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THIS PROSPECTUS IS FILED
PURSUANT TO RULE 424(B)(3) AND
RELATES TO REGISTRATION NUMBER
333-32088
[LOGO]
7,907,388 SHARES
COMMON STOCK, PAR VALUE $.001 PER SHARE
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This prospectus relates to 4,736,682 shares of our common stock, which may
be offered and sold, from time to time, by the selling stockholders named in
this prospectus and an additional 3,170,706 shares of our common stock issuable
upon the exercise of outstanding warrants. We will not receive any proceeds from
the sale of the shares by the selling stockholders.
Our common stock currently is quoted on the OTC Bulletin Board under the
symbol "NGPX." On July 14, 2000, the last reported sale price of our common
stock on the OTC Bulletin Board was $6.50 per share.
SEE "RISK FACTORS" COMMENCING ON PAGE 3 TO READ ABOUT THE RISKS YOU SHOULD
CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
We will bear all costs and expenses of the registration of the shares under
the Securities Act and certain state securities laws, other than discounts or
commissions, if any, payable with respect to sales of the shares.
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The date of this prospectus is July 14, 2000
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TABLE OF CONTENTS
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Prospectus Summary.......................................... 1
Risk Factors................................................ 3
Dividend Policy............................................. 10
Price Range of Common Stock................................. 10
The Company................................................. 12
Business.................................................... 13
Management's Plan of Operation.............................. 23
Management.................................................. 26
Principal Stockholders...................................... 27
Selling Stockholders and Plan of Distribution............... 30
Certain Transactions........................................ 34
Description of Securities................................... 35
Shares Eligible for Future Sale............................. 36
Legal Matters............................................... 36
Experts..................................................... 36
Where You Can Find More Information......................... 36
Index to Financial Statements............................... 38
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PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS. THIS SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU
SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE ENTIRE
PROSPECTUS CAREFULLY, INCLUDING "RISK FACTORS" AND THE FINANCIAL STATEMENTS,
BEFORE MAKING AN INVESTMENT DECISION.
OUR COMPANY
INTERNET BUSINESS
We have entered a new business involving the formation of joint ventures
with North American based Internet companies for the purpose of assisting these
Internet companies in bringing their business concepts to the European Union. We
also have begun to establish facilities throughout Europe designed to develop
and accelerate European Internet start-up companies. Our Internet business will
be conducted through our wholly owned subsidiary, New Generation Partners, Inc.
PLASTIC BUSINESS
We own the rights to a plastic technology that is capable of blending
immiscible plastic mixtures. We believe our technology is capable of turning
mixed plastic recycling into high quality uniform thermoplastic resins and end
products. To date, we have focused on developing our plastic technology to a
commercial stage. We believe that there are commercially viable applications for
our plastic technology available now and that these applications can best be
exploited by an entity with more established operations and expertise in the
recycling and plastic industry. Accordingly, we anticipate that within the next
three (3) months, our newly formed plastic subsidiary will enter into an
exclusive Master License agreement with an entity or venture, the partners of
which are currently involved in the recycling and/or equipment manufacturing
industries. We expect that the master licensee will assume all responsibility
for the costs and control over the commercialization of our plastic technology.
We expect that it will identify the specific applications that will be pursued
and perform any necessary research and development to commercialize the selected
applications. We anticipate that our plastic subsidiary will receive royalty
income based on kilograms processed using our plastic technology. However, at
the present time, we do not have any agreements with a prospective master
licensee, we have not fully developed a commercially viable product and we have
not generated any revenues.
ABOUT US
We were incorporated in the State of Delaware in April of 1999. We are the
surviving entity of a merger with SW Ventures, Inc., a Nevada corporation, which
took place on June 10, 1999. On May 17, 2000 we changed our name from "New
Generation Plastic, Inc." to "New Generation Holdings, Inc." Our principal
executive offices are located at 245 Park Avenue, New York, New York 10167. Our
phone number is 212-792-4104. Our website address is www.ngpx.com. The
information in our website is not a part of this prospectus.
THE OFFERING
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Common Stock offered by the selling stockholders............ 7,907,388 shares(1)
Common Stock outstanding prior to the offering.............. 12,552,061 shares
Common Stock outstanding after the offering................. 12,552,061 shares
OTC Bulletin Board Symbol................................... NGPX
</TABLE>
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(1) Includes 3,170,706 shares of common stock issuable upon the exercise of
outstanding warrants.
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully review and consider the risks discussed under "Risk Factors" as well
as the other information set forth in this prospectus before buying our common
stock.
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully review and consider the risks and uncertainties described below as
well as the other information set forth in this prospectus before investing in
our common stock. If any of the following risks actually occur, our business,
financial condition, or operating results could be materially adversely
affected. In such case, the trading price of our common stock could decline and
you may lose all or part of your investment.
We have a limited operating history and a history of losses, we expect to
incur losses in the future, and our auditors have expressed doubt as to our
ability to continue as a going concern.
GENERAL RISKS ASSOCIATED WITH INVESTMENT IN OUR COMMON STOCK
We have a limited operating history and a history of losses and we expect to
incur losses in the future.
We incurred net losses of approximately $3,547,326 for the period April 15,
1999 through December 31, 1999. As of December 31, 1999, we had an accumulated
deficit of $3,547,326 that has since increased to $4,152,146 (unaudited) as of
March 31, 2000. We have not generated any operating revenues to date and as
described in our Plan of Operation below, in order to operate our business in
accordance with our current business plan, we intend to raise $60,000,000 over
the next twelve (12) months and $10,000,000 over the next three (3) months. 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.
THERE IS A LIMITED PUBLIC MARKET FOR OUR COMMON STOCK
Our common stock is quoted on the OTC Bulletin Board with relatively limited
trading activity to date. We cannot assure you that an active trading market
will develop for our common stock, or that if one develops, it will be
sustained.
OUR STOCK PRICE MAY BE VOLATILE
The market prices of many publicly traded companies, particularly
development stage companies, have been and can be expected to be highly
volatile. The future market price of our common stock could be significantly
impacted by
- future sales of our common stock,
- announcements of technological innovations for new commercial
- products by our present or potential competitors,
- developments concerning proprietary rights,
- failure to enter into and maintain strategic alliances,
- adverse litigation,
- variations in quarterly operating results,
- general trends in the Internet industry, and
- other factors outside of our control.
WE DO NOT ANTICIPATE PAYING DIVIDENDS
To date, we have not declared or paid dividends on our common stock. We
presently intend to retain earnings, if any, to finance our operations and do
not expect to pay cash dividends on our common stock in
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the foreseeable future. The payment of dividends will depend, among other
things, upon our earnings, assets, general financial condition, and upon other
relevant factors.
OUR RIGHT TO ISSUE PREFERRED STOCK COULD ADVERSELY AFFECT COMMON STOCKHOLDERS
Our certificate of incorporation authorizes the issuance of preferred stock
with such designations, rights, and preferences as may be determined from time
to time by our Board of Directors, without any further vote or action by our
stockholders. Therefore, our Board of Directors is empowered, without
stockholder approval, to issue a class of stock with dividend, liquidation,
conversion, voting, or other rights, which could adversely affect the voting
power or other rights of the holders of our common stock.
ANTI-TAKEOVER PROVISIONS MAY DISCOURAGE TAKEOVER ATTEMPTS
Provisions of the Delaware General Corporation Law and our certificate of
incorporation may discourage potential acquisition proposals or delay or prevent
a change of control. See "Description of Capital Stock."
SHARES ELIGIBLE FOR FUTURE SALE MAY ADVERSELY AFFECT OUR STOCK PRICE
A substantial number of our shares are available for future sale. If these
shares are sold in the public market, it may adversely affect prevailing market
prices for our common stock and could impair our ability to raise capital
through future sales of equity securities. See "Shares Eligible for Future
Sale."
SHOULD OUR COMMON STOCK FALL BELOW $5 PER SHARE, IT WILL BE CLASSIFIED AS A
"PENNY STOCK"
The Securities and Exchange Commission has adopted regulations which define
a "penny stock" to be any equity security that has a market price of less than
$5.00 per share, subject to certain exceptions, including an exception for
securities authorized for quotation on certain stock exchanges and on the Nasdaq
Small Cap Market. For any transaction involving a penny stock, the rules require
the delivery, prior to the transaction, of a disclosure schedule prepared by the
SEC relating to the penny stock market. Disclosure also must be made about
commissions payable to both the broker-dealer and the registered representative
and about current quotations for the security. Finally, monthly statements must
be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. Our common stock
currently does not fall within the definition of a "penny stock." If our common
stock were to trade below $5.00 per share, the trading market for our common
stock would be materially adversely affected unless an exemption from the penny
stock rules is available.
RISKS ASSOCIATED WITH OUR PLASTIC BUSINESS
OUR BUSINESS IS SUBJECT TO FACTORS OUTSIDE OUR CONTROL
Our business may be affected by a variety of factors, many of which are
outside our control. Factors that may affect our business include:
- the ability to find a suitable master licensee, venture partner or
partners to commercialize our technology;
- competition;
- our ability to attract qualified personnel;
- the amount and timing of operating costs and capital expenditures
necessary to establish our business, operations, and infrastructure; and
- general economic conditions as well as economic conditions specific to the
recycling industry.
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PRODUCTS USING OUR PLASTIC TECHNOLOGY, WHICH HAVE NOT YET BEEN DEVELOPED, MAY
NOT BE READILY ACCEPTED BY THE MARKET
Although we believe that our patented plastic blending technology will have
commercial applications in the plastic recycling industry, we cannot assure you
that the market will recognize the benefits or the potential of our technology.
Even if the master licensee is able to successfully demonstrate to potential
customers the benefits, safety, efficacy, and cost-effectiveness of
thermoplastic resins and end products using our technology, we cannot assure you
that there will be sufficient market acceptance and demand of such products to
allow us to generate sufficient royalty income to operate profitably in the
plastic business.
WE MUST MAINTAIN AND ESTABLISH STRATEGIC ALLIANCES AND OTHER THIRD PARTY
RELATIONSHIPS TO IMPLEMENT OUR BUSINESS STRATEGY
Our strategy for developing, manufacturing, marketing, and distributing
products using our plastic blending technology is dependent upon entering into a
master license with a master licensee that has an established reputation in the
plastic recycling and/or equipment manufacturing industries, strategic alliances
and relationships with joint venture partners, contract manufacturers, or other
third parties, and upon the subsequent success of these parties in performing
their responsibilities. We have no such existing relationships and cannot assure
you that those which we may establish in the future will be successful. Failure
to secure a master license agreement will have a material adverse effect on our
business and our financial condition and may require us to cease operations.
WE FACE COMPETITION
The domestic and international recycling markets are highly competitive.
Products using our technology will compete with existing products using a
variety of plastic blending technologies. Many of the manufacturers of competing
products
- are well established in their industry,
- have substantially greater experience than us in research and development,
manufacturing, sales and marketing, and
- have significantly greater financial, research, manufacturing, and
marketing resources than us.
Furthermore, future technologies developed by others may render products
using our technology obsolete or non-competitive.
WE WILL BE EXPOSED TO NUMEROUS RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
We intend to market our products in international markets. International
operations entail various risks, including
- political instability;
- economic instability and recessions;
- exposure to currency fluctuations;
- difficulties of administering foreign operations generally;
- reduced protection for intellectual property rights;
- potentially adverse tax consequences; and
- obligations to comply with a wide variety of foreign laws and other
regulatory requirements.
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WE HAVE EXTREMELY LIMITED MANUFACTURING, MARKETING AND SALES CAPABILITIES
We have extremely limited manufacturing, marketing and sales resources.
While we anticipate that we will enter into an exclusive agreement with a master
licensee that will assume these responsibilities, we can provide no assurances
that such an alliance will be formed.
OUR TECHNOLOGY MAY BECOME OBSOLETE
Many companies in the recycling industry invest large sums in research and
development. The development by others of new or improved products, processes,
or technologies may make products using our technology obsolete or
non-competitive.
WE DEPEND ON PATENTS AND PROPRIETARY RIGHTS
Our success will depend, in part, on our ability to obtain and maintain
patent rights to preserve our trade secrets and to operate without infringing on
the proprietary rights of third parties. We cannot assure you that
- any additional patents will be issued to us,
- the scope of any existing or future patents will exclude competitors or
provide us with competitive advantages,
- any of our patents will be held valid and enforceable if challenged, or
- others will not claim rights in or ownership to the patents and other
proprietary rights held by us.
Furthermore, others may have developed or could develop similar products or
patent rights, may duplicate our products, or design around our current or
future patents. Others may independently develop or otherwise acquire
substantially equivalent know-how, or gain access to and disclose our
proprietary technology. We cannot assure you that we can ultimately protect
meaningful rights to our proprietary technology.
WE MAY NOT BE ABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS
Solvay, S.A has opposed our European patent covering our plastic technology.
We have retained counsel in Munich, Germany to defend our patent rights. While
we believe our patent will be upheld in substantially the form it was issued, we
can provide no assurances that we will be successful in our patent defense. An
adverse determination with respect to the enforceability of our European patent
could have a material adverse effect on our business and our financial
condition.
There could be additional litigation concerning our intellectual property
rights in the future. Such litigation, if it occurs, could result in substantial
expense to us and diversion of our efforts, but may be necessary to
- enforce our patents,
- protect our trade secrets and know-how,
- defend us against claimed infringement of the rights of others, or
- determine the enforceability, scope, and validity of the proprietary
rights of others.
An adverse determination in any such litigation could subject us to significant
liability to third parties or require us to seek licenses from third parties.
Accordingly, an adverse determination in such litigation could have a material
adverse effect on our business and financial condition.
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RISKS ASSOCIATED WITH OUR INTERNET BUSINESS
WE HAVE NO OPERATING HISTORY UPON WHICH YOU MAY EVALUATE US
Our Internet subsidiary was formed in February of 2000. To date our Internet
subsidiary has not made any investments or conducted any meaningful business.
Accordingly, we have no operating history upon which you may evaluate our
business and prospects. We anticipate that many of the companies that our
Internet subsidiary develops will be in the early stages of their development.
Our business and prospects must be considered in light of the risk, expense and
difficulties frequently encountered by companies in early stages of development,
particularly companies in new and rapidly evolving markets such as business to
business e-commerce and other Internet related companies. If we are unable to
effectively allocate our resources and help grow the companies our Internet
subsidiary develops, our stock price may be adversely affected and we may be
unable to execute our strategy of developing a collaborative network of Internet
related companies through our Internet subsidiary.
OUR BUSINESS WILL DEPEND UPON THE PERFORMANCE OF COMPANIES WHOSE BUSINESS IS
UNCERTAIN
Economic, governmental, industry and internal company factors outside our
control affect each of the companies our Internet subsidiary will invest in. If
these companies do not succeed, the value of our assets and the price of our
common stock could decline. The material risks relating these companies include:
- lack of the widespread commercial use of the Internet, which may prevent
these companies from succeeding; and
- intensifying competition for the products and services these companies
offer, which could lead to the failure of some of these companies.
OUR BUSINESS MODEL IS UNPROVEN
Our strategy is based on an unproven business model. Our business model
depends on the willingness of companies to join the collaborative network of our
Internet subsidiary, New Generation Partners, Inc. and the ability of the
collaborative network to assist our Internet subsidiary's network of companies.
Our business model depends on our Internet subsidiary's ability to share
information within its network of companies. If competition develops among
companies in its network, our Internet subsidiary may be unable to fully benefit
from the sharing of the information within its network. If we cannot convince
companies of the value of our business model, our ability to attract new
companies will be adversely affected and our strategy of building a
collaborative network may not succeed.
FLUCTUATIONS IN OUR QUARTERLY RESULTS MAY ADVERSELY AFFECT OUR STOCK PRICE
We expect that our quarterly results will fluctuate significantly due to
many factors, including
- the operating results of companies that our Internet subsidiary
collaborates with and/or develops;
- changes in equity losses or income and amortization of goodwill related to
the acquisition or divestiture of interests in companies that our Internet
subsidiary develops;
- changes in our methods of accounting for our interests in other companies,
which may result from changes in our Internet subsidiary's ownership
percentages of these companies;
- sales of equity securities by companies owned by our Internet subsidiary,
which could cause us to recognize gains or losses under applicable
accounting rules;
- the pace of development or a decline in growth of the B2B e-commerce
market and the Internet as a whole;
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- intense competition from other potential acquirers of Internet related
companies, which could increase our Internet subsidiary's cost of
acquiring interests in companies, and competition for the goods and
services offered by companies they own; and
- our Internet subsidiary's ability to effectively manage its growth and the
growth of companies they own during the anticipated rapid growth of the
global Internet market.
COMPANIES THAT OUR INTERNET SUBSIDIARY DEVELOPS MAY GROW RAPIDLY AND OUR
INTERNET SUBSIDIARY MAY HAVE DIFFICULTY ASSISTING THEM IN MANAGING THEIR GROWTH
We expect the companies that our Internet subsidiary develops to grow
rapidly, by adding new products and services and hiring new employees. This
growth is likely to place significant strain on their resources and on the
resources our Internet subsidiary allocates to assist these companies. In
addition, management of our Internet subsidiary may be unable to convince
companies it invests in to adopt their ideas for effectively and successfully
managing growth.
WE FACE COMPETITION FROM OTHER POTENTIAL ACQUIRERS OF INTERNET RELATED COMPANIES
We face competition from other capital providers including publicly-traded
Internet companies, venture capital companies and large corporations. Many of
these competitors have greater financial resources and brand name recognition
than we do. These competitors may limit our Internet subsidiary's opportunity to
acquire interests in companies. If our Internet subsidiary cannot acquire
interests in attractive companies on reasonable terms, our strategy to build a
collaborative network of companies may not succeed.
OUR EUROPEAN FOCUS EXPOSES US TO LESS DEVELOPED MARKETS, CURRENCY FLUCTUATIONS
AND POLITICAL INSTABILITY
We are pursuing opportunities outside the United States. This international
focus exposes us to several risks, including the following:
- political instability;
- economic instability and recessions;
- exposure to currency fluctuations;
- difficulties of administering foreign operations generally;
- reduced protection for intellectual property rights;
- potentially adverse tax consequences; and
- obligations to comply with a wide variety of foreign laws and other
regulatory requirements.
RECENT DECREASES IN INTERNET STOCK PRICES
Since April of 2000, stock prices of many Internet related public companies
have decreased significantly and it has become more difficult for Internet
related companies to raise capital in both the public and private markets. If
the market for Internet-related companies and initial public offerings were to
remain weak for an extended period of time, the ability of our Internet
subsidiary and the companies in which it invests to grow and access the capital
markets will be impaired.
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OUR INTERNET SUBSIDIARY MAY BE UNABLE TO OBTAIN MAXIMUM VALUE FOR THEIR
INTERESTS IN OTHER COMPANIES.
If our Internet subsidiary were to divest all or part of an interest in a
company, they may not receive maximum value for such positions. For companies
with publicly-traded stock, our Internet subsidiary may be unable to sell its
interest at then-quoted market prices. Furthermore, for those companies that do
not have publicly-traded stock, the realizable value of our Internet
subsidiary's interests may ultimately prove to be lower than the carrying value
currently reflected in our consolidated financial statements.
OUR INTERNET SUBSIDIARY MAY NOT HAVE OPPORTUNITIES TO ACQUIRE INTERESTS IN
COMPANIES.
Our Internet subsidiary may be unable to identify companies that complement
its strategy, and even if they identify a company that complements their
strategy, they may be unable to acquire an interest in the company for many
reasons, including:
- A failure to agree on the terms of the US 2 EU joint venture or D&A
agreement, such as the amount or price of the acquired interest;
- Incompatibility between our Internet subsidiary and management of the
company;
- Competition from other acquirers of Internet related companies;
- A lack of capital to acquire an interest in the company; and
- The unwillingness of the company to partner with our Internet subsidiary.
If our Internet subsidiary cannot acquire interests in attractive companies,
our strategy to build a collaborative network of companies through our Internet
subsidiary may not succeed.
WE MAY HAVE TO BUY, SELL OR RETAIN ASSETS WHEN WE WOULD OTHERWISE NOT WISH TO IN
ORDER TO AVOID REGISTRATION UNDER THE INVESTMENT COMPANY ACT OF 1940
We believe that our Internet subsidiary will be actively engaged in the
Internet business through their network of majority-owned subsidiaries and
companies that they will "control" for purposes of the Investment Company Act of
1940. Under the Investment Company Act, a company is considered to control
another company if it owns more than 25% of that company's voting securities. A
company may be required to register as an investment company if more than 45% of
its total assets consist of, and more than 45% of its income/loss and revenue
attributable to it over the last four quarters is derived from, ownership
interests in companies it does not control. Because many of the companies our
Internet subsidiary will own will not be majority-owned subsidiaries, and
because our Internet subsidiary will own 25% or less of the voting securities of
a number of companies, changes in the value of their interests in the
income/loss and revenue attributable to companies it owns could subject our
Internet subsidiary to regulation under the Investment company Act unless our
Internet subsidiary takes precautionary steps. For example, in order to avoid
having excessive income from "non-controlled" interests, our Internet subsidiary
may not sell minority interests they would otherwise want to sell or they may
have to generate non-investment income by selling interests in companies that
they are considered to control. Our Internet subsidiary may also need to ensure
that they retain more than 25% ownership interests in companies after any equity
offerings. In addition, our Internet subsidiary may have to acquire additional
income or loss generating majority-owned or controlled interests that they may
not otherwise have acquired or may not be able to acquire "non-controlling"
interests in companies that they would otherwise want to acquire. It is not
feasible for our Internet subsidiary to be regulated as an investment company
because the Investment Company Act rules are inconsistent with our Internet
subsidiary's strategy of actively managing, operating and promoting
collaboration among companies in its network.
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OUR BUSINESS IS DEPENDENT UPON OUR EXECUTIVE OFFICERS AND OUR ABILITY TO ATTRACT
AND RETAIN OTHER KEY PERSONNEL
Our success is dependent in large part on the continued employment and
performance of our President and Chief Executive Officer, Paul Hokfelt, as well
as other key management and operating personnel. The loss of any of these
persons could have a material adverse effect on our business. We do not have key
person life insurance on any of our employees.
Our future success also will depend upon our ability to recruit personnel,
and to hire and to retain additional qualified personnel with respect to our
Internet business. The failure to recruit such personnel or failure to otherwise
obtain such expertise would have a material adverse effect on our business and
financial condition.
WARNING REGARDING FORWARD LOOKING STATEMENTS
This prospectus contains certain forward-looking statements, including but
not limited to statements regarding:
- products to be developed;
- technological and competitive advantages;
- timetable for commercial introduction of products using our technology;
- strategic alliances;
- entrance into the Internet development and acceleration business; and
- our proposed restructuring.
These forward-looking statements are based on current expectations that
involve numerous risks and uncertainties. Assumptions relating to the foregoing
involve judgments with respect to, among other things, future economic,
competitive, and market conditions and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond
our control. Although we believe that our assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could prove
inaccurate and, therefore, we cannot assure you that the results discussed or
implied in such forward-looking statements will prove to be accurate. In light
of the significant uncertainties inherent in such forward-looking statements,
the inclusion of such statements should not be regarded as a representation by
us or any other person that our objectives and plans will be achieved. Words
such as "believes," "anticipates," "expects," "intends," "may," and similar
expressions are intended to identify forward-looking statements, but are not the
exclusive means of identifying such statements. We undertake no obligation to
revise any of these forward-looking statements.
DIVIDEND POLICY
We have never declared or paid dividends, and do not intend to pay any
dividends in the foreseeable future on shares of our common stock. Our earnings,
if any, are expected to be retained for use in expanding our business. The
payment of dividends is within the discretion of our Board of Directors and will
depend upon our earnings, if any, capital requirements, financial condition, and
such other factors as are considered to be relevant by our Board of Directors
from time to time.
PRICE RANGE OF COMMON STOCK
Our common stock is traded on the OTC Bulletin Board under the symbol
"NGPX". The following table sets forth for the periods indicated the high and
low bid quotations for our common stock as reported on the OTC Bulletin Board.
for all periods subsequent to our merger with SW Venture, Inc. These
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quotations reflect inter-dealer prices, without retail mark-up, markdown or
commission, and may not necessarily represent actual transactions.
<TABLE>
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HIGH LOW
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2nd Quarter 2000, ended 6/30/00............................. $8.375 $ 6.50
1st Quarter 2000, ended 3/31/00............................. $ 8.25 $ 6.25
4th Quarter 1999, ended 12/31/99............................ $ 8.5 $ 6.25
3rd Quarter 1999, ended 9/30/99............................. $ 8.5 $4.125
6/11/99 through 6/30/99..................................... $ 8.25 $ 7.25
</TABLE>
As of July 14, 2000, there were approximately 141 holders of record of our
common stock. On July 14, 2000, the last sale price reported on the OTC Bulletin
Board for our common stock was $6.50 per share.
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THE COMPANY
We were incorporated in the State of Delaware on April 15, 1999. We were the
surviving entity in a merger which took place on June 10, 1999 with SW
Ventures, Inc., a Nevada corporation organized on May 7, 1996. Since the merger,
our business purpose has focused on the commercial development of our patented
plastic processing technology. On January 25, 2000, our Board announced our
intention to enter into an additional business involving the establishment of a
European Internet venture acceleration network, that focuses on facilitating the
migration of North American Internet businesses to Europe and also acts as a
developer and accelerator of European Internet business models (See "Business").
On May 17, 2000, we changed our name from "New Generation Plastic, Inc." to "New
Generation Holdings, Inc." and we transferred our existing assets and
liabilities relating to our plastic business to a wholly owned subsidiary that
was renamed New Generation Plastic, Inc.
From its inception in May of 1996 until the date of our merger, SW
Ventures, Inc. business involved seeking out and investing in various oil and
gas opportunities in the Western United States. SW Ventures participation in the
oil and gas business ceased on June 10, 1999 when it contributed all of its
assets and liabilities relating to the oil and gas business to a wholly owned
Nevada subsidiary, SW Oil and Gas Company. Immediately thereafter all of the
stock of SW Oil and Gas Company was sold to Guido Cloetens, the former majority
shareholder of SW Ventures, Inc., in exchange for a Promissory Note with a
principal amount of $90,000 and the assumption of certain liabilities of SW
Ventures, Inc. by Mr. Cloetens and SW Oil and Gas Company.
On June 8, 1999, at a special meeting of the shareholders of SW
Ventures, Inc., the following actions were approved: (a) the reverse split of
the common stock of SW Ventures, Inc. (15 for 1), (b) the disposition of all of
the assets and liabilities of SW Ventures, Inc. relating to its oil and gas
operations to SW Oil and Gas Company, (c) the merger of SW Ventures, Inc. and
New Generation Plastic, Inc. with New Generation Plastic, Inc. as the surviving
entity and (d) the issuance of 11,580,000 post split shares of common stock of
New Generation Plastic, Inc. to Bachkine & Meyer Industries, S.A., a British
Virgin Islands corporation, pursuant to an exemption from the registration
requirements of Section 5 of the Securities Act of 1933, as amended under
Regulation S, in exchange for all of the assets and liabilities relating to our
patented technology pursuant to the terms of the Asset Contribution Agreement by
and between Bachkine & Meyer Industries, S.A. and SW Ventures, Inc. and Guido
Cloetens dated as of April 14, 1999.
RESTRUCTURING
On May 17, 2000, our stockholders approved a restructuring which we believe
allows us to more effectively pursue our Internet strategy. As part of this
restructuring, we formed two wholly owned subsidiaries, New Generation
Partners, Inc. and New Generation Plastic, Inc., in the State of Delaware.
We anticipate that our Internet subsidiary will enable us to assist in the
migration of North American based Internet companies to the European Union ("US
2 EU"), that we refer to as US 2 EU Ventures and also develop, accelerate and
physically host a number of Internet companies, that we refer to as D&A
Companies. We expect that by creating our Network of US 2 EU and D&A Companies,
we can use the collective knowledge and resources of the Network Companies, our
management team and our NGP partners to create synergies and promote growth
among Network Companies.
We then transferred all of our assets and liabilities relating to our
plastic business to another recently formed wholly owned Delaware subsidiary, NG
Plastic, Inc. which was later renamed "New Generation Plastic, Inc."
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BUSINESS
PLASTIC BUSINESS
Our plastic blending technology enables the production of homogeneous,
commercially usable polymers from a varied stream of otherwise immiscible waste
plastic or virgin feedstock. To date we have not generated any revenue from our
technology and have devoted our efforts to developing the technology to a
commercially viable stage. We believe that our technology is unique in its
ability to combine mixed plastic, including blending different polymers which
are normally incompatible, into homogenous compounds (the "NGP Compounds")
through a mechanical process. The NGP Compounds are created without the use of
costly additives, known as compatibilizers, which link non-compatible resins. We
believe that NGP Compounds can be customized to meet desired physical
specifications. Moreover, our technology can utilize consumer and industrial
plastic waste, as well as virgin materials. In this regard, we believe that our
technology provides a solution for the processing of mixed plastic waste.
Therefore, we expect that initial commercialization efforts will be focused on
the recycling market.
The core component of our technology is an integrated ultra high shearing
chamber that creates in situ compatibilization of otherwise non-compatible
resins and deeply microhomogenizes different polymers into a continuous amalgam.
The chamber is a cylindrical structure within which a rotor with impellers turns
at very high speed (peripheral tip speed ranges between 40 and 65 m/sec during
final processing). The speed and timing of the motor is programmed according to
the materials being processed and the nature of the compounds to be created. The
mixed plastic, as a result of the friction between the plastic particles, rotor
blades and chamber wall, are melted into a homogeneous blend. A sharp increase
of the torque indicates that the molten mixture has reached the predetermined
"gelification" level and is ready to be discharged from the chamber.
All processing steps are computer controlled by software. Parameters for
programming include temperature, rotor speed, torque variation and time.
Depending on the type of mixture processed, the cycle time should last between
20 and 60 seconds and temperatures of the expulsed hot compound melt range
between 180(Degree)C and 280(Degree)C.
We believe that the finished product is significantly more processable than
otherwise compatibilized or compacted mixed plastic and offers economic
advantages over current plastic recycling. For example, the finished product is
normally pelletized allowing it to be used in conventional plastic injection and
extrusion equipment.
We are currently operating a bench top prototype with a capacity of
approximately 30 kg/hour, have finalized the plans for the creation of a 150
kg/hour pilot unit and have plans for a full commercial size unit with a
capacity of 1,000 kg/hour (the "NGP Unit"). We expect that all of the above will
be made available to the master licensee (See "Management's Plan of
Operation--Plastic Business"). Our technology is protected by a patent that is
issued or pending in 62 jurisdictions worldwide.
We estimate that Newplast, NV and its affiliates (together, "Newplast"), the
prior owner of our technology, spent in excess of $12,000,000 from 1991 to 1996
in their effort to find a commercial application for our technology. Seven
prototypes were produced and tested, with the last and largest unit having a
standard capacity of 350kg/hour. Newplast was forced into liquidation by their
creditors in 1996. In 1998, Bachkine & Meyer Industries, S.A. bought the patent
rights covering the plastic blending technology from a secured creditor and
hired Bernard Dubrulle d'Ohrcel, the chief engineer in charge of the development
of the prototypes for Newplast.
The thermoplastic end product created by our technology from mixed plastic
waste is expected to have physical and chemical properties that are comparable
to certain virgin resins. In our opinion, current recycled mixed plastic
products have poor physical and chemical properties that have limited their
commercial acceptance. We expect that products using our technology will be able
to produce a series of NGP Compounds with specified characteristics by
controlling the mix of the recycled plastic feedstock
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without the use of compatibilizers. Additionally, NGP Compounds can be created
from mixed virgin resins that are currently immiscible.
Historically, virgin resins were not mixed due to the costs of chemical
processes, limited miscibility of polymers and limited markets due to higher end
product costs. However, over the past 10 years, polymer blends have garnered as
much as a 30% market share of polymer consumption. We believe that our
technology is well suited for the development of additional polymer blends and
may offer an economical process for recycling those blended products.
NGP Compounds can be pelletized and easily used in standard plastic
manufacturing techniques, such as injection, extrusion, extrusion/calendar, blow
molding and compression molding. These pellets can then be used in a range of
applications such as building materials, highway construction and sign posts,
agriculture, transportation, household products, office equipment, consumer
electronics, etc. The raw material costs of NGP Compounds utilizing plastic
waste are expected to be approximately half of the cost of using commodity
virgin resins (depending on geographic variables such as electric and labor
costs, percentage content/volume/costs of the plastic waste stream and the
specific resin the NGP Compounds are being compared to).
OUR TECHNOLOGY--RECYCLING APPLICATION
For a plastic recycling application, our technology must be integrated into
a three zone system. Generally, a 25,000 square foot facility is necessary for
operations. The activities within each zone are as follows:
ZONE ONE--CLEANING AND SIZE REDUCTION. Within the first zone, waste plastic
materials are shred, separated, washed, dried and ground to specification for
the process feedstock. Material is then conveyed to silos for composition
analysis and short-term storage. If necessary, the mixture can be supplemented
with mono-materials and/or additives for specific applications/technical
specifications.
ZONE TWO--NGP UNIT. Within the second zone, material is transported into
the ultra high shearing processing chamber. Depending on the type of mixture
processed, the cycle time should last between 35 and 120 seconds. Peripheral tip
speed ranges between 40 to 65 m/sec and temperatures of the expulsed hot
compound melt ranges between 180(Degree)C and 280(Degree)C during final
processing. The Company believes that within 20 - 60 seconds a phase change
occurs, causing molecular grafting or linking (re-arranging of the various
polymers) of various polymer chains, creating a homogeneous amalgam. The amalgam
is then extracted by centrifugal force from the inner chamber and is forced into
the reception area of a specially designed first phase extruder for temperature
control and extrusion. At the end of the first stage extruder is a special
filtration unit combined with an extrusion die designed to discharge the hot
melt in a spaghetti-like state into the degassing chamber. The filtered and
degassed hot melt is then introduced to the mouth of the second stage extruder
for pelletization or direct extrusion/compression of end products.
ZONE THREE--PACKAGING. Within the third zone, the pellets are conditioned
and transferred into 25 kg or larger containers to be shipped to production
equipment either on site or at an off-site manufacturing facility.
For the waste management market, our technology requires a feedstock or raw
material which has been collected, transported and sorted with a maximum 30%
non-plastic content (water, paper, dirt, glass, metal, etc.). The mixed plastics
are typically generated from the collection of municipal solid waste, industrial
(computer, electronics, automotive) waste and agricultural (film, packaging,
etc.) waste.
The integrated NGP Unit located within Zone Two can be sold to customers
that already have cleaning and packaging equipment or customers that will not be
using dirty plastic waste. We hope to enter into a venture or ventures with one
or more partners for the purpose of commercially producing identified
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streams of plastic. We anticipate that such an arrangement may result in the
payment of royalties to us equal to a fixed amount per kilo of production.
COMPETITION
We believe that current plastic or rubber processing equipment manufacturers
could compete with us through the use of new or existing technology. There are
more established and better funded waste processing equipment companies that
currently manufacture waste processing equipment that will compete with
equipment utilizing our technology. We anticipate that one or more of those
companies will be the exclusive or nonexclusive manufacturers for our NGP Units.
While there are numerous companies involved in plastic recycling, most of
these firms are focused on collection and processing rather than technology
development.
With regard to the mechanical recycling of mixed plastic there are several
techniques currently being utilized by companies in the recycling industry,
including:
INTRUSION--This technique involves the use of a specially designed
extruder, in which, the low melting point polymers melt from the main
body of material as they are extruded through round or square profiles.
The unmelted polymer flakes are used as filler. This technique involves
some pre-sorting, but the commercial use of the end product is limited
due to physical and chemical characteristics. Companies that utilize this
process include ART (Belgium), Remaplan (Germany), Testa (France) and
Hammer Plastic (United States).
CYROGENEFICATION (MICRONISATION)--This process utilizes very low
temperatures to create the micronisation of the feedstock into a fine
powder. The fine powder is then extruded with standard plastic processing
equipment. The resulting end product has better surface aspects and a
more homogeneous core than the end products from intrusion. The powder
can also be transformed into end products by compression molding and be
used as filler with a skin made of virgin polymers. The mechanical
properties of the end product utilizing this technique are generally
poor, though better than intrusion. This process is also costly.
There has been recent development work of other chemical processes in
Germany and France on the treatment of plastic waste, but costs associated with
these processes significantly limit market applications. Additionally, the costs
of incineration and landfill disposal (the largest waste management use for
plastic waste) are high and will continue to meet public resistance. New waste
management processes such as thermolization and pyrolization that are attempting
to take market share away from incineration (providing no toxic gas emissions)
are costly which has limited their market appeal. Pyrolisis has been developed
by large chemical companies to take polymers back to their original state via
high temperature and high pressure causing the materials to convert to the state
of synthetic oil; however, this technique is extremely costly (the end product
costs between 6 to 10 times more than the price of crude oil).
SOURCES AND AVAILABILITY OF EQUIPMENT/RAW MATERIALS
We believe that the reclaimed plastic waste utilized as a raw material in
our technology is readily available worldwide at little or no cost. In some
circumstances, we believe that we may receive payment to remove the plastic
waste materials we utilize.
Most of the equipment that makes up the NGP Unit is available from various
manufacturers worldwide. The processing chamber is a unique design, but we
believe that it can be manufactured by any of a number of the major plastic
machinery manufacturers.
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PATENTS AND TRADEMARKS
Our plastic blending technology currently utilizes our U.S. Patent Number
5,891,955 issued on April 6, 1999, entitled Process for Transforming a Starting
Material Containing At Least Two Different Thermoplastic Materials Into A New
Homogenous Thermoplastic Material. This patent has been filed or is pending in
62 jurisdictions worldwide. The European Patent No. 92907183.5-2307 issued on
September 16, 1998 was opposed by an application filed by Solvay, SA. We have
retained counsel in Munich, Germany to handle the opposition and we believe that
the patent will be upheld in substantially the form it was issued. A decision on
Solvay's opposition to our European patent is not expected until the fourth
quarter of 2000. If the challenge to our European patent is successful, it could
result in a material adverse effect on our business and our financial condition.
We have filed for the registration of the following three (3) trademarks
with the United States Patent and Trademark Office:
<TABLE>
<S> <C> <C>
A ) Mark: New Generation Plastic
App. No.: 75/628132
App. Date: January 27, 1999
Status: Filed
B ) Mark: NewGen Plastic
App. No.: 75/628971
App. Date: January 27, 1999
Status: Filed
C ) Mark: NGP
App. No.: Not yet assigned
App. Date: January 27, 1999
Status: Filed
</TABLE>
Each application covers the following goods and services: (a) Machinery for the
Production of Plastic Material, (b) Computer Software Used for the Production of
Plastic Material, (c) Plastic Material Used for Manufacturing and
(d) Manufacture of Plastic Products for Others, Recycling of Mixed Waste Plastic
Products for Others.
To date none of the trademarks has been issued; however, we are diligently
pursuing the applications.
RESEARCH AND DEVELOPMENT
We have been engaged in internal and external research and development
efforts aimed at bringing our technology to a commercially viable stage. A
research agreement was entered into with an independent polymer research and
testing organization called Pole Europeen de Plasturgie ("PEP") located in
Oyonnax, France to further analyze our technology and the NGP Compounds it
produces. In addition, some of the materials produced by the our bench type
prototype are being tested by Polymer Diagnostics, Inc. ("PDI") an independent
testing group based in Lake Avon, Ohio. PEP and PDI were commissioned to
accelerate the development and commercialization of our technology. Their
objectives were to: 1) show the improved technology performance relative to
conventional blending equipment, 2) show the commercial potential by processing
several readily available mixed plastic waste streams and some innovative blends
from virgin materials, and 3) gain process understanding to predict material
properties and develop quality control software in commercial machines. In 1999,
approximately $62,000 was spent on research and development with PEP and PDI.
We expect that the research agreement with PEP will be terminated in the
near future. We anticipate that the master licensee will be responsible for
future research and development costs (See "Management's Plan of
Operation--Plastic Business").
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NUMBER OF EMPLOYEES
We have 0 employees as of the date hereof, but we do retain the services of
an independent consultant.
INTERNET BUSINESS
We formed New Generation Partners, Inc., a wholly owned Delaware subsidiary
in February of 2000 for the purpose of establishing an Internet Development and
Acceleration ("D&A") Network throughout Europe. Our Internet subsidiary will
enable us to assist in the migration of North American based Internet companies
to the European Union, that we refer to as US 2 EU Ventures and also develop and
physically host a number of Internet companies, which we refer to as D&A
Companies, we can use the collective knowledge and resources of the Network
Companies and our management team to create synergies and promote growth among
Network Companies.
THE INTERNET MARKET
The Internet has created a significant and abrupt shift in the way in which
many companies do business. The Internet provides global connectivity and
unprecedented breadth of information accessible at rapid speed and minimal cost.
This low cost interconnectivity has changed how many companies communicate
internally, transact business with vendors and customers and compete with firms
around the world. These factors coupled with the relatively low costs associated
with establishing an Internet company have led to a boom in new Internet
companies.
Nevertheless, we believe that there will be significant opportunities for
new Internet companies due to the expected rise in Internet users worldwide
(both individual and commercial), particularly in Europe. Currently, we estimate
that the United States accounts for over 40% of worldwide Internet usage.
Estimates indicate that Europe will surpass the United States in number of
Internet subscribers by the end of 2001 and will account for approximately 50%
of worldwide Internet usage by 2005. Combined revenues for Internet access in
Europe are projected to grow from a recent estimate of $2.5 billion to almost
$12 billion in 2001. It is expected that revenues generated from European
e-commerce will grow from approximately $39 billion in 2000 to over
$430 billion in 2003. We estimate that while there are approximately 400+ U.S.
Internet related public companies, there are only 100+ such companies in Europe.
NGP NETWORK
The primary focus of our Internet subsidiary is to assist in the migration
of North American based Internet companies to the Euorpean Union ("US 2 EU"). We
will also develop, accelerate and physically host a number of Internet related
start up companies in Europe. We expect that specific areas of focus will
include B2B e-commerce and ventures oriented towards new emerging Internet
infrastructure and wireless Internet applications (i.e., WAP). We are committed
to having an active presence in each country where business opportunities have
been targeted. Presently, we have offices in New York, London, Geneva and
Stockholm. Facilities will soon open in Amsterdam and Hamburg, with continued
expansion expected into France, Belgium, Spain, and Italy. By providing initial
funding, administration, accounting and legal assistance, consulting services,
marketing, technology and contacts for additional funding, we hope to enable
Internet start-up companies to focus on their core business while keeping
operational expenses and other distractions normally associated with start-up
businesses to a minimum. We believe that Internet entrepreneurs and companies
requiring funding will actively seek out our Internet subsidiary.
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OUR US 2 EU PROCESS
We expect that the typical US 2 EU Venture will be structured as a Dutch
corporation (BV) to take advantage of the favorable corporate and tax laws in
The Netherlands as well as its membership in the EU. The North American venture
partner will retain a majority of the equity and control of the Board of
Directors will be shared equally. Generally, we will take responsibility for the
capital requirements and staffing of the US 2 EU Venture, while our North
American partner contributes its business model and expertise. Another key
feature of the US 2 EU Ventures is a buy back provision that will allow our
partner to acquire all of the equity in the venture on the occurrence of certain
liquidity events based on a formula derived purchase price that reflects the
fair value of the US 2 EU Venture. Naturally, there will also be the option of
engaging in an IPO or sale to a third party of the US 2 EU Venture as a means of
seeking liquidity.
Our New York office will serve as a liaison to our US 2 EU ventures and will
actively search for North American Internet businesses to enter our NGP Network.
OUR D&A PROCESS
Our D&A facilities will provide infrastructure for entrepreneurs to develop
an idea into a business plan, and in turn, convert that plan into a growing and
sustainable business. The infrastructure includes a senior local executive for
our internet subsidiary who acts as an intellectual partner to the entrepreneur
and organizes support in hardware, software, design, marketing assessment,
financials and administration.
EQUITY PARTICIPATION. We intend to take an equity stake of at least 15%
upon acceptance of a business concept for D&A. After an initial business plan is
created, we and the entrepreneur will agree on a continued collaboration to
verify and prototype the business plan. During this second phase of activity,
for our part, we will identify, contract with and pay for the services of
various advisors, in house or third party that are necessary to produce a
workable business plan that can be presented to third party investors. We expect
to receive additional equity of approximately 30% from the D&A Companies we
accept into this second phase. If the results of the verification by our
strategic partners, advisors and management regarding the D&A Company are
positive we will assist the D&A Company in the commercialization and third party
financing for the roll out of the business.
ACCEPTANCE DECISION CRITERIA; D&A RULE BOOK. In analyzing ideas for
acceptance as a D&A Company, we will look for strong business concepts with a
potential for market leadership within their niche and for outstanding
entrepreneurial capabilities. Decision criteria include:
- Management Team
- First to market
- Competition
- Other Investors
- Strategic Relationships
- Operations/Deals/Revenues to Date
- Uniqueness of Concept
- Market Size
- Proprietary Technology
- Intellectual Property
- Brand Recognition
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- Revenue/Business Model
- Funding Requirement
- Present valuation and future potential
- Website
We have developed a D&A Rule Book which incorporates these decision criteria
and acts as a guide that our D&A personnel use to: (a) guide them through the
decision process for accepting D&A Companies into their local D&A Network,
(b) engage in development activities, (c) network within the Local D&A Network
and the NGP D&A Network as a whole, and (d) develop additional cross border
synergies.
ADDED VALUE. At the completion of the first two Phases of activity, NGP is
able to assist in the development of regional and international partnerships and
take the lead in the next round of capital funding to expand the D&A Company's
business. All these arrangements are made with provision for a clear exit
strategy. An important component in the various stages of the D&A Process is our
close relationship with a global leader in interim executive management. This
group provides us with the ability to strengthen D&A Companies earlier in their
development with senior interim management that would not otherwise be
available, without our participation. In this way the D&A Company gains
credibility to recruit a permanent top executive.
The hubs of our D&A activities will be the various D&A facilities. The first
European D&A locations are in London, Stockholm and Geneva. We anticipate that
the second phase of the D&A offices will include Amsterdam and Hamburg, with
more expected to follow in France, Belgium, Spain and Italy.
The D&A facilities are designed to provide Internet entrepreneurs with the
opportunity to focus on developing their businesses without the pains and
distractions of a small business. In addition to providing funding, if necessary
we provide them with office space, hardware, software, connectivity, legal and
accounting assistance, consulting services and leveraged skills from other
entrepreneurs working with NGP.
A new D&A Company joining the NGP Network will develop a business plan with
the assistance of local D&A site's management, over an initial period of 30 to
90 days. The plan will then be reviewed and if acceptable, the D&A Company will
remain within the NGP Network. More mature ideas for the D&A Companies will then
be developed and an extensive market evaluation will occur over an additional 30
to 90 day period, including consumer acceptance testing, in depth marketing
studies, and preliminary business design and construction.
As part of the D&A Process, we will continually analyze each opportunity by:
- Performing an ongoing investment analysis to fund or not fund, and the
continual refinement of the business plan.
- Defining market, commercialization viability, and further business/funding
progression.
- Pushing forward the full functionality of the Network Company and either a
partial exit or full exit.
- Planning additional private capitalization or exit.
In summary, the NGP D&A Process follows the following timeline:
ACCEPTANCE (60-90 DAYS)
We analyze the markets, business concepts, entrepreneur's capabilities, and
negotiate the terms for the equity that NGP will receive as our "Initial D&A
fee."
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DEVELOPMENT (90 - 120 DAYS)
We work with the entrepreneurs to develop the business plan and verify its
efficacy.
ACCELERATION (18 MONTH AVERAGE)
We define the product platform, assist in the forming alliances, business
development, revenue creation, partnership and internal organization necessary
to succeed, evaluate additional funding needs and possibly make the next
investment.
STRUCTURING THE EXIT (ONGOING)
From the time of acceptance we are continually planning and preparing for
the eventuality of an orderly, and hopefully prosperous, liquidity event,
whether it be through an IPO, disposition or merger.
OUR INVESTMENT POLICY
Our focus is on B2B e-commerce and emerging wireless technologies for the
Internet. We anticipate that our capital resources will be allocated 45% to the
US 2 EU Ventures and 55% to D&A Companies. We expect that seed capital infusion
will average $500,000 and capital for D&A Companies entering into the
Development & Acceleration will average $1.5 million each. US 2 EU ventures
funding will average $1.5 million. We expect that many of the D&A Companies will
realize liquidity events within two (2) years. NGP aims at maintaining an active
position, i.e. more than 25% equity stake in each of the D&A and US 2 EU
companies.
We have an investment committee comprised of our management and
representatives of our partners Double Impact and Resco A.B. Currently, our CEO
Paul Hokfelt heads the investment committee with the assistance of Double Impact
and Resco A.B. acting as a Chief Technology Officer.
STRATEGIC ALLIANCES
We have entered into agreements with Double Impact Inc., eMarketer, Inc. and
Resco A.B. which we believe will greatly enhance our ability to provide services
to our Network Companies.
Double Impact is a highly regarded Internet venture catalyst, providing
Internet companies and entrepreneurs with a range of business development,
investment and advisory services. It targets entrepreneurial companies,
corporations and investors and in assists them in formulating Internet strategy,
forging partnerships, competing effectively, expanding globally and maximizing
upside potential. We believe the agreement with Double Impact will provide us
with a valuable Internet experience and expertise, development and acceleration
skills and analysis services which will assist us in developing protocols
regarding industries and companies to invest in.
eMarketer, Inc. is a worldwide authority on online business. As a new media
publisher, the company has numerous products and services. eMarketer's
award-winning web site has been visited by hundreds of thousand of e-marketers,
entrepreneurs, business analysts and industry experts from over 105 countries.
We believe the agreement with eMarketer will provide us with significant real
time research and market trend data.
Resco, A.B. will be providing technology expertise in wireless applications,
communications, platform development and web development. Resco provides us with
a strong technology capability that will help our internal systems as well as
those of the NGP Network Companies. We are also structuring a joint venture with
Resco to speed the development of our Stockholm and Hamburg D&A facilities.
Additionally, Resco is acting as our Chief Technology Officer.
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COMPETITION
The past few years have seen the emergence of several public companies in
the United States that invest broadly in promising pre-IPO Internet-related
start-up companies. These publicly traded incubator companies are a blend
between venture capital firms and corporate parents, assisting startups in a
myriad of financial, marketing and management areas. We expect that these
companies will be our chief competitors; however, there may be other entrants
into the Internet D&A market that will compete with us. Two of them, CMGI and
ICGE are discussed below. However, we believe that none of these U.S. companies
have a specific focus on European Internet investments and incubation
activities, such as we have.
More specifically, some of our potential competitors in Europe are currently
in dialogue with us to become either consultants or partners. Some of these
European companies are based in Sweden. One of the reasons we are approaching
these firms is due to the fact that a significant portion of the cross Atlantic
Internet traffic goes through Stockholm on the European side. Additionally,
Sweden has been on the cutting edge of Internet start-ups and technology.
The following are some of the public companies already involved in pre-IPO
Internet funding.
CMG INFORMATION SERVICES, INC. (CMGI)--ANDOVER, MASSACHUSETTS
Since 1995, CMGI invests, develops, acquires and operates various Internet
companies. The company provides incubating services for Internet-related
start-up businesses and provides capital resources. These companies, as they
grow within the CMGI network, are both public and private.
CMGI has several business units. First, CMGI has majority stakes in a range
of Internet-related businesses including, technology, ISP and marketing
companies at various stages of development, including AltaVista, iCAST,
MyWay.com, NaviNet, Adsmart, Activerse, Engage, et al. Further, CMGI is directly
involved in fulfillment services (the market segment which offers integrated
Web-based product fulfillment including turnkey outsourcing, telemarketing and
sales/lead inquiry management) through its investment in SalesLinkCorp, which in
turn has purchased major competitors.
CMGI also has an affiliated venture capital group formed in 1995 that makes
the early-stage venture transactions through three Venture funds. The synergy
amongst the start-up investments with the more mature companies allows a network
of relationships, experiences and management to feed off of each other and
improve all of the company's future business prospects. The company offers its
affiliates and network of holdings access to corporate resources, facilities
collaboration, development of strategic alliances and technical access to
corporate resources, technological innovation. Strategic investors include
Microsoft, Intel, Sumitomo and Compaq.
INVESTMENT CAPITAL GROUP (ICGE)--WAYNE, PENNSYLVANIA
ICGE is an Internet holding company actively engaged in business-to-business
e-commerce through a network of Partner Companies. It provides operational
assistance, capital support, industry expertise, and a strategic network of
business relationships intended to maximize the long-term market potential of
more than 45 business-to-business e-commerce partner companies. The company has
or had stakes in VerticalNet Inc., MatchLogic, WiseWire, and Breakaway
Solutions Inc. ICGE focuses on investments in online companies that provide
Internet-commerce services for businesses and suppliers. Its investors include
Safeguard Scientifics Inc., General Electric Co. and Comcast Corp.
Leveraging off of an initial $45 million start up in 1996, the company has
had a series of equity and debt moneys raised to fund their investments in
Internet companies.
Other parties in the marketplace include:
SafeGuard Scientific--Wayne, Pennsylvania
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Safeguard is an Internet-centric holding company that identifies, acquires,
operates and manages business-to-business companies and has interests in several
private equity funds. Safeguard currently focuses on companies engaged in
e-commerce, e-communication, and e-business services. Safeguard
Scientifics, Inc. develops and operates entrepreneurial, rapidly growing,
information technology companies with an emphasis on E-Commerce, E-Business
Software and Services, and E-Communications.
Other significant companies in the development and acceleration/incubation
market are:
SOFTBANK, Inc.--Tokyo, Japan;
Rare Medium--New York;
eCompanies--Santa Monica, California;
i-Hatch Ventures--New York;
KPE--London, New York and Los Angeles'
Protege--UK and California;
Ci4net--Jersey (UK);
Dawnay Day Lander--London;
Europ@web--France;
Antfactory--London;
GorillaPark--Amsterdam;
Cell Ventures -Sweden;
Icon Medialab International--Sweden; and
Framfab--Sweden.
EMPLOYEES
Our Internet subsidiary currently has seven (7) employees. We anticipate
that the number of employees will grow to twenty five (25) by the end of 2000.
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The primary focus is on the migration of established Internet businesses to
the European Union ("US 2 EU"). We will also intend to develop and accelerate
new European Internet businesses ("D&A").
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 prospectus.
The following information contains forward-looking statements which 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 the development and acceleration of 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 have completed the transfer of all assets and liabilities relative to
the plastic business to a wholly owned subsidiary.
2. We expect to identify a master licensee and enter into an exclusive
master license agreement for use of our plastic technology. We anticipate
that our plastic subsidiary will receive royalty payments on a per
kilogram basis.
3. We expect to maintain patent and trademark filings.
4. We expect to provide any necessary administrative or technical
assistance to master licensee with regard to our plastic technology.
The foregoing activities reflect the fact that we will no longer be directly
responsible for continuing research and development costs and capital
expenditures with regard to the commercialization of selected applications for
the plastic technology. We expect that the master licensee will be responsible
for all such costs.
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 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 US 2 EU and D&A. It is expected
that these candidates will be involved primarily in B2B e-commerce,
wireless Internet, or Internet infrastructure.
5. We anticipate entering into approximately four (4) US 2 EU and fifteen
(15) D&A ventures.
23
<PAGE>
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 Registration Statement, we have yet to generate any
revenue from our business operations. Consequently, we have been dependent upon
shareholder advances from Bachkine & Meyer Industries, S.A. to fund our cash
requirements and private placements of our common stock.
As of March 31, 2000, we had assets of $504,676 and liabilities of
$3,522,339. The biggest components of the liabilities are the loan due to
Bachkine & Meyer Industries, S.A. of $2,486,750 and the accrued consulting fees
of $675,000, both of which may be converted into equity at the obligee's option.
On April 10, 2000 we issued 66,675 shares of Common Stock to each of Gauk
Holding, Inc. and Mercer International, S.A. for $999,950. On May 24, 2000, we
issued 146,603 to each of Gauk and Mercer for approximately $2,200,000. On
June 26, 2000, we issued 280,000 shares of Common Stock to Jacques Mot, Paul
Hokfelt, Gauk and Mercer for approximately $2,100,000.
PLASTIC BUSINESS
For the next twelve months, we anticipate that we will require $150,000 in
additional capital. 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. We do not plan to purchase any
significant equipment in the next twelve months.
INTERNET BUSINESS
Our Internet business is in its initial stage of development. This business
has not generated any revenues to date and we do not expect any significant
revenue to be generated in the next twelve months. 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.
We expect that the Internet subsidiary will commit an aggregate of
approximately $50,000,000 to investments in 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 D&A sites will be
$9,000,000.
YEAR 2000 ISSUE
We believe that our accounting and operational systems are year 2000
compliant. We received verification from GE/Fanuc that the process control
software for the NGP Technology was year 2000 compliant. We have not yet
experienced any material year 2000 operating problems and do not expect to
encounter any such problems.
24
<PAGE>
FACILITIES
We currently have a short term lease agreement for use of office space and
conference facilities with Regus Business Center Corp. at 245 Park Avenue, 39th
Floor; New York, New York 10167. The agreement is on a month to month basis at a
rate of $225, plus expenses and is sufficient to conduct the day to day
operations of our US based business. We have a lease for our Swiss D&A facility
at Rue des Pierres du Niton 17, CH-1207 Geneva, Switzerland at a monthly rental
of approximately $3,000. Through our indirect subsidiary, New Generation
Partners (UK) Limited we have established our D&A facility in London at 10
Greycoat Place, 10 Greycoat Place, Suite 114; London, SW1P 1SB, England SW1 at a
monthly rental of approximately $3,400. Finally, we have recently secured office
space with our partner Resco A.B. for our initial Scandanavian D&A facility at
S:t Eriksgatan 60a, E-112 34 Stockholm. Presently we pay no rent for this space.
LEGAL PROCEEDINGS
We are not a party to any pending legal proceedings.
25
<PAGE>
MANAGEMENT
The following table sets forth the names, ages and positions of our
executive officers and directors:
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICES WITH THE COMPANY
---- -------- -------------------------------------
<S> <C> <C>
Jacques Mot.......................... 42 Chairman of the Board of Directors
Paul Hokfelt......................... 46 President, Chief Executive Officer
Anna Karin Portunato................. 34 Interim Chief Financial Officer
Marc Engel........................... 40 Executive Vice President
Thomas Marshall...................... 42 Executive Vice President, Secretary and General Counsel
and Director
Paul Mendelsohn...................... 32 Vice President of D&A
Marcel Rokegem....................... 50 Director
Sylvie Challande..................... 32 Director
Marc Jaffe........................... 48 Director
Terry Chabrowe....................... 49 Director
</TABLE>
JACQUES MOT has served as the Chairman of the Board since April of 1999 and
he served as President and Chief Executive Officer from April 1999 to
January 24, 2000. Mr. Mot is a founder of Bachkine & Meyer Industries, S.A.
("BMI"). Prior to the start up of BMI, Mr. Mot was an independent consultant to
Unilabs Group (listed on the Nasdaq and Swiss Stock Exchanges). Mr. Mot's
activities have primarily been securities related matters and investor
relations.
Mr. Mot was also a Director of Argenta & Magnum Management
Company Ltd.-Gilbratar, a company that created and marketed offshore entities.
From 1987 to 1992, Mr. Mot was the General Manager and Director of Iesa
Investissements S.A., a portfolio management and investment company, where he
handled portfolio and investment management on a confidential basis. Mr. Mot
attended the University of Lausanne, Switzerland studying economics from
1976-1979.
PAUL HOKFELT has served as our President and Chief Executive Officer since
January 25, 2000. Paul is a Swedish national who has been active internationally
and gained senior management experience in several European countries and the
United States with service providers in the medical field. Prior to joining us,
Paul was most recently a director and CEO of UCT International, a contract
research organization. Additionally, he was instrumental in his role as managing
director and COO in the rapid growth of Unilabs, S.A., a company he joined from
its start-up and led through its trading on the Swiss Stock Exchange in
April 1997. Unilabs, S.A. is a European leader in the field of medical
diagnostics.
Prior to these appointments, Paul was a senior officer with several
Scandinavian financial institutions for over ten years, amongst them SEB, which
specializes in the structuring of complex financing solutions. He holds a degree
in Business Administration from the Stockholm School of Economics (1976).
ANNA KARIN PORTUNATO has served as our Interim Chief Financial Officer since
May of 2000. Since 1994 Ms. Portunato has acted as an independent financial
consultant and accountant working with a number of clients, including Arthur
Andersen. She is currently CFO of Argo-Soditic, a private equity fund based in
Switzerland. Ms. Portunato was educated in Belgium and received an advanced
economic degree from Lausanne HEC in 1998. She holds dual US and Dutch
citizenship.
MARC ENGEL has served as our Executive Vice President in charge of Business
Development since April of 1999. Prior to these activities Mr. Engel was the
founder and principal of 21ST Century Capital
26
<PAGE>
Advisors, Inc. a financial advisory firm specializing in environmental and
technology company financings and business development.
Mr. Engel was a senior advisor and vice president at Hambro Resource
Development, the Hambros Bank subsidiary in New York, specializing in corporate
and project finance. He has also held various national marketing and sales
management positions within the construction and direct marketing industries.
Marc received his B.A. from Boston College in 1980.
THOMAS MARSHALL has served as General Counsel, Executive Vice President and
Secretary since August of 1999. He has also been a member of our Board of
Directors since April of 1999. Prior to joining us, Mr. Marshall was counsel to
the New York office of the law firm of Schnader Harrison Segal & Lewis LLP (from
1996 to 1999) where he concentrated in Taxation and Corporate and Securities
law. From 1993 to 1996, he was associated with the law firm of Keck, Mahin &
Cate where he performed similar duties.
Mr. Marshall holds a BS in Business Administration from the University of
Rhode Island, a JD from St. John's University School of Law and he was awarded
an LLM in Taxation from the New York University School of Law.
MARCEL ROKEGEM has served as a Director since April, 1999. Mr. Rokegem is
currently a consultant to Van Moer Santerre Group, a brokerage firm with offices
in Brussels, Luxemburg and Monaco. From 1987 to 1992 he was a co-founding
Partner and Director of Euro Suisse Limited London, a member of the London Stock
Exchange. Mr. Rokegem was a Partner of Jessup and Lamont International Limited
of London, an affiliate of Jessup and Lamont Securities Co., Inc., a member of
the New York Stock Exchange from 1982 to 1987. Prior to that Mr. Rokegem served
as the Partner in Charge of International Equity trading for BIARD, Hombergen,
Pringiers & Co. Mr. Rokegem began his career in 1970 with Kredietbank, NV of
Brussels where he was responsible for domestic and international equity trading,
as well as Eurobond sales until 1980.
Mr. Rokegem has a degree in Applied Economic Sciences for Antwerpen Jesuit
University, as well as a diploma from the International Securities Marketing
Association. Mr. Rokegem is fluent in Dutch, French, English and German.
PAUL MENDELSOHN has served as Vice President of D&A since June 29, 2000.
Prior to joining NGP, Paul was head of new business development for Norton
Healthcare, one of the largest generic drug companies in the U.K. and an Ivax
company.
MARC JAFFE has served as a Director since July 2000. Mr. Jaffe is currently
as the Managing Director-NY for Double Impact, Inc. Mr. Jaffe has also served as
the Chairman of the Board of Directors of Vizacom, a NASDAQ company (VIZY),
since January of 1998 and has been on the Board of Vizacom since 1995. In 1991,
Mr. Jaffe founded and continues to serve as President of Electronic Licensing
Organization, Inc. ("ELO"), a licensing agency dedicated to bringing together
the worlds of information and entertainment with new media and interactive
technologies.
TERRY CHABROWE has served as a Director since July 2000. Mr. Chabrowe has
served as the Chief Financial Officer/Chief Technical Officer of
eMarketer, Inc. since January 1, 1999. In 1991, Mr. Chabrowe founded Arete
CA, Inc. Arete focuses on how technology can improve corporate communications,
with a special emphasis on marketing activities.
SYLVIE CHALLANDE has served as a Director since July 2000. Ms. Challande has
been an attorney-at-law in the law firm of Budin & Partners (formerly Lalive
Budin & Partners) in Geneva, Switzerland. Ms. Challande received her law degree
from the University of Geneva in 1991.
27
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding compensation paid by us
to our former Chief Executive Officer. None of our other officers received
salary and bonus payments in excess of $100,000 during the period beginning
April 15, 1999 and ended December 31, 1999.
SUMMARY OF COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------ ------------------------- --------------------
SECURITIES
NAME AND OTHER RESTRICTED UNDERLYING LTIP
PRINCIPAL SALARY BONUS ANNUAL STOCK OPTIONS/SARS PAYOUT ALL OTHER
POSITION YEAR ($) ($) COMP. AWARD (#) ($) COMP.
--------- -------- -------- -------- -------- ---------- ------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jacques Mot, CEO................... 1999 0(1) 0 0 0 0 0 0
</TABLE>
EMPLOYMENT AGREEMENTS
We have an employment agreement with Paul Hokfelt, our President and Chief
Executive Officer pursuant to which we pay him commencing January 25, 2000 an
annual salary of 240,000 CHF (approximately $145,000). We also pay for all
expenses relating to the lease and maintenance of Mr. Hokfelt's car including
insurance and gas. Mr. Hokfelt has been granted option to purchase 500,000
shares of Common Stock. The agreement is for an initial term of three years and
renews automatically for additional one year terms unless either party provides
written notice of termination.
In the event that we terminate Mr. Hokfelt's employment without cause, he is
entitled to receive his base salary and fringe benefits for the remainder of the
then current term and his pro-rated bonus. The agreement also contains a
non-competition covenant.
COMPENSATION OF DIRECTORS
Currently members of our Board of Directors do not receive any compensation
for service on our Board. We expect that a compensation plan for Directors may
be adopted in the future.
INDEMNIFICATION AND LIMITATION OF LIABILITY
Our certificate of incorporation provides that our directors will not be
personally liable to our company or our stockholders for monetary damages for
breach of their fiduciary duties as directors to the extent permitted by
Delaware law.
Our bylaws provide that we must indemnify our directors, officers and
employees so long as they act in good faith and are not adjudged liable to the
Corporation. Our bylaws also provide for the prepayment of expenses to persons
entitled to indemnification (subject to certain conditions), and permit us to
purchase and maintain insurance on behalf of any director, officer, employee, or
agent against any liability asserted against them in any such capacity, whether
or not our bylaws would permit or require such indemnification.
28
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth, certain information, as of July 3, 2000,
regarding beneficial ownership of our common stock by
- each stockholder known by us to be the beneficial owner of more than five
percent (5%) of the outstanding shares of common stock;
- each of our directors;
- each of the named executive officers; and
- all of our current executive officers and directors as a group.
<TABLE>
<CAPTION>
NAME OF
BENEFICIAL OWNER NUMBER OF SHARES
PERCENT OF CLASS (1) BENEFICIALLY OWNED(1)
-------------------- ---------------------
<S> <C>
Paul Hokfelt................................................ 600,000*
Jacques Mot................................................. 100,000
Marcel Rokegem.............................................. 0
Thomas R. Marshall.......................................... 100,000**
Marc R. Engel............................................... 400,000**
Anna Karin Portunato........................................ 0
Paul Mendelsohn............................................. 133,333**
Terry Chabrowe.............................................. 0
Marc Jaffe.................................................. 0
Sylvie Challande............................................ 0
All executive officers and directors as a group............. 1,333,000
</TABLE>
------------------------
(1) Shares of common stock subject to warrants currently exercisable or
exercisable within 60 days of the date hereof are deemed outstanding for
computing the number of shares beneficially owned and the percentage of
outstanding shares of the class held by a person holding such warrants, but
are not deemed outstanding for computing the percentage of any other person.
Except as indicated by footnote, and subject to community property laws
where applicable, the persons named in the table have sole voting and
investment power with respect to all shares of common stock shown as
beneficially owned by them.
* Includes currently exercisable options to purchase 500,000 shares of common
stock.
** Comprised exclusively of currently exercisable options.
29
<PAGE>
SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION
The following table sets forth
- the names of each of the selling stockholders,
- the number of shares of common stock and warrants beneficially owned by
each selling stockholder prior to the offering,
- the number of shares of common stock that may be offered by each of the
selling stockholders pursuant to this prospectus, and
- the number of shares of common stock beneficially owned by each selling
stockholder after completion of the offering, assuming all of the
shares covered by this prospectus are sold.
<TABLE>
<CAPTION>
NAME AND ADDRESS # OF SHARES WARRANTS/$ 6.00 WARRANTS AT $12.00 WARRANTS AT $8.00
---------------- ----------- --------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Guido Cloetens........................ 3,197 28,584
ET International Limited.............. 20,000 5,000
VP Bank Schweiz (AG).................. 6,600 6,600
Credit Europeen S.A................... 196,700 165,450
Mees Pierson (Schweiz) AG............. 5,000 5,000
VP Bank (Vaduz) AG.................... 8,200 6,850
VP Bank (Luxembourg) SA............... 98,300 98,300
Charles Carpentier.................... 1,000 1,000
Nadine van Acker...................... 1,000 1,000
Jan Rasschaert........................ 128,107 128,107
Van Moer Santerre & Cie............... 244,995 244,995 25,000
Yvan Verstraeten...................... 25,000 25,000
Luc de Troyer......................... 2,500 2,500
Henri de Rick......................... 2,500 2,500
Peter Blanckaert...................... 2,000 2,000
Marcel van Bun........................ 1,800 1,800
Filip de Gheest....................... 1,200 1,200
Marc Adam............................. 7,200 7,200
Roger Coppens......................... 825 825
Gabrielle Coppens..................... 144 144
Amandine van der Vurst................ 481 481
Nicole van Belle...................... 1,350 1,350
Marc de Rick.......................... 3,700 3,050
De Rick BVBA.......................... 1,500 1,500
Willy Clement......................... 19,450 19,450
Guy de Vuyst.......................... 9,080 9,080
Henri van Emelen...................... 5,000 5,000
Andre de Backer....................... 2,500 2,500
Didier Bodson......................... 6,750 6,750
Paul Driessens........................ 3,000 3,000
Werner Kempenaerts.................... 8,030 8,030
Paul Kempenaerts...................... 70,333 70,333
G. Kiekens-Menschaert................. 5,850 5,850
V. De Paepe-Menschaert................ 2,800 2,800
Johnny Temmerman...................... 5,250 5,250
Linda Toeback......................... 2,655 2,655
Victor van Bos........................ 15,250 15,250
Gommaire Verbruggen................... 104,166 104,166 30,000
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS # OF SHARES WARRANTS/$ 6.00 WARRANTS AT $12.00 WARRANTS AT $8.00
---------------- ----------- --------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Jean-Paul Vranckx..................... 10,000 10,000
Dirk de Knibber....................... 5,064 5,064
Simonne Batselier..................... 1,135 1,135
Ward Rogiers.......................... 16,000 16,000
Romaine Bruenin....................... 3,300 3,300
Eddy van de Casteele.................. 1,500 1,500
Rudy Vunck............................ 34,372 34,372 60,000
Jean-Pierre de Bavay.................. 1,000 1,000
Jos Deno-Stuyck....................... 15,050 15,050
Jacques Diependaele................... 1,934 1,934
Bertels-Deno.......................... 2,200 2,200
Carine de Cock........................ 500 500
Willy Claes........................... 5,500 5,500
Abrdor Group Ltd...................... 70,802 70,802
Freddy van Poucke..................... 500 500
Jayne Rokegem......................... 14,200 14,200
Luc Hespeels.......................... 20,000 20,000
Bank IPPA & Assoc..................... 86,000 86,000
Johan de Smet......................... 1,000 1,000
Deborah Lippens....................... 4,200 4,200
Jacques Redant........................ 12,500 12,500
Briar................................. 8,500 4,250
Pierre Cayet.......................... 18,500 9,250
Daniel van Mossevelde................. 4,000 2,000
Filip van den Bergh................... 1,600 800
Geert van Doorslaer................... 1,000 500
Alfons de Nil......................... 1,000 500
Karel Symons.......................... 1,000 500
Armand van Gijsghem................... 2,000 1,000
Nicole de Buyser...................... 1,000 1,000
Clement de Buyser..................... 1,000 500
Francois van Ransbeeck................ 1,000 500
Rudy Wittewrongel..................... 4,000 2,000
Hilda Verhoeven....................... 1,000 500
Jaak Vancraenenbroek.................. 10,000 5,000
Dirk de Sutter........................ 1,000 500
Antoinette Rottiers................... 1,000 500
Paul van den Eeckhaut................. 1,000 500
Marie-Anne van den Berghe............. 1,000 500
Mark Schepens......................... 5,000 2,500
Peter van den Velde................... 10,670 5,000
Arno Schild........................... 50,000 --
VP Bank (Switzerland) Ltd............. 7,000 3,500
Ghislain Lecocq....................... 800 400
Rudy van Eepoel....................... 11,500 11,500
Rene Rokegem.......................... 18,347 18,347
John Devroe........................... 11,500 11,500
Hirt Investment....................... 50,000 --
Caroline Lammertyn.................... 5,288 5,288
Philip Rokegem........................ 28,500 28,500
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS # OF SHARES WARRANTS/$ 6.00 WARRANTS AT $12.00 WARRANTS AT $8.00
---------------- ----------- --------------- ------------------ -----------------
<S> <C> <C> <C> <C>
Jevson Management SA.................. 19,530 19,530
Libatel Investments S.A............... 100,000 --
Milhopper Ltd......................... 100,000 --
Resco AB.............................. 100,000 --
Double Impact......................... 4,000 --
Bachkine & Meyer Industries, S.A...... 550,000 --
Euromedia Communications.............. 10,000 --
WSDM 2000, LLC........................ 10,547 --
Laton Securities...................... 30,000 --
Kjell Jacobsson....................... 57,150 --
Bank Sarasin & Co..................... 420,000 127,500
Banque Syz & Cie...................... 123,080 --
Barbara Greenland..................... 579,932 144,984 47,500
Volger Investments Ltd................ 334,068 83,516 47,500
Japaco Inc............................ 200,000 228,912
Sheng Management SA................... 170,000 300,000
Halverton Management Ltd.............. 170,000 300,000
Cahir House Holding S.A............... 170,000 300,000
Jerri Austin.......................... 9
Ingrid Van Riesen..................... 17
Pascale Boudolf....................... 17
Teresa R. Caldwell.................... 9
Cede & Co............................. 22,720
Ludo Cloetens......................... 54
Herwig DeJong......................... 2,500
Paul Decraemer 50
Diversified Lenders Inc............... 834
Frank Falgiani........................ 117
Elizabeth Falgiani.................... 59
Frank Falgiani, Sr.................... 34
Kristine Gornichec.................... 500
Terri Jackson......................... 100
Mary MaGourik......................... 19
Daniel V. McLeod...................... 34
Dawn E. Napolitan..................... 9
Stephen H. Rogers..................... 17
Lisa Lotte Ruzicka.................... 259
Kristin Sumsion....................... 17
Symmetry, Inc......................... 634
Max Tanner............................ 2,501
Patrik Vandensande.................... 17
Etienne Vierge........................ 751
Cam C. Walker......................... 50
Wynn Walker........................... 34
C.F. Walker........................... 84
Bernard Waterbley..................... 667
Donald W. Williams.................... 9
--------- --------- ------- ------
4,736,682 2,960,706 115,000 95,000
========= ========= ======= ======
</TABLE>
32
<PAGE>
The selling stockholders are entitled to receive all of the proceeds from
the future sale of their shares.
The selling stockholders, from time to time, depending on market conditions
and other factors, may offer or sell their shares in the over-the-counter
market, or otherwise, at prices and terms then prevailing or at prices related
to the then-current market price, or in negotiated transactions. The shares may
be sold by various methods, including:
- block trades in which a broker or dealer so engaged will attempt to sell
the shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
- purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
- purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchases; and
- face to face transactions between sellers and purchasers without a broker
or dealer.
In effecting sales, brokers or dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate. These brokers or
dealers may receive commissions or discounts from the selling stockholders in
amounts to be negotiated. These brokers, dealers and any other participating
brokers or dealers may be deemed to be "underwriters" within the meaning of the
Securities Act, in connection with these sales.
We will bear all costs and expenses of the registration of the shares under
the Securities Act and certain state securities laws, other than discounts or
commissions, if any, payable with respect to sales of the shares.
The selling stockholders are not restricted as to the number of shares that
may be sold at any one time, and it is possible that a significant number of
shares could be sold at the same time. Sales of the shares by the selling
stockholders may have an adverse effect on the market price of the common stock.
33
<PAGE>
CERTAIN TRANSACTIONS
Bachkine & Meyer Industries, S.A. ("BMI"), a stockholder, has been advancing
funds to us pursuant to a line of credit agreement dated April 15, 1999. As of
March 31, 2000 (unaudited), $2,486,750 had been advanced to us under the terms
of this agreement. Under the terms of the agreement, principal payments are due
on demand after July 15, 2000. Interest is due quarterly in arrears and is based
upon the prime rate. We have agreed with BMI that BMI will have the sole option
to convert part or all of principal and interest due under the line of credit
into Common Stock at a rate determined by an independent committee of our Board
of Directors.
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 has been accrued as general and administrative
expense, but has not yet been paid. On April 15, 2000, we entered into a
Termination Agreement with BAMI in which it was agreed that because of the
change in our business focus that BAMI would allow its rights to receive the
monthly management consulting fee under the Consulting Agreement to terminate as
of December 31, 1999. At BAMI's sole option, all or part of the balance of
accrued consulting fees may be converted into Common Stock at a rate determined
by an independent committee of our Board of Directors.
34
<PAGE>
DESCRIPTION OF SECURITIES
Our authorized capital stock consists of 50,000,000 shares of common stock,
par value $.001 per share, and 1,000,000 shares of preferred stock, par value
$.001 per share. As of June 30, 2000, there were 12,522,061 shares of common
stock issued and outstanding; no shares of preferred stock were issued. In
addition, as of June 30, 2000, warrants to purchase 3,170,706 shares of common
stock were also outstanding.
COMMON STOCK
All holders of common stock have one vote per share on all matters submitted
to a vote of stockholders. Stockholders do not have rights to accumulate their
votes in the election of directors under our certificate of incorporation or
applicable provisions of the General Corporation Law of the State of Delaware.
The holders of common stock have the right to receive dividends, when, and
if declared, by our Board of Directors out of funds legally available therefor.
We have never paid any cash dividends on our common stock. We presently intend
to retain earnings, if any, to finance our operations, and therefore do not
anticipate paying any cash dividends in the future. If we liquidate, holders of
our common stock would share ratably in any assets available for distribution to
stockholders after payment of all our obligations.
Our common stock is neither redeemable nor has any preemptive, subscription,
sinking fund or conversion rights. All outstanding shares of common stock are
fully paid and non-assessable.
PREFERRED STOCK
Our Board of Directors may authorize the issuance up to 1,000,000 shares of
preferred stock without any further stockholder approval. The Board is expressly
authorized to provide for the issuance of shares of preferred stock in one or
more classes or series, and to fix for each such class or series the powers,
rights, privileges, preferences, qualifications, limitations or restrictions,
including dividend rights, dividend rates, conversion rights, voting rights,
redemption rights, redemption prices, liquidation preferences, and the
designation of and the number of shares constituting any class or series.
WARRANTS
Of the 7,907,388 shares of common stock covered by this prospectus,
3,170,706 shares are issuable pursuant to the exercise of warrants. The warrants
expire at various times during the next four (4) years, and are exercisable at
prices ranging from $6.00 to $12.00 per share. All of the warrants contain
anti-dilution provisions.
TRANSFER AGENT AND REGISTRAR
Colonial Stock Transfer Company of Salt Lake City, Utah, serves as transfer
agent and registrar for the common stock.
ANTITAKEOVER EFFECTS OF PROVISIONS OF DELAWARE LAW AND OUR CHARTER
Provisions of Delaware law and our certificate of incorporation could
discourage takeover attempts. These include:
- DELAWARE ANTITAKEOVER LAW. We are subject to Section 203 of the Delaware
General Corporation Law. In general, Section 203 prohibits a publicly-held
Delaware corporation from engaging in a business combination with an
interested stockholders for a period of three years from the date the
stockholder became an interested stockholder, unless the business
combination or the transaction in which the person became an interested
stockholder is approved in the manner provided in Section 203. Generally,
a business combination includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested
stockholder. Generally, an interested
35
<PAGE>
stockholder is a person who, together with affiliates and associates, owns
or within three years prior to the determination of interested stockholder
status did own 15% or more of the corporation's outstanding voting stock.
- OUR RIGHT TO ISSUE PREFERRED STOCK. Our certificate of incorporation
authorizes the issuance of preferred stock with such designations, rights,
and preferences as may be determined from time to time by our Board of
Directors, without any further vote or action by our stockholders.
Therefore, our Board of Directors is empowered, without stockholder
approval, to issue preferred stock with voting rights or preferences that
could prevent or discourage unsolicited takeover attempts.
SHARES ELIGIBLE FOR FUTURE SALE
As of the date of this prospectus, we have 12,522,061 shares of common stock
outstanding, 226,761 of which are freely tradable, and 12,325,300 of which are
restricted shares. In addition, there are warrants outstanding to purchase
3,170,706 of our shares and there are outstanding options to purchase 1,500,000
shares of common stock of which 1,133,000 are currently exercisable.
The resale of 4,736,682 of the restricted shares and the 3,170,706 shares
underlying the warrants are covered by the registration statement of which this
prospectus is a part. These shares may be resold in the open market at any time,
subject to
- the continued effectiveness of the registration statement; and
- our ability to suspend sales under the registration statement in certain
instances.
No prediction can be made as to what effect, if any, the sale of these
shares will have on the prevailing market price. The possibility that
substantial amounts of common stock may be sold in the public market may
adversely affect prevailing market prices for the common stock, and could impair
our ability to raise capital through future sales of equity securities.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us by
Westerman Shapiro Draghi & Miller, LLP, Garden City, New York ("WSDM"). As part
of our agreement with WSDM, we have agreed to pay a portion of their legal fee
to an affiliate of WSDM in our common stock based on the fair market value of
our common stock during the billing period. The shares of common stock issued to
WSDM are being registered for sale pursuant to the terms of this Registration
Statement. As of the effective date of this registration statement, the WSDM
affiliate owned 10,547 shares of our common stock.
EXPERTS
The financial statements of New Generation Holdings, Inc. as of
December 31, 1999 and for the period from April 15, 1999 (inception) through
December 31, 1999 have been included herein and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
The report of KPMG LLP covering the December 31, 1999 financial statements
contains an explanatory paragraph that states that the Company's loss from
operations and net capital deficiency raise substantial doubt about the entity's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of that uncertainty.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission, 450 Fifth Street,
N.W., Washington, D.C., a registration statement on Form SB-2 under the
Securities Act of 1933, with respect to the shares to
36
<PAGE>
be sold in this offering. This prospectus, which is part of the registration
statement, does not contain all of the information contained in the registration
statement. For further information with respect to us and the shares of our
common stock offered hereby, we refer you to the registration statement,
including the exhibits thereto, which may be inspected, without charge, at the
office of the Securities and Exchange Commission.
Copies of the registration statement may be obtained from the Commission in
Washington, D.C., upon payment of the requisite fees, or from the Commission's
Website at http://www.sec.gov. Statements contained in this prospectus as to the
contents of any contract or other document referred to are not necessarily
complete, and in each instance we refer you to the copy of such contract or
other document filed as an exhibit to the registration statement, each such
statement being qualified in all respects by the more complete description of
the matters involved.
37
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Independent Auditors' Report................................ F-2
Balance Sheet............................................... F-3
Statement of Operations..................................... F-4
Statement of Stockholders' Equity........................... F-5
Statement of Cash Flows..................................... F-6
Notes to Financial Statements............................... F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
New Generation Plastic, Inc.:
We have audited the accompanying balance sheet of New Generation Plastic,
Inc. (a development stage company) (the "Company") as of December 31, 1999, and
the related statements of operations, stockholders' equity (deficit), and cash
flows for the period from April 15, 1999 (inception) through December 31, 1999.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of New Generation Plastic, Inc.
(a development stage company) as of December 31, 1999, and the results of its
operations and its cash flows for the period from April 15, 1999 (inception)
through December 31, 1999, in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 7 to the
financial statements, the Company has suffered recurring losses from operations
and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in note 7. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
KPMG LLP
McLean, VA
March 3, 2000
F-2
<PAGE>
NEW GENERATION PLASTIC, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31,
1999
------------
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 3,708
Prepaid expenses.......................................... 159,554
----------
Total current assets.................................. 163,262
Intangible assets, net...................................... 443,929
----------
Total assets.......................................... $ 607,191
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 487,798
Accrued consulting expense................................ 675,000
Due to shareholder........................................ 2,175,186
----------
Total liabilities..................................... 3,337,984
----------
Stockholders' equity (deficit):
Common stock, $0.001 par value; 50,000,000 shares
authorized, 11,842,761 shares issued and outstanding.... 11,843
Preferred stock, $0.001 par value; 1,000,000 shares
authorized, none issued or outstanding.................. --
Additional paid-in capital................................ 804,690
Deficit accumulated during the development stage.......... (3,547,326)
----------
Total stockholders' equity (deficit).................. (2,730,793)
----------
Commitments and contingencies
Total liabilities and stockholders' equity
(deficit)........................................... $ 607,191
==========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
NEW GENERATION PLASTIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 15, 1999
(INCEPTION)
THROUGH
DECEMBER 31,
1999
--------------
<S> <C>
Operating expenses:
General and administrative................................ $ 2,046,982
Product development....................................... 1,426,236
-----------
Loss from operations.................................. (3,473,218)
Interest expense............................................ (74,108)
-----------
Loss before income taxes.............................. (3,547,326)
Income taxes................................................ --
-----------
Net loss.............................................. $(3,547,326)
===========
Basic and diluted net loss per common share................. $ (0.30)
Shares used to compute basic and diluted net loss per common
share..................................................... 11,842,761
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
NEW GENERATION PLASTIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
COMMON STOCK
--------------------- ADDITIONAL
NUMBER OF PAID-IN ACCUMULATED
SHARES AMOUNT CAPITAL DEFICIT TOTAL
---------- -------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Balance at April 15, 1999
(inception).......................... -- $ -- -- -- --
Issuance of common stock to Bachkine &
Meyer Industries, S.A................ 11,580,000 11,580 804,953 -- 816,533
Issuance of common stock in conjunction
with merger with SW Ventures, Inc.... 262,761 263 (263) -- --
Net loss............................... -- -- -- (3,547,326) (3,547,326)
---------- ------- ------- ---------- ----------
Balance at December 31, 1999........... 11,842,761 $11,843 804,690 (3,547,326) (2,730,793)
========== ======= ======= ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
NEW GENERATION PLASTIC, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 15, 1999
(INCEPTION)
THROUGH
DECEMBER 31,
1999
--------------
<S> <C>
Cash flows from operating activities:
Net loss.................................................. $(3,547,326)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization............................................ 73,270
Changes in operating assets and liabilities:
Increase in prepaid expenses.......................... (159,554)
Increase in accounts payable.......................... 487,798
Increase in accrued consulting expense................ 675,000
-----------
Net cash used in operating activities................. (2,470,812)
-----------
Cash flows provided by financing activities:
Cash received from shareholder loans...................... 2,175,186
Issuance of common stock.................................. 816,533
-----------
Net cash provided by financing activities............. 2,991,719
-----------
Cash flows used in investing activities:
Purchase of patents....................................... (517,199)
-----------
Net cash used in investing activities................. (517,199)
-----------
Net increase in cash and cash equivalents................... 3,708
Cash and cash equivalents at the beginning of period........ --
-----------
Cash and cash equivalents at the end of period.............. $ 3,708
===========
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
NEW GENERATION PLASTIC, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
(1) ORGANIZATION
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.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(A) DEVELOPMENT STAGE ENTERPRISE
During the period from April 15, 1999 (inception) through December 31,
1999, New Generation Plastic, Inc. 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.
(B) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of
three months or less from the date of purchase to be cash equivalents.
(C) INTANGIBLE ASSETS
Intangible assets consist of the costs associated with the purchase of
the patents. Such patents are being amortized over their estimated useful
life of five years. As of December 31, 1999, the related accumulated
amortization was $73,270.
(D) PRODUCT DEVELOPMENT COSTS
Product development costs include expenses incurred by the Company for
research, design and development of the Company's proprietary technology.
Product development costs are expensed as incurred.
(E) INCOME TAXES
The Company uses the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for future tax consequences attributable to
differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
F-7
<PAGE>
NEW GENERATION PLASTIC, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(F) 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.
(G) 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 amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results may differ from those
estimates.
(3) RELATED PARTY TRANSACTION
Bachkine & Meyer Industries, S.A. ("BMI"), the holder of a majority of the
outstanding common stock of the Company, has been advancing funds to the Company
pursuant to a line of credit agreement dated April 15, 1999. As of December 31,
1999, $2,175,186 had been advanced to the Company under the terms of this
agreement. Under the terms of the agreement, principal payments are due on
demand after July 15, 2000. Interest is due quarterly in arrears and is based
upon the prime rate; 8.0 percent as of December 31, 1999.
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 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 has been accrued as general and administrative expense, but
has not yet been paid.
(4) INCOME TAXES
No provision for federal or state income taxes has been recorded as the
Company has incurred a net operating loss since inception. As of December 31,
1999, the Company has a net operating loss carryforward available to offset
future taxable income of approximately $1,426,000, which expires in 2019. The
actual income tax benefit differed from the income tax benefit which would be
computed based upon the statutory federal tax rates as a result of recording a
valuation allowance. The valuation allowance was recorded as it is not more
likely than not that the deferred tax assets will be recoverable.
F-8
<PAGE>
NEW GENERATION PLASTIC, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
(4) INCOME TAXES (CONTINUED)
Temporary differences that give rise to deferred tax assets and liabilities
at December 31, 1999 are as follows:
<TABLE>
<S> <C>
Deferred tax assets/liabilities:
Net operating loss carryforwards.......................... $ 584,757
Start-up costs............................................ 839,263
Other..................................................... 30,384
----------
Total deferred tax assets............................. 1,454,404
Less: valuation allowance................................... (1,454,404)
----------
Net deferred tax assets..................................... $ --
==========
</TABLE>
(5) 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.
(6) BASIC AND DILUTED NET LOSS PER SHARE
The Company computes net income (loss) per share in accordance SFAS 128,
Earnings Per Share, which requires certain disclosures relating to the
calculation of income (loss) per common share, as follows.
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 15, 1999
(INCEPTION)
THROUGH
DECEMBER 31, 1999
-----------------
<S> <C>
Net loss.................................................... $(3,547,326)
===========
Weighted average shares of common stock outstanding......... $11,842,761
===========
Basic and diluted net loss per common share................. $ (0.30)
===========
</TABLE>
(7) FINANCIAL RESULTS AND LIQUIDITY
The Company incurred a net loss of $3,547,326 during the period from April
15, 1999 (inception) through December 31, 1999. Significant amounts of
additional cash will be needed to continue the development of the NGP Process
and to fund losses until the Company can achieve profitability. Based on
management's proposed plan as of December 31, 1999, the Company estimates that
at least $3.5 million would be required to fund the Company's operations through
December 31, 2000 and that additional amounts could be required thereafter.
F-9
<PAGE>
NEW GENERATION PLASTIC, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
(7) FINANCIAL RESULTS AND LIQUIDITY (CONTINUED)
While there is no assurance that funding will be available to execute the
plan, the Company is continuing to seek financing to support its development
efforts and is exploring a number of alternatives in this regard.
(8) 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.
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 business and
financial condition.
(9) SUBSEQUENT EVENTS
Effective January 25, 2000, the Board of Directors approved a change in the
business model of the Company to include the incubation of 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. Subject to stockholder approval, the
Company intends to transfers all the assets and liabilities relating to its
plastic business to NG Plastic, Inc.
On February 21, 2000, the Company authorized the issuance of warrants to
purchase 165,000 shares of the Company's common stock at $12.00 per share on a
one-for-one basis. 90,000 of these warrants expire on March 5, 2004 and 75,000
of these warrants expire on February 24, 2000. Concurrently, the Company issued
60,000 of the warrants with expiration date of March 5, 2000 to 2 shareholders.
These warrants are not exercisable until the shares purchasable upon exercise of
the warrants have been registered under the Securities Act of 1933.
F-10
<PAGE>
FINANCIAL STATEMENTS
OF
NEW GENERATION HOLDINGS, INC. (A DEVELOPMENT STAGE COMPANY)
FOR THE PERIOD ENDED MARCH 31, 2000 (UNAUDITED)
The unaudited financial statements of New Generation Holdings, Inc.
(formerly New Generation Plastic, Inc.), a Delaware corporation (the "Company")
(A Development Stage Company), as of, and for the three months ended, March 31,
2000, and for the period from April 15, 1999 (inception) through March 31, 2000,
were prepared by Management and commence on the following page. In the opinion
of Management, the financial statements fairly present the financial position,
operations and cash flows of the Company.
F-11
<PAGE>
NEW GENERATION HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I. FINANCIAL INFORMATION
Balance Sheets for the period as of December 31,
1999 (audited) and March 31, 2000 (unaudited)....... F-13
Statements of Operations for the three months ended
March 31, 2000 (unaudited) and for the period from
April 15, 1999 (inception) through March 31, 2000
(unaudited)......................................... F-14
Statements of Cash Flows for the three months ended
March 31, 2000 (unaudited) and for the period from
April 15, 1999 (inception) through March 31, 2000
(unaudited)......................................... F-15
Notes to the Unaudited Financial Statements......... F-16
</TABLE>
F-12
<PAGE>
NEW GENERATION HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1999 MARCH 31, 2000
------------------ ---------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 3,708 $ 6,651
Prepaid expenses.......................................... 159,554 62,716
Intangible assets, net...................................... 443,929 418,210
---------- ----------
Total assets............................................ $ 607,191 $ 487,577
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 487,798 $ 360,590
Accrued consulting expense................................ 675,000 675,000
Due to shareholder........................................ 2,175,186 2,486,750
---------- ----------
Total liabilities....................................... 3,337,984 3,522,340
---------- ----------
Stockholders' equity (deficit):
Common Stock, $0.001 par value; 50,000,000 shares
authorized, 11,842,761 and 11,837,828 shares outstanding
as of December 31, 1999 and March 31, 2000 (unaudited),
respectively............................................ 11,843 11,838
Preferred Stock, $0.001 par value; 1,000,000 shares
authorized, none issued or outstanding.................. -- --
Additional paid in capital................................ 804,690 1,105,545
Deficit accumulated during the development stage.......... (3,547,326) (4,152,146)
---------- ----------
Total stockholders' equity (deficit).................... (2,730,793) (3,034,763)
---------- ----------
Commitments and contingencies............................... -- --
Total liabilities and stockholders' equity (deficit).... $ 607,191 $ 487,577
========== ==========
</TABLE>
See accompanying notes to the financial statements.
F-13
<PAGE>
NEW GENERATION HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 15, 1999
THREE MONTHS (INCEPTION)
ENDED THROUGH
MARCH 31, 2000 MARCH 31, 2000
--------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Operating Expenses
General and Administrative................................ $ 483,556 $ 2,530,538
Product Development....................................... 77,147 1,503,383
---------- ------------
Loss from operations.................................... (560,703) (4,033,921)
Interest Expense............................................ (44,117) (118,225)
---------- ------------
Loss before income taxes................................ (604,820) (4,152,146)
Income Taxes................................................ -- --
Net Loss................................................ $ (604,820) $ (4,152,146)
========== ============
Basic and diluted net loss per common share................. $ (0.05) --
Shares used to compute basic and diluted net loss per common
share..................................................... 11,837,828 --
</TABLE>
See accompanying notes to financial statements.
F-14
<PAGE>
NEW GENERATION HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
APRIL 15, 1999
(INCEPTION)
THREE MONTHS ENDED THROUGH
MARCH 31, 2000 MARCH 31, 2000
------------------ ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net Loss.................................................. $ (604,820) $(4,152,146)
Adjustments to reconcile net loss to net cash used in
operating activities:
Amortization............................................ 25,719 98,989
Equity based compensation expense....................... 279,600 279,600
Changes in operating assets and liabilities:
Increase in prepaid expenses.......................... 96,839 (62,715)
Increase in accounts payable.......................... (105,959) 381,839
Increase in accrued consulting expense................ 0 675,000
---------- -----------
Net cash used in operating activities................. (308,621) (2,779,433)
---------- -----------
Cash flows provided by financing activities:
Cash received from shareholder loans...................... 311,564 2,486,750
Issuance of common stock.................................. -- 816,533
---------- -----------
Net cash provided by financing activities............... 311,564 3,303,283
---------- -----------
Cash flows used in investing activities:
Purchase of patents....................................... -- (517,199)
========== ===========
Net cash used in investing activities................... -- (517,199)
---------- -----------
Net increase in cash and cash equivalents................... 2,943 6,651
---------- -----------
Cash and cash equivalents, beginning of period.............. 3,708 --
Cash and cash equivalents, end of period.................... $ 6,651 $ 6,651
========== ===========
</TABLE>
See accompanying notes to the financial statements.
F-15
<PAGE>
NEW GENERATION HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(1) ORGANIZATION
New Generation Holdings, Inc. (formerly, 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 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.
(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.
(3) RELATED PARTY TRANSACTIONS
Bachkine & Meyer Industries, S.A. ("BMI"), a stockholder of the Company, has
been advancing funds to the Company pursuant to a line of credit agreement dated
April 15, 1999. As of March 31, 2000 (unaudited), $2,486,750 had been advanced
to the Company under the terms of this agreement. Under the terms of the
agreement, principal payments are due on demand after July 15, 2000. Interest is
due
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<PAGE>
NEW GENERATION HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(3) RELATED PARTY TRANSACTIONS (CONTINUED)
quarterly in arrears and is based upon the prime rate; 8.0 percent as of
December 31, 1999. BMI and the Company have agreed that BMI will have the sole
option to convert part or all of principal and interest due under the line of
credit into common stock of the Company at a rate determined by an independent
committee of the Board of Directors.
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 has been accrued as 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 business focus that BAMI would allow its rights to receive the
monthly management consulting fee under the Consulting Agreement to terminate as
of December 31, 1999. At 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 an independent committee of the Board of Directors.
In connection with the Strategic Collaboration Agreement dated as of
March 31, 2000 by and between the Company and New Generation Partners, Inc., on
one hand, and Double Impact, Inc. ("DI"), on the other, BMI agreed, pursuant to
Share Transfer Agreement dated as of March 31, 2000 by and among BMI, DI and the
Company, to transfer 500,000 shares of its Company Common Stock to DI as soon as
the transfer restrictions imposed on the shares are no longer applicable. In
connection with the Strategic Collaboration Agreement dated as of June 28, 2000
by and between the Company and New Generation Partners, Inc., on one hand, and
eMarketer, Inc. on the other, BMI agreed, pursuant to Share Transfer Agreement
dated as of June 28, 2000 by and among BMI, eMarketer and the Company, to
transfer 50,000 shares of its Company Common Stock to eMarketer as soon as the
transfer restrictions are no longer applicable. The Company has filed a
Form SB-2 registration statement (the "Form SB-2") with the Securities and
Exchange Commission (the "SEC") on March 10, 2000 to register for resale
approximately 4,700,000 shares of its Common Stock, including 550,000 shares
owned by BMI to be transferred to DI and eMarketer. The registration statement
has not yet been declared effective.
(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 shares underlying the foregoing warrants
will be included in the Form SB-2.
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 30,000 of the March 2004
Warrants to a shareholder and 25,000 of the February 2004 Warrants to another
F-17
<PAGE>
NEW GENERATION HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(4) WARRANTS (CONTINUED)
shareholder. These warrants are not exercisable until the shares purchasable
upon exercise of the warrants have been registered under the Securities Act of
1933. The shares underlying the foregoing warrants will be included in the
Form SB-2.
(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 60,000 shares of the Company's
common stock at exercise prices ranging from $7.50 to $9.50.
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) SUBSEQUENT EVENTS
On April 10, 2000, the Company issued 133,350 shares of common stock and
authorized and issued warrants to purchase an aggregate of 95,000 shares of the
Company's common stock at an exercise price of $8.00 per share (the "2000
Warrants") to 2 of its existing shareholders in exchange for $999,950. The 2000
Warrants are not exercisable until the shares purchasable upon exercise have
been registered under the Securities Act of 1933 and they expire two years after
the date upon which they first become exercisable. The shares underlying the
foregoing warrants will be included in the Form SB-2.
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 business focus that
BAMI would allow its rights to receive the monthly management consulting fee
under the Consulting Agreement to terminate as of December 31, 1999. The balance
of accrued consulting fees may be converted at BAMI's sole option into Common
Stock of the Company at rate determined by an independent committee of the Board
of Directors.
On May 17, 2000 the stockholders elected seven (7) directors to the Board of
Directors and approved: (a) A change in name of the Company to New Generation
Holdings, Inc., (b) The transfer of all the company's assets and liabilities
relating to its existing plastic business to NG Plastic, Inc., that was renamed
New Generation Plastic, Inc.; (c) the adoption of the 2000 Stock Compensation
Plan under which the Company may grant options, restricted stock and stock
appreciation rights with regard to up to 4,100,000 shares of its Common Stock to
its employees, directors and consultants and (d) the ratification of the
appointment of KPMG LLP as independent accountants for the Company for the year
ended December 31, 2000.
On May 24, 2000, the Company issued 293,206 shares of Common Stock to 2% of
its existing shareholders.
On June 26, 2000 the Company issued 280,000 shares to Jacques Mot, Paul
Hokfelt and two existing shareholders. In addition, the Company issued 30,000
May 2004 warrants and 25,000 Feb. 2004 Warrants to 2 existing shareholders.
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<PAGE>
Until , 2000, all dealers that effect transactions in our common
stock, whether or not participating in this offering, may be required to deliver
a prospectus. This requirement is in addition to the dealer's obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
[LOGO]
7,907,388 SHARES OF COMMON STOCK
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PROSPECTUS
, 2000
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