SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended June 30, 2000 Commission file number 0-15148
NEWBRIDGE CAPITAL, INC.
formerly SCIENTIFIC NRG, INCORPORATED
(Exact name of registrant as specified in its charter)
Nevada
(State or Other Jurisdiction of Incorporation or Organization)
4695 MacArthur Court, Suite 1450
Newport Beach, California 92660
(Address of Principal Executive Offices)
41- 1457271
(I.R.S. Employer Identification No.)
Registrant's telephone number, including area code: (949) 833-2094
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, No Par
Value
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $ -0-
State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past 60
days.(See definition of affiliate in Rule 12b-2 of the Exchange Act) September
1, 2000: $9,035,000
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. At October 1, 2000, the registrant
had 3,310,390 shares of common stock, no par value, issued and outstanding.
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TABLE OF CONTENTS
Page
PART I
Item 1. Description of business..........................................3
Item 2. Description of property..........................................7
Item 3. Legal proceedings................................................7
Item 4. Submission of matters to a vote of security holders..............7
PART II
Item 5. Market for common equity and related stockholder matters.........8
Item 6. Management's discussion and analysis.............................9
Item 7. Financial statements............................................11
Item 8. Changes in and disagreements with accountants on
Accounting and financial disclosure.........................12
PART III
Item 9. Directors, executive officers, promoters and control
persons; Compliance with Section 16(a) of the
Securities Exchange Act of 1934.............................12
Item 10. Executive compensation..........................................13
Item 11. Security ownership of certain beneficial owners and
Management..................................................14
Item 12. Certain relationships and related transactions..................15
Item 13. Exhibits and reports on form 8-K................................16
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
(a) General
NewBridge Capital, Inc., formerly Scientific NRG, Incorporated (the "Company")
was originally incorporated in the State of Minnesota on May 20, 1983 as NRG,
Inc. ("NRG"). In April, 1986, Scientific Component Systems, Inc., a Minnesota
corporation ("Scientific"), a company engaged in the commercial lighting and
energy-efficient lighting conversion business, was merged into NRG and the
combined entity changed its name to Scientific NRG, Incorporated in December
1986.
On June 29, 1999 the Company entered into an agreement to sell the assets and
current lighting business acquired from Scientific. Effective June 30, 1999 the
Company acquired substantially all of the assets of NuVen Capital Limited
Partnership, a Nevada limited partnership ("NuVen Capital"), and simultaneously
adopted a new business plan focused on investing in and acquiring businesses and
business interests with a view to assisting such businesses in expanding through
further acquisitions and internal development.
On November 30, 1999, the Company was merged into NewBridge Capital, Inc., a
Nevada corporation formed on July 22, 1999, and changed its name from Scientific
NRG, Incorporated to NewBridge Capital, Inc. to better reflect its new corporate
direction. At that time, the newly formed Nevada corporation exchanged each ten
existing shares of Scientific NRG, Incorporated for one share of NewBridge
Capital, Inc. The merger was reflected at historical cost since the companies
were under common control. All per share data and values presented herein have
been adjusted to give retroactive effect to this exchange.
Operating decisions for the Company's various businesses are made by the
management of the respective business units. Investment decisions and all other
capital allocation decisions for the Company as a whole are made by Fred G.
Luke, in consultation with professional advisors for Mr. Luke and the Company.
Mr. Luke is Chairman and President of the Company.
(b) Business Development
In 1986, the Company acquired the business of Scientific and, until June 1999,
designed, manufactured and marketed custom energy efficient lighting products
utilizing compact fluorescent lamp technology primarily within the United
States. The Company's principal products were energy efficient, compact
fluorescent downlight fixtures primarily for the commercial downlight canister
retrofit market.
On June 30, 1999 pursuant to the authorization given to the Board of Directors
at a stockholders meeting held on August 15, 1998, the Company executed an Asset
Purchase Agreement (the "Scientific Agreement") for the sale of its lighting
business to a former employee of the Company - See Notes to the Financial
Statements.
Following the Scientific Agreement, the Company entered into an Asset Purchase
Agreement with NuVen Capital (the "NuVen Agreement") whereby the Company
acquired the assets of NuVen Capital with a book value of $10,894,729 (the
"NuVen Assets") in exchange for 2,234,466 shares of the Company's no par value
common stock. As a result of this transaction, NuVen Capital acquired 80%
control of the Company.
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Following the purchase of the NuVen Assets, the Company changed its business
from the manufacturing and distribution of lighting systems to become a holding
company which intends to acquire operating businesses in what management
considers to be businesses which present the greatest opportunities for growth.
The Company's primary industry interests are in (i) the leisure and
entertainment, (ii) the communications (including the Internet), (iii) the
financial services, and (iv) consumer goods industries.
At June 30, 2000, the Company had equity method investments of $253,813 in YES
Licensing Partners, LLC ("YLP") and $50,147 in YES Clothing Co. ("YSCO"). The
Company intends to exploit the opportunities available through its investment in
YLP by seeking licensing agreements and by developing and marketing a clothing
line under the YES brand name. The Company intends to restructure YSCO by
negotiating debt settlements with YSCO's creditors. YLP has begun product
development under certain of its licensing agreements.
In May 2000, the Company made a tender offer to purchase 51% of Chic by H.I.S.,
Inc. which it intended to combine with the operations of YSCO. The tender offer,
to date, has been unsuccessful.
Former Lighting Business
Principal Products
Prior to June 1999 and the sale of its' lighting business the Company's
principal products were energy efficient light fixtures, which were offered by
the Company in several configurations suitable for downlighting, track lighting
and surface-mounted illumination for retrofit installation and new construction
applications.
Competitive Business Conditions
The lighting business was highly competitive. Companies that sold alternatives
to the Company's products included Janmar, Lumatech, Techtron, Enertron and
Progressive Technologies, Inc. Most competitors carried a broader product line
than the Company. In addition, major lighting fixture companies such as Hubbel,
Lightolier, Juno and Halo manufactured fixtures using the compact fluorescent
lamp technology almost exclusively in the new construction market, as opposed to
the retrofit market. The new construction market had historically constituted
less than 15% of the Company's sales.
Environmental Compliance
With the recent sale of its lighting business the Company does not anticipate
that any material capital expenditures will be required for environmental
compliance, or to comply with OSHA standards.
Current Business Development and Investment Activities
Leisure and Entertainment Industry
Thru its acquisition of the NuVen Assets, the Company became the single largest
voting shareholder of NuOasis Resorts, Inc., a publicly-held Nevada corporation
("NuOasis") which, thru various foreign subsidiaries, owns interests in gaming
casinos and hotels, provides casino and hotel management services, and food
manufacturing and distribution. NuOasis and its subsidiaries are active both in
the United States and internationally. The most important business activity
conducted by NuOasis is conducted thru a number of subsidiaries including
Cleopatra Palace Resorts and Casinos Limited a British subsidiary ("CPR"), which
operates the LePalace Hotel and Resort in Tunisia, North Africa and has other
resort casino gaming interests
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outside of the United States. Another NuOasis subsidiary, Oasis Resorts
International Inc. also owns and is in the process of developing a destination
resort hotel and casino in the United States, in Oasis Nevada near Wendover,
Nevada.
The Company's management intends to continue to evaluate possible expansion and
acquisition opportunites in both the domestic and international hotel and casino
gaming markets as well as internet gaming and other forms of entertainment.
These opportunities may include the ownership, management and operation of
facilities within or outside the United States. These opportunities may be
undertaken solely thru subsidiaries of the Company, its subsidiaries and third
parties, and will be subject to the Company or its respective subsidiary
obtaining adequate financing to participate in such opportunities.
At the present time the Company's management is evaluating other potential
expansion opportunities and sources of working capital and expansion financing
for its leisure and entertainment-related investments and business interests.
However, as of the date of this report, the Company has not entered any
agreements to make further acquisitions of or investments in other hotel or
gaming projects, nor has it received financing commitments for future projects
or funding of its present financing commitment related to the completion of its
Cleopatra-Themed projects in North Africa and Europe.
Communications Industry
Th Company's present management believes that the communications industry, in
particular Internet-related businesses, are candidates for consolidation.
Through its subsidiaries and equity investments, the Company intends to acquire
and consolidate small-cap and middle market companies which may be
undercapitalized but otherwise have promising communication and Internet related
products and services, as well as software technologies. These industries are
characterized by rapid technological development. In order to respond to the
rapidly changing competitive and technological conditions within these
industries, the Company expects to focus on acquisitions of minority interests
in existing businesses with development-stage technology, or niche market or
invest in new products through joint ventures with industry-known entities.
Financial Services Industry
The Company's present management has experience in providing financial
consulting and management advisory services to developing companies as well as
to mature companies that require restructuring or expansion capital. The Company
intends to seek out and acquire or invest in companies which presently offer
certain financial services worldwide, including but not limited to debt
financing (including "global debt swaps"), equipment leasing, investment and
merchant banking, merger and acquisition services, and "workout" firms also
specializing in corporate reorganizations and financial restructuring. To date
the Company has only provided management advisory services and financial
consulting for the business interests acquired from NuVen Capital.
Consumer Products
The Company owns fifty percent (50%) of YLP which owns certain clothing brands,
one of which is the trademark "YES", was identified in 1997 as the eighth most
recognized brand name in women's clothing. Through YLP the Company intends to
solicit licenses for all of its exclusive "YES"-related brands, each in
approximately twenty (20) clothing categories. Additionally, the Company intends
to search for, identify, acquire or create and license other brand names in the
area of clothing and other consumer products
Through YLP the Company is currently licensing its "YES" trademarks, and it
intends to license other brands it may develop or acquire in the future. The
Company intends to market its brands and trademarks utilizing
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a direct retail licensing strategy premised on the proposition that in North
America nearly all aspects of the moderately priced apparel, footwear and
accessories business can be sourced most effectively by large retailers, who not
only command significant economies of scale, but also interact daily with the
end consumer. In addition, the Company believes that retailers, in general, may
be able to obtain higher gross margins on sales and increase store traffic by
directly sourcing, stocking and selling licensed products bearing widely
recognized brand names, such as the Company's "YES"-related brands, than through
carrying strictly private label goods or branded product from third-party
vendors. The Company's strategy is to capitalize on these ideas by licensing its
portfolio of brands primarily directly to strong and growing retailers, who,
working in conjunction with Company
Subsequent Event
On October 5, 2000, the Company entered into a definitive agreement to acquire
the assets of SkateSurfSnow.com ("SSS")from PacificTradingPost.com Inc. The
Company will issue 136,000 shares of its common stock and warrants to acquire
1,204,004 shares of the Company's common stock for $4.00 per share for the net
assets of SkateSurfSnow.com. The acquisition has not closed since SSS has been
unable to deliver clear title to its assets. SSS operates an e-commerce Web site
and a brick-and-mortar retail store in Huntington Beach, California, serving the
fast growing skateboard, surfing and snowboarding markets. SSS sells core action
sports products, the latest hard and soft goods, apparel and accessories.
Employees
As of September 15, 2000 the Company had seven(7) employees, three(3) of which
who are also officers and directors of the Company.
Forward-looking Statments
This report may contain forward-looking statements, which can be identified by
the sue of forward-looking terminology such as "may," "will," "expect,"
"intend," "plans," "anticipate," "estimate" or "continue" or the negative
thereof or other variations thereon or comparable terminology. The matters
described herein and certain other factors noted throughout this report and in
any exhibits to this report of which this report is a part, constitute
cautionary statements identifying important factors with respect to any such
forward-looking statements identifying important factors with respect to any
such forward-looking statements, in including certain risks and uncertainties,
that could cause actual results to differ materially, from those in such
forward- looking statements.
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ITEM 2. DESCRIPTION OF PROPERTY
From July 1, 1996, through June 30, 1999, the Company maintained its operations
in Glendora, California, in a facility which was owned and operated by Parke
Industries, Inc. ("Parke"), formerly an affiliated company. The Company and
Parke, which also operated in the commercial lighting industry, also shared
certain officers and directors.
The Company's executive offices are located at 4695 MacArthur Court, Suite 1450,
Newport Beach, California 92660, where its telephone number is (949) 833-2094.
The Company occupies this facility under a month to month rental agreement with
NuVen Advisors, Inc. ("Advisors"), an affiliate of NuVen Capital, at the rate of
$11,800 per month.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings to which the Company is a party or to
which any of the Company's properties are subject.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
No matter was submitted during the fourth quarter of the fiscal year covered by
this report to a vote of security holders, through the solicitation of proxies
or otherwise.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) Market Information
The Company's common stock trades on the NASDAQ OTC Bulletin Board.
Until November 30, 1999, the Company's stock traded under the symbol "SNRG".
Following the 1999 Restructuring, the Company's shares have traded under the
symbol "NBRG".
The following table sets forth the range of high and low reported sales for the
Company's common stock from July 1, 1999 through June 30, 2000 adjusted for the
exchange described above:
Sales Price of Common Stock
Fiscal 2000
Quarter Ended High Low
06/30/00 $6.00 $1.50
03/31/00 $8.00 $1.50
12/31/99 $1.90 $.62
09/30/99 $1.90 $.59
Fiscal 1999
Quarter Ended High Low
06/30/99 $.60 $.40
03/31/99 $1.00 $.30
12/31/98 $1.00 $.62
09/30/98 $.93 $.93
The above prices were obtained from the National Quotation Bureau, Inc. The
prices shown in the above table represent inter-dealer quotations without retail
mark-up, mark-down or commission, and may not necessarily represent actual
transactions. At June 30, 2000, there were no broker-dealers publishing quotes
for the Company's common stock.
(b) Holders
As of June 30, 2000, there were approximately 720 holders of record of the
Company's common stock. The transfer agent for the Company is American Stock
Transfer and Trust of New York, New York.
(c) Dividends
The Company has never paid any cash dividends and intends during the foreseeable
future to retain any earnings to finance the growth of its business. Future
dividend policy will be determined by the Company's Board of Directors based
upon such considerations as the Company's earnings and financial condition,
business conditions, and other factors as the Board of Directors may deem
relevant.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis should be read together with the financial
statements and notes thereto included elsewhere herein.
Overview and Recent Developments
Through June 30, 1999, the Company was primarily engaged in the commercial
lighting business. It's products were designed to retrofit existing inefficient
commercial light fixtures to use energy-efficient flourescent lighting reduced
energy consumption significantly. In June 1999, the Company sold all of the
assets related to its commercial lighting business.
On June 30, 1999, the Company completed the asset purchase agreement (the
"Agreement") with NuVen Capital, which resulted in the Company acquiring certain
assets of NuVen Capital, in exchange for 2,234,466 shares of its common stock,
which was valued at $10,090,793 based the estimated fair value of the underlying
assets acquired. No liabilities were assumed in this transaction. The assets
obtained by the Company consisted of certain receivables, primarily from
affiliates, totaling $403,200, net of allowances; the investment in Preferred
Stock of NuOasis Resorts Inc. ("NuOasis") totaling $8,000,000; marketable
securities in affiliates totaling $1,136,556; and other non-current assets
totaling $551,037. As a result of this transaction, NuVen Capital obtained
approximately 70% control of the Company. The assets acquired were accounted for
at historical basis similar to a recapitalization since NuVen Capital and the
Company are under common control.
The Company intends to continue to liquidate certain of its investments, or
exchange its interests to acquire majority owned businesses. Management
considers the Company to be a blank-check company with no significant
operations.
Assets Acquired under the Agreement
During 1993, NuOasis designated a Series D Voting Convertible Preferred Stock
(the "NuOasis Preferred"). NuOasis presently has 24,000,000 shares of the
NuOasis Preferred issued and outstanding. The NuOasis Preferred was originally
issued in 1993 to NuVen Capital's predecessor in exchange for investment
securities with an estimated market value, based upon independent legal and
valuation opinions at the time and discounted approximately 50% at the date of
transfer, of $10,000,000. In connection with the NuVen Agreement, the Company
acquired 19,200,000 shares of the NuOasis Preferred with a carrying value of
$8,000,000. The NuOasis Preferred is redeemable, in whole or in part, at the
option of the NuOasis Board of Directors, at any time, at a redemption price of
up to $24,000,000; there is currently no intent of the NuOasis Board of
Directors to redeem the NuOasis Preferred due to liquidity issues. The NuOasis
Preferred is convertible, at the option of the holder, into shares of NuOasis
common stock at an exchange rate of .41667 per share, or into shares of NuOasis
having an aggregate market value at the time of such conversion of $10,000,000,
not to exceed 10,000,000 shares. Market value is determined based on 50% of
the closing bid price for 30 days preceding notice of conversion. Assuming the
conversion had occurred on June 30, 2000, the Company would be entitled to
approximately 396 million shares of NuOasis, and ultimate control of NuOasis .
The right to convert the NuOasis Preferred expires on December 31, 2001.
Management of the Company has no present plans to convert the NuOasis Preferred.
The Company's voting rights under the NuOasis Preferred, representing a minority
interest of approximately thirty percent (30%) of the total authorized voting
capital stock, and the Company currently has no right to the earnings and losses
of NuOasis.
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An appraisal of the NuOasis Preferred at the date of acquisition, indicated a
fair market value of approximately $10,900,000. Since the Company is required to
record the asset using the predecessor's basis, the Company has recorded the
investment at $8,000,000. NuOasis has a negative stockholders equity of
approximately $7,199,000 and requires significant working capital to meet its
obligations as they become due. Accordingly, the carrying value of its
investment substantially exceeds the net book value of NuOasis. Management
intends to negotiate a sale or an exchange of its interest in the NuOasis
Preferred and believes the carrying value of its investment will be recovered
through future discounted cash flows or the exchange of the NuOasis Preferred
for other securities of equal or greater value. In the event the Company does
not recover its investment in the next twelve months, management will take a
charge to operations.
In connection with the NuVen Agreement, the Company acquired additional equity
investments consisting of common stock in other publicly-held and privately-held
enterprises. During fiscal 2000, the Company sold a certain of these equity
investments. The remaining equity investments are accounted for as marketable
securities in the Company's balance sheet. Except for YES, the Company owns less
than 10% of the outstanding common stock of all these companies. As to the
relative insignificant value of such investment, the Company will record this
investment under the cost method.
Marketable Securities
Marketable securities are accounted for under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities. The Company's short-term investments
consisted solely of marketable equity securities, which were classified as
"available- for-sale" in accordance with the provisions of SFAS No. 115. Such
investments are presented as current assets and carried at their estimated fair
values in the accompanying financial statements. Unrealized gains and losses are
excluded from net income (loss) and reported as a separate component of
shareholders' equity (deficit), net of related deferred taxes and as a component
of comprehensive income.
Receivables From Affiliates
Receivables from affiliates at June 30, 1999 represented non-interest bearing
amounts acquired in connection with the NuVen Agreement in gross amounts
aggregating $765,792 with a carrying value of $382,896 after establishing a
reserve for a possible loss. During fiscal 2000, the Company made additional
investments in and loans to affiliated companies totaling approximately
$936,638. It also exchanged with Xplorer,S.A. $512,721 of receivables with a
carrying value of $90,588 for a receivable with a face value of $500,000. The
investments and loans in 2000 were substantially related to accrued management
fees or advances for operating expenses including professional fees for legal
and accounting services. As part of the NuVen Agreement, in fiscal 2000, NuVen
Capital assigned its interest in advisory agreements with 16 publicly-held
entities, some of whom were affiliates.
Management's Discussion and Analysis of Financial Condition and Results of
Operations to the Company
As the result of the above transactions, the Company presented its lighting
business as discontinued in the attached financial statements. Thus, continuing
operations for the fiscal years 2000 and 1999, were comprised only of the costs
and expenses related to the NuVen Agreement. The new business strategy of the
Company is to make acquisitions of or investments in what management considers
to be businesses which present the greatest opportunities for growth:
entertainment, communications(including the Internet), financial services and
consumer goods.
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Results of Operations
Year Ended June 30, 2000 Compared to Year Ended June 30, 1999
Continuing Operations
As a result of the asset acquisition in June 1999, there were no revenues
generated from continuing operations during fiscal 2000 and 1999 and,
consequently, no operating revenues or cost of revenues were recorded.
During fiscal 2000, the Company had a full year of operations and recorded
selling general administrative and Stock-based compensation expenses of $871,000
as compared to fiscal 1999 of $362,000. The 2000 expenses included $220,000 of
Stock-based compensation expenses to officers and consultants to the Company
represented by the value of the Company's common stock issued. The 1999 expenses
were substantially comprised of costs related to the asset acquisition,
including $273,000 represented by the value of shares of the Company's common
stock and options issued to Mr. Fred Luke, the Company's new Chairman and
President, as a transaction fee related to the NuVen Agreement, and the value of
common shares issued to Mr. John Forgy, the former President of the Company, as
a finders fee in connection with the NuVen Agreement.
Discontinued Operations
Revenues from discontinued operations were $406,000 in fiscal 1999. Cost of
goods sold were 67% of revenues and selling general and administrative costs
related to discontinued operations was $193,000. The loss from discontinued
operations was $36,000 with an additional loss of $30,000 realized on the sale
of the discontinued lighting business.
Liquidity and Capital Resources
As of June 30, 2000, the Company had a positive working capital of $1.7 million.
Management fully expects to realize fully its current assets including the
receivables from affiliates within the next fiscal year. The Company expects to
have additional working capital available as it negotiates the sale, exchange or
liquidation of its equity investments held for sale. Management believes that
the Company's working capital is sufficient to meet the operating needs for next
12 months.
Certain of the Company's assets are valued based on independent appraisals, as
well as estimates by the Company's Board of Directors. Valuations by the Board
of Directors are based on estimates, and those estimates may materially differ
from actual values which may realized upon sale, liquidation or exchange. Such
assets are subject to changes in market conditions, and accordingly, their value
is subject to significant volatility. In the event market conditions change
adversely, the carrying value of these assets could have a material impact on
the Company's financial condition, results of operations and cash flows.
The Company has no commitments for capital expenditures or additional equity or
debt financing.
ITEM 7. FINANCIAL STATEMENTS
The Company's audited financial statements are referred to in Item 13(a), listed
in the Index to Financial statements and included elsewhere herein as a part of
this Annual Report on Form 10-KSB.
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ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There were no changes in or disagreements with the Company's independent
accountants on financial statement disclosure or auditing scope or procedure
during the two year period prior covered by their report.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Fred G. Luke. Mr. Luke has been Chairman of the Board and President of the
Company since June, 1999. Mr. Luke has thirty (30) years of experience in
domestic and international financing and the management of privately and
publicly held companies. Since 1982, Mr. Luke has provided consulting services
and has served, for brief periods lasting usually not more than six months, as
Chief Executive Officer, President and/or Chairman of the Board of various
publicly held and privately held companies in conjunction with such
restructuring services. In addition to his position with the Company, Mr. Luke
currently serves as Chairman and President of NuOasis (formerly, Nona Morelli's
II, Inc.), Chairman and President of NuVen Advisors, Inc., formerly New World
Capital, Inc. ("NuVen Advisors"), Chairman and President of Hart Industries,
Inc. ("Hart"), and Chairman and President of Diversified Land & Exploration Co.
("DL&E"). Mr. Luke received a Bachelor of Arts Degree in Mathematics from
California State University, San Jose in 1969.
Jon L. Lawver, 62, has been Secretary and a Director of the Registrant since
June, 1999. Mr. Lawver has over thirty-two (32) years of experience in the area
of corporate finance where he has assisted medium size companies ($5 million to
$15 million) by providing expertise in documentation preparation and locating
financing for expansion requirements. Mr. Lawver was a Vice President and Branch
Manager with Bank of America from 1961 to 1970. From 1970 to present Mr. Lawver
has served as President and a Director of J.L. Lawver Corp., a financial
consulting firm. Since 1988 Mr. Lawver has served as President and a Director of
Eurasia, a private finance equipment leasing company specializing in oil and gas
industry equipment. Mr. Lawver also serves as an executive officer of Fantastic
Foods, Inc. a wholly-owned subsidiary of NuOasis, Resorts, Inc..
Leonard J. Roman, 51, has been Chief Financial Officer and a director since July
1999 and has 29 years of diversified public and private business management
experience. Since 1997, Mr. Roman has provided consulting services and has
served, for brief periods lasting usually not more than six months, as Chief
Financial Officer of various publicly held and privately held companies in
conjunction with such financial and corporate restructuring services. In
addition to his position with the Company, Mr. Roman currently serves as Chief
Financial Officer of NuOasis Resorts, Inc., Oasis Resorts, Inc. and
NetHoldings.Com, Inc.. From 1991 to 1994, he was General Manager and Chief
Financial Officer of Cosmar Corporation, from 1995 to 1997 he was President of
Trumpets Holdings, Inc. and was Executive Vice President, Chief Financial
Officer of W-C Designs, Inc. He ia a CPA with a B.S. degree from St. John's
University.
Oliver K. Washburn, 72, resigned as Director and Treasurer of Registrant on June
30, 1999 and is the former President and co-owner of Washburn Laboratories,
Inc., a St. Paul-based manufacturer of advertising specialty products from which
he retired in 1984. Mr. Washburn holds a Bachelor of Mechanical Engineering
degree from the University of Minnesota.
Daniel W. Parke, 45, resigned as Director and Chief Executive Officer of
Registrant on June 30, 1999 and is the previous owner of Parke Industries, Inc.
Parke manages annual sales of over $20 million of energy efficient lighting
products and services. Parke has eight divisions covering the United States and
is considered a leader in marketing energy efficient products and solutions
since 1984. Mr. Parke holds a Bachelor of Business Administration from Azusa
Pacific University.
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Jonathan D. Forgy, 46,resigned as Director and Chief Executive Officer of
Registrant on June 30, 1999 and is the CFO of Parke Industries since 1993. Prior
to joining Parke Industries, Mr. Forgy was a tax partner in a CPA firm. Mr.
Forgy's experience includes over 15 years of business consulting along with
practical experience in the delivery of energy efficient solutions. Mr. Forgy
holds a dual Bachelor of Business (Accounting and Finance) and a M.S. in
Taxation from Golden Gate University.
Richard O. Weed , 38, resigned as Director on June 30, 1999 but continues as
Legal Counsel for the Company. Mr. Weed is a partner in the law firm Weed & Co.
in Newport Beach, California. Weed & Co. provides advice on capital formation,
business strategy and legal matters on a special project basis. Mr. Weed is
known for using analytical firepower, creative problem solving and resourceful
implementation to assist clients. Mr. Weed's abilities are the result of his
association with prominent law firms in California and Texas and graduate
business education. Mr. Weed received a Master of Business Administration -
International Management in 1992 from the University of Southern California,
Juris Doctor in 1987 from St. Mary's University School of Law, and Bachelor of
Business Administration - International Business in 1984 from The University of
Texas at Austin. Mr. Weed is a member of the State Bar of California and State
Bar of Texas.
John Tastad, 33, resigned as Director on June 30, 1999 and is the former
President and Owner of Energy Solutions Incorporated (ESI), a St. Paul based
energy services company with offices nationwide. Mr. Tastad sold ESI to Northern
States Power Company in 1997. Currently, Mr. Tastad serves as President of Pulse
Products, Inc., a major manufacturers representative firm, and Funcepts, a
start-up indoor family entertainment business. Mr. Tastad holds a Bachelor of
Business (Marketing) from Bethel College.
ITEM 10. EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued by the Company
during each of the years in the three year period ended June 30, 2000 to that
person who, as of the applicable year ended, was the Company's Chief Executive
Officer or President. There were no officers or Directors of the Company who
received more than $100,000 of total compensation. At June 30, 2000, there were
no written employment agreements with any employee of the Company.
TABLE 1. SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Fiscal Salary Bonus Compensation Awards Options/SAR's Payouts Compensation
Principal Position Year ($) ($) ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fred G. Luke 2000 90,000 $238,502 150,547
(President) 1999 -
1998 -
Daniel W. Parke 2000 -
(Former CEO) 1999 12,000
1998 24,000
Jonathan D. Forgy 2000 -
(Former President) 1999 48,000
1998 48,000
</TABLE>
The following table sets forth certain information with respect to stock options
held as of June 30, 2000 by current and former executive officers of the Company
as adjusted for the 10 for 1 share exchange in November 1999. All options are
exercisable at the price indicated and none have been exercised. At June
13
<PAGE>
30, 2000, Mr. Fred G. Luke was the only member of executive management with
outstanding stock options.
<TABLE>
<CAPTION>
Number of Exercise or Expiration
Name Options Price/Share Date
<S> <C> <C> <C>
Daniel W. Parke, Former CEO 30,000 $2.00 September 30, 2005
Jonathan D. Forgy Former President 10,000 $2.00 September 30, 2005
Fred G. Luke, President and CEO 150,547 $0.70 December 31, 2004
</TABLE>
There were no Options/SARs exercised in the last fiscal year and there are no
Options/SARs outstanding with regard to Named Executive Officers who are
required to be included in this table, and there were no long-term incentive
plan awards made by the Company in the last fiscal year.
Compensation of Directors
No Director receives compensation for services on the Board or for Board
meetings attended.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table, based upon figures obtained from the Company's transfer
agent, sets forth certain information as of June 30, 2000 relating to the
beneficial ownership of the Company's common stock by (i) all persons known by
the Company to beneficially own more than 5% of the outstanding shares of the
Company's stock, (ii) each director of the Company and (iii) all officers and
directors of the Company as a group. As of June 30, 1999 the Company had
3,310,390 shares of its common stock issued or issuable and outstanding.
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address of Beneficial Percent of
Beneficial Owner Ownership Class
<S> <C> <C>
Beneficial owners of 5%
or more of common stock:
NuOasis International, Inc.(1)
4695 MacArthur Court, Suite 1450
Newport Beach, California 92660 433,797 13.1
Eurasia Finance & Development Corp.(2)
P.O. Box 113
Palos Verdes, California 90274 390,882 11.8
FLS, LLC
4001 S. Decatur
Suite 37-315
Las Vegas, Nevada 89103 260,809 7.9
</TABLE>
14
<PAGE>
<TABLE>
<S> <C> <C>
Fred G. Luke (3)
4695 MacArthur Court, Suite 1450
Newport Beach, California 92660 40,345 1.2
Jon Lawver
4695 MacArthur Court, Suite 1450
Newport Beach, California 92660 18,000 0.5
Leonard J. Roman
4695 MacArthur Court, Suite 1450
Newport Beach, California 92660 18,000 0.5
All officers and directors as a group
(Three) 76,345 2.2
</TABLE>
(1) NuOasis International Inc. is a wholly owned subsidiary of NuOasis. As
a result of the Company owning 19,200,000 shares of the NuOasis
Preferred Stock it could be considered as having a control position of
NuOasis. If the Company converted the NuOasis Preferred Stock it would
own approximately 11% of the common stock of NuOasis.
(2) Eurasia Finance and Development Corp.("Eurasia") is owned 100% by J.L.
Lawver Corp. J.L. Lawver Corp. is owned 49% by Mr. Jon Lawver, a
director and secretary of the Company. Mr. Lawver's wife owns another
25% of J.L. Lawver Corp. Mr. Lawver disclaims any interest in the
interest owned by his wife.
(3) Excludes 150,548 common shares exercisable by Mr. Fred Luke under a
stock option.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the last two years the Company did not enter into any transactions that
require disclosure under Item 404 of Regulation S-B except the following:
On August 12, 1998, the Company entered into an Advisory and Management
Agreement with Mr. Fred G. Luke and NuVen Advisors, whereas Mr. Luke and NuVen
Advisors were to advise and assist the Company in effecting a restructuring and
acquiring or merging with a new line of business or company.
On August 17, 1999, Mr. Luke, following the closing under the NuVen Agreement
was paid an acquisition fee of 279,308 shares of the Company's common stock (as
adjusted for the subsequent 1 for 10 Recapitalization) representing 10% of the
outstanding shares of the Company subsequent to the subject acquisition, valued
at $.80 per share. Additionally, Mr. Luke was granted an option to purchase
150,547 shares of the Company's common stock at a price of $.70 per share, as
adjusted for the 1 for 10 Recapitalization and upon the moving average selling
price of the shares for the 10-day period immediately preceding the acquisition.
The option given to Mr. Luke is fully vested and expires on December 31, 2004.
The Company charged general and administrative expense $238,502 for the shares
issued and stock option granted.
On August 17, 1999, Mr. John Forgy, the former President of the company was paid
a finders fee of 100,000
15
<PAGE>
shares, as adjusted for the 1 for 10 Recapitalization. These shares were paid
pursuant to the Employment Agreement with Mr. Forgy dated June 25, 1998. General
and administrative expenses were charged $80,000 representing the value of the
shares, based upon an adjusted value of $.80 per share, which was the average
trading price of shares for the 30 day period subsequent to the acquisition
date.
ITEM 13. EXHIBITS AND REPORTS' ON FORM 8-K
(a) Financial Statements
The Financial Statements included in this Item are indexed on Page F-1, "Index
to Financial Statements."
(b) Financial Statement Schedules
Not applicable.
(c) Exhibits
The following exhibits are included herein or incorporated herein by reference
from the Company's initial Registration Statement on Form 10 filing on or about
November 12, 1986 or in other reports filed pursuant to the Securities Exchange
Act of 1934.
Exhibit
Number Description
3.1 Articles of Incorporation NewBridge Capital, Inc. filed July 22, 1999
with the Secretary of State of Nevada.
3.3 Bylaws of NewBridge Capital, Inc. adopted July 26, 1999
4.1 Specimen of Share Certificate. (1)
10.1 Employment Agreement with John Forgy dated June 25, 1998 (Incorporated
herein by reference to Form S-8 previously filed with the SEC on
8/17/98 file number 333-61481).
10.2 Advisory Agreement with Fred G. Luke and NuVen Advisors, Inc. dated
August 12, 1998 (Incorporated herein by reference from Form S-8
previously filed with the SEC on 7/16/99 file number 333-82881).
10.3 Fee Agreement with Richard O. Weed dated July 1, 1999 (Incorporated
herein by reference from Form S-8 previously filed with the SEC on
7/16/99 file number 333-82881).
10.4 Asset Purchase Agreement, June 24, 1999 with NuVen Capital Limited
Partnership. (2)
10.5 Asset Purchase Agreement with Juan Flores dated June 29, 1999. (2)
10.6 Articles of Merger dated November 30, 1999 of Scientific NRG, Inc., a
Minnesota corporation with and into NewBridge Capital, Inc. a Nevada
Corporation.
10.7 Merger Agreement between Scientific NRG, Inc., a Minnesota corporation
with and into NewBridge Capital, Inc. a Nevada Corporation.
16
<PAGE>
27.1 Financial Data Schedule
_____________________
(1) Incorporated herein by reference from the Company's initial
Registration Statement on Form 10 filing on or about November 12, 1986.
(2) Incorporated herein by reference from the Company's Annual Report on
Form 10-KSB for the year ended June 30, 1999.
(d) Reports on Form 8-K
There were no reports on Form 8-K filed during the fourth quarter of the fiscal
year ended June 30, 1999.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Date: October 30, 2000 NEWBRIDGE CAPITAL, LTD.
a Nevada Corporation
By: /s/ Fred G. Luke
Name: Fred G. Luke
Title: President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signatures Title Date
/s/ Fred G. Luke Director and President October 30, 2000
Fred G. Luke
/s/ Jon L. Lawver Director and Secretary October 30, 2000
Jon L. Lawver
/s/ Leonard J, Roman Director and Chief October 30, 2000
Leonard J. Roman Financial Officer
17
<PAGE>
INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report................................................F-2
Financial Statements:
Balance Sheet as of June 30, 2000......................................F-3
Statements of Operations and Comprehensive Income (Loss) for each
of the two years in the period ended June 30, 2000.....................F-4
Statements of Stockholders' Equity (Deficit) for each of the two
years in the period ended June 30, 2000................................F-5
Statements of Cash Flows for each of the two years in the
period ended June 30, 2000.............................................F-6
Notes to Financial Statements..........................................F-8
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
NewBridge Capital, Inc. (formerly, Scientific NRG, Incorporated)
We have audited the accompanying balance sheet of NewBridge Capital Inc., a
company incorporated in the state of Nevada (the "Company"), as of June 30,
2000, and the related statements of operations and comprehensive income (loss),
stockholders' equity (deficit) and cash flows for each of the two years in the
period ended June 30, 2000. 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 audits.
We conducted our audits 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 audits provide 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 NewBridge Capital Inc.
(formerly, Scientific NRG, Inc.) as of June 30, 2000, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
As discussed in Note 6, the Company's held-for-sale investments consist of
Series D Preferred Stock (the "D Preferred") of an affiliate with a carrying
value of $8 million at June 30, 2000. Management obtained an independent
appraisal of the D Preferred which amounted to approximately $8.1 million. The
appraisal was based on data available on June 30, 2000, and those data have
adversely changed through the date of our report. Management is currently
negotiating the sale of all or part of the D Preferred, and management believes
that the carrying value of such asset will be realized. In the event management
is unable to execute an exchange or sale of the D Preferred by November 20,
2000, they will record a charge to operations based on data available to them at
that time. The accompanying financial statements do not reflect any impairment
as a result of events which have ocurred subsequent to June 30, 2000.
Irvine, California
October 25, 2000 /s/ McKennon, Wilson & Morgan LLP
F-2
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
BALANCE SHEET
June 30, 2000
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash and cash equivalents $ 790,001
Marketable securities (Note 3) 8,397
Receivables from affiliates (Note 4) 847,360
Retainer held by related party (Note 9) 144,000
Other 5,000
Total current assets 1,794,758
Equity-method investments (Note 5) 616,489
Investments, held for sale (Note 6) 8,090,588
Investments, at cost (Note 7) 156,311
Property and equipment, net of accumulated
depreciation of $28,728 20,909
Related-party lease deposit (Note 8) 100,000
$ 10,779,055
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
Current liabilities:
Accounts payable $ 6,441
Due to related party (Note 9) 90,341
Other current liabilities 35,216
Total current liabilities 131,998
Commitments and contingencies (Note 8)
Stockholders' equity (Note 9):
Preferred stock, $.001 par value; 25,000,000
shares authorized; none outstanding -
Common stock, $.001 par value; 75,000,000
shares authorized; 3,310,390 shares
issued and outstanding 3,310
Additional paid-in capital 14,453,108
Accumulated deficit (3,809,484)
Accumulated other comprehensive income 123
Total stockholders' equity 10,647,057
$ 10,779,055
</TABLE>
See accompanying notes to financial statements
F-3
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
<TABLE>
<CAPTION>
Year ended June 30,
1999 2000
---------- ----------
<S> <C> <C>
Revenues - $ - $ -
Expenses:
General and administrative expenses,
excluding stock-based compensation 88,707 650,512
Stock-based compensation 273,475 220,000
Total expenses 362,182 870,512
Operating loss (362,182) (870,512)
Gain on sale of marketable securities
(Note 3) - 1,070,386
Income from affiliates (Note 4) - 192,000
Other income - 36,463
Equity in losses of investees - (215,374)
Income (loss) from continuing operations (362,182) 212,963
Discontinued operations:
Loss from discontinued operations,
net of income taxes of $800 35,562 -
Loss on disposal of discontinued
operations, net of income
taxes of $0 30,363 -
Net income (loss) (428,107) 212,963
Other comprehensive income (loss)-
Unrealized gain on marketable
securities - 123
Comprehensive income (loss) $(428,107) $ 213,086
Basic income (loss) per share (Note 2):
Continuing operations $ (0.65) $ 0.07
Discontinued operations (0.11) -
Net income (loss) $ (0.76) $ 0.07
Weighted average number of shares
outstanding: 565,777 3,214,932
</TABLE>
See accompanying notes to financial statements
F-4
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Other
Additional Comprehensive Stockholders'
Preferred Stock Common Stock Paid-in Accumulated Accumulated Equity
Shares Amount Shares Amount Capital Deficit Income (Loss) (Deficit)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, June 30, 1998 - $ - 420,342 $ 420 $ 3,558,257 $(3,594,340) $ - $ (35,663)
Common stock issued for services
rendered by related parties - - 517,583 517 427,376 - - 427,893
Common stock issued in connection
with asset purchase the agreement
with NuVen Capital L.P. - - 2,234,465 2,235 10,088,558 - - 10,090,793
Value of options granted below fair value - - - - 15,055 - - 15,055
Net loss - - - - - (428,107) - (428,107)
----- ----- ---------- ------- ----------- ---------- --------- ------------
Balances, June 30, 1999 - - 3,172,390 3,172 14,089,246 (4,022,447) - 10,069,971
Common stock issued in connection with
employment services - - 60,000 60 179,940 - - 180,000
Common stock issued for services
by related party - - 78,000 78 173,922 - - 174,000
Value of options granted below fair value - - - - 10,000 - - 10,000
Net income - - - - - 212,963 - 212,963
Unrealized gain on marketable securities - - - - - - 123 123
----- ----- ---------- ------- ------------ ---------- --------- ------------
Balances, June 30, 2000 - $ - 3,310,390 3,310 14,453,108 (3,809,484) 123 10,647,057
===== ===== ========== ======= ============ ========== ========= ============
</TABLE>
See accompanying notes to financial statements
F-5
<PAGE>
NEWBRIDGE CAPITAL, INC.
(Formerly, SCIENTIFIC NRG, INCORPORATED)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended June 30,
1999 2000
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (428,107) $ 212,963
Adjustments to reconcile net income
(loss) to net cashprovided by (used in)
operating activities:
Depreciation 2,129 10,454
Loss on disposition of assets 30,363 -
Loss on equity-method investments - 215,374
Issuance of common stock for services
rendered 338,420 210,000
Options granted below fair value 15,055 10,000
Gain on sale of marketable securities - (1,070,386)
Changes in operating assets and
liabilities:
Decrease (increase) in prepaid
expense and other 26,122 (5,000)
Decrease in accounts payable (27,751) (12,053)
Increase in due related parties - 156,305
Increase (Decrease) in other current
liabilities (28,449) 17,569
Net cash used in operating activities (66,218) (254,774)
Cash flows from Investing Activities:
Payment for related-party lease deposit - (100,000)
Purchase of investment, at cost
Proceeds from sale of marketable
securities - 1,867,668
Advances to related parties 53,510 -
Increase in receivables from affiliate - (1,025,638)
Collections from receivables from
affiliates - 426,086
Net cash provided by investing activities 53,510 1,043,116
Cash flows from financing activities - - -
Net increase (decrease) in cash (12,708) 788,342
Cash and cash equivalents at beginning of
year 14,367 1,659
Cash and cash equivalents at end of year $ 1,659 790,001
</TABLE>
See accompanying notes to financial statements
F-6
<PAGE>
NEWBRIDGE CAPITAL, INC.
(Formerly, SCIENTIFIC NRG, INCORPORATED)
STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Year ended June 30,
1999 2000
<S> <C> <C>
Supplemental disclosure of cash flow information -
Cash paid during the year for -
Income taxes $ 800 $ -
Non-cash investing and financing activities:
Note receivable issued for sale of business $ 50,000 $ -
Common stock and warrants issued for services
rendered $ 427,893 $ 220,000
Marketable securities exchanged for services rendered $ - $ 32,000
Marketable securities exchanged for receivable from
affiliate $ - $ 44,500
Note receivable settled in exchange for payment of
liabilities $ - $ 50,000
Common stock issued for assets of NuVen Capital L.P. $10,090,793 $ -
Exchange of receivables from affiliate for note
receivable $ - $ 90,588
Exchange of note receivable for investment held for
sale $ - $ 90,588
Common stock issued to related party for retainer
agreement $ - $ 144,000
</TABLE>
See accompanying notes to financial statements
F-7
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND HISTORY
Organization and Nature of Operations
NewBridge Capital, Inc. (formerly, Scientific NRG, Incorporated) (the
"Company"), was originally incorporated in the state of Minnesota in 1983. The
Company historically designed, manufactured and marketed custom energy efficient
lighting products utilizing compact fluorescent lamp technology primarily within
the United States. The principal products were energy efficient, compact
fluorescent downlight fixtures primarily for the downlight canister retrofit
market.
In 1997, the Company relocated its operations to a new facility in Glendora,
California, which was owned and operated by a newly affiliated company, Parke
Industries, Inc. ("Parke") (see Note 7). The Company and Parke, which operated
in the commercial lighting industry, also shared certain officers and directors.
The Company entered into certain management agreements with two officers, which
were also directors, of Parke.
On August 15, 1998, the Company's Board of Directors approved the sale of the
Company's downlight business, which constitutes substantially all of the
Company's assets and operations. On June 29, 1999, the Company closed an asset
purchase agreement with an employee of the Company for the sale of its downlight
business.
Effective June 30, 1999, the Company consummated an asset purchase agreement
(the "NuVen Agreement") with NuVen Capital L.P. ("NuVen Capital"), which
resulted in the Company acquiring certain assets of NuVen Capital, in exchange
for 2,234,465 shares of the Company's common stock valued at $10,090,793, based
on the historical cost of the assets acquired (Note 9). No liabilities were
assumed in this transaction. The assets obtained by the Company consisted of
NuOasis Resorts, Inc. ("NuOasis") Series D Convertible Preferred Stock totaling
$8,000,000; certain receivables, primarily from affiliates, with a net carrying
value of $403,200; marketable securities in affiliates totaling $1,136,556; and
other non-current assets totaling $551,037. As a result of this transaction,
NuVen Capital obtained approximately 70% control of the Company. The assets
acquired were accounted for at historical bases similar to a recapitalization
since NuVen Capital and the Company are under common control (see Notes 3
through 8).
The Company intends to continue to liquidate its investments, or exchange its
interests to acquire majority owned businesses. Management considers the Company
to be a holding company with the intent to acquire new businesses.
On November 30, 1999, the Company was merged into NewBridge Capital, Inc., a
Nevada corporation formed by it on July 22, 1999, and changed its name from
Scientific NRG, Incorporated to NewBridge Capital, Inc. to better reflect its
new corporate direction. At that time, the newly formed Nevada corporation
exchanged one (1) share for every ten shares of Scientific NRG, Incorporated.
The merger was recorded at historical costs since the companies were under
common control, and all amounts, including share information, have been
retroactively restated for the years presented.
F-8
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Going Concern
During the year ending June 30, 1999, the Company discontinued its lighting
operations. In fiscal 2000, the Company's operations consisted of managing
certain investments and seeking business opportunities. The Company's plan is to
liquidate or exchange its interests to acquire interests in other ventures and
new operating opportunities. Management believes that its working capital is
sufficient to meet its working capital requirements for a period of 12 months
from the balance sheet date.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the 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.
Significant estimates made by management are, among others, provisions for
losses on receivable obligations, and in some cases, the valuation of the
Company's common stock, as authorized by the Board of Directors. Actual results
could materially differ from those estimates.
Cash and Cash Equivalents
Management considers highly liquid instruments with an original maturity of 90
days or less to be cash equivalents.
The Company cash of $790,001 is primarily invested in money market mutual funds
of a single institution. Company management does not consider this investment to
be at a significant risk.
Marketable Securities
Marketable securities are accounted for under the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain
Investments in Debt and Equity Securities. The Company's short- term investments
consisted solely of marketable equity securities, which were classified as
"available-for-sale" in accordance with the provisions of SFAS No. 115 based on
its intent to continue to exchange the equity securities for other assets.
Accordingly, such investments are presented as current assets and carried at
their estimated fair market values in the accompanying financial statements.
Unrealized gains and losses are excluded from net income (loss) and reported as
a separate component of shareholders' equity (deficit), net of related deferred
taxes and as a component of comprehensive income. The Company uses the specific
identification method when computing gains and losses from sales of its
marketable securities.
Investments
Investments in which the Company owns 20% to 50%, directly or indirectly, of the
voting capital stock are accounted for under the equity method, whereby the
Company reports its direct, proportionate share of earnings and losses.
Investments in preferred stock are reported under the cost method since these
securities do not participate in the income or losses of the investee company.
Investments in common stock which shares are not
F-9
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
publically traded and represent less than 20% of all voting securities are
accounted for under the cost method. Investments held for sale are carried at
net realizable value.
Property and Equipment
Property and equipment are recorded at cost and are depreciated using the
straight-line method over the estimated useful lives of the related assets, over
three years. Maintenance and repairs are charged to expense as incurred.
Significant renewals and betterments are capitalized. At the time of retirement
or other disposition of property and equipment, the cost and accumulated
depreciation are removed from the accounts and any resulting gain or loss is
reflected in operations.
Stock-based Compensation
The Company measures compensation cost related to stock and stock options issued
to employees using the intrinsic method of accounting prescribed by APB No. 25,
"Accounting for Stock Issued to Employees." The Company produces pro forma
disclosures of net income (loss) and earnings (loss) per share, as if the fair
value method of accounting defined in SFAS No. 123 had been applied. The Company
values non-employee options and warrants under the fair-value method using the
Black-Scholes valuation model.
Fair Value of Financial Instruments
The Company has financial instruments whereby the fair value of the financial
instruments could be different than that recorded on a historical basis on the
accompanying balance sheet. The Company's financial instruments consist of
receivables, investments and accounts payable. The carrying amounts of the
Company's financial instruments generally approximate their fair values as of
June 30, 2000. The Company is exposed to equity price risks on the marketable
portion of our equity securities. The carrying values of financial instruments,
including cash and cash equivalents, receivables from affiliates, and accounts
payable, approximate fair value because of the short maturity of these
instruments.
Per Share Information
Basic per share information is computed as net income (loss) divided by the
weighted average number of common shares outstanding for the period. Diluted per
share information reflects the potential dilution that could occur from common
shares issuable through stock options, and warrants, as well as other
convertible securities. A reconciliation of the shares used in Basic and
Dilutive income (loss) per share in fiscal 1999 and 2000 follow:
F-10
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
1999 2000
<S> <C> <C>
Weighted Average Shares - Basic 565,777 3,214,932
Effect of common stock purchase warrants and options - 190,547
Weighted Average Shares - Dilutive 565,777 3,405,479
Net income per share - Basic $ 0.07
Effect of dilutive securities (0.01)
Net income per share - Dilutive $ 0.06
</TABLE>
Common stock equivalents, which relate to shares issuable upon the exercise of
common stock purchase warrants and options, were not included in the per share
calculations for fiscal 1999 as their effect would be anti-dilutive.
Restatement of Shares Outstanding
All historical share and per share amounts have been restated to reflect the one
for ten exchange of shares resulting from the company reincorporating in Nevada
(Note 1).
Income Taxes
The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes." Under SFAS 109, deferred tax assets and liabilities are recognized for
the 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. A valuation
allowance is provided for significant deferred tax assets when it is more likely
than not that such assets will not be recovered.
Comprehensive Income
The Company reports the components of comprehensive income which include net
income (loss), and certain non- shareholder items. Non-shareholder items,
consisting of unrealized gains (losses) on marketable securities, are reported
directly within a separate component of stockholders' equity and bypass net
income (loss).
Reclassifications
Certain amounts in the accompanying 1999 financial statements have been
reclassified to conform to the 2000 presentation.
F-11
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. SFAS No. 133 establishes standards for the
accounting and reporting of derivative instruments and hedging activities,
including certain derivative instruments embedded in other contracts. Under SFAS
No. 133, entities are required to carry all derivative instruments at fair value
on their balance sheets. The accounting for changes in the fair value (i.e.,
gains or losses) of a derivative instrument depends on whether it has been
designated and qualifies as part of a hedging activity and the underlying
purpose for it. The Company does not believe that the adoption of SFAS No. 133
will have a significant impact on the Company's financial statements or related
disclosures.
NOTE 3 - MARKETABLE SECURITIES
In connection with the asset purchase agreement with NuVen Capital in fiscal
1999, the Company obtained shares of common stock in companies affiliated with
NuVen Capital. Each investment represents less than 20% of the outstanding
common stock and stock equivalents of the investee and each security is
nationally quoted on the National Association of Securities Dealers OTC Bulletin
Board ("OTCBB"). As such, each investment is accounted for in accordance with
the provisions of SFAS No. 115. Marketable securities consist of the following
at June 30, 2000:
NetCommerce, Inc., (Formerly, Virtual Enterprises, Inc.)
During fiscal 2000, the Company sold 1,059,376 shares of NetCommerce, Inc.
("NetCommerce") resulting in $923,964 of net proceeds. In connection therewith,
the Company recorded a gain of $214,182 in fiscal 2000. At June 30, 2000, the
Company held 12,349 shares of NetCommerce with a cost of $8,274 and a market
value of $8,397. During the year ended June 30, 2000, the Company's unrealized
gain on marketable securities of NetCommerce amounted to $123.
The Hartcourt Companies, Inc.
The Company's investments in Hartcourt Companies, Inc. ("Hartcourt") consisted
of 100,000 shares of common stock that were part of the asset purchase agreement
with NuVen Capital in fiscal 1999, and 44,500 additional shares of Hartcourt
common stock that were received during fiscal 2000 in settlement of a debt of
$44,500. During fiscal 2000, the Company sold all of its equity investment in
Hartcourt, resulting in $978,960 of net proceeds. In connection therewith, the
Company recorded a gain of $856,204 in fiscal 2000.
F-12
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - RECEIVABLES FROM AFFILIATES
On June 30, 1999, the Company acquired approximately $382,896, net of an
allowance for doubtful accounts, from NuVen Capital. The following is a
rollforward of receivables from affiliates during the year ended June 30, 2000:
<TABLE>
<CAPTION>
Balances, Balances,
Receivables From Affiliates: June 30, 1999 Advances Collections Other June 30, 2000
<S> <C> <C> <C> <C> <C>
Casino Management of America, Inc. $ 174,650 $ 13,000 $ (7,000) $(174,650) $ 6,000
Fred G. Luke 113,428 76,260 (113,428) (56,975) 19,285
Global Trade Finance, Inc. 47,378 137,000 (48,378) - 136,000
NuOasis Resorts, Inc. and subsidiaries 390,851 175,727 (243,000) (189,578) 134,000
NuVen Advisors, Inc. - 170,000 - - 170,500
NuVen Advisors LP - 351,390 - (44,500) 306,890
Other 39,485 101,761 (14,280) (52,281) 74,685
Allowance (382,896) - - 382,896 -
$ 382,896 $1,025,638 $(426,086) $(135,088) $ 847,360
</TABLE>
On September 30, 1999, the Company entered into an Exchange Agreement with
Xplorer, Inc., where it transfered receivables with a carrying value of $90,588
in exchange for a Note issued by Dega Technologies, Inc.(the "Dega Note") in the
face amount of $500,000. On November 30, 1999, the Company exchanged the Dega
Note for a 59% equity interest in Atlantic Pacific Trust, LLC ("APT") (Note 6).
As part of these exchanges, the Company guaranteed the full collectibility of
the Dega Note. Although the Dega Note is in default, it is secured by 200,000
shares of Oasis Resorts International, Inc. ("Oasis"), held by an affiliate,
with a market value at June 30, 2000 of approximately $340,000. At September 28,
2000, the value of such shares decreased to approximately $100,000. The Company
may be required to make up any deficiency in collateral.
On April 1, 2000, NuVen Advisors L.P. ("NuVen LP") assigned its interest in
advisory agreements with certain entities and affiliates. Monthly fees range
from $1,500 per month to $10,000 per month. During the year ended June 30, 2000,
the Company recorded $192,000 which are included in Income from affiliates in
the accompanying statement of operations and comprehensive income (loss).
Certain affiliates have pledged collateral securing amounts due the Company.
Accordingly, management has determined that all such receivables are fully
collectible.
NOTE 5 - EQUITY-METHOD INVESTMENTS
YES Licensing Partners, LLC
In connection with the asset purchase agreement executed on June 30, 1999, the
Company acquired a 50% equity interest in YES Licensing Partners, LLC ("YLP") at
a cost of $389,481. YLP holds six (6) trademark licenses of YES Clothing Co.
("YSCO") which have a remaining life of one to four years. In accordance with
generally accepted accounting principles, the acquisition of the YLP was
recorded at predecessor basis. The Company has reflected its proportionate share
of the equity in losses of YLP in the accompanying statement of operations for
F-13
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENT
fiscal 2000. YLP has no significant operations and no tangible assets at June
30, 2000. YLP intends to pursue licensing to strategic partners. YLP is
scheduled to dissolve on December 31, 2003. Equity in losses of YLP totaled
$135,668 during fiscal 2000. The carrying value of YLP at June 30, 2000 was
$253,813.
YES Clothing Co.
In connection with the asset purchase agreement effected on June 30, 1999, the
Company acquired 3,500,000 shares of YSCO common stock at an original cost of
$91,382. The Company's interest in YSCO represents 27% of the voting common
stock of YSCO. YSCO is an inactive company. Equity in losses of YSCO totaled
$41,235 in fiscal 2000. The carrying value of YES at June 30, 2000 was $50,147.
YES common stock is traded on the OTCBB.
Oasis Resorts International, Inc.
In connection with the asset purchase agreement executed on June 30, 1999, the
Company acquired 200,000 shares of Oasis common stock at an original cost of
$343,500. Because the President of NewBridge is also defined as a control person
of Oasis and Oasis is a consolidated subsidiary of NuOasis, the Company
reclassified its investment in Oasis as a security held for sale rather than a
marketable security. Equity in losses of Oasis totaled $38,472 in fiscal 2000.
The carrying value of Oasis at June 30, 2000 was $305,028. Oasis common stock is
now traded on the OTCBB.
Hart Industries, Inc.
The Company holds 750,000 shares of common stock in Hart Industries, Inc.
("Hart"), representing 43% of the voting control of Hart at June 30, 2000. The
Company's equity in losses during fiscal 2000 were not significant. Subsequent
to June 30, 2000, the Company's interest was reduced to 17%. Hart's common stock
did not resume trading until September 15, 2000. The Company's carrying value of
its investment in Hart is $7,500. Hart common stock is now traded on the OTCBB.
F-14
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
Combined financial data for unconsolidated equity investments
Following is a combined and condensed summary of financial data related to
equity-method investments:
<TABLE>
<CAPTION>
June 30, 2000
<S> <C>
Current assets $ 2,524,916
Noncurrent assets 8,260,974
Total assets $ 10,785,890
Current liabilities $ 11,631,840
Noncurrent liabilities 4,093,589
Total liabilities 15,725,429
Stockholders' deficit (4,939,539)
Total liabilities and stockholders deficit $ 10,785,890
</TABLE>
<TABLE>
<CAPTION>
Year ended
June 30, 2000
<S> <C>
Net revenue $ 5,822,216
Expenses 9,204,208
Net loss $ (3,381,992)
</TABLE>
NOTE 6 - INVESTMENTS HELD FOR SALE
NuOasis Resorts, Inc.
NuOasis operates as a holding company for leisure and entertainment-related
businesses. The President of NewBridge is also defined as a control person of
NuOasis. The NuOasis investment consists of a designated Series D voting,
convertible preferred stock (the "D Preferred"). The D Preferred consists of
24,000,000 shares, which were issued to NuVen Advisors, Inc. ("NuVen Advisors")
in 1993 in exchange for the investment securities with an estimated market
value, based upon independent legal and valuation opinions at the time,
discounted approximately 50% at the date of transfer, or $10,000,000. The D
Preferred is redeemable, in whole or in part, at the option of the Board of
Directors, at any time, at a redemption price of up to $24,000,000. The
Preferred D is convertible, at the option of the holder, into shares of NuOasis
common stock at an exchange rate of 0.41667 per share, or convertible into
shares having a market value at the time of such conversion of $0.41667 per
share. Market value is determined based on 50% of the closing bid price for 30
days preceding notice of conversion. The right to convert the D Preferred
expires on December 31, 2001.
F-15
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
In connection with asset purchase agreement with NuVen Capital in fiscal 1999,
the Company acquired 19,200,000 shares of D Preferred on June 30, 1999 with a
carrying value of $8,000,000. The Company obtained an independent appraisal of
the D Preferred at a fair market value of approximately $10,900,000 as of the
date of the acquisition. Since the Company is required to record the asset using
the predecessor's basis, the Company recorded the investment at $8,000,000.
At June 30, 2000, NuOasis has a stockholders' deficit of approximately
$12,000,000 and requires significant working capital to meet its obligations as
they become due. Accordingly, the carrying value of the Company's D Preferred
held substantially exceeds the net book value of NuOasis. However, NuOasis owns
investments which have a fair value which exceeds their carrying value.
Management obtained an independent appraisal of certain assets held by NuOasis
as of June 30, 2000, totaling $8.1 million. Data used to determine fair value at
June 30, 2000 adversely changed through October 25, 2000. Management is
negotiating a sale or an exchange of its interest in the D Preferred. Management
currently believes the carrying value of its investment will be recovered
through future discounted cash flows or an exchange of in-kind assets. In the
event the Company does not recover its investment by November 20, 2000,
management will take a charge to operations due to events subsequent to year end
indicating an impairment. The accompanying financial statments do not reflect
any impairment as a result of events which have ocurred subsequent to June 30,
2000.
Atlantic Pacific Trust, LLC
On November 30, 1999, the Company acquired a 59% interest in Atlantic Pacific
Trust, LLC ("APT") (Note 4). APT has rights to eight (8) unpatented mineral
claims located on Piute Mountain, Kern County, California. This group of claims
is commonly known as the Evening Star Mine. The Company intends to sell this
investment. Control of APT is considered temporary and it has received an offer
in excess of the carrying value of $90,588. No impairment was determined by
management in connection with the planned sale.
The investment is carried at cost totaling $90,588, which is deemed net
realizable value.
NOTE 7 - INVESTMENTS, AT COST
YES Clothing Co.
On February 5, 2000, the Company acquired 1,277,005 newly issued shares of
Series A Convertible Preferred Stock ("YSCO Preferred Stock") of YSCO for
$125,000. Each share of preferred stock is convertible, at the option of the
holder, into 32 65/100th shares, or a total of 41,694,213 shares of YSCO's
common stock, notwithstanding any stock dividend or reverse stock split. Such
right to convert expires in December 2003.
The YSCO Preferred Stock has the same voting rights in all matters as the common
stock on a two-for-one basis. Additionally, the holders of the YSCO Preferred
Stock are entitled to receive common stock dividends when, as, and if declared
by the directors of the Company, at the rate of $0.20 per share to be paid in
cash or in market value of the YSCO's common stock. No dividends had been
declared.
At the option of the YSCO directors, they may at any time or from time to time,
subject to applicable provisions of California law, redeem the whole or any part
of the outstanding YSCO Preferred Stock. Upon redemption, the Company will
receive for each share redeemed, the amount of two dollars ($2.00) per share,
payable in cash, plus a premium to compensate the original purchaser for the
investment risk and cost of capital equal to the greater of (a) two dollars per
share, or (b) an amount per share equal to fifty percent of the market
capitalization of YSCO on the date of notice of such redemption divided by
2,000,000. In the event of any liquidation, the YSCO Preferred Stock
shareholders are entitled to receive a preferential amount equal to two dollars
($2.00) per share plus the redemption provisions as noted above.
F-16
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
In accordance with generally accepted accounting principles, the YSCO Preferred
Stock is accounted for under the cost method, since the Company does not share
in the earnings and losses of YSCO, since participation in earnings and losses
is based on the shares of common stock held by an investor without recognition
of securities of the investee which are designated as common stock equivalents.
Diversified Land & Exploration Co.
In connection with asset purchase agreement with NuVen Capital in fiscal 1999,
the Company acquired 474,085 shares of common stock of Diversified Land and
Exploration Co. ("DL & E"). Currently, there is no market for these shares and
thus, the fair market price per share is not readily determinable. As such,
these investments are recorded in the accompanying financial statements as of
June 30, 2000, at predecessor basis of $31,311.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Operating Lease with Related Party
On June 2, 2000, the Company entered into a lease agreement with NuVen Advisors
for its corporate offices for a period of five (5) years. The Company is
obligated to pay $11,800 per month commencing August 2000. In addition, the
Company paid a $100,000 refundable security deposit to NuVen Advisors.
Future annual minimum lease payments over the next five (5) years and thereafter
are as follows:
Year Ending
June 30 Amount
2001 $ 129,800
2002 141,600
2003 141,600
2004 141,600
2005 141,600
Thereafter 11,800
$ 708,000
Rent Expense from continuing operations during the years ended June 30, 1999 and
2000 was $ -0- and $ 18,984, respectively.
F-17
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
NOTE 9 - STOCKHOLDERS' EQUITY
Common Stock Issuances
Fiscal 1999
The Board of Directors has generally used the quoted market price at or near the
date of the transaction or the value of the consideration received, whichever is
more readily determinable, to estimate the fair value of its common stock issued
for non-cash transactions. During the year ended June 30, 1999, there was no
significant market for trading for the Company's common stock, therefore, the
Board of Directors assigned an estimated fair market value for the Company's
common stock ranging from $0.60 to $1.00 per share based on the average bid-
and-asked prices during the 30 days subsequent to June 30, 1999.
On July 1, 1998, the Company issued 50,274 shares of common stock valued at
$0.90 per share or $45,247 to a director of the Company for legal services
rendered in connection with a registration of common stock and general corporate
matters. The Company accrued $10,274 of the amount due to this director as of
June 30, 1998, for services rendered in the prior fiscal year.
On July 1, 1998, the Company issued 24,000 shares of common stock valued at
$0.90 per share or $21,600 to a former chief executive officer for services
rendered during fiscal 1998. The Company accrued the amounts due this officer as
of June 30, 1998.
During the year ended June 30, 1999, the Company issued 64,000 shares of common
stock valued at $0.90 per share or $57,600 to a former executive officer, who
was also a director of the Company, for services rendered. The Company accrued
such liability at June 30, 1998.
In connection with an employment agreement, a former executive officer and
former director of the Company was entitled to a merger and acquisition fee
equal to 1/2 of 1% of the transaction amount involving the NuVen Agreement. On
June 30, 1999, upon the closing of the transaction, the Company issued 100,000
shares of common stock at $0.80 per share, based on the average bid-and-asked
price per share during the 30 days immediately after June 30, 1999. The Company
recorded $80,000 in compensation expense in connection with this issuance during
fiscal 1999, and included such costs in discontinued operations.
In connection with an advisory agreement, and as a result of services rendered
in connection with the NuVen Agreement, the Company issued 279,309 shares of
common stock to an officer and director of the Company. The Company determined
the fair market price per share to be $0.80 based on the average bid-and-asked
price per share during the 30 days immediately subsequent to June 30, 1999. The
Company recorded $223,447 of compensation expense in connection with this
issuance during fiscal 1999, and charged to continuing operations.
As discussed in Note 1, pursuant to the asset purchase agreement with NuVen
Capital, the Company issued 2,234,465 shares of common stock valued at
$10,090,793. The Board of Directors valued the Company's common stock based on
the underlying value of the assets received. NuVen Capital agreed to accept a
substantially lower value in the Company's common stock as determined based on
the 30-day moving average of the closing bid price to minimize shareholder
dilution.
F-18
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
Fiscal 2000
On July 14, 1999, the Company issued 30,000 shares of common stock to a director
and shareholder of the Company for services to be rendered in connection with a
retainer agreement for legal services commencing July 1, 1999 and continuing
through June 30, 2000. Such shares were registered by management of the Company
with the Securities and Exchange Commission pursuant to Form S-8. The shares
were valued at $30,000 and charged to operations.
Stock Incentive Plan
On April 6, 2000, the Company adopted the 2000 Stock Incentive Plan (the
"Plan"), whereby the Board of Directors reserved 1,000,000 shares for grant to
employees and consultants. At June 30, 2000, the Company has 892,000 shares
available for grant. Shares issued undr the Plan generally vest upon issuance.
The Plan expires April 6, 2003.
On May 15, 2000, the Company issued 60,000 shares of common stock under the Plan
to officers and directors of the Company for services rendered. Such shares were
registered by the Company with the Securities and Exchange Commission ("SEC")
pursuant to Form S-8. The Company recorded $180,000 of compensation expense in
connection with this issuance during fiscal 2000.
On May 15, 2000, the Company issued 48,000 shares of common stock under the Plan
to a shareholder of the Company for legal services rendered and to be rendered
in connection with a retainer agreement. Such shares were registered by
management of the Company with the SEC pursuant to Form S-8. Pursuant to the
agreement, the holder of the shares will liquidate and forward a statement which
will designate the application of the proceeds to outstanding invoices and
future services. The Company incurred approximately $90,341 of legal expense
during fiscal 2000 which are accrued in the accompanying balance sheet. The
value of shares totaling $144,000 of current assets in the accompanying balance
sheet are included in retainer held by third party until such shares are
liquidated.
Common Stock Purchase Warrants and Options
In connection with a fee agreement for professional services, the Company
granted on July 1, 1999, options to purchase 100,000 shares of common stock at
an exercise price of $3.00 per share for legal services rendered valued at
$10,000 and charged to operations. The options are fully vested and expire on
December 31, 2004.
F-19
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
Common stock purchase options and warrants consist of the following as of the
fiscal years ended June 30, 1999 and 2000:
<TABLE>
<CAPTION>
Options/Warrants
Options/Warrants Price
<S> <C> <C>
Outstanding and exercisable, June 30, 1998 62,000 $1.00 to $5.00
Canceled (60,000) $5.00
Granted 210,547 $0.70 and $2.00
Expired (20,000) $2.00
Outstanding and exercisable, June 30, 1999 192,547 $0.70 and $2.00
Canceled -
Granted 100,000 $3.00
Expired (2,000) $2.00
Outstanding and exercisable, June 30, 2000 290,547 $0.70 to $3.00
</TABLE>
In fiscal 1999, the Company repriced the exercise price of options to purchase
60,000 shares from $5.00 per share to $2.00 per share. The repricing constituted
an issuance of a new option contract. Since the estimated fair value was less
than the exercise price, no compensation was recorded in connection with the
repricing. Options to purchase 20,000 shares expired on June 30, 1999. Options
to purchase 40,000 shares expire in September 2001.
In connection with an advisory agreement between the Company and an executive
officer who is also a director, in fiscal 1999 the Company granted options to
purchase shares of common stock equal to four and nine-tenths percent (4.9%) of
the shares outstanding of the Company immediately following the purchase, or
150,547 options, exercisable at $0.70 per share. The options are fully vested
and expire on December 31, 2004. The fair market value of the underlying common
stock on the date of grant was deemed to be approximately $0.80 per share. In
accordance with APB No. 25, the Company recorded non-cash compensation expense
totaling $15,055 related to these stock options.
Pro forma information regarding net income is required by SFAS No. 123, and has
been determined as if the Company had accounted for its 150,547 employee stock
options issued in fiscal 1999 under the fair value method pursuant to SFAS No.
123, rather than the method pursuant to APB No. 25 as discussed herein. No stock
options were granted to employees in fiscal 2000. The fair value for these
options was estimated at the date of grant using a Black-Scholes option-pricing
model with the following assumptions:
<TABLE>
<CAPTION>
Year Ended June 30
1999 2000
<S> <C> <C>
Stock price per share $ 0.80 $ 1.00
Dividend yield - -
Volatility factor 1% 35%
Risk-free interest rates 5.5% 5.8%
Expected life (years) 4.5 2
</TABLE>
F-20
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
The Black-Scholes valuation model was developed for use in estimating the fair
value of traded options which have no vesting restrictions and fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee's stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
The Company's unaudited pro forma information is as follows:
<TABLE>
<CAPTION>
Year Ended June 30,
1999 2000
<S> <C> <C>
Net income (loss), as reported $ (428,107) $ 212,963
Additional compensation expense (23,105) -
Pro forma net income (loss) $ (451,212) $ 212,963
Pro forma net income (loss) per share $ (0.79) $ 0.07
</TABLE>
NOTE 10 - INCOME TAXES
For the years ended June 30, 1999 and 2000, the provision for income taxes was
not significant. The current income tax provision differs from the amount of
income tax determined by applying the expected U.S. Federal income tax rate to
pretax loss for the years ended June 30, 1999, and 2000, as a result of the
Company having a 100% valuation allowance for the expected tax benefit.
As of June 30, 1999, the Company has federal and state net operating losses
("NOLs") totaling $3.9 million and $1.2 million, respectively, to be offset
against future taxable income. The federal and state NOLs expire at various
dates through the year 2014 and 2004, respectively. The federal and state tax
codes provide for restrictive limitations on the annual utilization of net
operating loss carryforwards to offset taxable income when the stock ownership
of a company significantly changes, as defined. In light of the Company's
significant stock activity, certain of the net operating loss carryforwards are
subject to such annual limitations. At June 30, 2000, the Company's only
significant deferred tax asset consists of its NOL's valued at approximately
$1.3 million.
During the year ended June 30, 1999, the valuation allowance increased by
approximately $200,000. During the year ended June 30, 2000, the valuation
allowance decreased by approximately $80,000.
NOTE 11 - DISCONTINUED OPERATIONS
As discussed in Note 1, the Board of Directors approved the discontinuation of
its lighting business. On June 29, 1999, substantially all of the Company's
assets were sold to an employee for a $50,000 promissory note. A loss on
disposal of $30,363 was recorded upon the completion of the sale. During the
year ended June 30, 2000, the Company settled the note with the prior owner in
exchange for payment of liabilities, that had been accrued as of June 30, 1999,
of the downlight business.
F-21
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
Net losses from the Company's discontinued operations have been segregated from
continuing operations and reported as a separate line item on the statements of
operations. Prior year reported results have been reclassified in order to
provide for consistent presentation.
Operating results from the Company's discontinued operations for the year ended
June 30, 1999, are as follows:
Revenues $ 406,343
Costs of sales 273,590
Gross profit 132,753
Selling, general & administrative 167,515
Loss from operations (34,762)
Provision for income taxes 800
Loss from operations $ (35,562)
NOTE 12 - RELATED PARTIES TRANSACTIONS
Transactions with Parke
During the year ended June 30, 1999, the Company sold approximately $101,000 (or
25% of total sales) to Parke. As of June 30, 1999, there were no amounts due
from Parke.
On January 15, 1998, the Company entered into an administrative services
agreement with Parke. Pursuant to this agreement, Parke provided the Company
with general and administrative services for $2,500 per month. During fiscal
1999, the Company incurred $26,250 of certain general and administrative
expenses pursuant to this agreement.
The Company also shared employees and other general administrative services with
Parke. During the year ended June 30, 1999, the Company incurred approximately
$88,137 in payroll and other general administrative expenses (exclusive of the
service agreement mentioned above).
Also, see Notes 4 and 9 for additional disclosure of additional related party
transactions.
NuVen Advisors, LP
Effective July 1, 1999, the Company entered into an Advisory and Management
Agreement with NuVen LP (the "NuVen Advisory Agreement") to perform professional
and advisory services. Pursuant to the NuVen Advisory Agreement, the Company
agreed to pay NuVen LP $120,000 annually, payable monthly in $10,000 increments
in arrears. The Company expensed $95,000 in fiscal 2000. The NuVen Advisory
Agreement was effectively canceled on April 1, 2000, when the Company assumed
the advisory agreements of NuVen LP.
NOTE 13 - SUBSEQUENT EVENTS
Proposed Acquistion
On October 5, 2000, the Company entered into a definitive agreement to acquire
the assets of SkateSurfSnow.com ("SSS") from PacificTradingPost.com Inc. The
Company will issue 136,000 shares of its common stock and warrants to acquire
1,204,004 shares of the Company's common stock for $4.00 per share for the net
assets of SSS. The acquisition has not been closed since SSS has been unable to
deliver clear title to its assets. SSS operates an e-commerce web site and
retail store in Huntington Beach, CA., serving the skateboarding, surfing
F-22
<PAGE>
NEWBRIDGE CAPITAL, INC.
(FORMERLY, SCIENTIFIC NRG, INCORPORATED)
NOTES TO FINANCIAL STATEMENTS
and snowboarding markets. SSS sells core action sports products, the latest hard
and soft goods, apparel and accessories. There are no assurances that the
acquisition will be completed.
Transaction With Officer
In August 2000, the Company advanced $375,000 to an officer to allow him to
exercise options in Hart. The amounts are non-interest bearing and due on
demand.
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