<PAGE>
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, 2000
Commission file number 000-24623
New Generation Holdings, Inc.
-----------------------------------------------------------
(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)
400 West Broadway, 6th Floor
New York, New York 10012
------------------------------------------------
(Address of principal executive offices)
(516) 671-2716
------------------------------------------------
(Issuer's telephone number, including area code)
245 Park Avenue, 39th Floor
New York, New York 10167
------------------------------------------------
(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 September 30, 2000 the Issuer had outstanding 12,552,061 shares
of its Common Stock, $0.001 par value.
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The unaudited condensed consolidated financial statements of New Generation
Holdings, Inc. (formerly New Generation Plastic, Inc.), a Delaware
corporation (the "Company")(A Development Stage Company), as of September 30,
2000, for the three months ended September 30, 1999, for the period from
April 15, 1999 (inception) through September 30, 1999, for the three and nine
months ended September 30, 2000 and for the period from April 15, 1999
(inception) through September 30, 2000, were prepared by Management and
commence on the following page. In the opinion of Management, the financial
statements fairly present the financial position, results of operations and
cash flows of the Company.
<PAGE>
New Generation Holdings, Inc.
(A Development Stage Company)
INDEX
<TABLE>
<S> <C>
Part I. Financial Information
Financial Statements
Condensed Consolidated Balance Sheets as of December 31, 1999
and September 30, 2000 (unaudited) 1
Condensed Consolidated Statements of Operations for the three
months ended September 30, 1999 (unaudited), for the period
from April 15, 1999 (inception) through September 30, 1999
(unaudited), for the three and nine months ended
September 30, 2000 (unaudited) and for the period from
April 15, 1999 (inception) through September 30, 2000 (unaudited) 2
Condensed Consolidated Statements of Cash Flows for the three
months ended September 30, 1999, for the period from April
15, 1999 (inception) through September 30, 1999 (unaudited),
for the three and nine months ended September 30, 2000
(unaudited) and for the period from April 15, 1999
(inception) through September 30, 2000 (unaudited) 3
Notes to the Unaudited Condensed Consolidated Financial Statements 4
Management's Plan of Operation 9
Quantitative and Qualitative Disclosures About Market Risk 11
Part II. Other Information
Legal Proceedings 11
Exhibits and reports on Form 8-K 12
</TABLE>
<PAGE>
NEW GENERATION HOLDINGS, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1999 September 30, 2000
----------------- ------------------
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 3,708 $ 2,276,553
Prepaid Expenses 159,554 --
Other Assets -- 27,894
---------- ---------
Total Current Assets 163,262 2,304,447
Intangible assets, net 443,929 366,390
Property and Equipment, net -- 126,862
Investments in Partner Companies -- 343,797
---------- ---------
Total assets $607,191 $ 3,141,496
========= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 487,798 $ 588,565
Accrued consulting expense 675,000 675,000
Due to shareholder 2,175,186 2,165,696
---------- ---------
Total liabilities 3,337,984 3,429,261
---------- ---------
Commitments and Contingencies -- --
Stockholders' equity (deficit):
Common Stock, $0.001 par value; 50,000,000 shares authorized,
11,842,761 and 12,552,061 shares outstanding as of December 31, 1999
and September 30, 2000 (unaudited), respectively 11,843 12,552
Preferred Stock, $0.001 par value; 1,000,000 shares authorized,
none issued or outstanding -- --
Additional paid in capital 804,690 6,654,334
Deficit accumulated during the development stage (3,547,326) (6,954,651)
---------- ---------
Total stockholders' equity (deficit) (2,730,793) (287,765)
------------ --------
Total liabilities and stockholders' equity (deficit) $ 607,191 $ 3,141,496
============ ============
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
1
<PAGE>
NEW GENERATION HOLDINGS, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
April 15, 1999
Three months (inception) Three months
Ended through Ended
September 30, 1999 September 30, 1999 September 30, 2000
------------------ ------------------ ------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Operating Expenses
General and Administrative $ 581,840 $1,371,478 $1,085,599
Product Development 77,063 1,355,633 50,000
Write-Off of Note Receivable -- -- 500,000
------------- ------------- -------------
Loss from operations (658,903) (2,727,111) (1,635,599)
Interest Income -- -- 42,342
Interest Expense (35,349) (35,349) --
------------- ------------- -------------
Loss before income taxes (694,252) (2,762,460) (1,593,257)
Income Taxes -- -- --
------------- ------------- -------------
Net Loss $(694,252) $(2,762,460) $(1,593,257)
============= ============= =============
Basic and diluted net loss per common share $(0.06) $(0.23) $(0.13)
Shares used to compute basic and diluted net 11,842,761 11,842,761 12,552,061
loss per common share
</TABLE>
<TABLE>
<CAPTION>
Period from
April 15, 1999
Nine months (inception)
Ended through
September 30, 2000 September 30, 2000
------------------ ------------------
(unaudited) (unaudited)
<S> <C> <C>
Operating Expenses
General and Administrative $2,848,021 $4,895,003
Product Development 127,147 1,553,383
Write-Off of Note Receivable 500,000 500,000
------------ --------------
Loss from operations (3,475,168) (6,948,386)
Interest Income 67,843 67,843
Interest Expense -- (74,108)
------------ --------------
Loss before income taxes (3,407,325) (6,954,651)
Income Taxes -- --
------------ --------------
Net Loss $(3,407,325) $(6,954,651)
============= =============
Basic and diluted net loss per common share $(0.27) $(0.55)
Shares used to compute basic and diluted net 12,552,061 12,552,061
loss per common share
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
2
<PAGE>
NEW GENERATION HOLDINGS, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
April 15, 1999
Three months (inception) Three months
Ended through Ended
September 30, September 30, September 30,
1999 1999 2000
---- ---- ----
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net Loss $ (694,252) $ (2,762,460) $ (1,593,257)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization 25,860 47,410 25,860
Depreciation -- -- 10,010
Equity issued for services rendered -- -- --
Write-off of Note Receivable -- -- 500,000
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses and
other assets (134,234) (184,875) (27,894)
Increase (decrease) in accounts payable 299,718 489,718 37,630
Increase (decrease) in accrued consulting expense -- 225,000 (162,000)
------------- ------------- ------------
Net cash used in operating activities (502,908) (2,185,207) (1,209,651)
------------- ------------- ------------
Cash flows provided by financing activities:
Issuance of common stock -- 816,533 --
Cash received from Shareholder loan 539,494 1,965,686 --
Repayments of Shareholder loan -- -- (351,054)
------------- ------------- ------------
Net cash provided by (used in) financing activities 539,494 2,782,219 (351,054)
------------- ------------- ------------
Cash flows used in investing activities:
Purchase of patents -- (517,199) --
Notes Receivable -- -- --
Purchase of fixed assets -- -- (105,507)
Investments in Partner Companies -- -- (343,797)
------------- ------------- ------------
Net cash used in investing activities -- (517,199) (449,304)
------------- ------------- ------------
Net increase in cash and cash equivalents 36,586 79,813 (2,010,009)
Cash and cash equivalents, beginning of period 43,227 -- 4,286,562
------------- ------------- ------------
Cash and cash equivalents, end of period $ 79,813 $ 79,813 $ 2,276,553
============= ============= ============
<CAPTION>
Period from
April 15, 1999
Nine months (inception)
Ended through
September 30, September 30,
2000 2000
---- -----
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net Loss $ (3,407,325) $(6,954,651)
Adjustments to reconcile net loss to net cash
used in operating activities:
Amortization 77,539 150,809
Depreciation 10,010 10,010
Equity issued for services rendered 646,435 646,435
Write-off of Note Receivable 500,000 500,000
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses and
other assets 131,660 (27,894)
Increase (decrease) in accounts payable 100,767 588,565
Increase (decrease) in accrued
consulting expense -- 675,000
------------ ------------
Net cash used in operating activities (1,940,914) (4,411,726)
------------ ------------
Cash flows provided by financing activities:
Issuance of common stock 5,248,035 6,064,568
Cash received from Shareholder loan 297,447 2,472,633
Repayments of Shareholder loan (351,054) (351,054)
------------ ------------
Net cash provided by (used in) financing activities 5,194,428 8,186,147
------------ ------------
Cash flows used in investing activities:
Purchase of patents -- (517,199)
Notes Receivable (500,000) (500,000)
Purchase of fixed assets (136,872) (136,872)
Investments in Partner Companies (343,797) (343,797)
------------ ------------
Net cash used in investing activities (980,669) (1,497,868)
------------ ------------
Net increase in cash and cash equivalents 2,272,845 2,276,553
Cash and cash equivalents, beginning of period 3,708 --
------------ ------------
Cash and cash equivalents, end of period $ 2,276,553 $ 2,276,553
============ ============
</TABLE>
3
<PAGE>
NEW GENERATION HOLDINGS, INC.
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION
New Generation Holdings, Inc. (formerly named New Generation Plastic,
Inc.)(the "Company") was organized on April 15, 1999 under the laws of
the State of Delaware. During June 1999, the Company exchanged 262,761
shares of its common stock for all of the issued and outstanding common
stock of SW Ventures, Inc. ("SWV"). Concurrently, SWV changed its name
to New Generation Plastic, Inc. As of the date of the merger, the net
assets of the Company and SWV were determined to have nominal value.
Accordingly, the transaction has been recorded at the par value of the
stock exchanged. On May 17, 2000 the Company changed its name to New
Generation Holdings, Inc.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) DEVELOPMENT STAGE ENTERPRISE
During the period from April 15, 1999 (inception) through
December 31, 1999, the Company devoted substantially all of
its efforts to develop and market the patented technology
designed to process two or more discrete plastic polymers
("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.
Its planned principal operations have not commenced.
Effective January 25, 2000, the Board of Directors approved a
change in the business model of the Company to include the
development of and investment in Internet-related companies
primarily located in Europe. As part of this restructuring,
the Company formed a wholly owned subsidiary, New Generation
Partners, Inc., in the State of Delaware. Through this
subsidiary, the Company anticipates developing a collaborative
network of Internet companies involved in business-to-business
(B2B) e-commerce and ventures oriented towards new emerging
Internet infrastructure and wireless Internet applications.
Also as part of the restructuring, the Company formed another
wholly owned Delaware subsidiary, NG Plastic, Inc. On May 17,
2000, the stockholders approved a change in the name of the
Company to New Generation Holdings, Inc. and the transfer of
all the assets and liabilities relating to the Company's NGP
Process and the related plastic business to NG Plastic, Inc.,
its wholly owned subsidiary. NG Plastic, Inc. was
simultaneously renamed New Generation Plastic, Inc.
(continued)
4
<PAGE>
NEW GENERATION HOLDINGS, INC.
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(b) NET INCOME (LOSS) PER SHARE
The Company computes net income (loss) per share in accordance
with Statement of Financial Accounting Standard ("SFAS") No.
128, Earnings Per Share. Under the provisions of SFAS 128,
basic net income (loss) per share is computed by dividing the
net income (loss) for the period by the weighted average
number of common shares outstanding during the period. Diluted
net income (loss) per share is computed by dividing the net
income (loss) for the period by the weighted average number of
common and dilutive potential common shares outstanding during
the period. As the Company had a net loss during the period
presented, basic and diluted net income (loss) per share are
the same.
(c) PRINCIPLES OF ACCOUNTING FOR OWNERSHIP INTERESTS IN PARTNER
COMPANIES
The various interests that the Company acquires in its
Partner Companies are accounted for under three broad
methods: consolidation, equity method and cost method. The
applicable accounting method is generally determined based
on the Company's voting interest in a Partner Company.
Consolidation. Partner Companies in which the Company
directly or indirectly owns more than 50% of the
outstanding voting securities or those the Company has
effective control over are generally accounted for under
the consolidation method of accounting. Under this method,
a Partner Company's results of operations would be
reflected within the Company's Consolidated Statements of
Operations. All significant intercompany accounts and
transactions would be eliminated. Participation of other
Partner Company stockholders in the earnings or losses of a
consolidated Partner Company would be reflected in a
caption such as "Minority interest" in the Company's
Consolidated Statements of Operations. Minority interest
adjusts the Company's consolidated results of operations to
reflect only the Company's share of the earnings or losses
of the consolidated Partner Company. The results of
operations and cash flows of a consolidated Partner Company
would be included through the latest interim period in which
the Company owned a greater than 50% direct or indirect
voting interest for the entire interim period or otherwise
exercised control over the Partner Company. Upon dilution
of control below 50%, the accounting method would be adjusted
to the equity or cost method of accounting, as appropriate,
for subsequent periods.
Equity Method. Partner Companies whose results are not
consolidated, but over whom the Company exercises
significant influence, are accounted for under the equity
method of accounting. Whether or not the Company exercises
significant influence with respect to a Partner Company
depends on an evaluation of several factors including,
among others, representation on the Partner Company's Board
of Directors and ownership level, which is generally a 20%
to 50% interest in the voting securities of the Partner
Company, including voting rights associated with the
Company's holdings in common, preferred and other
convertible instruments in the Partner Company. Under the
equity method of accounting, a Partner Company's accounts
are not reflected within the Company's Consolidated
Statements of Operations; however, the Company's share of
the earnings or losses of the Partner Company would be
reflected in a caption such as "Equity income (loss)" in
the Consolidated Statements of Operations.
The amount by which the Company's carrying value exceeds
its share of the underlying net assets of Partner Companies
accounted for under the consolidation or equity method of
accounting is amortized on a straight-line basis generally
over three to five years. Equity method Partner Company
5
<PAGE>
goodwill that was previously classified in equity loss in
the Company's consolidated statements of operation would be
reclassified to amortization of goodwill and intangibles
for all periods presented.
Cost Method. Partner Companies not accounted for under the
consolidation or the equity method of accounting are
accounted for under the cost method of accounting. Under
this method, the Company's share of earnings or losses of
such companies is not included in the Consolidated
Statements of Operations. However, cost method Partner
Company impairment charges are recognized in the
Consolidated Statement of Operations. If circumstances
suggest that the value of the Partner Company has
subsequently recovered, such recovery is not recorded.
The Company records of its ownership interest in equity
securities of Partner Companies accounted for under the
cost method at cost, unless these securities have readily
determinable fair values based on quoted market prices, in
which case these interests are valued at fair value and
classified as available-for-sale securities or some other
classification in accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities."
The Company continually evaluates the carrying value of its
ownership interests in each of its Partner Companies for
possible impairment based on achievement of business plan
objectives and milestones, the value of each ownership
interest in the Partner Company relative to carrying value,
the financial condition and prospects of the Partner
Company, and other relevant factors. The business plan
objectives and milestones the Company considers include,
among others, those related to financial performance such
as achievement of planned financial results or completion
of capital raising activities, and those that are not
primarily financial in nature such as the launching of a
web site or the hiring of key employees. The fair value of
the Company's ownership interests in and advances to
privately held Partner Companies is generally determined
based on the value at which independent third parties have
invested or have committed to invest in the Partner
Companies.
(3) RELATED PARTY TRANSACTIONS
Bachkine & Meyer Industries, S.A. ("BMI"), a stockholder of the
Company, had been advancing funds to the Company pursuant to a line of
credit agreement dated April 15, 1999 (the "BMI LOC"). As of September
30, 2000 (unaudited), $2,165,696 of amounts advanced to the Company
under the terms of this agreement remained outstanding. As of April 1,
2000 BMI and the Company agreed that (i) no further interest would be
due on the amounts outstanding under the BMI LOC retroactive to January
1, 2000 and (ii) BMI's right to demand repayment under the BMI LOC
would be extended to December 31, 2000. Previously, BMI and the Company
agreed that BMI will have the sole option to convert part or all of the
outstanding principal and interest due under the BMI LOC into common
stock of the Company at a rate determined by the Board of Directors. On
November 13, 2000, the Company and BMI agreed to retire the outstanding
balance of the BMI LOC by a cash payment of $300,000, the forgiveness
of $500,000 of indebtedness and the conversion of the remaining
$1,365,696 into common stock of the Company at a rate determined by the
Board of Directors from the trading price of the stock. On November 13,
2000, the Board approved the conversion at a rate of $3.59 per share,
the average closing price of the Company's common stock the date of and
for the ten (10) trading days prior to such date.
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, was entitled to receive a monthly management
consulting fee of $75,000 in exchange for engineering expertise in the
development and commercialization of the NGP Process. For the period
ended December 31, 1999, $675,000 (nine months' fees) of such fee was
accrued as a general and administrative expense, but has not yet been
paid. On April 15, 2000, BAMI and the Company entered into a
Termination Agreement in which it was agreed that because of the change
in the
6
<PAGE>
(continued)
NEW GENERATION HOLDINGS, INC.
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Company's business focus, BAMI would allow its rights to receive the
monthly management consulting fee under the Consulting Agreement to
terminate as of December 31, 1999 and BAMI's sole option, all or part
of the balance of accrued consulting fees may be converted into common
stock of the Company at a rate determined by the Board of Directors.
BAMI informed the Company that it desired to convert the outstanding
balance of consulting fees simultaneously with the conversion of the
BMI LOC at the same rate. On November 13, 2000, the Board of Directors
approved the conversion on those terms and a conversion agreement was
entered into by the parties.
(4) WARRANTS
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 the
stockholder. These 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 years after the date upon
which they first become exercisable. As a result of this declaration,
2,960,706 warrants were issued.
The Company authorized the issuance of warrants to purchase an
aggregate of 165,000 shares with the following terms: warrants for
75,000 shares with an exercise price of $12.00 per share expiring on
February 24, 2004 (the "Feb. 2004 Warrants") and warrants for 90,000
shares with an exercise price of $12.00 per share expiring on March 5,
2004 (the "Mar. 2004 Warrants"). Concurrently, the Company issued
60,000 of the Mar. 2004 Warrants to 2 shareholders. On June 26, 2000,
the Company issued 25,000 of the Feb. 2004 Warrants and 30,000 of the
Mar. 2004 Warrants to 2 shareholders. The warrants are not exercisable
until the shares purchasable upon exercise of the warrants have been
registered under the Securities Act of 1933.
(5) COMMITMENTS AND CONTINGENCIES
In conjunction with the incorporation of the Company, the Company
entered into consulting agreements with several third parties. Under
those agreements the Company is contractually obligated to issue, upon
the adoption of a stock option plan, options to purchase an aggregate
of 50,000 shares of the Company's common stock at exercise prices
ranging from $7.50 to $9.50 per share.
7
<PAGE>
(continued)
NEW GENERATION HOLDINGS, INC.
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
One of the Company's European patents related to the plastic technology
has been opposed by a third party. While the Company believes its
patent will be upheld in substantially the form it was issued, the
Company can provide no assurances that it will be successful in its
patent defense. An adverse determination with respect to the
enforceability of the Company's European patent could have a material
adverse effect on the Company's plastic business and financial
condition.
(6) NOTE RECEIVABLE
On June 5, 2000, the Company made a bridge loan to Double Impact,
Inc. in the amount of $500,000. The loan was due on July 17, 2000
and Double Impact provided to the Company, as collateral for the
loan, 2,200,000 shares of Strathmore Group Limited and was to
provide the Company with shares of NBCi, Inc. for the balance of the
collateral. The loan was not repaid when due and the Company entered
into a settlement agreement, dated November 5, 2000, with Double
Impact and Bachkine & Meyer Industries, S.A. ("BMI") under which (i)
the Company forgave the principal and interest under the Double
Impact loan in its entirety (accordingly, the entire amount of the
Note Receivable was written off as of September 30, 2000), (ii) Double
Impact released the Company from its obligation to pay any accrued fees
that were due to Double Impact under the Strategic Collaboration
Agreement and (iii) Double Impact released BMI from its obligation to
deliver 500,000 shares of the Company's Common Stock to Double Impact.
In connection with the settlement, BMI agreed to forgive $500,000 of
the principal of its outstanding shareholders loan to the Company, as
described in Note 3 above.
(7) SUBSEQUENT EVENTS
As described in Note 3 above, on November 13, 2000, the Company and BMI
entered into an agreement to retire the entire amount of the
outstanding shareholder loan. The Company will pay to BMI $300,000 in
cash, BMI will forgive $500,000 of the shareholder loan and the balance
of $1,365,696 will be converted into 380,417 shares of Common Stock. In
addition, on the same date, the Company and BMI entered into an
agreement to convert the $675,000 outstanding balance due as consulting
fees into 188,022 shares of Common Stock.
On November 5, 2000, the Company, BMI and Double Impact executed a
Settlement Agreement that released each of the parties from its
obligations under Strategic Collaboration Agreement, the Share Delivery
Agreement and the Double Impact Promissory Note.
8
<PAGE>
ITEM 2. MANAGEMENT'S PLAN OF OPERATION
You should read the following plan of operation in conjunction with the
financial statements and notes thereto contained elsewhere in this Form 10-QSB.
The following information contains forward-looking statements that are subject
to risks and uncertainties. If one or more of these risks and uncertainties
materialize, actual results may differ from those expressed or implied by the
forward-looking statements.
OVERVIEW
We are a development stage company that has not yet generated any
revenue. We have restructured our existing plastic business and entered into a
new business involving development of primarily European Internet businesses.
These two businesses will be carried out in two of our subsidiaries formed for
those purposes. We are presently a holding company with no operations aside from
the ownership of the subsidiary corporations' stock.
PLASTIC BUSINESS
Over the course of the next twelve months, we anticipate that we will
engage in the following activities:
1. We intend to capitalize and acquire an entity in France in order
to create a full scale commercial recycling plant specifically
for the recycling of computer scrap.
2. We expect to maintain patent and trademark filings.
3. We intend to capitalize on the commercial value of the plastic
business' technology in the form of licensing agreements with
industrial partners.
INTERNET BUSINESS
Over the course of the next twelve months, we anticipate that we will
engage in the following activities:
1. We expect to identify and establish strategic partnerships with
firms that provide expertise that will benefit our Network
Companies.
2. We have established initial Development & Acceleration ("D&A")
sites in London, Geneva and Stockholm, and expect to establish
sites in Germany, Amsterdam, France, Belgium, Spain and Italy.
3. We anticipate hiring a Chief Investment Officer and Internet
Analyst.
4. We expect to identify candidates for migration from North America
to the European Union ("US 2 EU") and D&A. It is expected that
these candidates will be involved primarily in B2B e-commerce,
wireless Internet applications, or Internet infrastructure.
9
<PAGE>
5. We anticipate entering into approximately four (4) US 2 EU and
fifteen (15) D&A ventures.
6. We expect that we will provide seed capital investments on the
order of $500,000 to a number of D&A companies.
7. We anticipate that we will invest an average of $1,500,000 in
select D&A Companies that we provided seed capital.
8. We anticipate that we will invest an average of $1,500,000 in
select US 2 EU Companies.
LIQUIDITY AND CAPITAL RESOURCES
As of the date of this Form 10-QSB, we have yet to generate any revenue
from our business operations. Consequently, we have been dependent upon
issuances of new securities and shareholder advances from Bachkine & Meyer
Industries, S.A. to fund our cash requirements.
As of September 30, 2000, we had assets of $3,141,496 and liabilities
of $3,429,261. The biggest components of the liabilities are the loan due to
shareholder of $2,165,696 and the accrued consulting fees of $675,000. The loan
due to shareholder will be satisfied in full by a cash payment of $300,000, the
forgiveness of $500,000 and the conversion of the remaining balance into equity,
at a rate of $3.59 per share. The entire amount of the consulting fees are to be
converted into equity at a rate of $3.59 per share.
PLASTIC BUSINESS
For the next twelve months, we anticipate that we will require at least
$1,000,000 in additional capital to acquire and develop a commercial plant to
recycle computer scrap. We anticipate that these funds will either be provided
by additional loans from Bachkine & Meyer Industries, S.A. or from the proceeds
of a private placement of our equity securities.
INTERNET BUSINESS
Our Internet business is in its initial stage of development. This
business has not generated any revenues to date. In order to operate this
business in accordance with our current business plan, we intend to raise a
minimum of $60,000,000 in the next twelve months. We anticipate that in the next
90 days, we will raise approximately $10,000,000. We cannot guarantee that any
new capital will be available to us or that adequate funds for operations will
be available as or when needed, or on terms satisfactory to us. Our failure to
obtain adequate additional financing may require us to delay, curtail or scale
back some or all of our proposed activities and potentially to cease operations
in both the plastic and Internet businesses.
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We expect that the Internet subsidiary will commit an aggregate of
approximately $50,000,000 to investments in Network and non-Network Companies.
In addition, we expect that we will incur $3,200,000 of corporate overhead
expenditures for salaries, rent, expenses, and legal and accounting expenses.
The anticipated expenses for establishing and operating the initial network of
development sites will be $9,000,000. Finally, we expect that we will expend
approximately $500,000 in legal, accounting and other expenses directly related
to investments in non-Network Companies.
YEAR 2000
Management believes that the Company's accounting and operational
systems are year 2000 compliant. The Company received verification from GE/Fanuc
that the process control software for the NGP Technology was year 2000
compliant. The Company has not yet experienced any material year 2000 operating
problems and does not expect to encounter any such problems.
FORWARD LOOKING STATEMENTS
When used in this Form 10-QSB, in filings by the Company with the
Securities and Exchange Commission (the "SEC"), in the Company's press releases
or other public or stockholder communications, or in oral statements made with
the approval of an authorized executive officer of the Company, the words or
phrases "would be," "will allow," "intends to," "will likely result," "are
expected to," "will continue," "is anticipated," "estimate," "project," or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
The Company cautions readers not to place undue reliance on any forward
looking statements, which speak only as of the date made, are based on certain
assumptions and expectations which may or may not be valid or actually occur,
and which involve various risks and uncertainties. The Company's actual results
for future periods could differ materially from those anticipated or projected.
Unless otherwise required by applicable law, the Company does not
undertake, and specifically disclaims any obligation, to update any
forward-looking statements to reflect occurrences, developments, unanticipated
events or circumstances after the date of such statement.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
The Company has no long-term debt as of September 30, 2000. The
Company invests in money market funds and, under its current policies, the
Company does not use interest rate derivative instruments to manage its
exposure to interest rate changes.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
None
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Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are included with this report.
10(xii) Loan Retirement Agreement dated as of November 13,
2000 by and between the Company and Bachkine &
Meyer Industries, SA.
10(xiii) Consulting Fee Conversion Agreement dated as of
November 13, 2000 by and between the Company and
BAMI Consulting, Inc.
(b) Reports on Form 8-K
None
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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 Holdings, Inc.
(Registrant)
Date: November 21, 2000 By: /s/ Paul Hokfelt
-------------------------------------
Paul Hokfelt
Chief Executive Officer
By: /s/ Anna Karin Portunato
------------------------------------
Anna Karin Portunato
Interim Chief Financial Officer
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