"THIS DOCUMENT IS A COPY OF THE AMENDMENT NO. 2 TO
FORM 8-K FILED ON APRIL 5, 1999 PURSUANT TO A RULE 201
TEMPORARY HARDSHIP EXEMPTION."
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
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):
January 19, 1999
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)
2001 Marcus Ave., W290, Lake Success, NY 11042-1011
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 327-2400
<PAGE>
IMPORTANT NOTE: THIS AMENDMENT 2 IS BEING FILED TO REPLACE THE INCORRECT
FINANCIAL STATEMENTS OF CREDITRISK MONITOR, A DIVISION OF MARKET GUIDE INC.
(ITEM 7(a)), WITH CORRECTED FINANCIALS. ALL CREDITRISK MONITOR HISTORICAL
FINANCIAL STATEMENTS FILED ON APRIL 2, 1999 IN AMENDMENT #1 ARE INCORRECT AND
SHOULD BE DISREGARDED!!!
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 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 19, 1999, New Generation Foods, Inc. (the "Company") completed
its purchase of the assets of the CreditRisk Monitor credit information service
("CRM") from Market Guide Inc. ("MGI"). The purchase price for the assets of CRM
was approximately $2,390,000, of which $1.29 million was paid at or prior to
closing and the balance is represented by two secured promissory notes, one for
approximately $100,000 and the other for $1.0 million (together the "MGI
Notes"). The $100,000 MGI Note, which bears interest at 8.5% from the closing
date, provides for the deferral of principal amortization until February 2001.
The $1.0 Million MGI Note bears interest at 6% from July 2001 and provides for
the deferral of principal amortization until such date. After the respective
deferrals, both MGI Notes are then payable over 24 months. The MGI Notes are
secured by a first priority purchase money security interest on substantially
all of the assets of the Company.
The assets purchased included customer contracts, receivables, equipment,
software and intangibles.
During January 1999, the Company completed a $3.25 million private
placement of its common stock to finance the acquisition and future working
capital needs.
After shareholder approval, the Company, previously a non-operating entity,
will change its name to CreditRiskMonitor.com, Inc. and apply for a new stock
symbol that reflects this new name.
CreditRisk Monitor was formed as a division of Market Guide Inc. in
September 1996 and had no operations or financial statements prior to such date.
Item 7 includes the following financial statements and pro forma financial
information:
<PAGE>
(1) Financial Statements of CreditRisk Monitor, a division of Market Guide
Inc. as of and for the fiscal years ended February 28, 1998 and February 28,
1997 together with the Report of Zerbo, McKiernan and Zambito, L.L.C,
independent auditors;
(2) Balance Sheets of CreditRisk Monitor, a division of Market Guide Inc.
as of November 30, 1998 (unaudited) and February 28, 1998; Unaudited Statements
of Operations and Accumulated Deficit for the 3 months and 9 months ended
November 30, 1998 and November 30, 1997; Unaudited Statements of Cash Flows for
the 9 months ended November 30, 1998 and November 30, 1997.
(3) Pro Forma Consolidated Balance Sheet as of December 31, 1998 and Pro
Forma Consolidated Statement of Operations of the Company for the year then
ended and showing balance sheet and income statement items for New Generation
Foods, Inc. and CreditRisk Monitor both historically and on a Pro-Forma Combined
basis as though the Company had operated as a combined entity for that 12-month
period and incorporating changes due to the Company's 1998 Private Placement
which was actually completed in January 1999.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
Financial Statements of CreditRisk Monitor, a division of Market Guide Inc.
as of and for the fiscal year ended February 28, 1998 and February 28, 1997
together with the Report of Zerbo, McKiernan and Zambito LLC, independent
auditors; Balance Sheets of CreditRisk Monitor, a division of Market Guide Inc.
as of November 30, 1998 (unaudited) and February 28, 1998; Unaudited Statements
of Operations and Accumulated Deficit for the 3 months and 9 months ended
November 30, 1998 and November 30, 1997; Unaudited Statements of Cash Flows for
the 9 months ended November 30, 1998 and November 30, 1997.
(b) Pro Forma Financial Information.
Pro Forma Consolidated Balance Sheet as of December 31, 1998 and Pro Forma
Consolidated Statement of Operations of the Company for the year then ended.
(c) Exhibits.
2. Plan of Acquisition (Asset Purchase Agreement). (1)
20. Press release dated January 19, 1999. (1)
(1) Filed as an Exhibit to Registrant's Report on Form 8-K dated January 19,
1999 (File No. 1-10825) which was filed with the Securities and Exchange
Commission on February 3, 1999.
<PAGE>
CREDITRISK MONITOR
- A DIVISION OF MARKET GUIDE INC. -
FINANCIAL STATEMENTS
AND
REPORT OF INDEPENDENT AUDITORS'
FOR THE YEARS ENDED FEBRUARY 28, 1998
AND FEBRUARY 28, 1997
<PAGE>
Table of Contents
Financial Statements
- --------------------
Report of Independent Auditors'
Balance Sheets as of February 28, 1998 and February 28, 1997 F-4
Statements of Operation and Accumulated Deficit for the
Fiscal Years Ended February 28, 1998 and February 28, 1997 F-5
Statements of Cash Flows for the Fiscal Years Ended February
28, 1998 and February 28, 1997 F-6
Notes to Financial Statements February 28, 1998 and February
28, 1997 F-7-F10
F-2
<PAGE>
Zerbo, McKiernan & Zambito Letterhead]
REPORT OF INDEPENDENT AUDITORS'
To the Board of Directors of
Market Guide, Inc.
2001 Marcus Avenue, Suite S200
Lake Success, NY 11042-1011
We have audited the accompanying Balance Sheets of CreditRisk Monitor - A
Division of Market Guide, Inc. as of February 28, 1998 and 1997 and the related
Statements of Operation and Accumulated Deficit and Cash Flows for the years
then ended. 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 CreditRisk Monitor - A Division
of Market Guide, Inc. as of February 28, 1998 and 1997 and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Zerbo, McKiernan & Zambito, L.L.C
Zerbo, McKiernan & Zambito, L.L.C
Fairfield, New Jersey
August 28, 1998
F-3
<PAGE>
CREDITRISK MONITOR - A DIVISION OF MARKET GUIDE INC.
Balance Sheets
February 28, February 28,
1998 1997
------------ ------------
ASSETS
Current assets:
Cash $ -0- $ -0-
Accounts receivable (net of allowance
for doubtful accounts) 220,040 -0-
----------- -----------
Total current assets 220,040 -0-
Property, plant and equipment:
Furniture and equipment 220,271 99,757
Software 15,063 14,039
----------- -----------
235,334 113,796
Less: Accumulated depreciation 41,481 5,734
----------- -----------
Net property, plant and equipment 193,853 108,062
Other assets:
Capitalized projects (net of 516,260 391,976
accumulated amortization)
----------- -----------
Total other assets 516,260 391,976
----------- -----------
Total assets $ 930,153 $ 500,038
=========== ===========
LIABILITIES AND EQUITY
Current liabilities:
Unearned revenues $ 444,279 $ -0-
----------- -----------
Total current liabilities 444,279 -0-
Total liabilities 444,279 -0-
Equity:
Advances from Market Guide Inc. 1,199,857 568,331
Accumulated Deficit (713,983) (68,293)
----------- -----------
Total equity 485,874 500,038
----------- -----------
Total liabilities and equity $ 930,153 $ 500,038
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
CREDITRISK MONITOR - A DIVISION OF MARKET GUIDE INC.
Statements of Operation and Accumulated Deficit
For the Years Ended
--------------------------
February 28, February 28,
1998 1997
------------ ------------
Revenue:
Earned revenue $ 297,244 $ -0-
----------- -----------
Total revenues 297,244 -0-
Expenses:
Salaries, payroll taxes and employee benefits 802,128 8,525
Database and product costs 91,957 8,812
General and administrative 215,245 58,112
Depreciation 35,747 5,734
Amortization 71,938 -0-
Advertising and promotion 167,250 33,788
----------- -----------
Total expenses 1,384,265 114,971
----------- -----------
Loss before income taxes (1,087,021) (114,971)
Provision for income taxes (441,331) (46,678)
----------- -----------
Net loss $ (645,690) $ (68,293)
Accumulated deficit, beginning of year (68,293) -0-
----------- -----------
Accumulated deficit, end of year $ (713,983) $ (68,293)
----------- -----------
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
CREDITRISK MONITOR - A DIVISION OF MARKET GUIDE INC.
Statements of Cash Flows
For the Years Ended
--------------------------
February 28, February 28,
1998 1997
------------ ------------
Cash Flows From Operating Activities:
Net income $ (645,690) $ (68,293)
----------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 107,686 5,734
Changes in assets and liabilities
(Increase)/Decrease in accounts receivable (220,040) -0-
Increase/(Decrease) in unearned revenues 444,279 -0-
----------- -----------
Total adjustments 331,925 5,734
----------- -----------
Cash used by operating activities (313,765) (62,559)
----------- -----------
Cash Flows From Investing Activities:
Payments for fixed assets (121,538) (113,796)
Payments for capitalized projects (196,222) (391,976)
----------- -----------
Cash used by investing activities (317,760) (505,772)
----------- -----------
Cash Flows From Financing Activities:
Proceeds from Market Guide Inc. 1,144,499 568,331
Proceeds to Market Guide Inc. (512,974) -0-
----------- -----------
Cash provided by financing activities 631,525 568,331
----------- -----------
Net change in cash -0- -0-
Cash at beginning of year -0- -0-
----------- -----------
Cash at end of year $ -0- $ -0-
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
CREDITRISK MONITOR - A DIVISION OF MARKET GUIDE INC.
Notes to Financial Statements
February 28, 1998 and February 28, 1997
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Nature of Business
CreditRisk Monitor (CRM), a division of Market Guide Inc., formed in
September 1996, is an online information and news service that follows more
than 575 U.S. publicly held domestic retail chains and wholesalers. This
online service is accessible through the Internet
(www.creditriskmonitor.com) and has been designed to provide corporate
credit managers with the analytical tools necessary to analyze and follow,
on a daily basis, all the public companies they do business with.
The CRM information service consists of: CRM Company Reports, the CRM Alert
Notification Service and the CRM Real-Time News Service. The CRM web site
became operational in April 1997.
All of the Company's revenues are derived from annual subscription sales of
its CreditRisk Monitor Internet service.
2. Revenue Recognition
CreditRisk Monitor subscriptions are deferred at the time of sale and
recognized ratably as revenue over the terms of their subscriptions. Costs
associated with procurement of these revenues are expensed as incurred.
Bad debts are recorded under the allowance method of accounting. For the
fiscal years ended February 28, 1998 and February 28, 1997, $6,461 and $0
were charged to bad debt expense, respectively. As of February 28, 1998 and
February 28, 1997, the allowance for doubtful accounts totalled $6,461 and
$0, respectively.
3. Property and Equipment
Depreciation is provided for in amounts sufficient to relate the cost of
depreciable assets to their estimated useful service lives.
The straight-line method of depreciation is followed for substantially all
assets for both financial and tax reporting purposes. For the fiscal years
ended February 28, 1998 and February 28, 1997, $35,747 and $5,734,
respectively, were charged to depreciation expense.
Market Guide Inc. assumes all liability for equipment purchased under
capital lease obligations.
F-7
<PAGE>
4. Capitalization of Computer Software
Management has elected, pursuant to SFAS No. 86, to capitalize certain
computer software costs incurred for new product development. These costs
are reported at the lower of unamortized cost or net realizable value. All
research and development, database maintenance and customer support costs
are expensed as incurred.
The straight-line method of amortization is used over the estimated
economic life of the asset. For the years ended February 28, 1998 and
February 28, 1997, capitalization of computer software and database
expansion totaled $588,198 and $391,976, respectively. For the fiscal years
ended February 28, 1998 and February 28, 1997, $71,938 and $0,
respectively, were charged to amortization expense. As of February 28, 1998
and February 28, 1997, accumulated amortization was $71,938 and $0,
respectively.
5. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Estimated overhead costs have been allocated to CreditRisk Monitor from
Market Guide Inc. These general and administrative costs totaled $86,327
and $24,950 in the fiscal years ended February 28, 1998 and February 28,
1997, respectively.
6. Advances from Market Guide Inc.
Market Guide Inc. subsidizes all costs incurred by CreditRisk Monitor. All
cash generated from CreditRisk Monitor operations is used to offset costs
incurred by Market Guide Inc.
The Advances from Market Guide Inc. account represents the following:
1998 1997
----------- -----------
Total cash outlay by Market Guide Inc. $ 1,585,830 $ 615,009
Less: Cash generated by CreditRisk
Monitor operations (512,974) -0-
----------- -----------
Net cash outlay by Market Guide Inc. 1,072,856 615,009
Less: Tax benefits received by Market Guide
Inc. (441,331) (46,678)
----------- -----------
Advances from Market Guide Inc. $ 631,525 $ 568,331
=========== ===========
Market Guide Inc. will continue to meet the obligations of CreditRisk
Monitor as they become due without substantial disposition of assets
outside the ordinary course of business, restructuring of debt, externally
forced revisions of its operations, or similar actions.
F-8
<PAGE>
7. Advertising Costs
All advertising costs are expensed as incurred and are included in
advertising and promotion expense. For the fiscal years ended February 28,
1998 and February 28, 1997, $61,590 and $9,151, respectively, were charged
to advertising expense.
NOTE B - LEGAL PROCEEDINGS
Market Guide Inc. is currently involved in a pending lawsuit. The ultimate
outcome of this litigation is unknown at the present time. Market Guide's
management does not believe that pending actions will have a material
effect on the business activities of Market Guide or its division,
CreditRisk Monitor. Accordingly, no provision for any liability has been
made to the accompanying financial statements of CreditRisk Monitor, a
division of Market Guide Inc.
NOTE C - INCOME TAXES
Market Guide Inc. has adopted SFAS 109 and Management believes that it does
not have a greater than 50 percent probability of realization of net
operating loss carryforwards and has provided for a full valuation
allowance. This procedure has been consistently applied to CreditRisk
Monitor. Market Guide Inc. also assumes all responsibility of income taxes
currently payable.
The components of the provisions for income taxes (credits) are as follows:
For the Years Ended
-----------------------------
02/28/98 02/28/97
-----------------------------
Current
Federal $ (332,629) $(35,181)
State and Local (108,702) (11,497)
Deferred
Federal -0- -0-
State and Local -0- -0-
-----------------------------
TOTALS $ (441,331) $(46,678)
=============================
F-9
<PAGE>
NOTE C - INCOME TAXES (continued)
Total income tax expense differs from the expected tax expense (computed by
applying the U.S. Federal statutory income tax rate of 34% to income before
income taxes) as follows:
2/28/98 % 2/28/97 %
---------------------------------------
Tax at Federal statutory rate $(369,587) (34.0) $ (39,090) (34.0)
State income taxes, net of
Federal tax benefit (71,744) (6.6) (7,588) (6.6)
---------------------------------------
TOTALS $(441,331) (40.6) $ (46,678) (40.6)
=======================================
NOTE D - SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
Selected quarterly financial data for the years ended February 28, 1998 and
February 28, 1997 are presented for CreditRisk Monitor, a division of
Market Guide Inc. in the following table:
<TABLE>
<CAPTION>
Three Months Ended
May 31, 1997 August 31, 1997 November 30, 1997 February 28, 1998
<S> <C> <C> <C> <C>
Earned revenue $ 10,629 $ 47,324 $ 97,168 $ 142,123
Loss before taxes (170,887) (288,513) (297,170) (330,451)
Net loss (101,506) (171,377) (176,519) (196,288)
<CAPTION>
May 31, 1996 August 31, 1996 November 30, 1996 February 28, 1997
<S> <C> <C> <C> <C>
Earned revenue $ -0- $ -0- $ -0- $ -0-
Loss before taxes -0- -0- (34,325) (80,646)
Net loss -0- -0- (20,389) (47,904)
</TABLE>
F-10
<PAGE>
CREDITRISK MONITOR
- A DIVISION OF MARKET GUIDE INC. -
FINANCIAL STATEMENTS
FOR THE PERIODS ENDED NOVEMBER 30, 1998
AND NOVEMBER 30, 1997
<PAGE>
Table of Contents
Financial Statements
- --------------------
Balance Sheets as of November 30, 1998 (Unaudited) and
February 28, 1998 F-3
Statements of Operations and Accumulated Deficit for the 3
months and 9 months ended November 30, 1998 (Unaudited) and
November 30, 1997 (Unaudited) F-4
Statement of Cash Flows for the 9 months ended November 30,
1998 (Unaudited) and November 30, 1997 (Unaudited) F-5
Notes to Financial Statements F-6
<PAGE>
CREDITRISK MONITOR - A DIVISION OF MARKET GUIDE INC.
Balance Sheets
November 30, February 28,
1998 1998
(Unaudited)
ASSETS $ -0- $ -0-
Current assets:
Cash
Accounts receivable (net of allowance 255,368 220,040
for doubtful accounts)
Total current assets 255,368 220,040
Property, plant and equipment at cost:
Furniture and equipment 338,901 220,271
Software 19,961 15,063
358,862 235,334
Less: Accumulated depreciation 83,915 41,481
Net property, plant and equipment 274,947 193,853
Other assets:
Capitalized projects (net of
accumulated amortization) 457,402 516,260
Total other assets 457,402 516,260
Total assets $ 987,717 $ 930,153
=========== ===========
LIABILITIES AND EQUITY
Current liabilities:
Unearned revenues $ 549,894 $ 444,279
Total current liabilities 549,894 444,279
Total liabilities 549,894 444,279
<PAGE>
Equity
Advances from Market Guide Inc. 1,601,753 1,199,857
Accumulated deficit (1,163,930) (713,983)
Total equity 437,823 485,874
Total liabilities and equity $ 987,717 $ 930,153
=========== ===========
<PAGE>
CREDITRISK MONITOR - A DIVISION OF MARKET GUIDE INC.
Unaudited Statements of Operation and Accumulated Deficit
<TABLE>
<CAPTION>
For the 3 Months Ended For the 9 Months Ended
Nov. 30, Nov. 30, Nov. 30, Nov. 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Earned Revenues $ 245,812 $ 97,168 $ 667,440 $ 155,121
Total revenues 245,812 97,168 667,440 155,121
Expenses:
Salaries, payroll taxes and employee benefits 279,306 244,793 835,959 520,893
Database and product costs 32,003 19,420 101,832 42,891
General and administrative 95,691 72,735 274,220 152,545
Depreciation 16,871 10,256 42,434 24,397
Amortization 19,620 19,620 58,859 52,319
Advertising and promotion 36,131 27,514 111,583 118,647
Total expenses 479,622 394,338 1,424,887 911,692
Loss before income taxes (233,810) (297,170) (757,447) (756,571)
Provision for income taxes (94,926) (120,650) (307,501) (307,168)
Net loss (138,884) (176,520) (449,946) (449,403)
Accumulated deficit, beginning of quarter (1,025,045) (341,177) (713,983) (68,294)
Accumulated deficit, end of quarter $(1,163,929) $ (517,697) $(1,163,929) $ (517,697)
</TABLE>
<PAGE>
CREDITRISK MONITOR - A DIVISION OF MARKET GUIDE INC.
Unaudited Statements of Cash Flows
For the 9 Months Ended
November 30, November 30,
1998 1997
Cash Flows From Operating Activities:
Net loss $ (449,946) $ (449,403)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 101,292 76,716
Changes in assets and liabilities
(Increase)/Decrease in accounts receivable (35,328) (358,513)
Increase/(Decrease) in unearned revenues 105,615 419,416
Total adjustments 171,579 137,619
Cash used by operating activities (278,367) (311,784)
Cash Flows From Investing Activities:
Payments for fixed assets (123,529) (111,246)
Payments for capitalized projects -0- (196,223)
Cash used by investing activities (123,529) (307,469)
Cash Flows From Financing Activities:
Proceeds from Market Guide Inc. 1,127,318 835,277
Proceeds to Market Guide Inc. (725,423) (216,024)
Cash provided by financing activities 401,895 619,253
Net change in cash -0- -0-
Cash at beginning of year -0- -0-
Cash at end of year $ -0- $ -0-
<PAGE>
CREDITRISK MONITOR - A DIVISION OF MARKET GUIDE INC.
Notes to Financial Statements November 30, 1998
Note 1 INTERIM FINANCIAL STATEMENTS
The accompanying financial statements of Market Guide Inc. have been prepared
without audit, except for the balance sheet as of February 28, 1998. In the
opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.
Operating results for the nine months ended November 30, 1998 are not
necessarily indicative of the results that may be expected for the year ending
February 28, 1999.
Note 2 DEPRECIATION AND AMORTIZATION
Depreciation and amortization are provided for in amounts sufficient to relate
the cost of depreciable assets to operations over their estimated service lives.
The straight-line method of depreciation is followed for substantially all
assets for both financial and tax reporting purposes.
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
Historical
----------------------------
New
Generation CreditRisk Pro Forma
Foods, Inc. Monitor Adjustments Combined
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 13,400 $ -- $ 3,250,000 (a) $ 2,030,213
(1,233,187)(c)
Purchase option 115,000 -- (115,000)(c) --
Accounts receivable -- 408,478 -- 408,478
------------ ------------ ------------ ------------
Total current assets 128,400 408,478 1,901,813 2,438,691
GOODWILL -- -- 2,433,524 (c) 2,316,487
17,039 (d)
(134,076)(f)
FIXED ASSETS -- 215,690 -- 215,690
------------ ------------ ------------ ------------
TOTAL ASSETS $ 128,400 $ 624,168 $ 4,218,300 $ 4,970,868
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 5,908 $ 4,945 $ 25,000 (a) $ 58,268
22,415 (c)
Accrued franchise taxes 45,580 -- -- 45,580
Accrued expenses 46,284 -- 26,948 (b) 90,271
17,039 (d)
------------ ------------ ------------ ------------
Total current liabilities 97,772 4,945 91,402 194,119
SENIOR SECURED NOTE -- -- 787,630 (c) 787,630
EXPENSE PROMISSORY NOTE -- -- 98,162 (c) 98,162
UNEARNED INCOME -- 796,353 -- 796,353
------------ ------------ ------------ ------------
Total liabilities 97,772 801,298 977,194 1,876,264
------------ ------------ ------------ ------------
REDEEMABLE CONVERTIBLE VOTING
SENIOR PREFERRED STOCK 1,100,000 -- (1,100,000)(e) --
------------ ------------ ------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock 3,998 -- 13,000 (a) 52,981
35,983 (e)
Additional paid-in capital 22,818,930 -- 3,212,000 (a) 27,067,999
1,064,017 (e)
(26,948)(b)
Accumulated deficit (23,892,300) (177,130)(g) (134,076)(f) (24,026,376)
177,130 (c)
------------ ------------ ------------ ------------
Total stockholders' equity (deficit) (1,069,372) (177,130) 4,341,106 3,094,604
------------ ------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 128,400 $ 624,168 $ 4,218,300 $ 4,970,868
============ ============ ============ ============
</TABLE>
<PAGE>
(a) Represents net proceeds from private placement of 1,300,000 shares of
common stock.
(b) Represents legal and state filing fees incurred in connection with the
private placement.
(c) Represents purchase of the assets of the CreditRisk Monitor credit
information service.
(d) Represents legal, state filing fees, and taxes incurred in connection with
the acquisition of the CreditRisk Monitor assets.
(e) Represents conversion of 1,100,000 shares to senior preferred stock into
3,598,299 shares of common stock.
(f) Represents write-off of capitalized in-process research and development
projects that have not reached technological feasibility.
(g) Represents accumulated deficit net of advances from Market Guide Inc.
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Historical
------------------------------
New
Generation CreditRisk Pro Forma
Foods, Inc. Monitor (f) Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Earned revenues $ -- $ 809,563 $ -- $ 809,563
----------- ----------- ----------- -----------
EXPENSES
Salaries and employee benefits -- 1,117,194 -- 1,117,194
Database and product costs -- 150,898 -- 150,898
General and administrative 28,216 336,920 -- 365,136
Depreciation and amortization -- 132,262 37,344 (a) 169,606
Advertising and promotion -- 160,186 -- 160,186
Interest expense -- -- 7,925 (b) 81,895
73,970 (c)
----------- ----------- ----------- -----------
28,216 1,897,460 119,239 2,044,915
----------- ----------- ----------- -----------
Loss from operations (28,216) (1,087,897) (119,239) (1,235,352)
----------- ----------- ----------- -----------
OTHER INCOME AND EXPENSES
Interest and dividend income 7,700 -- -- 7,700
Gain on investments 2 -- -- 2
Write-off of intangible assets -- -- (134,076)(e) (134,076)
----------- ----------- ----------- -----------
7,702 -- (134,076) (126,374)
----------- ----------- ----------- -----------
Loss before income taxes (20,514) (1,087,897) (253,315) (1,361,726)
PROVISION (BENEFIT) FOR
INCOME TAXES 2,925 (441,664) 441,664 (d) 2,925
----------- ----------- ----------- -----------
NET LOSS $ (23,439) $ (646,233) $ (694,979) $(1,364,651)
=========== =========== =========== ===========
NET LOSS PER SHARE
Basic $ (0.06) $ (0.26)
=========== ===========
Diluted $ (0.06) $ (0.26)
=========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES
Basic 399,830 5,300,129
=========== ===========
Diluted 399,830 5,300,129
=========== ===========
</TABLE>
(a) Represents goodwill amortization in excess of capitalized costs
written-off.
(b) Represents deferred interest expense on Expense Promissory Note.
(c) Represents amortization of debt discount on Senior Secured Note.
(d) Represents NGNF's inability to take advantage of net operating loss.
(e) Represents write-off of capitalized in-process research and development
projects that have not reached technological feasibility.
(f) Amounts for CreditRisk Monitor were determined by adding results for the
year ended February 28, 1998 and the results from the nine months ended
November 30, 1998 and subtracting the results for the nine months ended
November 30, 1997.
<PAGE>
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: April 5, 1999
