months, it
is anticipated that the Company will:
(i) Complete the initial testing of the NGP Process, BT-30 unit and the
initial compounds at the PEP;
<PAGE>
(ii) Order, install and operate the 150 kg/hour pilot plant;
(iii) Fabricate a 1000 kg/hour full capacity integrated NGP Process unit;
(iv) Design and fabricate a North American based NGP Process prototype
unit;
(v) Investigate alternative manufacturers for NGP Process units and
plants;
(vi) Pursue joint venture and/or co-development programs with industrial
companies or organizations; and
(vii) Develop additional research programs and investigate government
subsidies both in Europe and the United States.
The Company expects to hire additional employees in the next twelve
months. The Company is actively seeking executive management personnel and
expects to hire technical and engineering staff once sufficient capital is
available
Financing. The Company is currently engaged in a private offering of no
less than 833,334 ($5 million) and up to 2,500,000 shares of Common Stock at
$6.00 per share ($15 million) (the "Private Offering"). The Private Offering is
offered in the United States only to "accredited investors" as that term is
defined in Regulation D under the Securities Act of 1933 and outside of the
United States pursuant to Regulation S under that Act only to investors meeting
certain eligibility criteria. The purpose of the Private Offering is to raise
the capital necessary to fund the Company's initial operations and to cover the
expenses of effectuating the commercialization of the NGP Process.
The Company has been financing its activities under a Line of Credit
Agreement with BMI, pursuant to which BMI has advanced approximately $1,426,192
to the Company through the second quarter of 1999. The Company estimates that it
will require approximately $5,000,000 over the next twelve months. The Company
anticipates that the cash necessary to meet these expenses will be provided by
the proceeds of the Private Offering, joint venture arrangements and/or from
continued advances from BMI. There can be no assurance, however, that sufficient
funds will be available from any or all of these anticipated sources or
otherwise. If insufficient funds are available to complete all of the
activities, Management will determine which of the activities the Company will
complete. In addition, the Company hopes to realize revenues in the next twelve
months, but does not expect that such revenues will be sufficient to meet the
Company's operating capital requirements.
<PAGE>
New Generation Plastic, Inc.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
On June 10, 1999, the Company completed a series of transactions,
including, the one-for-fifteen reverse stock split of the then outstanding
common stock of SWV (the "Reverse Split"), the merger of SWV into NGP resulting
in the reincorporation of the Company in Delaware (the "Delaware Merger"), and
the issuance of 11,580,000 post split shares of the Company's common stock to
BMI in exchange for the contribution of the NGP Assets (the "NGP Contribution").
As a result of the Reverse Split, the number of then existing outstanding shares
of common stock of SWV was reduced from 3,416,066 to 227,768 held by 40
shareholders of record. The relative terms of shares of common stock were not
altered by the Delaware Merger, except that the rights of the shareholders are
now governed by Delaware law.
As a result of the transactions contemplated by the NGP Contribution,
11,580,000 shares of the Company's common stock were issued to BMI, 20,000
shares were issued to ET International Ltd., a corporation controlled by Guido
Cloetens, and 15,000 shares were issued to Guido Cloetens. On June 11, 1999,
trading in the common stock of the Company commenced on the OTCBB under the new
symbol "NGPX." As of June 30, 1999, the Company had 11,842,768 shares of common
stock outstanding out of the 50,000,000 shares that are authorized. In addition,
the Company is authorized to issue 1,000,000 shares of preferred stock with such
terms as the Board of Directors may determine.
Item 3 Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
On May 26, 1999, the Company distributed to its shareholders a Notice
of a Special Meeting of the Shareholders that was held on June 8, 1999
<PAGE>
in Salt Lake City, Utah. Each shareholder was provided with a Proxy Statement
that described the proposed transactions and asked the shareholder to vote in
favor of the following proposal:
To approve a reverse stock split, reincorporation of the
Company from the State of Nevada to the State of Delaware and the
recapitalization of the Company, including the sale of the Company's
oil related assets to an affiliate and the acquisition of other assets
comprising a new business operation for the Company in consideration of
the issuance of shares of common stock on a post reverse split basis
representing 98% of the then issued and outstanding shares of common
stock.
A quorum was present in person or by proxy and the foregoing proposal
was approved by a vote of 2,794,066 in favor and none against.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a)
Exhibit No. Exhibit
----------- -------------------------------------------------------
99.1 Line of Credit Agreement, dated as of April 15, 1999,
by and between New Generation Plastic, Inc. and
Bachkine & Meyer Industries, S.A.
99.2 Consulting Agreement, dated as of April 15, 1999, by
and between New Generation Plastic, Inc. and B.A.M.I.
Consulting, S.A.
(b} Reports on Form 8-K - On July 22, 1999, the Company filed a report
on Form 8-K to report the completion of the reorganization and recapitalization
of the Company on June 10, 1999 and the initiation of trading on June 11, 1999
of the Company's common stock under the new symbol "NGPX" on the OTCBB.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
New Generation Plastic, Inc.
(Registrant)
Date: August 23, 1999 By: /s/ Jacques Mot
---------------------------
Jacques Mot
Chairman and Chief Executive
Officer
By: /s/ Elliot H. Levine
--------------------------
Elliot H. Levine
Interim Chief Financial
Officer
Exhibit 99.1
LINE OF CREDIT AGREEMENT
This Line of Credit Agreement (this "Agreement") is entered
into as of April 15, 1999 by and between New Generation Plastic, Inc., a
Delaware corporation ("NGP"), and Bachkine & Meyer Industries, S.A., a British
Virgin Islands corporation ("BMI").
RECITALS
WHEREAS, on April 14, 1999 BMI entered into an Asset
Contribution Agreement with SW Venture, Inc. and Guido Cloetens to contribute
all of the assets and liabilities related to a proprietary process capable of
producing homogeneous, commercially usable plastic polymer end products from a
mixed virgin or recycled stream of discrete polymers or waste plastic (the "NGP
Process"), to NGP in exchange for 11,580,000 shares of NGP common stock;
WHEREAS, BMI intends for NGP to be the operating entity that
will seek the commercialization of the NGP Process and desires, subject ot the
terms of this Agreement, to make available to NGP funds from time to time as may
be necessary for NGP operations;
WHEREAS, on the terms and subject to the conditions set forth
herein, BMI hereby agrees to lend to NGP and NGP agrees to repay to BMI any
amounts so advanced under this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, BMI and NGP, for
themselves, their successors and assigns, hereby agree as follows:
ARTICLE I
LINE OF CREDIT FOR ADVANCES
Section 1.1. Advances under the Line of Credit. On the terms
and subject to the conditions of this Agreement and in the Master Promissory
Note (the "Master Note") dated of even date herewith (attached hereto as
Appendix A), BMI agrees to lend to NGP amounts that NGP shall reasonably request
from time to time, provided that BMI reserves the right to limit or discontinue
advances hereunder in its sole discretion, with or without cause. NGP hereby
promises to repay the amounts advanced hereunder on demand, provided that the
parties agree that BMI will not demand payment of the Principal Amount due
hereunder until after July 15, 2000. The facility under which the foregoing
advances are made to NGP and repaid to BMI shall be referred to herein as the
"Letter of Credit."
Section 1.2 Notice of Request for Advance. NGP shall give BMI
at least three (3) business days notice in writing specifying the amount and
purpose of each advance and the date funds are required to be received.
Section 1.3 Master Note. Each of the advances under the Line
of Credit shall be made pursuant to the Master Note. The Master Note will
initially not bear
<PAGE>
interest, but if parties determine that the Master Note is likely to remain
outstanding for more than six months, the parties have agreed to select a
commercially reasonable rate of interest (the "Interest Rate") based on the
Prime Rate (as defined below). Once established such Interest Rate may be
adjusted by the parties from time to time to reflect any changes to the
composite Prime Rate as published in the Wall Street Journal.
ARTICLE II
MISCELLANEOUS
Section 2.1. Future Litigation and other Proceedings. In the
event that NGP (or any of its officers or directors) or BMI (or any of its
officers or directors) at any time after the date hereof initiates or becomes
subject to any litigation or other proceedings before any governmental authority
or arbitration panel with respect to which the parties have no prior agreements
(as to indemnification or otherwise), the party (and its officers and directors)
that has not initiated and is not subject to such litigation or other
proceedings shall comply, at the other party's expense, with any reasonable
requests by the other party for assistance in connection with such litigation or
other proceedings (including by way of provision of information and making
available of employees as witnesses). In the event that NGP (or any of its
officers or directors) and BMI (or any of its officers or directors) at any time
after the date hereof initiate or become subject to any litigation or other
proceedings before any governmental authority or arbitration panel with respect
to which the parties have no prior agreements (as to indemnification or
otherwise), each party (and its officers and directors) shall, at their own
expense, coordinate their strategies and actions with respect to such litigation
or other proceedings to the extent such coordination would not be detrimental to
their respective interests and shall comply, at the expense of the requesting
party, with any reasonable requests of the other party for assistance in
connection therewith (including by way of provision a information and making
available of employees as witnesses).
Section 2.2. Force Majeure.
(a) For purposes of this Section, "force majeure" means an
event beyond the control of either party, which by its nature could not have
been foreseen by such party, or if it could have been foreseen, was unavoidable,
and includes without limitation acts of God, storms, floods, riots, fires,
sabotage, civil commotion or civil unrest, interference by civil or military
authorities, acts of war (declared or undeclared) and failure of energy sources.
(b) Neither party shall be under any liability for failure to
fulfill any obligation under this Agreement, so long as and to the extent to
which the fulfillment of such obligation is prevented, frustrated, hindered, or
delayed as a consequence of circumstances of force majeure, provided always that
such party shall have exercised all due diligence to minimize to the greatest
extent possible the effect of force majeure on its obligations hereunder.
(c) Promptly on becoming aware of force majeure causing a
delay in performance or preventing performance of any obligations imposed by
this Agreement (and the
2
<PAGE>
termination of such delay), the party affected shall give written notice to the
other party giving details of the same, including particulars of the actual, and
it applicable, estimated continuing effects of such force majeure on the
obligations of the party whose performance is prevented or delayed. If such
notice shall have been duly given and actual delay resulting from such force
majeure shall be deemed not to be a breach of this Agreement, and the period for
performance of the obligation, to which it relates shall be extended
accordingly, provided that if force majeure results in the performance of a
party being delayed by more than 60 days, the other party shall have the right
to terminate this Agreement with respect to any Service effected by such delay
forthwith by written notice.
Section 2.3. Entire Agreement. This Agreement (including the
Master Note attached hereto asAppendix A and constituting a part of this
Agreement) and any other writing signed by the parties that specifically
references this Agreement constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements,
understandings and negotiations, both written and oral between the parties with
respect to the subject matter hereof. This Agreement is not intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
Section 2.4. Information. Subject to applicable law and
privileges, each party hereto covenants and agrees to provide the other party
with all information regarding itself and transactions under this Agreement that
the other party reasonably believes are required to comply with all applicable
federal, state, county and local laws, ordinances, regulations and codes,
including, but not limited to, securities laws and regulations.
Section 2.5. Notices. Any notice, instruction, direction or
demand under the terms of this Agreement required to be in writing will be duly
given upon delivery, if delivered by hand, facsimile transmission, intercompany
mail, or mail, to the following, addresses:
(a) If to NGP, to;
New Generation Plastic, Inc.
245 Park Avenue, 39th Floor
New York, NY 10167
Phone: 212-792-4104
Fax: 212-986-0272
(b) If to BMI, to
Bachkine & Meyer Industries, S.A.
125 Main Street
Road Town, Tortola
BVI
Phone: 011 41 22 318 3755
Fax: 011 41 22 318 3750
3
<PAGE>
or to such other addresses or telecopy numbers as may be specified by like
notice to the other parties.
Section 2.6. Governing Law. This Agreement shall be construed
in accordance with and governed by the substantive internal laws of the State of
Delaware.
Section 2.7. Should any provision of this Agreement be invalid
or unenforceable, such invalidity or unenforceability shall not render the
entire Agreement invalid. Rather, the Agreement shall be construed as if not
containing the particular invalid or unenforceable provision, and the rights and
obligations of each party shall be construed and enforced accordingly.
Section 2.8 Amendment. This Agreement may only be amended by a
written agreement executed by both parties hereto.
Section 2.9 Counterparts. This Agreement may be executed in
separate counterparts, each of which shall be deemed an original and all of
which, when taken together, shall constitute one agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be signed by their duly authorized representatives.
NEW GENERATION PLASTIC, INC.
By: /s/ Marc R. Engel
-------------------------------
Name: Marc R. Engel
Title: Executive Vice President
BACHKINE & MEYER INDUSTRIES, S.A.
By: /s/ Jacques Mot
-------------------------------
Name: Jacques Mot
Title: Chairman
4
<PAGE>
Appendix A
Master Promissory Note
5
<PAGE>
MASTER PROMISSORY NOTE
New York, New York
April 15, 1999
FOR VALUE RECEIVED, New Generation Plastic, Inc. ("Debtor")
promises to pay to the order of Bachkine & Meyer Industries, S.A. ("Lender"), in
lawful money of the United States of America, in immediately available funds, at
such location as the Lender shall designate, the principal sum of the aggregate
of all advances (the "Advances") made to the Debtor by the Lender pursuant to
the Line of Credit Agreement, or so much thereof as shall from time to time be
outstanding, together with interest on said principal sum or amount outstanding,
as appropriate (the "Principal Amount"), from the date hereof until this Note is
paid in full.
1. Interest. In the event that the parties determine that the
Note will remain outstanding for more than six (6) months from the date hereof,
the parties will determine an interest rate based on the Prime Rate (as defined
herein) in effect from time to time. The calculation of such rate (the "Interest
Rate") shall be annexed hereto as Schedule A. If interest is being charged as
set forth above, Debtor promises to pay interest on the Principal Amount of this
Note from the date the Interest Rate becomes effective, payable quarterly in
arrears beginning on the end of the first calendar quarter ending after interest
begins to accrue and continuing on the end of each quarter of each year for so
long as any of the Principal Amount remains unpaid at the Interest Rate.
Interest shall be calculated on the basis of a 360 day year consisting of 12
months of 30 days each.
2. Principal. Debtor promises to pay to the order of Lender,
the Principal Amount in one lump sum payment on demand, together with all
accrued but unpaid interest thereon. Notwithstanding the foregoing, the Lender
hereby agrees that, absent a default by the Debtor, it will not demand payment
of the Principal Amount until after July 15, 2000.
3. Payments. Debtor may pay this Note in whole or in part at
any time. Partial payments of this Note shall be applied first to accrued and
unpaid interest on the Principal Amount of this Note and then to the Principal.
4. Remedies. Upon default by Debtor of its obligation to pay
the Principal Amount on demand or the interest thereon when due, the Lender may
exercise any and all of the rights and remedies afforded to it under law.
5. Method of Payment. All payments of principal and interest
hereunder shall be made by certified check, wire transfer or other mutually
agreeable form of payment to Lender at its address specified herein or at any
other address of Lender which is specified in writing by Lender to Debtor at
least two (2) business days prior to the date when such payment is due. If the
payment of principal or interest on the Note shall become due on a day which is
not a business day, such payment shall be made on the next succeeding business
day and, in the case of a principal payment, such extension of time shall be
included in computing interest in connection with such payment.
6. No Waiver. Each and every one of the rights, remedies,
options and benefits provided herein to Lender or the holder hereof, shall be
cumulative and shall not be exclusive of any other rights, remedies or benefits
provided in any other agreements between Lender and Debtor, or as provided by
law. Neither the failure nor delay by Lender or the holder hereof to exercise
any right, remedy, option, power or privilege hereunder shall operate as a
waiver of the right to exercise
<PAGE>
the same at a later time; nor shall any single or partial exercise of any such
right, remedy, option, power or privilege by Lender or the holder hereof operate
as a waiver of any such right, remedy, option, power or privilege.
7. Waiver of Presentment. Debtor and all endorsers, guarantors
and all persons who are liable or who may hereafter become liable under this
Note, jointly and severally, hereby expressly waive presentment for payment,
demand, notice of nonpayment, notice of dishonor, protest of any dishonor,
notice of protest, diligence in collection and notice of any other kind in
connection with this Note.
8. Collection Costs. Debtor agrees to pay all collection costs
(including, but not limited to, reasonable attorneys' fees and disbursements)
incurred by Lender hereunder.
9. Governing Law. This Note shall be construed in accordance
with and governed by the internal laws and decisions of the State of Delaware
(without giving effect to choice of law principles).
10. Application of Law. The parties hereto intend and believe
that each provision of this Note comports with all applicable local, state and
federal laws and judicial decisions. However, if any provision or provisions or
if any portion of any provision or provisions in this Note is found by a court
of law to be in violation of any applicable local, state or federal ordinance,
statute, law, administrative or judicial decision, or public policy and if such
court should declare such portion, provision or provisions of this Note to be
illegal, invalid, unlawful, void or unenforceable as written, then it is the
intent of all parties hereto that such portion, provision or provisions shall be
given force to the fullest possible extent that it or they are legal, valid and
enforceable, that the remainder of this Note shall be construed as if such
illegal, invalid, unlawful, void or unenforceable portion, provision or
provisions were not contained therein, and that the rights, obligations and
interests of Debtor and the holder hereof under the remainder of this Note shall
continue in full force and effect. All agreements herein are expressly limited
so that in no contingency or event whatsoever, whether by reason of advancement
of the proceeds hereof, acceleration of maturity of the unpaid principal balance
hereof, or otherwise, shall the amount paid or agreed to be paid to the holders
hereof for the use, forbearance or detention of the money to be advanced
hereunder exceed the highest lawful rate permissible under applicable usury
laws. If, from any circumstances whatsoever, the fulfillment of any provision
hereof at the time performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law which a court of competent
jurisdiction may deem applicable hereto, then, ipso facto, the obligation to be
fulfilled shall be reduced to the limit of such validity; and if, from any
circumstance, the holder hereof shall ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be excessive
interest shall be applied to the reduction of the unpaid principal balance due
here under and not to the payment of interest.
11. Captions. The captions and headings of various Sections of
this Note are for convenience only and are not to be considered as defining or
limiting in any way, the scope or intent of the provisions hereof.
2
<PAGE>
12. Notices. Any notice, demand, request or other
communication which any party hereto may be required or may desire to give
hereunder shall be sufficiently given (i) on the date of transmittal, if
personally delivered, (ii) on the business day after transmittal, if sent by
facsimile (with a confirming copy mailed by international air mail), and (iii)
on the third day following posting if mailed postage prepaid, by registered air
mail, addressed as follows:
If to Lender: Bachkine & Meyer Industries, S.A.
125 Main Street
Road Town, Tortola
BVI
Facsimile: 011 41 22 318 3750
If to Debtor: New Generation Plastic, Inc.
245 Park Avenue, 39th Floor
New York, NY 10167
Facsimile: (212) 986-0272
13. Modification, Waiver. No modification, waiver, amendment,
discharge or change of this Note shall be valid unless the same is in writing
and signed by the party against which the enforcement of such modification,
waiver, amendment, discharge or change is sought.
14. Time is of the Essence. Time is hereby declared to be of
the essence of this Note and of every part hereof.
15. Successors and Assigns. This Note shall inure to the
benefit of and shall be binding on the parties hereto and their respective
successors and assigns.
The undersigned has executed this Note as of the day and year
first set forth above.
New Generation Plastic, Inc.
By: /s/ Marc R. Engel
-------------------------------
Name: Marc R. Engel
Title: Executive Vice President
3
Exhibit 99.2
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement"), made and entered
into as of this 15th day of April, 1999, by and between New Generation Plastic,
Inc., a Delaware corporation, having its principal office at 245 Park Avenue,
39th Floor, New York, New York 100167 (the "Company"), and B.A.M.I Consulting,
S.A. (the "Consultant"), a British Virgin Islands corporation, having its
principal office at 125 Main Street, Road Town, Tortola, British Virgin Islands.
WHEREAS, Bachkine & Meyer Industries, S.A., ("BMI") a British
Virgin Islands corporation originally entered into a Consulting Agreement with
the Consultant as of January 1, 1998; and
WHEREAS, BMI has contributed to NGP all of the assets and
liabilities (the "NGP Assets") relating to the proprietary process that it
believes is capable of creating polymer compounds from a stream of mixed waste
plastic or virgin resins (the "NGP Process"); and
WHEREAS, NGP was formed for the purpose of pursuing the
commercialization of the NGP Process and has begun those efforts; and
WHEREAS, BMI has assigned its rights and obligations under the
original Consulting Agreement and the parties desire to execute this agreement
to reflect the understanding between NGP and the Consultant.
NOW, THEREFORE, the parties agreed hereto as follows:
Article 1
TERM AND TERMINATION
1.1 Term. This Agreement will become effective on the date
first shown above and will continue in effect until three (3) years from the
date hereof, unless sooner terminated or extended by written agreement signed by
both parties.
1.2 Termination. Either party may terminate this Agreement in
the event of a material breach by the other party of any obligation provided
herein. Any such termination may be made only by written notice to the other
party, specifically identifying the breach or breaches on which termination is
based. Following receipt of such notice, the party in breach shall have fifteen
(15) days to cure such breach or breaches, and this Agreement shall terminate in
the event that such cure is not made by the end of such period.
-1-
<PAGE>
1.3 Independent Consultant. It is the intention of the parties
that the Consultant be an independent contractor and not an agent, joint
venturer, or partner of the Company.
Article 2
SERVICES TO BE PERFORMED BY THE CONSULTANT
2.1 Scope of Services. The scope of the services to be
performed by the Consultant hereunder is set forth in Exhibit A, as it shall be
amended from time to time during the Term.
Article 3
COMPENSATION
3.1 Consideration for Services Rendered. For the first twelve
(12) months of the Term, the compensation payable by the Company to the
Consultant for the work performed pursuant to this Agreement shall be US$75,000
per month. The compensation for each successive twelve (12) month period of the
Term shall be increased by an amount not less than the percentage increase in
Consumer Price Index for All Urban Consumers, Northeast for the preceding
calendar year.
3.2 Expenses. Except as otherwise provided herein, the
Consultant shall be responsible for payment of all ordinary and necessary
expenses incident to the performance of services hereunder.
-2-
<PAGE>
Article 4
EMPLOYMENT TAXES AND BENEFITS
4.1 Compensation of the Consultant's Personnel. The Consultant
shall bear sole responsibility for payment of compensation to its employees. The
Consultant shall pay and report, for all personnel assigned to the Company's
work, income tax withholding, workers' compensation, social security taxes, and
unemployment insurance applicable to such personnel as employees of the
Consultant. The Consultant shall bear sole responsibility for any health or
disability insurance, retirement benefits, or other welfare or pension benefits,
if any, to which such personnel may be entitled. The Consultant agrees to
defend, indemnify, and hold harmless the Company, its officers, directors,
employees and agents, and the administrators of the Company's benefit plans,
from and against any claims, liabilities, or expenses relating to such
compensation, tax, insurance, or benefit matters, provided that the Company
shall notify the Consultant of each such claim and cooperate with the Consultant
in the defense and resolution of such claim.
4.2 Workers' Compensation. Notwithstanding any other workers'
compensation or insurance policies that may be maintained by the Company, the
Consultant shall procure and maintain workers' compensation coverage sufficient
to meet the statutory requirements of every jurisdiction in which the
Consultant's personnel are engaged in work for the Company.
Article 5
GENERAL PROVISIONS
5.1 Notices. Any notices to be given hereunder by any party to
the another party may be effected either by personal delivery in writing or by
registered or certified mail (postage prepaid with return receipt requested),
overnight delivery service or facsimile (with a copy by registered mail). Mailed
notices shall be addressed to the parties at the addresses appearing in the
introductory paragraph of this Agreement, but each party may change such address
by written notice in accordance with this paragraph. The date upon which any
such notice is received at the designated address shall be deemed to be the date
of such notice.
5.2 No Discrimination. The Consultant agrees that in the
performance of this Agreement it will not discriminate or permit discrimination
against any person or group of persons on the grounds of sex, race, color,
religion, or natural origin in any manner prohibited by the applicable law.
5.3 Assignment. Neither party may assign its rights or
obligations under this Agreement without the prior written consent of the other.
-3-
<PAGE>
5.4 Arbitration. In the event of a dispute between the parties
arising under this Agreement, the parties shall submit to binding arbitration
before a single arbitrator in the City of New York under the Commercial
Arbitration Rules of the American Arbitration Association. The decision of the
arbitrator shall be final and binding with respect to the dispute subject to
arbitration and shall be enforceable in any court of competent jurisdiction. The
prevailing party shall be entitled to the reimbursement of its own expenses and
costs incurred in such arbitration. Nothing in this paragraph shall derogate
from the rights of the parties to seek preliminary injunctive relief to preserve
the status quo.
5.5 Waivers. Any delay or forbearance by either party in
exercising any right hereunder shall not be deemed a waiver of that right.
5.6 Entire Agreement of the Parties. This Agreement supersedes
any and all agreements, either oral or written, between the parties hereto with
respect to the rendering of services by the Consultant for the Company and
contains all the covenants and agreements between the parties with respect to
the rendering of such services in any manner whatsoever. Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, orally or otherwise, have been made by any party, or anyone acting
on behalf of any party, that are not embodied herein, and that no other
agreement, statement, or promise not contained in this Agreement shall be valid
or binding. Any modification of this Agreement will be effective only if it is
in writing signed by the party to be charged.
5.7 Partial Invalidity. If any provision in this Agreement is
held by a court of competent jurisdiction to be invalid, void, or unenforceable,
the remaining provisions will nevertheless continue in full force without being
impaired or invalidated in any way.
5.8 Governing Law. This Agreement will be governed by and
construed in accordance with the laws of the State of Delaware (United States of
America), without regard to its laws relating to choice of laws.
5.9 Headings. The headings in this Agreement are inserted
merely for the purpose of convenience and shall not affect the meaning or
interpretation of this Agreement.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first written above.
NEW GENERATION PLASTIC, INC.
By: /s/ Marc R. Engel
-------------------------------
Name: Marc R. Engel
Title: Executive Vice President
B.A.M.I. CONSULTING, S.A.
By: /s/ Jacques Mot
-------------------------------
Name: Jacques Mot
Title: Director
-5-
<PAGE>
EXHIBIT A
Scope of Services
The Consultant shall perform the following services for the Company
during the Term:
0.1 The Consultant will advise the Company on its capital structure.
0.2 The Consultant shall provide engineering expertise in the development,
intellectual property protection and commercialization of the process
(the "NGP Process") that permits the production of a thermoplastic
compound from mixed plastics waste and/or the production of a
thermoplastic compound from a polymers/copolymers matrix which are
otherwise incompatible.
0.3 The Consultant will assist in the issuance, modification and
maintenance of all patents acquired by the Company with regard to the
NGP Process.
Dated as of April 15, 1999 B.A.M.I. CONSULTING, S.A.
By: /s/ Jacques Mot
-------------------------------
Jacques Mot
(Director)
NEW GENERATION PLASTIC, INC.
By: /s/ Marc R. Engel
-------------------------------
Name: Marc R. Engel
Title: Executive Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the Balance
Sheet as of June 30, 1998 and Statements of Operation for the Six and Three
Months Ended June 30, 1998 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0001024605
<NAME> New Generation Plastic, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 3-MOS
<FISCAL-YEAR-END> Dec-31-1999 Dec-31-1999
<PERIOD-START> Jan-01-1999 Apr-01-1999
<PERIOD-END> Jun-30-1999 Jun-30-1999
<EXCHANGE-RATE> 1.000 1.000
<CASH> 43,227 43,227
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 129,682 129,682
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 2,064,058 2,064,058
<CURRENT-LIABILITIES> 415,000 415,000
<BONDS> 0 0
0 0
0 0
<COMMON> 11,828 11,828
<OTHER-SE> 211,038 211,038
<TOTAL-LIABILITY-AND-EQUITY> 2,064,058 2,064,058
<SALES> 0 0
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<TOTAL-COSTS> 580,302 573,751
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<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (593,667) (590,557)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (580,302) (573,751)
<DISCONTINUED> (13,365) (16,806)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (593,667) (590,557)
<EPS-BASIC> (0.049) (0.048)
<EPS-DILUTED> (0.049) (0.048)
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