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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 September 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)
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)
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X ] No [ ]
As of November 10, 1999 there were 11,842,768 shares of the issuer's
Common Stock outstanding.
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<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 September 30, 1999 and for the three
month period and nine month period ending September 30, 1999 were prepared by
Management. In the opinion of Management the condensed financial statements
include all adjustments which are necessary to fairly present the financial
condition of the Company at September 30, 1999 and for the periods presented.
<PAGE>
New Generation Plastic, Inc.
Condensed Financial Statements
Condensed Balance Sheets at September 30, 1999 and December 31, 1998
Condensed Statement of Operations for the nine months ended September
30, 1999 and September 30, 1998
Condensed Statement of Operations for the three months beginning July
1, 1999 and ended September 30, 1999 and the three months beginning July 1, 1998
and ended September 30, 1998
Condensed Statement of Cash Flows for the nine months ended September
30, 1999 and the nine months ended September 30, 1998
<PAGE>
New Generation Plastic, Inc.
Condensed Balance Sheets
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
------------------ -----------------
(unaudited)
<S> <C> <C>
Assets:
Cash 77,225 8,900
Accounts Receivable 0 3,748
Inventory 0 292
Fixed Assets 0 128,258
Prepaid Expenses 221,291 0
Other Assets 1,934,376 0
------------- -------------
Total Assets 2,242,898 141,198
============= =============
Liabilities & Stockholders' Equity:
Accounts Payable 714,718 4,125
Due to Shareholder 1,927,432 8,889
------------- ------------
Total Liabilities 2,642,150 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 September 30, 1999 and on December
31, 1998, respectively.
Preferred Stock; 1,000,000 authorized, none issued or
outstanding on September 30, 1999. 0 N/A
Add'l Paid in Capital 847,190 167,268
Retained Earnings (Deficit) (1,258,285) (42,500)
--------------- -------------
Total Stockholders' Equity (399,252) 128,184
Total Liabilities &
Stockholders' Equity 2,242,898 141,198
============= =============
</TABLE>
<PAGE>
New Generation Plastic, Inc.
Condensed Statement of Operations for the nine months
ended September 30, 1999 and September 30, 1998
<TABLE>
<CAPTION>
Nine months Nine months
Ended Ended
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
Operating Expenses
General and Administrative 1,230,658 14,112
Depreciation and Amortization 286 528
----------- -----------
1,230,944 14,640
----------- -----------
Income (Loss) from Continuing
Operations (1,230,944) (14,640)
Income (Loss) from Discontinued
Operations 9,114 26,327
Income (Loss) on Sale of Discontinued
Operations (22,479) 0
------------ -----------
Income (Loss) before Taxes
Operations (1,244,039) 11,687
------------ -----------
Taxes 0 0
----------- -----------
Net Income (Loss) After Taxes (1,244,039) 11,687
============ ===========
Earning per Share from Continuing
Operations (0.1039) (0.0043)
Earnings per Share from Discontinued
Operations (0.0011) 0.0077
</TABLE>
<PAGE>
New Generation Plastic, Inc.
Condensed Statement of Operations for the three months beginning July
1, 1999 and ended September 30, 1999 and the three months
beginning July 1, 1998 and ended September 30, 1998
<TABLE>
<CAPTION>
Three months beginning Three months beginning
July 1, 1999 July 1, 1998
Ended Ended
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
Operating Expenses
General and Administrative 650,372 7,363
Depreciation and Amortization 0 215
- ---
Total 650,372 7,578
Income (Loss) from Continuing
Operations (650,372) (7,578)
Income (Loss) from Discontinued
Operations 0 7,740
(Loss) on sale of Discontinued
Operations 0 0
----- -----------
Net Income (Loss) before Taxes (650,372) 162
------------ --------
Taxes 0 0
----------- -----------
Net Income After Taxes (650,372) 162
=========== =========
Earnings per Share from Continuing Operations (0.0549) (0.0022)
Earning per Share from Discontinued Operations 0 0.0023
=========== =========
</TABLE>
<PAGE>
New Generation Plastic, Inc.
Condensed Statement of Cash Flows for the nine months ended September
30, 1999 and the nine months ended September 30, 1998
<TABLE>
<CAPTION>
Period Ended Period Ended
September 30, 1999 September 30, 1998
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net Income (Loss) (1,244,039) 11,687
Adjustments to reconcile net income to net cash provided by operating
activities:
Deprec., deplet. and amort. .. 286 13,859
Changes in assets and liabilities:
Accounts receivable 3,748 (5,011)
Inventories 292 799
Other current assets (231,296) (111)
Other assets (1,934,376) --
Accounts payable and accrued expenses 710,593 (8,864)
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Net cash provided by operating activities (2,695,062) 12,359
Cash Flows from Investing Activities (Purchase) of Mineral
Interests and Fixed Assets 0 (72,213)
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0 (72,213)
Cash flows from financing activities:
Shareholder Loans 1,947,058 0
Purchase of Common Stock 688,349 55,934
Sale of Fixed Assets 127,971 0
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Net cash provided by financing activities 2,763,387 55,934
Net increase in cash and cash equivalents 68,325 (3,920)
Cash and cash equivalents, beginning of period 8,900 8,424
Cash 77,225 4,504
============ =============
</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 POLICIES
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 and a
1,000 kg/hour industrial unit.
e. INTANGIBLE ASSETS
Intangible assets consist of the costs 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 $450,000 for consulting fees due to
BAMI (as defined below) and $239,718 for unpaid legal fees.
Bachkine & Meyer Industries, S.A. ("BMI"), the holder of a majority of
the outstanding Common Stock of the Company, has been advancing monies to the
Company pursuant to a Line of Credit Agreement (the "LC Agreement"). The balance
of such advances, including accrued interest, as of September 30, 1999 is
$1,955,686. The LC Agreement provides that such amount is due on demand by BMI.
BMI has agreed in the LC Agreement not to demand payment of such amount until
after July 15, 1999 unless there is a default by the Company. Effective July 1,
1999, BMI began charging interest on the advances to the Company at a rate of 8%
per annum.
4. RELATED PARTY TRANSACTIONS
In addition to the LC Agreement referred to above, B.A.M.I. Consulting,
S.A. ("BAMI"), a British Virgin Islands corporation, that is an affiliate of
BMI, is entitled to receive a monthly management consulting fee of $75,000. For
the period ended September 30, 1999, $450,000(representing six months' of such
fees)has been accrued as a 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 of
such amount until the Company has positive cash flow.
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 ("SW Oil"). Mr. Guido Cloetens, the then
majority shareholder of SWV, purchased all of the outstanding shares of equity
of SW Oil from the Company in exchange for his promissory note in the total
principal amount of $90,000, plus the assumption of certain debt of SWV 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 or Plan of Operation.
PLAN OF OPERATION
The Company, a Delaware corporation, is a development stage company and
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
Company believes the NGP Process is 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.
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 by its merger into NGP, 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 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."
<PAGE>
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 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 attempt to:
(i) Complete the initial testing of the NGP Process, BT-30 unit and
the initial compounds at the PEP;
(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;
<PAGE>
(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.
The Company has been financing its activities under the LC Agreement with BMI,
pursuant to which BMI has advanced $1,955,686 to the Company through September
30, 1999. The Company does not have sufficient funds on hand to continue its
operations for more than a few months. The Company estimates that it will
require the expenditure of approximately $5,000,000 through September 30, 2000
in order to fund planned activities. The Company believes that the funds
necessary to meet its expenses will be provided by the proceeds of the sale of
securities, any joint venture or co-development programs that the Company may
enter into, if any, and from continued advances from BMI. There can be no
assurance, however, that sufficient funds will be available, if at all, from any
or all of these anticipated sources or otherwise. If insufficient funds are
available to complete the activities, the Company will determine which of the
activities will be pursued. 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 funding requirements. However, there can be no
assurance that the Company will be able to realize revenues within the next
twelve months. If the Company is unable to obtain sufficient funds, it may be
required to cease operations.
FORWARD LOOKING STATEMENTS
The statements contained in this report which are not historical facts contain
forward looking information regarding the Company's financial position, business
strategy, plans, projections and future performance based on the beliefs,
expectations, estimates, intentions or anticipations of management as well as
assumptions made by and information currently available to the Company's
management. Such statements reflect the current view of the Company with respect
to future events and are subject to risks, uncertainties and assumptions related
to various factors that could cause the Company's actual results to differ
materially from those expected by the Company including lack of funding, product
development and the results of research efforts.
<PAGE>
New Generation Plastic, Inc.
PART II - OTHER INFORMATION
Item 5. Other Information.
The Company declared a pro rata distribution to each holder of its
common stock of record on October 14, 1999 consisting of a warrant to purchase
one share of the Company's common stock at an exercise price of $6.00 per share
for each four shares of common stock owned by a stockholder. Only stockholders
of record as of October 14,1999 received the distribution. Warrants to purchase
fractional shares will be rounded up to the next whole share. The Warrants are
not exercisable until the shares purchasable upon exercise of the Warrants have
been registered under the Securities Act of 1933 and expire two (2) years after
the date upon which they first become exercisable.
The Company has received notice of an opposition to its European Patent
No. 0 539 534 filed by Solvay S.A. The Company is preparing its response to the
opposition which will be filed with the European Patent office in early 2000.
The Company believes this administrative procedure will not materially affect
its patent rights.
Item 6. Exhibits and Reports on Form 8-K.
(a) There are no exhibits required to be included with this report.
(b} Reports on Form 8-K - None.
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: November 15, 1999 By: /s/ Jacques Mot
---------------------------
Jacques Mot
Chairman and Chief Executive
Officer
By: /s/ Elliot H. Levine
--------------------------
Elliot H. Levine
Interim Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the Balance
Sheet as of September 30, 1998 and Statements of Operation for the Nine and
Three Months Ended September 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> 9-MOS 3-MOS
<FISCAL-YEAR-END> Dec-31-1999 Dec-31-1999
<PERIOD-START> Jan-01-1999 Jul-01-1999
<PERIOD-END> Sep-30-1999 Sep-30-1999
<EXCHANGE-RATE> 1.000 1.000
<CASH> 77,225 77,225
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 221,291 221,291
<PP&E> 0 0
<DEPRECIATION> 286 0
<TOTAL-ASSETS> 2,242,898 2,242,898
<CURRENT-LIABILITIES> 714,718 714,718
<BONDS> 0 0
11,828 11,828
0 0
<COMMON> 0 0
<OTHER-SE> (411,095) (411,095)
<TOTAL-LIABILITY-AND-EQUITY> 2,242,898 2,242,898
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 1,244,039 650,372
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (1,244,039) (650,372)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,244,039) (650,372)
<DISCONTINUED> 9,114 0
<EXTRAORDINARY> (22,479) 0
<CHANGES> 0 0
<NET-INCOME> (1,230,944) (650,372)
<EPS-BASIC> (0.105) (0.055)
<EPS-DILUTED> (0.105) (0.055)
</TABLE>
