UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 9, 1998
NEW GENERATION FOODS, INC.
(Exact name of registrant as specified in its charter)
NEVADA 1-10825 36-2972588
(State or Other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
9 Dunham Road, Scarsdale, New York 10583
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (914) 722-2410
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FORWARD LOOKING STATEMENTS
Certain statements in this Form 8-K, including statements prefaced by
the words "anticipates", "estimates", "believes", "expects" or words of similar
meaning, constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
ITEM 5. OTHER EVENTS.
New Generation Foods, Inc. (the "Company") has acquired an option (the
"Option") to purchase the assets of the Credit Risk Monitor credit information
service ("CRM") from Market Guide Inc. ("MGI"). Exercise of the Option, which
expires November 30, 1998 unless extended to no later than January 31, 1999 (the
"Option Period"), is at the sole discretion of the Company and is conditioned
on, among other things, the Company's ability to raise financing of
approximately $2.5 million to fund the initial payment and CRM's working capital
requirements. There can be no assurance that said financing will be obtained
and/or that the Option will be exercised.
During the Option Period, Jerome S. Flum, Chairman and President of the
Company, will act as an unpaid, part-time consultant to MGI, assisting in the
management of CRM.
If the Option is exercised, the purchase price for the CRM assets will
be approximately $2.5 Million, less the amount of $60,000 paid by the Company
for the Option (subject to increase, up to $70,000, if the Option Period is
extended until January 31, 1998), and subject to certain other adjustments. Of
this price, approximately $1.5 Million is payable in cash at the closing and the
balance will be evidenced by a promissory note, payable with interest at the
rate of 6% per annum which shall accrue commencing July 1, 2001, in 24 equal
monthly installments of principal and interest commencing July 30, 2001 and
ending June 30, 2003. Certain other costs and expenses to be paid by the
Company, in an amount to be determined at closing, will be evidenced by a
separate promissory note, payable with interest at the rate of 8.5% per annum,
which shall accrue from the closing date until January 30, 2001, whereupon all
principal and accrued interest will be payable in 24 equal monthly installments
of principal and interest commencing January 31, 2001 and ending December 31,
2003. The notes will be secured by a first priority purchase money security
interest on substantially all of the assets of the Company.
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A copy of the press release issued by the Company in connection with
the acquisition of the Option is attached as Exhibit 20 hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits.
20. Press release dated September 9, 1998.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEW GENERATION FOODS, INC.
By: /s/Jerome S. Flum
Name: Jerome S. Flum
Title: Chairman of the Board and
Principal Financial Officer
DATE: September 24, 1998
EXHIBIT LIST
Exhibit
Number
20. Press Release dated September 9, 1998.
EXHIBIT 20
[LOGO]
NEWS RELEASE
AT NEW GENERATION FOODS, INC.
Jerry Flum
Chairman & CEO
(516)327-2400 ext. 224
FOR IMMEDIATE RELEASE
NEW GENERATION FOODS SECURES OPTION TO BUY CREDITRISK
MONITOR'S INTERNET SERVICE
Lake Success, New York, September 9, 1998 --- New Generation Foods, Inc. (OTCBB:
NGNF) announced that it has entered into an option agreement to purchase the
assets of the CreditRisk Monitor (CRM) credit information service from Market
Guide Inc. (Nasdaq: MARG). CRM (creditriskmonitor.com) is the only real-time,
interactive, Internet-based service, targeted at corporate credit personnel.
Jerry Flum, Chairman and CEO of New Generation Foods, commented, "CRM currently
has over 300 customers, most of whom are major corporations, and should finish
calendar 1998 with over 400 customers. CRM's service is sold on a renewable
yearly subscription basis, which generates a stable recurring income stream. In
addition, the Company believes that CRM's revenue may be counter cyclical to a
significant extent since the importance of assessing credit risk increases if
economic growth slows or declines. The Company believes that CRM's cash revenue
should be approximately $1.2 million and $2.5 million for 1998 and 1999,
respectively. If the option is exercised, the Company believes that CRM will
have positive cash flow in 2000 and that cash flow will be sufficient to meet
the balance of the purchase price due and to fund future working capital needs
thereafter."
If the option is exercised, the purchase price of approximately $2.5 million is
payable as follows: An initial payment of $1.5 million less adjustments by
January 31, 1999, and the balance in equal monthly installments, beginning in
July 2001 and ending in June 2003. Exercise of the option is at the discretion
of New Generation Foods, and is dependent, in large part, on the Company's
ability to raise financing of approximately $2.5 million to fund the initial
payment and CRM's working capital requirement. New Generation Foods emphasized
that there can be no assurance that it will conclude the transaction.
New Generation Foods is a non-operating corporation with approximately $75,000
of assets and $45,000 of liabilities, and, as previously reported, an aggregate
of $16.0 million of tax loss carryforwards (expiring in varying amounts annually
though 2017). The Company's capitalization consists of 399,830 shares of common
stock and 1,100,000 shares of preferred stock, convertible into 3,599,000 common
shares, or a total of approximately 4 million shares of common stock on a fully
diluted basis.
Safe Harbor Statement: Certain statements in this press release, including
statements prefaced by the words "anticipates", "estimates", "believes",
"expects" or words of similar meaning, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward- looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking
statements.
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