As filed with the Securities and Exchange Commission on February 10, 2006
Registration No. 333-_____
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
----------------------------
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
NEWGEN TECHNOLOGIES, INC.
(Name of small business issuer in its charter)
Nevada 4925 33-0840184
(State or other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Classification Code Number) Identification No.)
Organization)
6000 Fairview Road, 12th Floor
Charlotte, North Carolina 28210
(704) 552-3590
(Address and telephone number of principal
executive offices and principal place
of business) Bruce Wunner, Chief
Executive Officer
NewGen Technologies, Inc.
6000 Fairview Road, 12th Floor
Charlotte, North Carolina 28210
(704) 552-3590
(Name, address and telephone number of agent for service)
Copies to:
Thomas A. Rose, Esq.
Yoel Goldfeder, Esq.
Sichenzia Ross Friedman Ference LLP
1065 Avenue of the Americas, 21st Flr.
New York, New York 10018
(212) 930-9700
(212) 930-9725 (fax)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If any securities being registered on this Form are to be offered on a delayed
or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [ ]
1
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. _________
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. _________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. _________
2
CALCULATION OF REGISTRATION FEE
- ------------------------------- -------------------- ---------------- --------------------------- --------------------
Title of each class of Number of Shares Proposed Proposed maximum Amount of
securities to be registered to be registered maximum aggregate offering price registration fee
(1) offering
price per
share
- ------------------------------- -------------------- ---------------- --------------------------- --------------------
Common Stock, $0.001 par 19,531,250(2) $2.75(3) $53,710,937.50 $5,747.07
value issuable upon
conversion of Convertible
Debentures
- ------------------------------- -------------------- ---------------- --------------------------- --------------------
Common Stock, $0.001 par
value issuable upon exercise 5,625,000 $1.00(4) $5,625,000.00 $601.88
of warrants
- ------------------------------- -------------------- ---------------- --------------------------- --------------------
Common Stock, $0.001 par
value issuable upon exercise 2,155,000 $0.001(4) $2,155.00 $0.23
of warrants
- ------------------------------- -------------------- ---------------- --------------------------- --------------------
Common Stock, $0.001 par
value issuable upon exercise 100,000 $5.00(4) $500,000.00 $53.50
of warrants
- ------------------------------- -------------------- ---------------- --------------------------- --------------------
Common Stock, $0.001 par
value issuable upon exercise 140,000 $1.50(4) $210,000.00 $22.47
of warrants
- ------------------------------- -------------------- ---------------- --------------------------- --------------------
Common Stock, $0.001 par 20,124,588 $2.75(3) $55,342,617.00 $5,921.66
value
- ------------------------------- -------------------- ---------------- --------------------------- --------------------
Total 47,675,838 $115,390,709.50 $12,346.81
- ------------------------------- -------------------- ---------------- --------------------------- --------------------
(1) Includes shares of our common stock, par value $0.001 per share, which
may be offered pursuant to this registration statement, which shares
are issuable upon conversion of convertible debentures held by the
selling stockholders. In addition to the shares set forth in the table,
the amount to be registered includes an indeterminate number of shares
issuable upon conversion of the convertible debentures, as such number
may be adjusted as a result of stock splits, stock dividends and
similar transactions in accordance with Rule 416. The number of shares
of common stock registered hereunder represents a good faith estimate
by us of the number of shares of common stock issuable upon conversion
of the convertible debentures and upon exercise of the warrants. For
purposes of estimating the number of shares of common stock to be
included in this registration statement, we calculated a good faith
estimate of the number of shares of our common stock that we believe
will be issuable upon conversion of the convertible debentures and upon
exercise of the warrants to account for market fluctuations, and
antidilution and price protection adjustments, respectively. Should the
conversion ratio result in our having insufficient shares, we will not
rely upon Rule 416, but will file a new registration statement to cover
the resale of such additional shares should that become necessary. In
addition, should a decrease in the exercise price as a result of an
issuance or sale of shares below the then current market price result
in our having insufficient shares, we will not rely upon Rule 416, but
will file a new registration statement to cover the resale of such
additional shares should that become necessary.
(2) Includes a good faith estimate of the shares underlying the convertible
debenture to account for market fluctuations.
(3) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(c) and Rule 457(g) under the Securities Act of
1933, using the average of the high and low price as reported on the
Over-The-Counter Bulletin Board on February 8, 2006, which was $2.75
per share.
(4) Calculated in accordance with Rule 457(g)(1) under the Securities Act
of 1933.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
3
The information in this Prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement is filed with the Securities and Exchange Commission and becomes
effective. This Prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the sale is not
permitted.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED FEBRUARY 10, 2006
NEWGEN TECHNOLOGIES, INC.
47,675,838 SHARES OF
COMMON STOCK
This prospectus relates to the resale by the selling stockholders of up
to 47,675,838 shares of our common stock, including up to 19,531,250 shares of
common stock underlying a convertible debenture in the principal amount of
$5,000,000, up to 5,625,000 shares issuable upon the exercise of common stock
purchase warrants with an exercise price of $1.00 per share, 2,155,000 shares
issuable upon the exercise of common stock purchase warrants with an exercise
price of $0.001 per share, 100,000 shares issuable upon the exercise of common
stock purchase warrants with an exercise price of $5.00 per share and 140,000
shares issuable upon the exercise of common stock purchase warrants with an
exercise price of $1.00 per share. The $5,000,000 convertible debenture is
convertible into our common stock at the lower of $1.00 or 80% of the lowest
closing bid price for the common stock for the 5 trading days before but not
including the conversion date.
The selling stockholders may sell common stock from time to time in the
principal market on which the stock is traded at the prevailing market price or
in negotiated transactions. The selling stockholders may be deemed underwriters
of the shares of common stock, which they are offering. We are not selling any
shares of common stock in this offering and therefore will not receive any
proceeds from this offering.
Our common stock is listed on the Over-The-Counter Bulletin Board under
the symbol "NWGN." The last reported sales price per share of our common stock
as reported by the Over-The-Counter Bulletin Board on February 8, 2006, was
$2.75.
Investing in these securities involves significant risks. See "Risk
Factors" beginning on page 7.
No other underwriter or person has been engaged to facilitate the sale
of shares of common stock in this offering. None of the proceeds from the sale
of stock by the selling stockholders will be placed in escrow, trust or any
similar account.
We may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. You should read the entire prospectus and
any amendments or supplements carefully before you make your investment
decision.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ________, 2006.
4
Table Of Contents
Prospectus Summary........................................................7
Risk Factors..............................................................9
Use Of Proceeds..........................................................10
Market For Common Equity And Related Stockholder Matters.................17
Business.................................................................22
Facilities...............................................................26
Employees................................................................27
Legal Proceedings........................................................27
Management...............................................................27
Certain Relationships And Related Transactions...........................29
Security Ownership Of Certain Beneficial Owners And Management...........30
Description Of Securities To Be Registered...............................30
Indemnification For Securities Act Liabilities...........................31
Plan Of Distribution.....................................................31
Penny Stock..............................................................31
Selling Stockholders.....................................................33
Legal Matters............................................................37
Experts..................................................................37
Available Information....................................................37
5
PROSPECTUS SUMMARY
The following summary highlights selected information contained in this
prospectus. This summary does not contain all the information you should
consider before investing in the securities. Before making an investment
decision, you should read the entire prospectus carefully, including the "risk
factors" section, the financial statements and the notes to the financial
statements. As used throughout this prospectus, the terms "NewGen," "NWGN," the
"Company," "we," "us," and "our" refer to NewGen Technologies, Inc.
NEWGEN TECHNOLOGIES, INC.
We were incorporated under the laws of the State of Nevada on January
29, 1997. On July 29, 2005, we entered into a Share Exchange Agreement with
ReFuel America, Inc., a Delaware corporation and the shareholders of ReFuel
America, Inc., which closed on August 2, 2005. Pursuant to the Agreement, we
acquired all of the outstanding equity stock of ReFuel America, Inc from the
shareholders of ReFuel America, Inc. On August 10, 2005 we changed our name to
NewGen Technologies, Inc.
Subsequent to the acquisition of ReFuel America, Inc., we develop for
commercial use various intellectual property to be utilized in the production of
traditional and alternative fuels, which are intended to increase an
automobile's miles per gallon while providing cleaner fuel emissions by changing
the property of fuel to allow more complete combustion. In addition, through the
development of various joint ventures, we will produce alternative fuels and
blend with traditional fuels for distribution.
For the period from June 1, 2005, our inception, through September 30,
2005, we had no revenue and a net loss of $2,495,235. As a result of this loss
and our small amount of working capital, in their report on our financial
statements, our auditors expressed substantial doubt about our ability to
continue as a going concern.
Our executive offices are located at 6000 Fairview Road, 12th Floor,
Charlotte, North Carolina 28210, and our telephone number is (704) 552-3590. We
are a Nevada corporation.
The Offering
Common stock outstanding before the offering........... 38,611,224 shares
Common stock offered by selling stockholders........... Up to 47,675,838 shares, including the following:
o up to 19,531,250 shares of common stock underlying
convertible debentures in the principal amount of
$5,000,000 (includes a good faith estimate of the
shares underlying the callable secured convertible
notes to account for market fluctuations
antidilution and price protection adjustments,
respectively),
o up to 5,625,000 shares of common stock issuable
upon the exercise of common stock purchase
warrants at an exercise price of $1.00 per share
(includes a good faith estimate of the shares
underlying the warrants to account for market
fluctuations antidilution and price protection
adjustments, respectively),
o 2,155,000 shares of common stock issuable upon the
exercise of common stock purchase warrants at an
exercise price of $0.001 per share, o 100,000
shares of common stock issuable upon the exercise
of common stock purchase warrants at an exercise
price of $5.00 per share
o 140,000 shares of common stock issuable upon the
exercise of common stock purchase warrants at an
exercise price of $1.50 per share
Common stock to be outstanding after the offering...... Up to 66,162,474 shares.
Use of proceeds....................................... We will not receive any proceeds from the sale of the common
stock hereunder. However, we will receive the sale price of
any common stock we sell to the selling stockholder upon
exercise of the warrants. We expect to use the proceeds
received from the exercise of the warrants, if any, for
general working capital purposes. See "Use of Proceeds" for a
complete description.
OTCBB Symbol.................................. ........ NWGN
The above information regarding common stock to be outstanding after the
offering is based on 38,611,224 shares of common stock outstanding as of
February 8, 2006 and assumes the subsequent conversion of our issued secured
convertible notes and exercise of warrants by our selling stockholders.
6
RISK FACTORS
This investment has a high degree of risk. Before you invest you should
carefully consider the risks and uncertainties described below and the other
information in this prospectus. If any of the following risks actually occur,
our business, operating results and financial condition could be harmed and the
value of our stock could go down. This means you could lose all or a part of
your investment.
Risks Related to Our Financial Results
We Are a Development Stage Company with Little Experience in the Operation of
its Business. There is a Risk that Our Business May Fail.
To date, we have been involved primarily in product development in
developing sources of supply for product components and developing joint
ventures for production of alternative fuels. We have only a limited operating
history and no experience in producing and bringing to market its products. We
may experience in the future many of the problems, delays and expenses
encountered by any early stage business, many of which are beyond its control.
These problems include, but are not limited to:
o substantial delays and expenses related to testing, development, and
production of our products,
o unanticipated difficulties relating to the production and marketing
of a new product in the marketplace,
o competition from larger and more established companies
o lack of market acceptance of our new products and technologies.
We have only a limited operating history upon which to base any
projection of the likelihood it will prove successful, and thus we cannot assure
that it will achieve profitable operations or even generate any operating
revenues.
In addition, our technology is a new approach to reducing harmful
emissions from certain internal combustion engines and the unproven aspects of
its technology may never prove commercially viable. There is the potential that
we may not be able to produce on a sustainable basis the preliminary performance
results achieved in certain of its research efforts. It is also possible that
our products will not meet certain regulatory requirements and we may not be
able to manufacture or successfully market its products at a reasonable cost.
We May Need to Raise Capital to Fund our Operations, and our Failure to Obtain
Funding When Needed may Force us to Delay, Reduce or Eliminate our Product
Development efforts.
If in the future, if we are not capable of generating sufficient
revenues from operations and our capital resources are insufficient to meet
future requirements, we may have to raise funds to continue the
commercialization, marketing and sale of our technologies and products.
We cannot be certain that funding will be available on acceptable
terms, or at all. To the extent that we raise additional funds by issuing equity
securities, our stockholders may experience significant dilution. Any debt
financing, if available, may involve restrictive covenants that impact our
ability to conduct our business. If we are unable to raise additional capital if
required or on acceptable terms, it may have to significantly delay, scale back
or discontinue the development and/or commercialization of one or more of its
product candidates, restrict its operations or obtain funds by entering into
agreements on unattractive terms.
Our Independent Auditors Have Expressed Doubt About Our Ability to Continue as a
Going Concern, Which May Hinder Our Ability to Obtain Future Financing.
In their report dated December 27, 2005, our independent auditors stated
that our financial statements for the period from June 1, 2005 (inception)
through September 30, 2005, were prepared assuming that we would continue as a
going concern. The independent auditors noted that we have suffered significant
losses from operations and have a small amount of working capital. As a result
of the going concern qualification, we may find it much more difficult to obtain
financing in the future, if required. Further, any financing we do obtain may be
on less favorable terms.
7
Risks Related To Our Business
Our Commercial Success Will Depend in Part on Our Ability to Obtain and Maintain
Patent Protection.
Our success will depend in part on our ability to maintain and/or
obtain and enforce patent protection for our technologies and to preserve its
trade secrets, and to operate without infringing upon the proprietary rights of
third parties. We have obtained rights to three patent applications filed in
Great Britain, and may, in the future, seek rights from third parties to other
patent applications or patented technology. There can be no assurance that
patents will issue from the patent applications filed or that the scope of any
claims granted in any patent will provide us with proprietary protection or a
competitive advantage.
We cannot be certain that the creators of our technology were the first
inventors of inventions covered by its patent applications or that they were the
first to file. Accordingly, there can be no assurance that patents will be valid
or will afford us with protection against competitors with similar technology.
The failure to maintain and/or obtain patent protection on the technologies
underlying our proposed products may have a material adverse effect on our
competitive position and business prospects.
It is also possible that our technologies may infringe on patents or
other rights owned by others. We may have to alter our products or processes,
pay licensing fees, defend an infringement action or challenge the validity of
the patents in court, or cease activities altogether because of patent rights of
third parties, thereby causing additional unexpected costs and delays to us.
There can be no assurance that a license will be available to us, if at all,
upon terms and conditions acceptable to us or that we will prevail in any patent
litigation. Patent litigation is costly and time consuming, and there can be no
assurance that we will have sufficient resources to pursue such litigation. If
we do not obtain a license under such patents, are found liable for infringement
or are not able to have such patents declared invalid, we may be liable for
significant money damages and may encounter significant delays in bringing
products and services to market. There can be no assurance that we have
identified United States and foreign patents that pose a risk of infringement.
We May Experience Difficulties in the Introduction of New Products that Could
Result in Us Having to Incur Significant Unexpected Expenses or Delay the Launch
of New Products.
Our technologies and products are in various stages of development.
These development stage products may not be completed in time to allow
production or marketing due to the inherent risks of new product and technology
development, limitations on financing, competition, obsolescence, loss of key
personnel and other factors. Unanticipated technical obstacles can arise at any
time and result in lengthy and costly delays or in a determination that further
development is not feasible. Therefore, there can be no assurance of timely
completion and introduction of improved products on a cost-effective basis, or
that such products, if introduced, will achieve market acceptance such that they
will sustain us to achieve profitable operations.
We currently do not have any mechanism for the distribution of our
alternative fuel products. We have entered into an agreement to acquire three
fuel terminals located in the Southeast region of the Unites States. Although we
have entered into an agreement to retain an experienced management company to
operate and manage the terminals, we have no experience in the operation of a
distribution center and if we do not ultimately acquire the fuel terminals or if
we are unable to develop a sufficient method for the distribution of our
alternative fuel products we will be unable to develop the commercial use of our
intellectual property.
We Will Require Additional Financing in Order to Construct Bio-Diesel Production
Plants
We will need funding in excess of $250 million in order to construct
several bio-diesel production facilities. Accordingly we will be required to
obtain additional private or public financing including debt or equity financing
and there can be no assurance that such financing will be available as needed,
or, if available, on terms favorable to us. Any additional equity financing may
be dilutive to stockholders and such additional equity securities may have
rights, preferences or privileges that are senior to those of our existing
common stock. Furthermore, if we are unable to obtain financing we will not be
able to consummate the acquisition of the fuel terminals and we may have to
forfeit the deposit paid to the seller as liquidated damages.
8
We are Dependent on Third Parties for the Manufacturing of Certain of our
Products and any Conflicts with These Third Parties May Prevent it from
Commercializing its Products.
We do not control these third parties, nor are we able to control the
amount of time and effort they put forth on our behalf. It is possible that any
of these third parties may not perform as expected, and that they may breach or
terminate their agreements with us before completing their work. It is also
possible that they may choose to provide services to a competitor. Any failure
of a third party to provide us with the services for which it has contracted
could prevent us from commercializing our products or delay market introduction.
We Have Entered into Several Joint Venture Agreements to Build and Operate
Biodiesel Plants, But We Have No Experience in the Construction or Operation of
Such Facilities, Therefore There is a Risk that these Joint Ventures May Not be
Successful and We Will Dependent on Third Parties for Supply of Biodiesel.
We have entered into several joint venture agreements to build and
operate biodiesel plants around the United States and in Europe. Although we
plan on hiring experienced engineers to assist in the development of these
facility we do not have experience in the construction industry or experience in
the production of biodiesel fuel. Accordingly, we will be dependent on the
experience of our joint venture partners and employees with respect to these
projects. If these joint ventures are not successful we will then be required to
locate alternative means to produce our biodiesel products.
We are Dependent on Supplies of Gasoline and Diesel to Produce our Products.
The production of our products is dependent on a sufficient supply of
gasoline and diesel. If we are unable to obtain a sufficient fuel supply it
could prevent us from commercializing our blended products or we would have to
market 100% biodiesel and additive only.
We are Dependent Upon Key Personnel.
Our success is heavily dependent on the continued active participation of
certain of our current executive officers, including S. Bruce Wunner and Ian
Williamson. Loss of the services of one or both of these officers could have a
material adverse effect upon our business, financial condition or results of
operations. Neither of these individuals currently have any plans to retire or
leave in the near future. We do not maintain any key life insurance policies for
any of its executive officers or other personnel. The loss of any of our senior
management could significantly impact our business until adequate replacements
can be identified and put in place.
There is a Risk that Products Developed by Competitors Will Reduce Our Profits
or Force Us Out of Business.
We may face competition from companies that are developing products
similar to those we are developing. The petroleum/fossil fuels industry has
spawned a large number of efforts to create technologies that help reduce or
eliminate harmful emissions from the burning of fuels. These companies may have
significantly greater marketing, financial and managerial resources than us. We
cannot assure investors that our competitors will not succeed in developing and
distributing products that will render our products obsolete or noncompetitive.
Generally, such competition could potentially force us out of business.
Our Products Can Only Be Applied to a Limited Range of Uses With the Resulting
Concentration Possibly Limiting our Potential Growth.
Our products are being developed with a limited set of functional uses
relating primarily to internal combustion engines. Significant efforts exist to
find alternatives to internal combustion engines. In addition, the regulatory
environment is becoming increasingly restrictive with regard to the performance
of internal combustion engines and the harmful emissions they produce. If
alternatives to internal combustion engines become commercially viable, it is
possible that the potential market for our products could be reduced, if not
eliminated.
9
We May Be Subject to Government Approvals and Regulations that Reduce our
Ability to Commercialize our Products, Increase our Costs of Operations and
Decrease our Ability To Generate Income.
We are subject to United States and international laws and regulations
regarding the development, production, transportation and sale of the products
it sells. There is no single regulatory authority to which we must apply for
certification or approval to sell its products in the United States or outside
its borders.
There can be no assurance that we will obtain regulatory approvals and
certifications for our products. Even if we are granted such regulatory
approvals and certifications, it may be subject to limitations imposed on the
use of our products. In the future, we may be required to comply with certain
restrictive regulations, or potential future regulations, rules, or directives.
We cannot guarantee that restrictive regulations will not, in the future, be
imposed. Such potential regulatory conditions or compliance with such
regulations may increase our cost of operations or decrease our ability to
generate income.
We Create Products That May Have Harmful Effects on the Environment If Not
Stored and Handled Properly Prior to Use, Which Could Result in Significant
Liability and Compliance Expense.
The re-processing of refined fossil fuels involves the controlled use
of materials that are hazardous to the environment. We cannot eliminate the risk
of accidental contamination or discharge and any resulting problems that occur.
Federal, state and local laws and regulations govern the use, manufacture,
storage, handling and disposal of these materials. We may be named a defendant
in any suit that arises from the improper handling, storage or disposal of these
products. We could be subject to civil damages in the event of an improper or
unauthorized release of, or exposure of individuals to, hazardous materials.
Claimants may sue us for injury or contamination that results from use by third
parties of alternative fuel products, and our liability may exceed our total
assets. Compliance with environmental laws and regulations may be expensive, and
current or future environmental regulations may impair our research, development
and production efforts.
We May Have Difficulties Managing Growth Which Could Lead to Higher Losses.
While we have not yet achieved any revenues through the sale or
licensing of our products, should certain events occur, we might be in a
position to rapidly commercialize our products. Rapid growth would strain our
human and capital resources, potentially leading to higher operating losses. Our
ability to manage operations and control growth will be dependent upon our
ability to raise and spend capital to improve its operational, financial and
management controls, reporting systems and procedures, and to attract and retain
adequate numbers of qualified employees. Should we be unable to successfully
create improvements to its internal procedures and controls in an efficient and
timely manner, then management may receive inadequate information necessary to
manage our operations, possibly causing additional expenditures and inefficient
use of existing human and capital resources.
Risks Relating To Our Current Financing
There Are A Large Number of Shares Underlying Our Convertible Debentures And
Warrants That May Be Available For Future Sale And The Sale Of These Shares May
Depress The Future Market Price Of Our Common Stock.
As of February 8, 2006, we had 38,611,224 shares of common stock issued
and outstanding and convertible debentures outstanding that may be converted
into an estimated 3,906,250 shares of common stock, and outstanding warrants to
purchase up to 5,625,000 shares of common stock. In addition, other warrants to
purchase an aggregate of 2,395,000 and options to purchase 800,000 shares of
common stock have been granted. The number of shares of common stock issuable
upon conversion of the outstanding convertible debentures may increase if the
market price of our stock declines. All of the shares, including all of the
shares issuable upon conversion of the notes and upon exercise of our warrants,
may be sold without restriction. There is currently a limited market for shares
of our common stock and the sale of these shares may adversely affect the market
price of our common stock.
10
The Continuously Adjustable Conversion Price Feature Of Our Convertible
Debentures Could Require Us To Issue A Substantially Greater Number Of Shares,
Which Will Cause Dilution To Our Existing Stockholders.
Our obligation to issue shares upon conversion of our convertible
debenture in the principal amount of $5,000,000 is essentially limitless since
conversion is at the lower of $1.00 or 80% of the lowest closing bid price for
the common stock for the 5 trading days before but not including the conversion
date. Accordingly, the number of shares of common stock issuable upon conversion
of our secured convertible notes will increase if the market price of our stock
declines, which will cause dilution to our existing stockholders. The following
is an example of the amount of shares of our common stock that are issuable,
upon conversion of the callable secured convertible notes (excluding accrued
interest), based on market prices 25%, 50% and 75% below the current market
price of $2.75.
Number % of
% Below Price Per of Shares Outstanding
Market Share Issuable Stock
------ ----- -------- -----
25% $2.0625 2,367,424 5.84%
50% $1.3750 3,551,136 8.51%
75% $0.6875 7,102,273 15.69%
As illustrated, the number of shares of common stock issuable upon
conversion of our secured convertible notes will increase if the market price of
our stock declines, which will cause dilution to our existing stockholders.
The Continuously Adjustable Conversion Price Feature Of Our $5,000,000 Principal
Convertible Debenture May Encourage Investors To Make Short Sales In Our Common
Stock, Which Could Have A Depressive Effect On The Price Of Our Common Stock.
The convertible debenture is convertible into shares of our common
stock at a 20% discount to the trading price of the common stock prior to the
conversion. The significant downward pressure on the price of the common stock
as the selling stockholder converts and sells material amounts of common stock
could encourage short sales by investors. This could place further downward
pressure on the price of the common stock. There is currently a limited market
for our common stock and the selling stockholder could sell common stock into
the market in anticipation of covering the short sale by converting their
securities, which could cause the further downward pressure on the stock price.
In addition, not only the sale of shares issued upon conversion or exercise of
notes, warrants and options, but also the mere perception that these sales could
occur, may adversely affect the market price of the common stock.
The Issuance Of Shares Upon Conversion Of The Convertible Debentures And
Exercise Of Outstanding Warrants May Cause Immediate And Substantial Dilution To
Our Existing Stockholders.
The issuance of shares upon conversion of the convertible debentures
and exercise of warrants may result in substantial dilution to the interests of
other stockholders since the selling stockholders may ultimately convert and
sell the full amount issuable on conversion. Although the selling stockholders
may not convert their convertible debentures and/or exercise their warrants if
such conversion or exercise would cause them to own more than 4.9% of our
outstanding common stock, this restriction does not prevent the selling
stockholders from converting and/or exercising some of their holdings and then
converting the rest of their holdings. In this way, the selling stockholders
could sell more than this limit while never holding more than this limit. There
is no upper limit on the number of shares that may be issued which will have the
effect of further diluting the proportionate equity interest and voting power of
holders of our common stock, including investors in this offering.
In The Event That Our Stock Price Declines, The Shares Of Common Stock Allocated
For Conversion Of The Convertible Debentures And Registered Pursuant To This
Prospectus May Not Be Adequate And We May Be Required To File A Subsequent
Registration Statement Covering Additional Shares. If The Shares We Have
Allocated And Are Registering Herewith Are Not Adequate And We Are Required To
File An Additional Registration Statement, We May Incur Substantial Costs In
Connection Therewith.
11
Based on the current conversion price of our convertible debentures, we
have made a good faith estimate as to the amount of shares of common stock that
we are required to register and allocate for conversion of the convertible
debentures. Accordingly, we have allocated and are registering 25,156,250 shares
to cover the conversion of the convertible debentures and stock purchase
warrants. In the event that our conversion or exercise price decreases, the
shares of common stock we have allocated for conversion of the convertible
debentures and are registering hereunder may not be adequate. If the shares we
have allocated to the registration statement are not adequate and we are
required to file an additional registration statement, we may incur substantial
costs in connection with the preparation and filing of such registration
statement.
If We Are Required For Any Reason To Repay Our Outstanding Convertible
Debentures, We Would Be Required To Deplete Our Working Capital, If Available,
Or Raise Additional Funds. Our Failure To Repay The Convertible Debentures, If
Required, Could Result In Legal Action Against Us, Which Could Require The Sale
Of Substantial Assets.
On January 24, 2006, we entered into a financing arrangement involving the sale
of an aggregate of $5,000,000 principal amount of convertible debentures and
stock purchase warrant to buy 1,125,000 shares of our common stock. The
convertible debenture is due and payable, with 10% interest, three years from
the date of issuance, unless sooner converted into shares of our common stock.
In addition, any event of default such as our failure to repay the principal or
interest when due, our failure to issue shares of common stock upon conversion
by the holder, our failure to timely file a registration statement or have such
registration statement declared effective, breach of any covenant,
representation or warranty in the Securities Purchase Agreement or related
convertible note, the assignment or appointment of a receiver to control a
substantial part of our property or business or the commencement of a
bankruptcy, insolvency, reorganization or liquidation proceeding against us
could require the early repayment of the convertible debentures. We anticipate
that the full amount of the convertible debentures will be converted into shares
of our common stock, in accordance with the terms of the convertible debentures.
If we are required to repay the convertible debentures, we would be required to
use our limited working capital and raise additional funds. If we were unable to
repay the notes when required, the note holders could commence legal action
against us and foreclose on all of our assets to recover the amounts due. Any
such action would require us to curtail or cease operations.
Risks Related To This Offering
There Is No Assurance Of An Established Public Trading Market, Which Would
Adversely Affect The Ability Of Investors In Our Company To Sell Their
Securities In The Public Markets.
Although our common stock trades on the Over-the-Counter Bulleting
Board (the "OTCBB"), a regular trading market for the securities may not be
sustained in the future. The NASD has enacted recent changes that limit
quotations on the OTCBB to securities of issuers that are current in their
reports filed with the Securities and Exchange Commission. The effect on the
OTCBB of these rule changes and other proposed changes cannot be determined at
this time. The OTCBB is an inter-dealer, Over-The-Counter market that provides
significantly less liquidity than the NASD's automated quotation system (the
"NASDAQ Stock Market"). Quotes for stocks included on the OTCBB are not listed
in the financial sections of newspapers as are those for The Nasdaq Stock
Market. Therefore, prices for securities traded solely on the OTCBB may be
difficult to obtain and holders of common stock may be unable to resell their
securities at or near their original offering price or at any price. Market
prices for our common stock will be influenced by a number of factors,
including:
12
o the issuance of new equity securities;
o changes in interest rates;
o competitive developments, including announcements by competitors of
new products or services or significant contracts, acquisitions,
strategic partnerships, joint ventures or capital commitments;
o variations in quarterly operating results;
o change in financial estimates by securities analysts;
o the depth and liquidity of the market for our common stock;
o investor perceptions of our company and the technologies industries
generally; and
o general economic and other national conditions.
The Limited Prior Public Market And Trading Market May Cause Volatility In The
Market Price Of Our Common Stock.
Our common stock is currently traded on a limited basis on the OTCBB
under the symbol "NWGN." The quotation of our common stock on the OTCBB does not
assure that a meaningful, consistent and liquid trading market currently exists,
and in recent years such market has experienced extreme price and volume
fluctuations that have particularly affected the market prices of many smaller
companies like us. Our common stock is thus subject to volatility. In the
absence of an active trading market:
o investors may have difficulty buying and selling or obtaining market
quotations;
o market visibility for our common stock may be limited; and
o a lack of visibility for our common stock may have a depressive
effect on the market for our common stock.
Our Common Stock Could Be Considered To Be A "Penny Stock."
Our common stock could be considered to be a "penny stock" if it meets
one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under
Section 15(g) of the Securities Exchange Act of 1934, as amended. These include
but are not limited to the following: (i) the stock trades at a price less than
$5.00 per share; (ii) it is NOT traded on a "recognized" national exchange;
(iii) it is NOT quoted on The Nasdaq Stock Market, or even if so, has a price
less than $5.00 per share; or (iv) is issued by a company with net tangible
assets less than $2.0 million, if in business more than a continuous three
years, or with average revenues of less than $6.0 million for the past three
years. The principal result or effect of being designated a "penny stock" is
that securities broker-dealers cannot recommend the stock but must trade in it
on an unsolicited basis.
Broker-Dealer Requirements May Affect Trading And Liquidity.
Section 15(g) of the Securities Exchange Act of 1934, as amended, and
Rule 15g-2 promulgated thereunder by the SEC require broker-dealers dealing in
penny stocks to provide potential investors with a document disclosing the risks
of penny stocks and to obtain a manually signed and dated written receipt of the
document before effecting any transaction in a penny stock for the investor's
account.
Potential investors in our common stock are urged to obtain and read
such disclosure carefully before purchasing any shares that are deemed to be
"penny stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to
approve the account of any investor for transactions in such stocks before
selling any penny stock to that investor. This procedure requires the
broker-dealer to (i) obtain from the investor information concerning his or her
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on that information, that transactions in penny
stocks are suitable for the investor and that the investor has sufficient
knowledge and experience as to be reasonably capable of evaluating the risks of
penny stock transactions; (iii) provide the investor with a written statement
setting forth the basis on which the broker-dealer made the determination in
(ii) above; and (iv) receive a signed and dated copy of such statement from the
investor, confirming that it accurately reflects the investor's financial
situation, investment experience and investment objectives. Compliance with
these requirements may make it more difficult for holders of our common stock to
resell their shares to third parties or to otherwise dispose of them in the
market or otherwise.
13
Shares Eligible For Future Sale May Adversely Affect The Market Price Of Our
Common Stock, As The Future Sale Of A Substantial Amount Of Our Restricted Stock
In The Public Marketplace Could Reduce The Price Of Our Common Stock.
From time to time, certain of our stockholders may be eligible to sell
all or some of their shares of common stock by means of ordinary brokerage
transactions in the open market pursuant to Rule 144, promulgated under the
Securities Act ("Rule 144"), subject to certain limitations. In general,
pursuant to Rule 144, a stockholder (or stockholders whose shares are
aggregated) who has satisfied a one-year holding period may, under certain
circumstances, sell within any three-month period a number of securities which
does not exceed the greater of 1% of the then outstanding shares of common stock
or the average weekly trading volume of the class during the four calendar weeks
prior to such sale. Rule 144 also permits, under certain circumstances, the sale
of securities, without any limitations, by a non-affiliate of our company that
has satisfied a two-year holding period. Any substantial sale of common stock
pursuant to Rule 144 or pursuant to any resale prospectus may have an adverse
effect on the market price of our securities.
14
USE OF PROCEEDS
This prospectus relates to shares of our common stock that may be
offered and sold from time to time by selling stockholders. We will receive no
proceeds from the sale of shares of common stock in this offering. However, we
will receive the sale price of any common stock we sell to the selling
stockholder upon exercise of the warrants. We expect to use the proceeds
received from the exercise of the warrants, if any, for general working capital
purposes. However, the selling stockholders will be entitled to exercise the
warrants on a cashless basis if the shares of common stock underlying the
warrants are not then registered pursuant to an effective registration statement
or if there is an event of default. In the event that the selling stockholder
exercises the warrants on a cashless basis, then we will not receive any
proceeds. In addition, we have received gross proceeds of $5,000,000 from the
sale of the convertible debentures. The proceeds received from the sale of the
convertible debentures will be and are being used for the acquisition of fuel
terminals, as well as working capital needs for such terminals.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is traded on the OTC Bulletin Board, referred to
herein as the OTCBB, under the symbol "NWGN" The following table sets forth, for
the calendar periods indicated, the range of the high and low last reported bid
prices of our common stock, as reported by the OTCBB. The quotations represent
inter-dealer prices without retail mark-ups, mark-downs or commissions, and may
not necessarily represent actual transactions.
2005
--------------------------------------------
Low High
---------------- ---------------
1st Quarter.................................. $ 1.50 $ 0.75
2nd Quarter.................................. $ 1.50 $ 0.51
3rd Quarter.................................. $ 3.99 $ 0.60
4th Quarter.................................. $ 2.50 $ 1.25
2004
--------------------------------------------
Low High
---------------- ---------------
1st Quarter.................................. $ 4.50 $ 0.78
2nd Quarter.................................. 2.10 0.69
3rd Quarter.................................. 1.20 0.75
4th Quarter.................................. 1.20 0.75
As of February 8, 2006, there were approximately 305 holders of record
of our common stock.
Dividends
We have never declared or paid any cash dividends on its common stock.
We currently intend to retain future earnings, if any, to finance the expansion
of our business. As a result, we do not anticipate paying any cash dividends in
the foreseeable future.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table shows information with respect to each equity
compensation plan under which our common stock is authorized for issuance as of
the fiscal year ended December 31, 2005.
15
EQUITY COMPENSATION PLAN INFORMATION
- ------------------------------------ ------------------------ ----------------------- ---------------------------
Plan category Number of securities Weighted average Number of securities
to be issued upon exercise price of remaining available for
exercise of outstanding options, future issuance under
outstanding options, warrants and rights equity compensation plans
warrants and rights (excluding securities
reflected in column (a)
- ------------------------------------ ------------------------ ----------------------- ---------------------------
(a) (b) (c)
- ------------------------------------ ------------------------ ----------------------- ---------------------------
Equity compensation plans approved -0- -0- -0-
by security holders
- ------------------------------------ ------------------------ ----------------------- ---------------------------
Equity compensation plans not -0- -0- -0-
approved by security holders
- ------------------------------------ ------------------------ ----------------------- ---------------------------
Total -0- -0- -0-
- ------------------------------------ ------------------------ ----------------------- ---------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-Looking Statements
The information in this report contains forward-looking statements. All
statements other than statements of historical fact made in this report are
forward looking. In particular, the statements herein regarding industry
prospects and future results of operations or financial position are
forward-looking statements. These forward-looking statements can be identified
by the use of words such as "believes," "estimates," "could," "possibly,"
"probably," anticipates," "projects," "expects," "may," "will," or "should" or
other variations or similar words. No assurances can be given that the future
results anticipated by the forward-looking statements will be achieved.
Forward-looking statements reflect management's current expectations and are
inherently uncertain. Our actual results may differ significantly from
management's expectations.
The following discussion and analysis should be read in conjunction
with our financial statements, included herewith. This discussion should not be
construed to imply that the results discussed herein will necessarily continue
into the future, or that any conclusion reached herein will necessarily be
indicative of actual operating results in the future. Such discussion represents
only the best present assessment of our management.
Corporate History
Refuel America, Inc. (a development stage company), (the "Company") was
incorporated on June 1, 2005 under the laws of the state of Delaware. The
Company was formed for the purpose of developing and distributing innovative
alternative fuels including biodiesel and ethanol blends with regular
hydrocarbons. The Company's offices are located in Charlotte, North Carolina,
its only location. The Company's fiscal year end is December 31.
On July 29, 2005, Bongiovi Entertainment, Inc. ("Bongiovi"), a totally
inactive reporting public shell corporation, consummated a Share Exchange
Agreement (the "Agreement") with Refuel America, Inc. ("Refuel") whereby all of
the shareholders in Refuel had their shares converted into 28,135,033 shares of
Bongiovi, or approximately 89% of the common stock of Bongiovi. As part of the
reverse merger between Bongiovi and Refuel, warrants were issued to a
shareholder to purchase 2,255,000 common shares. One warrant for 2,155,000
common shares has no expiration date and has an exercise price of $0.001 per
share. The other warrant for 100,000 common shares is exercisable for a term of
five years and has an exercise price of $5.00. Under generally accepted
accounting principles, a company whose stockholders receive over fifty percent
of the stock of the surviving entity in a business combination is considered the
acquirer for accounting purposes. Accordingly, the transaction was accounted for
as an acquisition of Bongiovi, the legal acquirer, and a recapitalization of
Refuel, the accounting acquirer.
16
On August 10, 2005, to effect a name change, Bongiovi executed a merger
and reorganization agreement with the sole shareholder of NewGen Technologies,
Inc, a newly formed Nevada corporation. This transaction effectively changed the
registrant's name from Bongiovi Entertainment, Inc. to NewGen Technologies, Inc.
(NewGen).
There have been no significant operations since inception and the
Company is in the process of raising additional capital and financing for future
operations.
Overview
Bongiovi was an entertainment content provider and independent record
label, whose market is the global entertainment/music consumer. Bongiovi was
engaged in the acquisition of music industry assets and in operational
activities that included: the signing and development of artists for the purpose
of creating, promoting, marketing and distributing and selling recorded
material, the utilization and development of a national/international record
promotion and distribution network, the identification, acquisition and
development of a "catalog" of recorded works and other entertainment related
activities.
Since June 14, 2004, Bongiovi had no operating business and did not
intend to develop its own operating business but instead was seeking to effect a
merger with a corporation and undertake a merger for its own corporate purposes.
This merger occurred on August 2, 2005, whereby the Bongiovi became the legal
acquirer and Refuel became the accounting acquirer. As such, the inception date
of Newgen Technologies, Inc. is June 1, 2005 which is the inception date of
Refuel America. Accordingly, the profit and loss and cash flow statements
include only activity from June 1, 2005 (inception) to September 30, 2005.
Plan of Operations
To date we have not derived any revenues and we have not derived a
profit from our operations. There can be no assurance that we will be able close
on the transactions noted below or conduct operations profitably in the future,
if at all, or that we will be able to generate revenues from operations in the
future. We currently do not have sufficient cash reserves to meet all of our
anticipated obligations for the next twelve months. As a result, we are in the
process of soliciting additional equity and debt funding in the near future.
Newgen and its wholly-owned subsidiary, Refuel is a fuel production and
distribution company engaged in the development of fuel technology, including
bio fuels and blends, which can increase an automobile's miles per gallon while
providing cleaner fuel emissions by changing the property of fuel to allow more
complete combustion and decrease the dependency on foreign fuels.
While we have not yet begun distribution, we intend to utilize our
patent pending technology to produce fuel products, which we plan to distribute
to both the wholesale and retail segments of the fuel marketplace. We intend to
continue development of our technology to diversify our product offerings. We
utilize technology that is multi-functional and multi-purpose, allowing it to be
used in a wide range of fuels including gasoline, diesel, Biodiesel and Ethanol.
Our products include proprietary formulae, designed to positively alter the
combustion characteristics of the fuel. Because of the unique character of the
proprietary formulae, our formulations are designed to create a mono-layer on
the fuel delivery system, increasing lubricity (reducing engine wear and tear)
while the detergent character of the formulae is designed to prevent deposit
formation on fuel injectors. The technology is also designed to result in
greater atomization and efficiency of combustion, to provide increases in fuel
economy and reductions in emissions.
Currently, we are in the process of working with a joint venture
partner through our Refuel subsidiary to build and operate biodiesel plants in
the Southeast. A facility that is planned to produce 60 million gallons annually
will be based in Sandersville, Georgia. This joint venture serves as the initial
step in our plans to manufacture, process, and distribute biofuels in the U.S.
with the aim of substantially increasing a vehicle's operating efficiency while
reducing the amount of carbon monoxide, particulates, and nitrous oxides
produced. Current cash requirements are projected to be approximately $1,400,000
in general and administrative costs and approximately $35,000,000 to $40,000,000
in capital expenditures over the next twelve to fourteen months. Operations are
planned to commence in the second quarter 2007.
17
In addition, we have closed on the purchase of three fuel terminals in
the southeast United States from Crown Central LLC. The terminals, with a total
storage capacity of over 10 million gallons, and an annual throughput capacity
of more than 500 million gallons (which is more than previously disclosed in our
financial statement estimate of 350 million due to a change in the mix of
hydrocarbon fuel and biofuels permissible by the obtained permits), will be used
for the distribution and storage of alternative fuels, including biodiesel and
ethanol blends, as well as traditional hydrocarbon fuels. The three terminals
are strategically located near existing fuel pipelines with railcar access. The
purchase of these terminals will give NewGen the opportunity to process, blend,
and store its proprietary biodiesel and ethanol blends as well as hydrocarbon
fuels. This agreement is a crucial next step in our growth strategy - allowing
the Company to blend biodiesel and ethanol with hydrocarbon fuels for
distribution domestically and internationally. We intend to offer proprietary
products to meet the increasing demand for biofuel blends, driven by greater
fuel efficiency, cleaner exhaust, and a growing need for energy independence.
Two of these terminals, located in Charlotte, North Carolina and Spartanburg,
South Carolina, are expected to be operational by the second quarter of 2006,
with the Columbus, Georgia location scheduled to come on line in the fourth
quarter.
On November 8, 2005, we announced that our wholly-owned subsidiary,
Refuel America, Inc., and PowerSHIFT Energy Company, Inc., a provider of
alternative energy solutions, entered into a Limited Liability Company Agreement
for the formation of PowerSHIFT Biofuels of Hawaii, LLC and a Limited Liability
Company Agreement for the formation of PowerSHIFT Biofuels of Iowa, LLC. These
joint venture entities are equally owned by NewGen and PowerSHIFT Energy and
were created to build biodiesel plants and power generation facilities in the
United States. These entities have already identified several potential
opportunities in California, Hawaii, and Iowa to provide biodiesel and complete
green energy solutions for utilities, industry and transportation. The first of
these projects could potentially be operational by the second quarter of 2007,
and all identified plants combined would produce in excess of 140 million
gallons of biodiesel. Additional sites are currently being explored in the
Midwest and Rocky Mountain states.
On November 28, 2005, NWGT International, Inc., our wholly owned
subsidiary, and Actanol Service Ltd., entered into a Limited Liability Company
Agreement for the formation of Actanol Bioengineering, LLC. This joint venture
entity is equally owned by NewGen and Actanol Service Ltd. and were created to
oversee the design, engineering, construction, operations and technology support
for biodiesel and other biofuel plants worldwide.
On November 29, 2005, we entered into a joint venture agreement with AG
Global Partners Limited and Newgen Fuel Technologies Limited, to acquire 500
shares of Newgen Fuel Technologies Limited, so that it would be equally owned by
us and AG Global Partners Limited, and to allow Newgen Fuel Technologies Limited
to utilize our technology in the field of conventional and biofuel blends, and
the sale and distribution of such products. In connection with this joint
venture we also entered into a Technology License & Development Agreement with
Newgen Fuel Technologies Limited, to grant Newgen Fuel Technologies Limited an
exclusive license to our technology in certain defined territories in exchange
for royalty payments. This joint venture has not yet been completed.
On November 30, 2005, NWGT International, Inc., our wholly owned
subsidiary and Actanol Service Ltd., entered into a Limited Liability Company
Agreement for the formation of Actanol Bioengineering, LLC. This joint venture
entity is equally owned by us and Actanol Service Ltd. and was created to
oversee the design, engineering, construction, operations and technology support
for biodiesel and other biofuel plants worldwide.
Liquidity and Capital Resources
As of September 30, 2005, we had a cash balance of $829,845 and
negative cash flow from operations of $1,079,987. During August and September,
2005 the Company issued 3,333,491 shares to acquire Bongiovi, and sold 4,225,500
shares of common stock to various individuals at a value of $0.50 per share for
cash proceeds of $2,087,750 and a subscription receivable of $25,000. The
proceeds from this offering were used for the repayment of outstanding debt
obligation, professional expenses, working capital and general corporate
expenses. In addition, the Company issued to employees, 300,000 options having
an intrinsic value of $885,000 of which $848,125 has been deferred. We currently
do not have sufficient cash reserves to meet all of our anticipated obligations
for the next twelve months. As a result, we will require additional equity and
debt funding in the near future. Accordingly, the consolidated financial
statements as of September 30, 2005 have been prepared on a going concern basis.
18
Cornell Financing
To obtain funding we entered into a Securities Purchase Agreement with
Cornell Capital Partners LP on January 24, 2006 for the sale of $5,000,000 in
secured convertible debentures and warrants to buy 1,125,000 shares of our
common stock. Provided that the terms and conditions of the Securities Purchase
Agreement are satisfied Cornell Capital Partners LP is obligated to provide us
with an aggregate of $5,000,000 as follows:
o $2,200,000 was disbursed on January 24, 2006;
o $650,000 will be disbursed on the earlier to occur of (i) the date
that all shares pledged to Cornell Capital Partners LP have been
received by them, or (ii) two business days before this prospectus
is declared effective; and
o $2,150,000 will be disbursed two business days before this
prospectus is declared effective.
The secured convertible debentures bear interest at 10%, mature three
years from the date of issuance and the principal is convertible into our
common, at a conversion price per share equal to the lesser of (i) $1.00, or
(ii) eighty percent (80%) of the lowest closing bid price for the our common
stock during the five trading days immediately preceding the conversion date,
subject to adjustment. Upon three-business days advance written notice, we may
redeem the secured convertible debentures, in whole or part if the closing bid
price of our common stock at the time of such written notice is less than $1.00.
In the event that we exercise our right of redemption within 90 days of the date
of issuance of the secured convertible debentures, the redemption will be
calculated at 107% of the face value and if the right of redemption is exercised
after 90 days of the date of issuance of the secured convertible debentures, the
redemption will be calculated at 110% of the face value.
The warrants are exercisable until three years from the date of
issuance and have an exercise price of $1.00 per share. The conversion price of
the callable secured convertible notes and the exercise price of the warrants
may be adjusted in certain circumstances such as if we pay a stock dividend,
subdivide or combine outstanding shares of common stock into a greater or lesser
number of shares, or take such other actions as would otherwise result in
dilution of the selling stockholder's position. The selling stockholders have
contractually agreed to restrict their ability to convert or exercise their
warrants and receive shares of our common stock such that the number of shares
of common stock held by them and their affiliates after such conversion or
exercise does not exceed 4.99% of the then issued and outstanding shares of
common stock. In addition, we have granted the investors a security interest in
substantially all of our assets and intellectual property and registration
rights.
As a result of the foregoing financing, we currently have sufficient
funds on hand to fund our current operations. We intend to complete the second
and third rounds of our private placement financing to fund our current and
future operations. If successful in completing this financing, we may not be
able to do so on terms that are not excessively dilutive to our existing
stockholders or less costly than existing sources of financing. Failure to
secure additional financing in a timely manner and on favorable terms if and
when needed in the future could have a material adverse effect on our financial
performance, balance sheet and stock price and require us to implement cost
reduction initiatives and curtail operations.
Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123 (R), "Share-Based
Payment". SFAS No. 123 (R) revises SFAS No. 123, "Accounting for Stock-Based
Compensation" and supersedes APB Opinion No. 25, "Accounting for Stock Issued to
Employees". SFAS No. 123 (R) focuses primarily on the accounting for
transactions in which an entity obtains employee services in share-based payment
transactions. SFAS No. 123 (R) requires companies to recognize in the statement
of operations the cost of employee services received in exchange for awards of
equity instruments based on the grant-date fair value of those awards (with
limited exceptions).
SFAS No. 123 (R) is effective as of the first interim or annual
reporting period that begins after June 15, 2005 for non-small business issuers
and after December 15, 2005 for small business issuers. Accordingly, the Company
will adopt SFAS No. 123 (R) in its quarter ending March 31, 2006. The Company is
currently evaluating the provisions of SFAS No. 123 (R) and has not yet
determined the impact, if any, that SFAS No. 123 (R) will have on its financial
statement presentation or disclosures.
19
Results of Operations
Our consolidated net loss for the period from June 1, 2005 (inception)
to September 30, 2005 was $2,495,235. General and administrative expenses
primarily consisted of the following: a) professional fees of approximately
$981,000 of which $520,000 related to consulting prior to inception (the largest
of which consisted of approximately $200,000 for the Bongoivi consultant;
approximately $211,000 in legal fees and $154,000 in recruiting fees; b) wages
approximating $813,000; c) approximately $280,000 in travel related expenses; d)
marketing studies approximating $241,000; and e) royalty expense of $62,500
relating the assignment to the company of the Great Britain patent applications
from related parties.
Currently there are no signed contracts that will produce revenue and
there can be no assurances that management will be successful in negotiating
such contracts.
Prior to June 1, 2005, the Company had no operating business.
Going Concern
The Company's continuation as a going concern is dependent upon its
ability to generate sufficient cash flows to meets its obligations on a timely
basis, to obtain additional financing as may be required and ultimately and to
attain profitability.
Critical Accounting Policies
Income Taxes
Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established, when necessary, to reduce
deferred tax assets to the amount expected to be realized.
Use of Estimates
The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclose the nature of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
BUSINESS
Overview of Business
We are a fuel production and distribution company engaged in the
development of fuel technology which can increase an automobile's miles per
gallon while providing cleaner fuel emissions by changing the property of fuel
to allow more complete combustion. While we have not yet begun distribution, we
intend to utilize our patent pending technology to produce the following fuel
products, which we plan to distribute to both the wholesale and retail segments
of the fuel marketplace:
o E10 - a combination of gasoline and anywhere from 5.7 to 10% ethanol
based upon a customer's fuel specifications
o E85 - a combination of 85% fuel ethanol and 15% gasoline
o B20 - a combination of 20% biodiesel and 80% conventional diesel
o Premium Diesel - conventional diesel enhanced by our technology
We intend to continue development of our technology to diversify our
product offerings.
20
In addition, currently, we are in the process of working with various
joint venture partners to build and operate biodiesel plants throughout the
United States. This will allow us to manufacture, process, and distribute
biofuels in the United States with the aim of substantially increasing a
vehicle's operating efficiency while reducing the amount of carbon monoxide,
particulates, and nitrous oxides produced. We have also signed an agreement to
purchase three fuel terminals in the southeast United States from Crown Central,
LLC. The terminals, with a total storage capacity of over 10 million gallons,
and an annual throughput capacity of more than 500 million gallons (which is
more than previously disclosed in our financial statement estimate of 350
million due to a change in the mix of hydrocarbon fuel and biofuels permissible
by the obtained permits), will be used for the distribution and storage of
alternative fuels, including biodiesel and ethanol blends, as well as
traditional hydrocarbon fuels.
Features and Benefits of Our Products
We utilize technology that is multi-functional and multi-purpose,
allowing it to be used in a wide range of fuels including gasoline, diesel,
Biodiesel and Ethanol. Our products include proprietary formulae, designed to
positively alter the combustion characteristics of the fuel. Because of the
unique character of the proprietary formulae, our formulations are designed to
create a mono-layer on the fuel delivery system, increasing lubricity (reducing
engine wear and tear) while the detergent character of the formulae is designed
to prevent deposit formation on fuel injectors. The technology is also designed
to result in greater atomization and efficiency of combustion, to provide
increases in fuel economy and reductions in emissions. Below are the
descriptions of specific benefits intended from this new technology, which is
achieved using components substantially and predominantly from petroleum
sources.
o Lubricity - The reduction of sulfur and aromatics in modern fuels
has led to lubricity problems in fuel delivery and combustion
systems. Our technology is designed to increase lubricity above the
recommended standards to resolve these problems. Higher lubricity
will reduce wear on the fuel system and will lower maintenance costs
on the engine, injectors and fuel pump. In addition, enhanced fuel
lubricity will allow the engine to run with improved efficiency.
o Detergency - Modern fuel standards mean that all fuels should
contain a recommended amount of detergent. Our products have
detergent components that support these standards. Together with
lubricity enhancement, this is intended to enable more complete
combustion. This is especially effective with diesel fuels and can
substantially reduce black smoke and particulate matter without
decreasing power and torque.
o Greenhouse Gas Emissions - 100% complete combustion leaves only
residues of carbon dioxide (CO2) and water (H20). Carbon dioxide is
recognized as a major contributor to global warming. Incomplete
combustion produces nitrogen oxides (NOx) that may lead to ozone
problems, and unburned hydrocarbons, a carcinogen. Our products are
designed to provide more complete combustion and increase fuel
efficiency. When less fuel has to be burned for the same power
output, less CO2 and NOx are released into the atmosphere.
o Co-solvency - A designed benefit of our technology is the ability to
suspend water in fuel as a complete homogeneous solution. This
`cools the charge' in the combustion chamber which can provide more
effective, efficient, and complete combustion. This can also reduce
the prospects of short-lived fuel injectors which can fail when
water passes through them.
o Storage & Handling Contamination - Use of our technology in fuel
storage tanks and fuel systems can help to prevent microbial
contamination by eliminating phase separation. This can help reduce
blocked filters when the fuel is pumped through the fuel system. The
effect of these benefits is a reduction in the need for biocides
that are expensive and difficult to handle.
o Corrosion inhibitors - Our technology has been designed, as part of
our multifunctional purpose, to behave as a natural corrosion
inhibitor. Corrosion in fuel storage systems and engines has been
caused by free water in the fuel supply. Ethanol blends tend to
attract more water. Our technology is designed to eliminate
corrosion caused by this water by homogenizing the water into the
fuel to keep free water at a minimum in the fuel system.
21
Alternative Fuel Products
Ethanol Combinations
Ethanol is a fuel blending component that is used widely by major oil
companies and distributors. According to Ethanol producer Iogen (www.iogen.ca),
approximately 12% of all US gasoline is currently blended with Ethanol. Ethanol
is considered an `alternative' fuel component, as it can be produced from
domestically-produced agricultural products. Ethanol has been used in low
concentrations (less than 10%) with no changes in engine components or fuel
handling and delivery systems. Ethanol can be used in higher concentrations (up
to 85%) in specially-designed `Flexible Fuel Vehicles', described below.
E10 refers to a gasoline-based ethanol product. This typically has a
combination of 90% gasoline and 10% ethanol, but the percentage of ethanol can
range from 5.7% to 10% in accordance with the specifications of the customer.
E10 is commonly used throughout the United States and can be used in all
gasoline vehicles without engine modification.
E85 (85% ethanol, 15% gasoline) is currently available at approximately
400 gas station pumps in the United States, according to the National Ethanol
Vehicle Coalition (www.e85fuel.com). Flexible-Fuel Vehicles (FFVs) are designed
to run on regular unleaded or any ethanol fuel blend up to 85% Ethanol. Special
onboard diagnostics "read" the fuel blend, enabling drivers to fuel with E85 or
regular unleaded if E85 is not available. Today, Ford Motor Company, General
Motors, and Daimler-Chrysler Corporation all offer E85 engines as standard
equipment in certain vehicles. These vehicles come with the same factory
warranties as gasoline vehicles.
Ethanol has lower energy content vs. gasoline, and is `hygroscopic',
meaning that it can draw water into the fuel from the surrounding air. These
characteristics can create lower fuel efficiency and handling problems in
Ethanol-based fuels. Our technology is intended to make up for the typical loss
of performance with ethanol blends. Our technology is designed to enable a clear
homogenous solution, eliminating typical problems with water that cause phase
separation, and thereby improving combustion.
Biodiesel Combinations
Biodiesel is a bio fuel component which can be produced from
domestically grown soybean and other oil crops as well as palm oil, rape seed
oil, waste oil and animal fats. Biodiesel requires no engine modifications or
changes in the fuel handling and delivery systems. Biodiesel delivers similar
horsepower, torque, and miles per gallon as conventional diesel, while producing
significantly lower emissions of Carbon Monoxide, black smoke, and particulate
matter.
B20 (blend of 20% Biodiesel with 80% conventional diesel) has limited
distribution in the US currently, although all diesel vehicles can use this
fuel. According to the National Biodiesel Board, usage of Biodiesel in the US
was 30 million gallons in 2004, vs. a total on-road diesel consumption of 34
billion gallons, according to the Energy Information Administration. Federal and
state fleets are mandated to use B20 if available, to meet their targets for the
Energy Policy Act and EO13149 compliance (discussed below).
According to the EPA, one drawback with Biodiesel is that it increases
emissions of Nitrous Oxides. Our technology is designed to enhance the
performance of B20 by eliminating this Nitrous Oxide increase, while also
substantially increasing the reduction of black smoke and particulates.
Suppliers and Production Process
There are no special blending facilities or requirements necessary for
the production of our products, and the addition point in the fuel supply chain
is flexible. We are currently in negotiation for the supply of the other fuel
components, including traditional gasoline and diesel, as well as Ethanol and
Biodiesel. Supply is worldwide and will be contracted to the most cost effective
and geographical location to the order.
22
Industry Overview
According to the Energy Information Administration (www.eia.doe.gov),
gasoline is used in the US in over 200 million vehicles with combined travel of
over 7 billion miles per day. US on-highway diesel consumption averaged 94
million gallons per day in 2002, and was growing at a pace of 3 million
gallons/day per year. There are approximately 167,000 retail fuel outlets across
the nation.
Alternative fuels have become a national issue with growing support
across the country. The Wall Street Journal recently reported that Governors
from 33 states are pushing to expand use of ethanol as a vehicle-fuel additive.
They recognize that ethanol creates jobs, is good for the environment and is
good public policy. Recently, the Fuels Security Act of 2005 was passed in the
Senate, designed to create a renewable fuels standard mandating the use of 7.5
billion gallons of renewable motor vehicle fuels in the US by 2012.
Our products are designed for use in all internal combustion engines,
opening the entire motor transport market for sales and distribution. This
market includes automotive, marine, rail and aviation. In addition, our products
can be utilized in stationary equipment as those used in power generation,
chemical plants and mining. The intended benefits of its technology are designed
to create competitive products with multiple economic and environmental effects.
Distribution
We currently do not have any mechanism for the distribution of our
alternative fuel products. However, we have recently acquired three fuel
terminals located in the Southeast region of the Unites States. In addition, we
may sell our branded alternative fuels under licensing and marketing agreements
with local dealers, wholesalers and jobbers. "Jobbers" is a term used in the
fuel industry to describe companies that have a supply infrastructure that
facilitates the purchase, blending, storage and delivery of fuel.
Intellectual Property
We have submitted the following patent applications for these new
technologies in the United Kingdom pertaining to the use of our proprietary
technology for production of our fuels. These applications show inventive steps
and novelty which distinguishes them from the prior patents granted to the
inventors of our technology. These inventive steps and novelty are required for
new patents to issue.
0509818.1 - CLEAN BURNING FUELS AND ADDTIVES
0509649.0 - CLEAN BURNING SPARK IGNITION FUELS AND ADDITIVES THAT
ENABLE THE UTILISATION OF A RENEWABLE FEEDSTOCK SUCH AS
ETHANOL
0509653.2 - CLEAN BURNING COMPRESSION FUELS THAT ENABLE THE UTILISATION
OF A RENEWABLE FEEDSTOCK SUCH AS ETHANOL AND BIO DIESEL
These applications were each submitted on May 12, 2005, and are
currently being reviewed for issue by The Patent Office in the United Kingdom.
It is anticipated that patents would be converted to Patent Convention Treaty
applications to cover worldwide all the countries that have entered into the
Patent Convention Treaty (over 70 countries are members of the PCT). After one
year as a PCT applicant, we can then decide in which country we wish to file.
The US applications may be concurrently filed with the PCT applications.
Competition
To date, we have not commenced commercial production or sale of our
products. Our proprietary brand fuels will compete with many other branded
fuels. Our primary competition will be the larger oil and independent chain gas
stations across the United States. The fuel industry is extremely competitive
and includes several companies which have achieved substantial market share, and
have long operating histories, large customer bases, and substantially greater
financial, development, and marketing resources than we do. Currently, these
entities tend to compete in a commodity business, with differentiation created
by pricing. In some cases, the fuel suppliers also compete by differentiating
the quality of the product offering. By offering conventional and alternative
fuels with patent pending technology, we intend to provide a new source of
differentiation for the customer and consumer.
23
Other potential competitors are fuel additive manufacturers. There are
six major competitors in the additives market, including Lubrizol,
Chevron-Texaco, Associated Octel, Infineum, BASF, and Akzo Nobel. Our business
model includes sales of fuel, not additives. Therefore, these additive
manufacturers are not direct competitors unless they partner with fuel suppliers
mentioned above. We intend to continue development of our technology to maintain
a competitive advantage and to diversify our product offerings.
Government Regulation
In the US, two significant energy policy measures have shaped renewable
fuels' present and future status. First, the Energy Policy Act (EPAct) was
passed in 1992, designed to encourage the use of alternative fuels to help
reduce US dependence on imported oil. For fiscal year 1999 and beyond, 75% of a
federal fleet's vehicle acquisitions must be alternative fuel vehicles.
Supplementing this is Executive Order 13149 (EO13149), which mandates that any
federal agency with a fleet of 20 or more vehicles in the US must develop a
compliance strategy that documents how the agency plans to accomplish a required
reduction of 20% in petroleum consumption by 2005 (vs. 1999 consumption).
In addition to these mandates, recent changes to tax policy have
continued to build incentives for alternative fuels. The Volumetric Ethanol
Excise Tax Credit (VEETC) provision contained in the JOBS/FSC/ETI Bill
(`Jumpstart Our Business Strength' bill, containing a repeal of the Foreign
Sales Corporation/Extraterritorial Income (FSC/ETI) exclusion ) has improved the
distribution and availability of both E85 and Biodiesel fuels. This bill was
signed into law in late October, 2004.
In January 2000, the Environmental Protection Agency enacted a set of
diesel emission standards that requires significant reduction in harmful
emissions, especially particulate matter and oxides of Nitrogen. Particulate
matter in diesel emissions is to be reduced by 90% and oxides of Nitrogen is to
be reduced by 95%, beginning in 2004 and to be fully implemented by 2007. In
addition, the Environmental Protection Agency also requires that 97% of the
Sulfur currently in diesel fuel be eliminated beginning in 2006.
Finally, the energy bill recently passed by congress contains
additional incentives and mandates for federal fleets in regards to renewable
fuels. The principal mandate is for state and federal fleets to report their
alternative fuel uses in accordance with EO13149. This federal leadership has
been followed by many states that have adopted tax incentives and mandates for
state-operated fleets.
In order for our products to be used in the United States,
Environmental Protection Agency registration is required. We will address this
on an as and when needed basis as all fuels will be within existing American
Society for Testing and Materials standards.
FACILITIES
We lease our principal executive offices, which are located at 6000
Fairview Road, 12th Floor, Charlotte, North Carolina 28210. These offices
consist of approximately 500 square feet, with monthly rent of $2,963.00.
In addition to our executive officers, we own three terminals which
will be used for the production and distribution of our alternative fuel
products:
o Spartanburg Terminal - 400 Delmar Road, Spartanburg, South Carolina
29302 consisting of 3.8 acres;
o Columbus Terminal - 4840 Miller Road, Columbus, Georgia 31904
consisting of 7.5 acres; and
o Charlotte Terminal - 7720 Mt. Holly Road, Paw Creek, North Carolina
28214 consisting of 6.2 acres.
We believe that current facilities are adequate for our current and
immediately foreseeable operating needs. We do not have any policies regarding
investments in real estate, securities or other forms of property.
24
EMPLOYEES
As of February 8, 2006 we had six employees. We have not experienced
any work stoppages and we consider relations with our employees to be good. We
anticipate hiring additional employees as we increase production and
distribution of our products
LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and
legal proceedings, which arise in the ordinary course of business. However,
litigation is subject to inherent uncertainties, and an adverse result in these
or other matters may arise from time to time that may harm our business. We are
currently not aware of any such legal proceedings or claims that we believe will
have, individually or in the aggregate, a material adverse affect on our
business, financial condition or operating results.
MANAGEMENT
Executive Officers and Directors
Below are the names and certain information regarding our executive
officers and directors.
- ------------------------------- ----------------------------------------------
Name Age Position
- ------------------------------- ----------------------------------------------
S. Bruce Wunner 63 Chief Executive Officer and Chairman
- ------------------------------- ----------------------------------------------
Ian Williamson 50 President and Director
- ------------------------------- ----------------------------------------------
Scott Deininger 43 Chief Financial Officer and Director
- ------------------------------- ----------------------------------------------
Cliff Hazel 53 Director
- ------------------------------- ----------------------------------------------
Carlos Genardini 59 Director
- ------------------------------- ----------------------------------------------
Noel M. Corcoran 54 Director
- ------------------------------- ----------------------------------------------
Officers are elected annually by the Board of Directors, at our annual
meeting, to hold such office until an officer's successor has been duly
appointed and qualified, unless an officer sooner dies, resigns or is removed by
the Board. There are no family relationships among any of our directors and
executive officers.
Background of Executive Officers and Directors
S. Bruce Wunner, Chief Executive Officer and Chairman. Mr. Wunner was
appointed Chairman of NewGen on June 9, 2005. Prior to joining NewGen, Mr.
Wunner was instrumental in key leadership roles in the international expansion
of McDonald's Corporation for over 33 years from 1962 to 1995 and retired as
Senior Vice President CEO of Latin America. Since 1996, Mr. Wunner has been the
managing partner of FEA, LLC, D/B/A Treasure Coast Capital Partners, a boutique
investment banking firm focusing on mid-market mergers & acquisitions,
divestitures and raising capital. Mr. Wunner focuses on specialties in real
estate development, retail food, distribution, recreation, leisure and the
entertainment industry.
Ian Williamson, President and Director. Mr. Williamson was appointed as
the President and as a Director of NewGen on June 9, 2005. Mr. Williamson has
been actively involved in the development of alternative and renewable fuels
since 1975. His initial work was predominantly in the field of district heating
and energy schemes, utilizing trash and other non-oil substitutes. In 1994, Mr.
Williamson started industry research and development for alternative fuels for
the motor industry. Mr. Williamson and Cliff Hazel are the original inventors of
a clear stable "e-diesel" and authors of numerous patents and applications
related to cleaner-burning and performance-enhancing motor fuels utilizing
alcohol, water, bio-diesel and liquids from natural gas. From October 1999 Mr.
Williamson founded Interfacial Technologies (UK) Ltd which was acquired in May
2001 by International Fuel Technology Inc. (IFT) Mr. Williamson was employed as
Chief Technology Officer and served on the board of directors of IFT from May
2001 to May 2003. After his employment with IFT, Mr. Williamson continued his
research, leading to the discovery of the new molecules referenced above. Mr.
Williamson studied Mechanical and Combustion Engineering at Nottingham
University, United Kingdom. He has had peer-reviewed papers published, and is a
member of the Society of Automotive Engineers.
25
Scott Deininger, Chief Financial Officer. Mr. Deininger joined us as
Chief Financial Officer in October 2005 and was appointed as a Director in
January 2006. Prior to joining us Mr. Deininger served as treasurer and senior
vice president of finance and administration (principal financial officer) at
American Tire Distributors Holdings, Inc. from July, 2003 to October, 2005. From
January, 2001 until June, 2003, Mr. Deininger served as vice president and
corporate controller of Safety-Kleen Corporation, prior to which he was the
Chief Financial Officer of Carmeuse North America. Prior to working for Carmeuse
North America Mr. Deininger spent eight years working at KPMG. Mr. Deininger is
a certified public accountant and holds a B.S. degree in Accounting from York
College of Pennsylvania.
Cliff Hazel, Director. Mr. Hazel was appointed as a Director of NewGen
on June 9, 2005. Mr. Hazel has a strong background in computer programming and
has consulted for international blue chip companies world wide. The basis of the
technology purchased in the US by IFUE and OTD was a trial and error algorithm
and plotting probabilities of solution maps. Mr. Hazel was the co-founder of
Interfacial Technologies (UK) Ltd and was a consultant to Interfacial and IFT
from 1999 to 2003. As the co-inventor of the technology to be utilized by NewGen
Mr. Hazel has been improving the formulae. Since 2003 Mr. Hazel has been
Managing Director of MF Logic, LLC, a development stage company that is about to
launch a multi-functional computer-driven printer/scanner/copier into the hotel
market for executive users.
Carlos Genardini, Director. Mr. Genardini was appointed as a Director
of NewGen on June 9, 2005. Since 2002, Mr. Genardini has been President of
Genardini & Associates, Inc. a management and consulting firm and has 33 years
of executive experience with global and regional businesses in the
telecommunications and semiconductor industries. His previous business career
was entirely with Motorola and his last assignment was Senior Vice President of
the Latin America and Caribbean region. He has served on the engineering boards
of Hong Kong University, City University of Hong Kong and on the boards of two
Chinese joint ventures. He was also a Board Member of the Hong Kong Science and
Advisory Board. Mr. Genardini joined Motorola in 1969 upon receiving his
Bachelor of Science in Electrical Engineering from Arizona State University. He
has pursued postgraduate studies at several universities and executive training
through Motorola University. He has been a featured speaker at
telecommunications and semiconductor forums throughout Asia and Latin America
and has actively represented Motorola at all levels of government and public
events.
Noel M. Corcoran, Director. Mr. Corcoran was appointed as a Director of
NewGen in January 2006. Mr. Corcoran has led his own tax consulting firm, Noel
M. Corcoran & Associates, since 1984. During that time, he has served as a
financial and tax advisor to many corporations and high net worth individuals
internationally. He has also been President of the Irish Taxation Institute and
serves as a director of many companies. He has a Commerce Degree from University
College Dublin and is a Fellow of the Irish Taxation Institute.
Board of Directors
Our Directors are elected by the vote of a majority in interest of the
holders of our voting stock and hold office until the expiration of the term for
which he or she was elected and until a successor has been elected and
qualified.
A majority of the authorized number of directors constitutes a quorum
of the Board for the transaction of business. The directors must be present at
the meeting to constitute a quorum. However, any action required or permitted to
be taken by the Board may be taken without a meeting if all members of the Board
individually or collectively consent in writing to the action.
Directors may receive compensation for their services and reimbursement
for their expenses as shall be determined from time to time by resolution of the
Board. Our non-executive directors currently receive compensation of $3,000 per
month for their participation at Board meetings and committees of the Board.
Executive Compensation
The following table sets forth all compensation paid in respect of our
Chief Executive Officer and those individuals who received compensation in
excess of $100,000 per year (collectively, the "Named Executive Officers") for
our last three completed fiscal years.
26
SUMMARY COMPENSATION TABLE
Annual Compensation
---------------------------------------------------
Year Other
Name and Annual
Principal Position Salary ($) Bonus ($) Compensation ($)(1)
----------------------------- ------ -------------- ------------ -----------------------
S. Bruce Wunner, 2005 31,250 -0- 146,109
Chief Executive Officer 2004 -0- -0- -0-
2003 -0- -0- -0-
John King, 2005 328,285 -0- 50,000
Former Chief Executive 2004 -0- -0- -0-
Officer 2003 -0- -0- -0-
Ian V. Williamson 2005 195,247 -0- 120,000
President 2004 -0- -0- -0-
2003 -0- -0- -0-
Ronald E. Simmons, 2005 -0- -0- -0-
Former Chief Executive 2004 -0- -0- -0-
Officer 2003 -0- -0- -0-
Larry Shatsoff, 2005 -0- -0- -0-
Former President 2004 -0- -0- -0-
2003 -0- -0- -0-
(1) Includes non-cash compensation, in the form of common stock, for services
performed for the Company.
There are no current employment agreements between us and any
individuals.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On February 1, 2005, Refuel entered into a consulting agreement with
Treasure Coast Capital Partners a company solely owned by Bruce Wunner our Chief
Executive Office and Chairman. Pursuant to this agreement Mr. Wunner was to be
paid fees for various services provided to Refuel. On July 1, 2005, after Mr.
Wunner was appointed Chairman the agreement was modified to pay Mr. Wunner
$120,000 for services provided and the remainder of the agreement was canceled.
On July 1, 2005, Advanced Fuel Chemistry, Inc., a Delaware Corporation
("Advanced Fuel") assigned to ReFuel the patent applications previously
referenced. According to the terms of this assignment, ReFuel was assigned these
applications with full title guarantee.
On July 1, 2005, Refuel entered into a royalty agreement, whereby
Refuel is required to pay Clifford Hazel, a member of our Board of Directors,
and Ian Williamson, our President, an aggregate of $250,000 immediately and a
continuing royalty fee of the greater of $250,000 or 0.1% of the aggregate fuel
additive products sold utilizing the patents per year during the term of the
Royalty Agreement.
On June 1, 2005, ReFuel issued a promissory note to John King, our
former Chief Executive Officer and a former member of our board of directors, in
the aggregate principal amount of $316,500. The promissory note bears interest
at an annual rate of 10% from May 1, 2005, and was due January 15, 2006. The
promissory note was issued to Mr. King as repayment for pre-incorporation
expenses paid for on behalf of ReFuel.
27
On November 1, 2005, we acquired all of the issued and outstanding
equity of Advanced Fuel, a company jointly owned by a member of our Board of
Directors and Ian Williamson, our President, for a purchase price of $1.00.
Our obligations in connection with $5,000,000 in secured convertible
debentures issued to Cornell Capital Partners LP are secured by substantially
all of our assets and the assets of our subsidiaries. In addition, S. Bruce
Wunner has granted a security interest in 214,916 shares of common stock that he
owns, Ian Williamson has granted a security interest in 5,000,000 shares of
common stock that he owns, Scott Deininger has granted a security interest in
115,000 shares of common stock that he owns and Cliff Hazel has granted a
security interest in 5,000,000 shares of common stock that he owns.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of February 8,
2006 with respect to the beneficial ownership of the outstanding common stock by
(i) any holder of more than five (5%) percent; (ii) each of our executive
officers and directors; and (iii) our directors and executive officers as a
group. Except as otherwise indicated, each of the stockholders listed below has
sole voting and investment power over the shares beneficially owned.
- ----------------------------- ---------------- ----------------- ----------------- ----------------- -----------------
Name of Beneficial Owner (1) Number of Percentage of Number of Number of Percentage of
Shares Shares Shares Offered Shares Shares
Beneficially Beneficially Beneficially Beneficially
Owned Prior to Owned Prior to Owned After the Owned After the
Offering Offering (2) Offering Offering
- ----------------------------- ---------------- ----------------- ----------------- ----------------- -----------------
S. Bruce Wunner (3) 429,833 1.13% 163,337 266,496 *
- ----------------------------- ---------------- ----------------- ----------------- ----------------- -----------------
Ian Williamson 10,232,867 27.02% 3,861,122 6,371,745 16.50%
- ----------------------------- ---------------- ----------------- ----------------- ----------------- -----------------
Scott Deininger 280,000 * 106,400 173,600 *
- ----------------------------- ---------------- ----------------- ----------------- ----------------- -----------------
Cliff Hazel 10,000,000 26.39% 3,861,122 6,138,878 15.90%
- ----------------------------- ---------------- ----------------- ----------------- ----------------- -----------------
Carlos Genardini 54,000 * 54,000 0 *
- ----------------------------- ---------------- ----------------- ----------------- ----------------- -----------------
Noel M. Corcoran 0 * 0 0 *
- ----------------------------- ---------------- ----------------- ----------------- ----------------- -----------------
All officers and directors 20,996,700 54.87% 8,045,981 12,950,719 33.54%
as a group (6 persons)
- ----------------------------- ---------------- ----------------- ----------------- ----------------- -----------------
* Less than 1%.
(1) Except as otherwise indicated, the address of each beneficial owner is c/o
NewGen Technologies, Inc. 6000 Fairview Road, 12th Floor, Charlotte, North
Carolina 28210.
(2) Applicable percentage ownership is based on 38,611,224 shares of common
stock outstanding as of February 8, 2006, together with securities
exercisable or convertible into shares of common stock within 60 days of
February 8, 2006 for each stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities.
Shares of common stock that are currently exercisable or exercisable within
60 days of February 8, 2006 are deemed to be beneficially owned by the
person holding such securities for the purpose of computing the percentage
of ownership of such person, but are not treated as outstanding for the
purpose of computing the percentage ownership of any other person.
(3) Of the shares beneficially owned by Mr. Wunner 347,333 shares are owned by
FEA, LLC, an entity in which Mr. Wunner owns the majority of the outstanding
membership interests.
o No Director, executive officer, affiliate or any owner of record or
beneficial owner of more than 5% of any class of voting securities of
the Company is a party adverse to the Company or has a material
interest adverse to the Company.
DESCRIPTION OF SECURITIES TO BE REGISTERED
COMMON STOCK
28
Our authorized capital stock consists of 100,000,000 shares of common
stock at a par value of $0.001 per share and 10,000,000 shares of preferred
stock at a par value of $0.001 per share. As of February 8, 2006, there were
38,171,224 shares of our common stock issued and outstanding and no shares of
preferred stock outstanding.
Holders of our common stock are entitled to one vote for each share on
all matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. Holders of our common stock representing a majority of the voting
power of our capital stock issued, outstanding and entitled to vote, represented
in person or by proxy, are necessary to constitute a quorum at any meeting of
stockholders. A vote by the holders of a majority of our outstanding shares is
required to effectuate certain fundamental corporate changes such as
liquidation, merger or an amendment to our articles of incorporation.
Holders of our common stock are entitled to share in all dividends that
the board of directors, in its discretion, declares from legally available
funds. In the event of a liquidation, dissolution or winding up, each
outstanding share entitles its holder to participate pro rata in all assets that
remain after payment of liabilities and after providing for each class of stock,
if any, having preference over the common stock. Our common stock has no
pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to our common stock.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our directors and executive officers are indemnified as provided by the
Nevada Revised Statutes. These provisions state that our directors may cause us
to indemnify a director or former director against all costs, charges and
expenses, including an amount paid to settle an action or satisfy a judgment,
actually and reasonably incurred by him as a result of him acting as a director.
The indemnification of costs can include an amount paid to settle an action or
satisfy a judgment. Such indemnification is at the discretion of our board of
directors and is subject to the Securities and Exchange Commission's policy
regarding indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling us
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
PLAN OF DISTRIBUTION
The selling stockholders and any of their respective pledgees, donees,
assignees and other successors-in-interest may, from time to time, sell any or
all of their shares of common stock on any stock exchange, market or trading
facility on which the shares are traded or in private transactions. These sales
may be at fixed or negotiated prices. The selling stockholders may use any one
or more of the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits the purchaser;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately-negotiated transactions;
o short sales that are not violations of the laws and regulations of
any state or the United States;
o broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
o through the writing of options on the shares;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. The selling
stockholders shall have the sole and absolute discretion not to accept any
purchase offer or make any sale of shares if they deem the purchase price to be
unsatisfactory at any particular time.
29
The selling stockholders may also engage in short sales against the
box, puts and calls and other transactions in our securities or derivatives of
our securities and may sell or deliver shares in connection with these trades.
The selling stockholders or their respective pledgees, donees,
transferees or other successors in interest, may also sell the shares directly
to market makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the selling stockholders
and/or the purchasers of shares for whom such broker-dealers may act as agents
or to whom they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the shares will do so for their own account and at
their own risk. It is possible that a selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price. The
selling stockholders cannot assure that all or any of the shares offered in this
prospectus will be issued to, or sold by, the selling stockholders. The selling
stockholders and any brokers, dealers or agents, upon effecting the sale of any
of the shares offered in this prospectus, may be deemed to be "underwriters" as
that term is defined under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, or the rules and regulations under
such acts. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
selling stockholders, but excluding brokerage commissions or underwriter
discounts.
The selling stockholders, alternatively, may sell all or any part of
the shares offered in this prospectus through an underwriter. No selling
stockholder has entered into any agreement with a prospective underwriter and
there is no assurance that any such agreement will be entered into.
The selling stockholders may pledge their shares to their brokers under
the margin provisions of customer agreements. If a selling stockholder defaults
on a margin loan, the broker may, from time to time, offer and sell the pledged
shares. The selling stockholders and any other persons participating in the sale
or distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations under
such act, including, without limitation, Regulation M. These provisions may
restrict certain activities of, and limit the timing of purchases and sales of
any of the shares by, the selling stockholders or any other such person. In the
event that the selling stockholders are deemed affiliated purchasers or
distribution participants within the meaning of Regulation M, then the selling
stockholders will not be permitted to engage in short sales of common stock.
Furthermore, under Regulation M, persons engaged in a distribution of securities
are prohibited from simultaneously engaging in market making and certain other
activities with respect to such securities for a specified period of time prior
to the commencement of such distributions, subject to specified exceptions or
exemptions. In regards to short sells, the selling stockholder can only cover
its short position with the securities they receive from us upon conversion. In
addition, if such short sale is deemed to be a stabilizing activity, then the
selling stockholder will not be permitted to engage in a short sale of our
common stock. All of these limitations may affect the marketability of the
shares.
We have agreed to indemnify the selling stockholders, or their
transferees or assignees, against certain liabilities, including liabilities
under the Securities Act of 1933, as amended, or to contribute to payments the
selling stockholders or their respective pledgees, donees, transferees or other
successors in interest, may be required to make in respect of such liabilities.
If the selling stockholders notify us that they have a material
arrangement with a broker-dealer for the resale of the common stock, then we
would be required to amend the registration statement of which this prospectus
is a part, and file a prospectus supplement to describe the agreements between
the selling stockholders and the broker-dealer.
PENNY STOCK
30
The Securities and Exchange Commission has adopted Rule 15g-9 which
establishes the definition of a "penny stock," for the purposes relevant to us,
as any equity security that has a market price of less than $5.00 per share or
with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require:
o that a broker or dealer approve a person's account for transactions
in penny stocks; and
o the broker or dealer receive from the investor a written agreement
to the transaction, setting forth the identity and quantity of the
penny stock to be purchased.
In order to approve a person's account for transactions in penny
stocks, the broker or dealer must
o obtain financial information and investment experience objectives of
the person; and
o make a reasonable determination that the transactions in penny
stocks are suitable for that person and the person has sufficient
knowledge and experience in financial matters to be capable of
evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a
penny stock, a disclosure schedule prescribed by the Commission relating to the
penny stock market, which, in highlight form:
o sets forth the basis on which the broker or dealer made the
suitability determination; and
o that the broker or dealer received a signed, written agreement from
the investor prior to the transaction.
Disclosure also has to be made about the risks of investing in penny
stocks in both public offerings and in secondary trading and about the
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
SELLING STOCKHOLDERS
The following table presents information regarding the selling
stockholders. A description of each selling stockholder's relationship to our
Company and how each selling stockholder acquired the shares in this offering is
detailed in the information immediately following this table.
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Total Shares
of Common
Stock and
Common Stock Total
Issuable Percentage
Upon of Common Percentage Percentage
Conversion Stock, Shares of Beneficial of Common Beneficial of Common
of Notes Assuming Common Stock Ownership Stock Owned Ownership Stock Owned
and/or Full Included in Before Before After After
Name Warrants** Conversion Prospectus Offering*** Offering*** Offering (2) Offering (2)
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Cornell Capital 5,331,250 12.25% Up to 2,004,888(1) 4.9% -- --
Partners, L.P. 25,456,250
shares of
common stock
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
John B. Lowy, P.C. 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
John B. Lowy 100,000 * 100,000 100,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Patrick F. Speake & 100,000 * 100,000 100,000 * 0 *
Jennifer A. Speake
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
John Yuhnick 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Nils Hellpap 4,000 * 4,000 4,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Donna L. King & Wayne 80,000 * 80,000 80,000 * 0 *
King
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Marlene J. Larose 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Elliott R. Larose 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
D'onofrio Living Trust 130,000 * 130,000 130,000 * 0 *
August 7, 1998
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Jeffrey S. Araj 100,000 * 100,000 100,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Gordon H. Harper 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Jagdish P. Patel 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
S. Bruce Wunner 82,500 * 31,350 82,500 51,150 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Brandon Lee Wunner 20,000 * 20,000 20,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
31
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Michelle Lee Coffey 20,000 * 20,000 20,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Colleen Sue Britt 20,000 * 20,000 20,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Michael Bruce Wunner 10,000 * 10,000 10,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Lewis James Bryan 20,000 * 20,000 20,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Shannon Marie Wright 20,000 * 20,000 20,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Casey Christopher Wunner 7,500 * 7,500 7,500 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
FEA,LLC 347,333 * 131,987 347,333 215,346 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Michael Woods 203,333 * 101,667 203,333 101,666 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Ian Williamson 10,232,867 * 3,861,122 10,232,867 6,371,745 16.50%
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Cliff Hazel 10,000,000 * 3,861,122 10,000,000 6,138,878 15.90%
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Michael F. D'Onofrio 360,000 * 180,000 360,000 180,000 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Conrad Lee 60,000 * 60,000 60,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Carlos Genardini 54,000 * 54,000 54,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
John W. King 960,380 * 100,000 960,380 860,380 2.25%
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Michael J. Daniels 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Stephen Kravit & Anne 50,000 * 50,000 50,000 * 0 *
Kravit
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
George Hohas 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Equity Trust Company 7,500 * 7,500 7,500 * 0 *
Custodian FBO Samantha
Aberman IRA
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Equity Trust Company 7,500 * 7,500 7,500 * 0 *
Custodian FBO Michael
Aberman IRA
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Equity Trust Company 7,500 * 7,500 7,500 * 0 *
Custodian FBO Elliot
Aberman IRA
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Equity Trust Company 14,000 * 14,000 14,000 * 0 *
Custodian FBO Joel
Aberman IRA
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Equity Trust Company 14,000 * 14,000 14,000 * 0 *
Custodian FBO Holli
Aberman IRA
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Martin McNeill 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Clearing and Outsourcing 200,000 * 200,000 200,000 * 0 *
Services, Jeffrey S.
Araj, FBO
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Daniel Berman 40,000 * 40,000 40,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Fidelity Management 30,000 * 30,000 30,000 * 0 *
Trust Co., Michael
D'Onofrio, FBO
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Roy Moore 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Christopher David Bissell 48,000 * 48,000 48,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Trevor Ashmore 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Tyne Cure Ltd. 500,000 * 500,000 500,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Jean Carol Ryan 288,000 * 288,000 288,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Ezio Da Fonseca 150,000 * 150,000 150,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Redmount Trust Company 200,000 * 200,000 200,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
C. D. Bissell 52,000 * 52,000 52,000 * 0 *
Engineering Ltd.
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Joseph Wilson 100,000 * 100,000 100,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Alan and Janice Keeble 100,000 * 100,000 100,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Kurt Hellinger 70,000 * 70,000 70,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Frank Hawkins 30,000 * 30,000 30,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Scott Deininger 280,000 * 106,400 280,000 * 173,600 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Winifred Jack 328,000 * 328,000 328,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Alexander Greystoke 25,000 * 25,000 25,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Blois Olson 150,000 * 150,000 150,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Colin John Meek 25,000 * 25,000 25,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Casa Azul Investments, 50,000 * 50,000 50,000 * 0 *
LLC
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
ADP Clearing and 100,000 * 100,000 100,000 * 0 *
Outsourcing Services,
Barry Forst, FBO
(729-90107)
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Carl Planagan 30,000 * 30,000 30,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Radu Achirilaoie 100,000 * 100,000 100,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Frank H. Marincek 60,000 * 60,000 60,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Hartford Mutual Fund 40,000 * 40,000 40,000 * 0 *
IRA, Mariano Orlando
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Salvatore Cerruto 20,000 * 20,000 20,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
ADP Clearing and 80,000 * 80,000 80,000 * 0 *
Outsourcing Services,
FBO Peter Cardasis
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
32
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Lorraine Szocik 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Armando Tiscareno 40,000 * 40,000 40,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Michael T. Young 20,000 * 20,000 20,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Frank J. Orlando 45,000 * 45,000 45,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
4237901 Canada Inc. 200,000 * 200,000 200,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Joseph W. Beasley, P.A. 100,000 * 100,000 100,000 * 0 *
Qualified Deferred
Compensation Trust
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Zaid I. Ayoub 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Basim S. Nimri 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Stephen Saul Kennedy 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Dieter Langer & Loretta 40,000 * 40,000 40,000 * 0 *
Langer
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Michael Karr 24,000 * 24,000 24,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Daphne Kennedy 20,000 * 20,000 20,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Maria Tiscareno 6,000 * 6,000 6,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Claudine Young 20,000 * 20,000 20,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Brandon Lord 3,000 * 3,000 3,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Carol Racette Lord 12,000 * 12,000 12,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
John Godfrey 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
The Blues 1,360,000 * 1,360,000 1,360,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Desmond Morrow 1,500,000 * 1,500,000 1,500,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Marie C. D'Onofrio 33,500 * 33,500 33,500 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Thomas M. D'Onofrio 17,000 * 17,000 17,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Frank Crivello, SEP IRA 2,570,240 * 2,570,240 2,004,888(3) 4.9% 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Frank Crivello 875,000 * 875,000 875,000(3) 4.9% 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Giuseppe Orlando - IRA 25,000 * 25,000 25,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
LMU & Company 75,000 * 75,000 75,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Battersea Capital Inc. 75,000 * 75,000 75,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Kurt Jensen 25,000 * 25,000 25,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Crotolus, Inc. 25,000 * 25,000 25,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
David Marks 500,000 * 500,000 500,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Luigi Lo Basso 25,000 * 25,000 25,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Guy Crawford 75,000 * 75,000 75,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Henry Hackel 25,000 * 25,000 25,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Underwood Family Partners 25,000 * 25,000 25,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Sichenzia Ross Friedman 100,000 * 100,000 100,000 * 0 *
Ference LLP
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Betty Jo Currie 10,000 * 10,000 10,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Hugh Tarbutton 100,000 * 100,000 100,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Ed Zamorski 3,000 * 3,000 3,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
MFGLL NewGen LLC 12,000 * 12,000 12,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Bradely Haight 1,000 * 1,000 1,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Stuart Valentine 3,000 * 3,000 3,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Hal Masover & Joan 5,000 * 5,000 5,000 * 0 *
Masover
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Joseph Smith 3,900 * 3,900 3,900 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
George Windate 2,000 * 2,000 2,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Robert Armstrong 20,000 * 20,000 20,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Pavlette Long 7,000 * 7,000 7,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Mary Jane Ferguson 2,500 * 2,500 2,500 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Colter Dean Hunter 2,000 * 2,000 2,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Steve Martin 3,000 * 3,000 3,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Stephen Dexter 10,000 * 10,000 10,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
S. Hunter Smith 2,000 * 2,000 2,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Fox Growth Fund, Inc. 1,140,000 * 1,140,000 1,140,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Elaine Saleeby & Eli 5,000 * 5,000 5,000 * 0 *
Saleeby
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
LP Cramer & Associates 50,000 * 50,000 50,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
James Persse 5,000 * 5,000 5,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
David Hanby 10,000 * 10,000 10,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Concetta Cotugno 1,000 * 1,000 1,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
John Deininger 1,000 * 1,000 1,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Peter Deininger 100 * 100 100 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Andrew Deininger 100 * 100 100 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Kristin Brown 100 * 100 100 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Hampton Holcomb 5,000 * 5,000 5,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Frank Stone 5,000 * 5,000 5,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Jack's Creek Farm 2,000 * 2,000 2,000 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Pamela Hall 2,500 * 2,500 2,500 * 0 *
- -------------------------- -------------- ------------- -------------- -------------- ------------- ------------- -------------
Raymon Bellucci 10,000 * 10,000 10,000 * 0 *
33
* Less than 1%.
** This column represents an estimated number based on a current conversion
price of $1.28, divided into the principal amount.
*** These columns represent the aggregate maximum number and percentage of
shares that the selling stockholders can own at one time (and therefore,
offer for resale at any one time) due to their 4.9% limitation.
The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended,
and the information is not necessarily indicative of beneficial ownership for
any other purpose. Under such rule, beneficial ownership includes any shares as
to which the selling stockholders has sole or shared voting power or investment
power and also any shares, which the selling stockholders has the right to
acquire within 60 days. The actual number of shares of common stock issuable
upon the conversion of the secured convertible notes is subject to adjustment
depending on, among other factors, the future market price of the common stock,
and could be materially less or more than the number estimated in the table.
(1) The actual number of shares of common stock offered in this prospectus, and
included in the registration statement of which this prospectus is a part,
includes such additional number of shares of common stock as may be issued or
issuable upon conversion of the secured convertible notes and exercise of the
related warrants by reason of any stock split, stock dividend or similar
transaction involving the common stock, in accordance with Rule 416 under the
Securities Act of 1933, as amended. However the selling stockholders have
contractually agreed to restrict their ability to convert their secured
convertible notes or exercise their warrants and receive shares of our common
stock such that the number of shares of common stock held by them in the
aggregate and their affiliates after such conversion or exercise does not exceed
4.9% of the then issued and outstanding shares of common stock as determined in
accordance with Section 13(d) of the Exchange Act. Accordingly, the number of
shares of common stock set forth in the table for the selling stockholders
exceeds the number of shares of common stock that the selling stockholders could
own beneficially at any given time through their ownership of the secured
convertible notes and the warrants. In that regard, the beneficial ownership of
the common stock by the selling stockholder set forth in the table is not
determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended.
(2) Assumes that all securities registered will be sold.
(3) Frank Crivello is the beneficial owner of the shares held by Frank Crivello
SEP IRA. The actual number of shares of common stock offered in this prospectus,
and included in the registration statement of which this prospectus is a part,
includes such additional number of shares of common stock as may be issued or
issuable upon exercise of warrants. However the selling stockholder has
contractually agreed to restrict his ability to exercise his warrants and
receive shares of our common stock such that the number of shares of common
stock beneficially held by him in the aggregate after such exercise does not
exceed 4.9% of the then issued and outstanding shares of common stock as
determined in accordance with Section 13(d) of the Exchange Act. Accordingly,
the number of shares of common stock set forth in the table for the selling
stockholder exceeds the number of shares of common stock that the selling
stockholders could own beneficially at any given time through their ownership of
the warrants. In that regard, the beneficial ownership of the common stock by
the selling stockholder set forth in the table is not determined in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as amended.
Except as set forth, none of the selling stockholders have held a
position or office, or had any other material relationship, with our Company.
The selling stockholders, other than Cornell Capital Partners, L.P. acquired
their securities through a private placement offering which closed in October
2005 and in December 2005.
Cornell Capital Partners, L.P. is the holder of convertible debentures
in the principal amount of $5,000,000, a warrant to purchase 1,125,000 shares of
common stock and 300,000 shares of common stock. Cornell Capital Partners is a
private equity fund. All investment decisions of Cornell Capital Partners are
made by its general partner, Yorkville Advisors, LLC. Mark Angelo, the managing
member of Yorkville Advisors, makes the investment decisions on behalf of
Yorkville Advisors and has voting control over the securities beneficially owned
by Yorkville Advisors, LLC and Cornell Capital Partners. Cornell Capital
Partners acquired all shares being registered in this offering in financing
transactions with us.
34
The convertible debenture has a term of three years, accrues interest
at 10% and is convertible into our common stock at a price per share equal to
the lesser of $1.00 or 80% of the lowest closing bid price of the our common
stock for the 5 trading days immediately preceding the conversion date. The
warrants are exercisable until three years from the date of issuance and have an
exercise price of $1.00 per share. Cornell Capital Partners may not convert the
debenture or exercise the warrant for a number of shares of common stock in
excess of that number of shares of common stock which, upon giving effect to
such conversion, would cause the aggregate number of shares of common stock
beneficially owned by the holder and its affiliates to exceed 4.9% of the
outstanding shares of our common stock following such conversion.
LEGAL MATTERS
Sichenzia Ross Friedman Ference LLP, New York, New York will issue an
opinion with respect to the validity of the shares of common stock being offered
hereby.
EXPERTS
Our financial statements as of September 30, 2005 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the period of June 1, 2005 (date of inception) through September 30, 2005,
appearing in this prospectus and registration statement have been audited by
Weinberg & Company, P.A., independent registered public accountants, as set
forth on their report thereon appearing elsewhere in this prospectus, and are
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form SB-2 to
register the securities offered by this prospectus. For future information about
us and the securities offered under this prospectus, you may refer to the
registration statement and to the exhibits filed as a part of the registration
statement.
In addition, after the effective date of this prospectus, we will be
required to file annual, quarterly, and current reports, or other information
with the SEC as provided by the Securities Exchange Act. You may read and copy
any reports, statements or other information we file at the SEC's public
reference facility maintained by the SEC at 100 F Street, N.E., Washington, D.C.
20549. You can request copies of these documents, upon payment of a duplicating
fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference room. Our SEC filings are
also available to the public through the SEC Internet site at http\\www.sec.gov.
35
NEWGEN TECHNOLLOGIES, INC.
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm F-1
Consolidated Balance Sheet as of September 30, 2005 F-2
Consolidated Statements of Operations for the period from June 1, 2005
(inception) through September 30, 2005 F-3
Consolidated Statements of Changes in Shareholders' Equity for the period
from June 1, 2005 (inception) through September 30, 2005 F-4
Consolidated Statement of Cash Flows for the period from June 1, 2005
(inception) through September 30, 2005 F-5
Notes to the Consolidated Financial Statements as of September 30, 2005 F-6
36
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- -------------------------------------------------------
To the Board of Directors and shareholders of:
NewGen Technologies, Inc. (Formerly Bongiovi Entertainment, Inc.) (a development
stage company)
We have audited the accompanying condolidated balance sheet of NewGen
Technologies, Inc. (formerly Bongiovi Entertainment, Inc.) and subsidiaries (a
development stage company) (the "Company") as of September 30, 2005 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the period from June 1, 2005 (inception) to September 30, 2005. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of NewGen
Technologies, Inc. (formerly Bongiovi Entertainment, Inc.) and subsidiaries (a
development stage company) as of September 30, 2005 and the consolidated results
of its operations and its cash flows for the period from June 1, 2005
(inception) through September 30, 2005, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 10 to the
consolidated financial statements, the Company has working capital of $25,009 as
of September 30, 2005 and a net loss of $2,495,235 and a cash flow deficiency
from operations of $1,079,987 for the period from June 1, 2005 (inception)
through September 30, 2005. These matters raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 10. The consolidated financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.
WEINBERG & COMPANY, P.A.
Boca Raton, Florida
December 27, 2005
F-1
NewGen Technologoes, Inc. (Formerly Bongiovi Entertainment, Inc.)
And Subsidiaries
(A development stage company)
Consolidated
Balance Sheet
ASSETS
September 30,
2005
-----------
CURRENT ASSETS:
Cash $ 829,845
Prepaid royalties 187,500
Receivable from future joint venture 58,306
Other current assets 23,334
-----------
Total Current Assets 1,098,985
-----------
Deposit on land and improvements 170,000
Property and Equipment, net 8,108
-----------
Total Other Assets 178,108
-----------
TOTAL ASSETS $ 1,277,093
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses - related parties $ 527,094
Accounts payable and accrued expenses - other 265,382
Note payable, related party 281,500
-----------
TOTAL LIABILITIES 1,073,976
-----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 10,000,000 shares
authorized, none issued and outstanding --
Common stock, $0.001 par value; 100,000,000 shares authorized,
31,468,524 shares issued and outstanding 31,468
Additional paid-in capital 1,068,323
Common stock to be issued (5,319,500 shares) 2,659,750
Common stock subscriptions receivable (27,581)
Deferred equity-based expenses (1,033,608)
Deficit accumulated during development stage (2,495,235)
-----------
TOTAL STOCKHOLDERS' EQUITY 203,117
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,277,093
===========
The accompanying notes are an integral part of the consolidated
financial statements.
F-2
NewGen Technologoes, Inc. (Formerly Bongiovi Entertainment, Inc.)
And Subsidiaries
(A development stage company)
Consolidated Statements of Operations
For the period from June 1, 2005 (inception) to September 30, 2005
Revenues $ --
------------
General and administrative expenses 2,471,351
------------
Loss from operations (2,471,351)
------------
Other (expenses)
Interest (20,137)
Bank fees (3,747)
------------
Total other (expenses) (23,884)
------------
Loss before provision for income taxes (2,495,235)
Provision for income taxes --
------------
Net loss $ (2,495,235)
============
Loss per share - basic and diluted $ (0.08)
============
Weighted average number of common
shares outstanding - basic and diluted 32,580,309
============
The accompanying notes are an integral part of the consolidated
financial statements.
F-3
NewGen Technologoes, Inc. (Formerly Bongiovi Entertainment, Inc.)
And Subsidiaries
(A development stage company)
Consolidated Statement of Changes in Stockholders' Equity
For The Period from June 1, 2005 (Inception) to September 30, 2005
Additional Common Common Stock
Common Stock Paid-In Stock to Subscriptions
Shares Amount Capital be issued Receivable
----------- ----------- ----------- ----------- -----------
-- $ -- $ -- $ -- $ --
Balance at June 1, 2005
Issuance of shares of common stock 27,711,000 27,711 (24,940) -- (2,581)
to founders in exchange for
subscriptions receivable
Issuance of shares of common stock 424,033 424 211,596 -- --
in exchange for services and
expense reimbursement
Transfer of shares of common stock 3,333,491 3,333 (3,333) -- --
in a share exchange agreement
Common stock to be issued -- -- -- 2,112,750 (25,000)
for cash (4,225,500 shares)
Common stock to be issued -- -- -- 547,000 --
for services and expense
reimbursement (1,094,000 shares)
Non-cash compensation expense -- -- 885,000 -- --
Net loss -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Balance at September 30, 2005 31,468,524 $ 31,468 $ 1,068,323 $ 2,659,750 $ (27,581)
=========== =========== =========== =========== ===========
Deficit
Accumulated
Development
During
Stage Total
----------- -----------
$ -- $ --
Balance at June 1, 2005
Issuance of shares of common stock -- 190
to founders in exchange for
subscriptions receivable
Issuance of shares of common stock -- 149,178
in exchange for services and
expense reimbursement
Transfer of shares of common stock -- --
in a share exchange agreement
Common stock to be issued -- 2,087,750
for cash (4,225,500 shares)
Common stock to be issued -- 424,359
for services and expense
reimbursement (1,094,000 shares)
Non-cash compensation expense -- 36,875
Net loss (2,495,235) (2,495,235)
----------- -----------
Balance at September 30, 2005 $(2,495,235) $ 203,117
=========== ===========
The accompanying notes are an integral part of the consolidated
financial statements.
F-4
NewGen Technologoes, Inc. (Formerly Bongiovi Entertainment, Inc.)
And Subsidiaries
(A development stage company)
Consolidated Statement of Cash Flows
For The Period June 1, 2005 (Inception) to September 30, 2005
Net loss $(2,495,235)
Adjustments to reconcile net loss to net cash
used in operating activities:
Expense portion of stock based compensation and services 573,537
Noncash compensation expense 36,875
Amortization of royalty agreement 62,500
Changes in operating assets and liabilities:
Increase in prepaid royalties (250,000)
Increase in receivable from future joint venture (58,306)
Increase in other current assets (23,334)
Increase in accounts payable and accrued expenses - related parties 527,094
Increase in accounts payable and accrued expenses - other 265,382
Note payable issued for expenses paid on behalf of the Company
and accrued interest, net of repayments 281,500
-----------
Net cash used in operating activities (1,079,987)
-----------
Deposit on land and improvements (170,000)
Purchases of property and equipment (8,108)
-----------
Net cash used in investing activities (178,108)
-----------
Proceeds received for common stock issued to founders 190
Proceeds received for common stock to be issued 2,087,750
-----------
Net cash provided by financing activities 2,087,940
-----------
829,845
-----------
$ 829,845
===========
Common stock issued for deferred equity based expenses $ 1,033,608
===========
Common stock issued for subscriptions receivable $ 27,581
===========
The accompanying notes are an integral part of the consolidated
financial statements.
F-5
NEWGEN TECHNOLOGIES, INC. (formerly Bongiovi Entertainment, Inc.)
AND SUBSIDIARIES (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO SEPTEMBER 30, 2005
(1) ORGANIZATION
Refuel America, Inc. (a development stage company), ("Refuel") was incorporated
on June 1, 2005 under the laws of the state of Delaware. Refuel was formed for
the purpose of developing and distributing innovative alternative fuels
including biodiesel. Refuel's offices are located in Charlotte, North Carolina,
its only location. The Company's fiscal year end is December 31.
On July 29, 2005, Bongiovi Entertainment, Inc. ("Bongiovi"), a totally inactive
reporting public shell corporation, consummated a Share Exchange Agreement (the
"Agreement") with Refuel America, Inc. ("Refuel") whereby all of the
shareholders in Refuel had their shares converted into 28,135,033 shares of
Bongiovi, or approximately 89% of the common stock of Bongiovi. As part of the
reverse merger between Bongiovi and Refuel, warrants were issued to two
shareholders to purchase 2,255,000 common shares. One warrant for 2,155,000
common shares has no expiration date and has an exercise price of $0.50 per
share. The other warrant for 100,000 common shares is exercisable for a term of
five years and has an exercise price of $5.00. Under generally accepted
accounting principles, a company whose stockholders receive over fifty percent
of the stock of the surviving entity in a business combination is considered the
acquirer for accounting purposes. Accordingly, the transaction was accounted for
as an acquisition of Bongiovi, the legal acquirer, and a recapitalization of
Refuel, the accounting acquirer.
On August 10, 2005, to effect a name change, Bongiovi executed a merger and
reorganization agreement with the sole shareholder of NewGen Technologies, Inc,
a newly formed Nevada corporation. This transaction effectively changed the
registrant's name from Bongiovi Entertainment, Inc. to NewGen Technologies, Inc.
(NewGen).
There have been no significant operations since inception and the Company is in
the process of raising additional capital and financing for future operations
(See Note 10).
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
NewGen Technologies, Inc. and its wholly-owned subsidiary Refuel America, Inc.
(collectively, "the Company") and all variable interest entities (VIEs) for
which the Company is the primary beneficiary. All material intercompany accounts
and transactions have been eliminated in consolidation.
Variable Interest Entities
In January 2003, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation 46, Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51 (FIN 46). In December 2003, the FASB modified FIN
46 to make certain technical corrections and address certain implementation
issues that had arisen. FIN 46 (R) provides a new framework for identifying VIEs
and determining when a company should include the assets, liabilities,
non-controlling interests and results of activities of a VIE in its consolidated
financial statements.
F-6
NEWGEN TECHNOLOGIES, INC. (formerly Bongiovi Entertainment, Inc.)
AND SUBSIDIARIES (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO SEPTEMBER 30, 2005
In general, a VIE is a corporation, partnership, limited-liability corporation,
trust or any other legal structure used to conduct activities or hold assets
that either 1) has an insufficient amount of equity to carry out its principal
activities without additional subordinated financial support 2) has a group of
equity owners that are unable to make significant decisions about its
accountabilities or 3) has a group of equity owners that do not have the
obligation to absorb losses or the right to receive returns generated by its
operations. FIN 46 (R) requires a VIE to be consolidated if a party with an
ownership, contractual or other financial interest in the VIE (a variable
interest holder) is obligated to absorb a majority of the risk of loss from the
VIE's activities, is entitled to receive a majority of the VIE's residual
returns, or both. A variable interest holder that consolidates the VIE is called
the primary beneficiary. Upon consolidation, the primary beneficiary must record
all of the VIE's assets, liabilities and non-controlling interests at fair value
and account for the VIE as if it were consolidated based on majority voting
interest.
The provisions of FIN 46 (R), are effective for small business issuers no later
than the end of the first reporting period that ended after December 15, 2004.
Cash
The Company maintains its cash balances in financial institutions. Balances in
the institutions may at times exceed the Federal Deposit Insurance Corporation
limits. The Company also maintains $2,025 in its attorney's escrow account from
proceeds received from founders.
Property and Equipment
Property and equipment are recorded at cost and depreciated over the estimated
useful lives of the related assets using the straight line method with lives of
three years.
Loss per Share
Basic net loss per common share for the period from June 1, 2005 (Inception) to
September 30, 2005 is computed based on the weighted average number of common
shares outstanding during the period. Diluted net loss per common share is
computed based on the weighted average number of common shares and common stock
equivalents outstanding during the period. The exercise of outstanding options
of 800,000 shares and warrants to purchase 2,255,000 common shares as of
September 30, 2005, were not included in the computation of diluted loss per
share since the assumed conversion and exercise would be anti-dilutive for all
periods presented.
Use of Estimates
In preparing the consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclose the nature of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Income Taxes
Deferred income taxes are recognized for the tax consequences in future years of
differences between the tax bases of assets and liabilities and their financial
reporting amounts based on enacted tax laws and statutory tax rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized.
F-7
NEWGEN TECHNOLOGIES, INC. (formerly Bongiovi Entertainment, Inc.)
AND SUBSIDIARIES (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO SEPTEMBER 30, 2005
Fair Value of Financial Instruments
At September 30, 2005, the carrying value of the Company's financial
instruments, which include cash, receivable from future joint ventures, accounts
payable, accrued expenses and notes payable-related party, approximates their
fair value due to the short-term maturity of those instruments.
Joint Ventures
The Company intends to operate its manufacturing and distribution business
through various joint ventures. Upon the adoption of FIN 46 (R), the Company has
consolidated all joint ventures that were determined to be VIEs and where the
Company is the primary beneficiary.
On September 2, 2005, the Company formed a joint venture, named Advanced
Biotechnologies, LLC, with Advanced Biotechnologies, Inc. for the purpose of
blending, processing, storing, distributing and selling biodiesel, biodiesel
mixtures and biodiesel byproducts. The Company has a 50% voting interest and a
50% allocation share of Advanced Biotechnologies, LLC's profits and losses. The
Company is committed to fully fund the $200,000 of joint venture equity to be
used for working capital. The Company has contributed capital of $50,000 for
initial start up costs to Advanced Biotechnologies, LLC as of September 30,
2005. An additional $118,500 was contributed for working capital subsequent to
September 30, 2005. The Company has concluded that this joint venture is a VIE
and accordingly has included this entity in its consolidated financial
statements as of September 30, 2005 and for the period from June 1, 2005
(inception) through September 30, 2005.
On November 8, 2005, the Company formed a joint venture, named PowerSHIFT
Biofuels of Iowa LLC, with PowerSHIFT Biofuels Inc., for the purpose of
conducting the business of manufacturing, processing, storing, marketing,
distributing, and selling biodiesel, biodiesel mixtures, and biodiesel
byproducts. The Company has advanced $25,000 for initial start up costs to
PowerSHIFT Biofuels, of Iowa, LLC subsequent to September 30, 2005. The Company
has a 50% voting interest and a 50% allocation share of PowerSHIFT Biofuels
LLC's profits and losses. The Company is committed to fund up to $125,000 in
initial start up costs.
On November 8, 2005, the Company formed a joint venture, named PowerSHIFT
Biofuels of Hawaii, LLC, with PowerSHIFT Biofuels Inc., for the purpose of
conducting the business of manufacturing, processing, storing, marketing,
distributing, and selling biodiesel, biodiesel mixtures, and biodiesel
byproducts. The Company has advanced $25,000 for initial start up costs to
PowerSHIFT Biofuels, of Hawaii, LLC subsequent to September 30, 2005. The
Company has a 50% voting interest and a 50% allocation share of PowerSHIFT
Biofuels LLC's profits and losses. The Company is committed to fund up to
$125,000 in initial start up costs.
On November 29, 2005, the Company formed a joint venture named NewGen Fuel
Technologies, Ltd, a company registered in the United Kingdom, with AG Global
Partners, Ltd. to be involved in all steps of the fuel from the manufacture of
biofuels through the supply and distribution of fuels to wholesale and retail
networks in Europe, the Middle East, Southeastern Asia and Australia. As of
September 30, 2005, the Company paid start up cost in the amount of $58,306
which is included in receivable from future joint ventures. on the accompanying
consolidated balance sheet as of September 30, 2005. The Company has a 50%
voting interest and a 50% allocation share of NewGen Fuel Technologies, Ltd's
profits and losses. The Company is committed to fund up to $200,000 in working
capital costs as a short-term loan. The Company maintains a majority of Board of
Director members on the joint venture and accordingly this joint venture shall
be consolidated in the next quarter when the joint venture was actually formed.
On November 30, 2005, the Company formed a joint venture named Actanol
BioEngineering, LLC with Actanol BioEngineering, Inc., a provider of alternative
energy and biofuel plant solutions, to conduct the business of design,
engineering, contracting, building, staffing and managing the feasibility and
operational
F-8
NEWGEN TECHNOLOGIES, INC. (formerly Bongiovi Entertainment, Inc.)
AND SUBSIDIARIES (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO SEPTEMBER 30, 2005
processes of various types of biofuel plants and agro-refineries. The Company
has advanced $12,000 for initial start up costs to Actanol BioEngineering, LLC
subsequent to September 30, 2005. The Company has a 50% voting interest and a
50% allocation share of Actanol BioEngineering, LLC profits and losses. The
Company is committed to fund up to $125,000 in initial start up costs.
Stock-Based Compensation
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation, which encourages but does not require companies to recognize
compensation expense for stock-based awards based on their fair market value at
the date of grant. SFAS No. 123 allows companies to continue to employ the
intrinsic value method under APB No. 25 provided that pro-forma disclosures of
net income and earnings per share under the fair value method are included in
the notes to the condensed consolidated financial statements. The required
disclosures were amended in December 2002 with the issuance of SFAS No. 148,
Accounting for Stock Based Compensation - Transition and Disclosure. The Company
has adopted the disclosure requirements of SFAS No. 123 as amended by SFAS No.
148, but will continue to account for stock-based compensation using the
intrinsic value method prescribed under APB No. 25.
The Company accounts for its employee stock options in accordance with
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees." Accordingly, compensation expense is recorded on the date of grant
only if the current market price of the underlying stock exceeds the exercise
price. The Company provides pro-forma net income and pro-forma earnings per
share disclosures for employee stock option grants as if the fair-value-based
method had been applied in accordance with Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation." Had the cost of
stock options issued to employees been determined based on the fair value of
options at the grant date, the Company's net loss and loss per share pro-forma
amounts would be as follows:
For the
period from
June 1, 2005
(Inception) to
September 30,
2005
-----------
Net loss as reported $(2,495,235)
Add: Stock based employee compensation expense
included in reported net income net of related tax effects 36,875
Deduct: Total stock based employee compensation
expense determined under fair value based method
net of related tax effects (46,612)
-----------
Pro forma net loss $(2,500,972)
===========
Loss per share:
Basic and diluted - as reported $ (0.08)
===========
Basic and diluted - pro forma $ (0.08)
===========
On September 7, 2005, the Company adopted an incentive based Non-Qualified Stock
Option Plan ("NQSO Plan") with a vesting period of four (4) years to begin after
the first year of employment. Up to eight million shares or 15% of the float of
Common stock will be provided for the NQSD Plan. The incentive awards will be
based on performance, up to maximum levels, tiered as follows: Chairman/CEO
100%, next level 50% to 75%, and the next level 25% of their cash compensation.
F-9
NEWGEN TECHNOLOGIES, INC. (formerly Bongiovi Entertainment, Inc.)
AND SUBSIDIARIES (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO SEPTEMBER 30, 2005
In addition, a special one-time award was granted to certain individuals for
their efforts contributed to the Company up to the date of the award. The amount
of shares allocated for this award is 300,000. The options were granted as of
September 9, 2005, and participants will be fully vested over a two-year
timeframe. The option price is $0.50 per share. The shares are to be equally
split between Mike D'Onofrio, John King, Bruce Wunner, and Mike Woods. Another
award was granted to Scott Deininger on October 10, 2005, the date of
employment, for the option to purchase 500,000 shares at $1.00 per share and
vesting in accordance with the NQSO Plan.
Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123 (R), "Share-Based Payment". SFAS
No. 123 (R) revises SFAS No. 123, "Accounting for Stock-Based Compensation" and
supersedes APB Opinion No. 25, "Accounting for Stock Issued to Employees". SFAS
No. 123 (R) focuses primarily on the accounting for transactions in which an
entity obtains employee services in share-based payment transactions. SFAS No.
123 (R) requires companies to recognize in the statement of operations the cost
of employee services received in exchange for awards of equity instruments based
on the grant-date fair value of those awards (with limited exceptions).
SFAS No. 123 (R) is effective as of the first interim or annual reporting period
that begins after June 15, 2005 for non-small business issuers and after
December 15, 2005 for small business issuers. Accordingly, the Company will
adopt SFAS No. 123 (R) in its quarter ending March 31, 2006. The Company is
currently evaluating the provisions of SFAS No. 123 (R) and has not yet
determined the impact, if any, that SFAS No. 123 (R) will have on its financial
statement presentation or disclosures.
(3) DEPOSIT ON LAND AND IMPROVEMENTS
On September 28, 2005, the Company executed a definitive agreement in the amount
of $1,700,000 for the purchase of three fuel terminals, subject only to
obtaining financing, that are strategically located near existing fuel pipelines
in the Southeast United States. In conjunction with this purchase contract, a
deposit of $170,000 was given to the seller. Additionally, on December 13, 2005
the company paid another $170,000 deposit to extend the purchase contract to
January 15, 2006. The terminals, with a total storage capacity of over 10
million gallons, and an annual throughput capacity of more than 350 million
gallons, will be used for the distribution and storage of alternative fuels,
including biodiesel and ethanol blends, as well as traditional hydrocarbons. The
Company expects the closing of this purchase, subject to financing and customary
terms and conditions, to occur on or before January 15, 2006.
(4) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
For the period from June 1, 2005 (inception) through September 30, 2005, various
officers and directors of the Company agreed to defer a portion of their
salaries payable, and expense reimbursement until such time as adequate funds
have been received by the Company. The amount deferred as of September 30, 2005
was $498,365, which is included in accounts payable and accrued expenses -
related parties (See Note 9). Accounts payable and accrued expenses consisted of
the following as of September 30, 2005:
Related Non-related
-------- --------
Accounts Payable $ 38,242 $129,542
Accrued Expenses 488,852 135,840
-------- --------
Total $527,094 $265,382
======== ========
F-10
NEWGEN TECHNOLOGIES, INC. (formerly Bongiovi Entertainment, Inc.)
AND SUBSIDIARIES (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO SEPTEMBER 30, 2005
(5) NOTE PAYABLE - RELATED PARTY
The Company's wholly-owned subsidiary, Refuel executed a promissory note on June
30, 2005 with an Executive Director in the amount of $316,500, which includes
$5,863 in accrued interest included in the note payable. As of September 30,
2005 the principal balance is $281,500 and accrued interest of $13,188 which is
included in accrued expenses-related parties. The note bears interest at 10% per
annum with an original due date of December 1, 2005, that has been extended
until January 15, 2006.
(6) COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases office space under three non-cancelable operating leases, two
of which expired on November 30, 2005 (which were automatically renewed for six
months) and one expires February 28, 2006. Rent expense for all operating leases
for the period from June 1, 2005 (Inception) through September 30, 2005 was
$11,208. The leases are renewable every six months.
Commitments
The Company has entered into two management services contracts (commencing on
October 1, 2005 and November 1, 2005) for management of two fuel terminals
(storage tanks, piping and racks for dispensing) for $8,333 per month for the
next sixty months, per contract. At September 30, 2005, the Company has prepaid
$8,333 in terminal management services.
The Company has committed to fund the Advanced Biotechnologies, LLC joint
venture up to $200,000 in working capital. (See also Note 1)
The Company is committed to fund Powershift Biofuels of Iowa, LLC up to $125,000
in initial start up costs (See also Note 1).
The Company is committed to fund Powershift Biofuels of Hawaii, LLC up to
$125,000 in initial start up costs (See also Note 1).
The Company is committed to fund NewGen Fuel Technologies, Ltd up to $200,000 in
working capital costs as a short-term loan (See Note 1).
The Company is committed to fund Actanol BioEngineering, LLC up to $125,000 in
initial start up costs (See Note 1)
Contingencies
The Company signed an agreement, subject only to financing, to purchase three
fuel terminals (see note 3). Deposits of $340,000 have been paid through the
date of this report. These deposits may be forfeited if the closing does not
occur by February 28, 2006 or other breach of the contract by the buyer. The
Company firmly believes the transaction will close by January 15, 2006.
On November 3, 2005, NewGen was advised by two Directors that a personal lawsuit
against them in the United Kingdom alleging they improperly obtained technology
owned by another company has been dropped. NewGen is currently marketing
products utilizing technology received from the two Directors under a royalty
agreement. The management of NewGen firmly believes that the technology is
materially different than that referred to in the aforementioned lawsuit.
Further, the two NewGen Directors have filed patent applications in the United
Kingdom for protection of their technology used by NewGen.
F-11
NEWGEN TECHNOLOGIES, INC. (formerly Bongiovi Entertainment, Inc.)
AND SUBSIDIARIES (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO SEPTEMBER 30, 2005
(7) INCOME TAXES
September 30,
2005
-----------
Taxes at U.S. federal statutory rate of 34% $ (848,380)
Valuation Allowance 848,380
-----------
Tax expense (benefit) $ -
===========
The tax effects of temporary differences that give rise to significant portions
of deferred tax assets and liabilities at September 30, 2005 are presented
below:
September 30,
2005
-----------
Deferred income tax assets:
Net operating loss carryforwards $ 848,380
Deferred income tax liabilities: -
-----------
848,380
Valuation Allowance (848,380)
-----------
Net deferred tax assets $ -
===========
As of September 30, 2005, the Company has a net operating loss carryforward for
federal income tax purposes in the amount of $2,495,235, which expires in 2025.
The Company has recorded a valuation allowance of $848,380 as of September 30,
2005. The valuation allowance was recorded due to the doubt surrounding the
Company's ability to utilize the deferred tax asset.
(8) STOCKHOLDERS' EQUITY
The total number of shares of all classes of stock which the Company is
authorized to issue is 100,000,000 shares of common stock, par value $ 0.001
("Common Stock") and 10,000,000 shares of preferred stock, par value $ 0.001
("Preferred Stock"). The Common Stock shall be identical and shall entitle each
of the holders thereof to the same rights and privileges. When dividends (if
any) are declared upon the Common Stock, whether payable in cash, in property or
in shares of stock of the Company, the holders of Common Stock shall be entitled
to share equally, share for share, in such dividends. Each holder of Common
Stock shall be entitled to one vote per share.
In June 2005, the Company issued 27,711,000 shares of Common Stock to founders
at a value of $0.001 per share for total subscriptions receivable of $2,771, of
which $190 has been received as of September 30, 2005.
In June 2005, the Company issued a total of 424,033 shares of Common Stock to
various individuals in exchange for services rendered, future services to be
rendered and expense reimbursement, at a value of $0.50 per share for a total of
$212,020, of which $62,842 has been deferred.
During August and September, 2005 the Company sold 4,225,500 shares of Common
Stock to various individuals at a value of $0.50 per share for cash proceeds of
$2,087,750 and a subscription receivable of $25,000.
F-12
NEWGEN TECHNOLOGIES, INC. (formerly Bongiovi Entertainment, Inc.)
AND SUBSIDIARIES (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO SEPTEMBER 30, 2005
On September 9, 2005, the Company issued to employees 300,000 options having an
intrinsic value of $885,000, of which $848,125 has been deferred over a two year
vesting period.
Various individuals exchanged services, future services and expense
reimbursements at a value of $0.50 per share for 1,094,000 shares of Common
Stock totaling $547,000 of which $122,641 has been deferred.
(9) RELATED PARTY TRANSACTIONS
The Company's wholly-owned subsidiary, Refuel, executed a promissory note on
June 30, 2005 with an Executive Director in the amount of $316,500, which
includes $5,863 in accrued interest included in the note payable. As of
September 30, 2005 the principal balance is $281,500 and accrued interest of
$13,188 which is included in accrued expenses-related parties (See Note 4). The
note bears interest at 10% per annum with an original due date of December 1,
2005 has been extended until January 15, 2006.
Various officers and directors of the Company agreed to defer a portion of their
salaries, payable under employment agreements, and expense reimbursement until
such time as adequate funds have been received by the Company. The amount
deferred as of September 30, 2005 was $498,365, which is included in accounts
payable and accrued expenses - related parties (See Note 4).
On July 1, 2005, the Company entered into an assignment and royalty agreement
with two directors and shareholders of the Company, whereby various Great
Britain patent applications were assigned to the Company. According to the terms
of the agreement, the Company is required to pay $250,000 at the inception of
the agreement (paid July 1, 2005) and a continuing royalty fee of the greater of
$250,000 or 0.1% of the aggregate products sold per year utilizing the assigned
patents during the term of the royalty agreement (indefinite until cancelled by
either the directors or the Company). As of September 30, 2005, $187,500 of the
$250,000 inception payment remains prepaid and $62,500 has been amortized.
On September 14, 2005, the Company entered into a two-month management services
agreement with Treasure Coast Capital Partners ("TCCP"), a company owned by a
shareholder and officer of the Company. The agreement provides for the Company
to pay $43,250 in fees, of which $30,000 has been paid.
(10) GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. The Company has working capital of
$25,009 as of September 30, 2005 and a net loss of $2,495,235 and a cash flow
deficiency from operations of $1,079,987 for the period from June 1 (inception)
to September 30, 2005. These matters raise substantial doubt about its ability
to continue as a going concern. These financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
The Company's existence is dependent on management's ability to develop
profitable operations and resolve the Company's liquidity problems. In order to
improve the Company's liquidity, management is actively pursuing additional
equity and debt financing through discussions with investment bankers and
private investors. There can be no assurance the Company will be successful in
its efforts to raise additional financing.
(11) SUBSEQUENT EVENTS
The Company has entered into a management services contract for management of a
fuel terminal (storage tanks, piping and racks for dispensing) located in
Spartanburg, SC. for $8,333 per month. The term of the agreement is for a period
of sixty months beginning October 1, 2005 through September 30, 2010.
F-13
NEWGEN TECHNOLOGIES, INC. (formerly Bongiovi Entertainment, Inc.)
AND SUBSIDIARIES (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO SEPTEMBER 30, 2005
On October 28, 2005, the Company executed a letter of intent to merge with
Prolong International Corporation ("Prolong"), a maker of proprietary lubricants
and fuel additives. The merger is subject to satisfactory due diligence,
definitive agreements, regulatory approvals and shareholder consent. Under the
letter of intent, the Company will merge with Prolong, with Prolong being the
surviving company. Prolong will take the name NewGen Technologies, Inc.,
operating through two subsidiaries, Refuel America, Inc. and Prolong Super
Lubricants, Inc., and will trade on the American Stock Exchange (AMEX). Current
NewGen Technologies, Inc. shareholders will own approximately 93.6% of the new
company, with the balance owned by current Prolong shareholders. The board and
senior management of the merged parent company will come from NewGen
Technologies, Inc. On November 30, the Company announced that it has terminated
merger negotiations with Prolong International Corporation. The Company decided
not to pursue the merger based upon recent developments, including Prolong's
delisting from the American Stock Exchange.
On November 1, 2005, the Company entered into a management services contract for
management of a fuel terminal (storage tanks, piping and racks for dispensing)
located in Paw Creek, NC. for $8,333 per month. The term of the agreement is for
a period of sixty months beginning November 1, 2005 through October 31, 2010.
On November 3, 2005, the Company was advised by two Directors that a personal
lawsuit against them in the United Kingdom alleging they improperly obtained
technology owned by another company has been dropped. The Company is currently
marketing products utilizing technology received from the two Directors under a
royalty agreement. The Company firmly believes that the technology is materially
different than that referred to in the aforementioned lawsuit. Further, the two
Directors have filed patent applications in the United Kingdom for protection of
their technology used by the Company.
On November 8, 2005, the Company formed a joint venture with PowerSHIFT Energy
Company, Inc., ("PowerSHIFT Energy") a provider of alternative energy solutions,
to build biodiesel plants and power generation facilities in the United States.
The joint venture, PowerSHIFT Biofuels, LLC, ("PowerSHIFT Biofuels") is equally
owned by NewGen and PowerSHIFT Energy. PowerSHIFT Biofuels has already
identified several potential opportunities in California, Hawaii, and Iowa to
provide biodiesel and complete green energy solutions for utilities, industry
and transportation. The first of these projects could potentially be operational
by the fourth quarter of 2006, and all identified plants combined would produce
in excess of 140 million gallons of biodiesel. Additional sites are currently
being explored in the Midwest and Rocky Mountain states. The Company has
advanced $50,000 for initial start up costs to PowerSHIFT, LLC subsequent to
September 30, 2005. The Company has a 50% voting and share of profits/losses in
PowerSHIFT Biofuels, LLC.
A stock option award was granted to the Company's new CFO on October 10, 2005,
(date employment began) for the option to purchase 500,000 shares at $1.00 per
share and vesting in accordance with the NQSO Plan.
On November 29, 2005, NewGen announced the formation of its first international
joint venture with AG Global Partners, Ltd. ("AG"), a provider of international
biofuel and alternative energy solutions. AG will be responsible for assembling
a team to emulate the Company's and ReFuel America's model of being a completely
integrated supplier of performance fuels and biofuels. The joint venture
company, owned
F-14
NEWGEN TECHNOLOGIES, INC. (formerly Bongiovi Entertainment, Inc.)
AND SUBSIDIARIES (A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD FROM JUNE 1, 2005 (INCEPTION) TO SEPTEMBER 30, 2005
equally by the Company and AG, will be involved in all steps of the fuel from
the manufacture of biofuels through the supply and distribution of fuels to
wholesale and retail networks, including commercial fleets and retail gas
stations. The Company and AG share equally in profits and losses. The operation
will offer performance fuels, biofuels and green energy solutions to
governments, businesses, and other industry players in various global markets
including Europe, the Middle East, Southeast Asia, and Australia. The Company
has not advanced any start up costs subsequent to September 30, 2005. The
Company has a 50% voting and share of AG profits and losses.
On November 30, 2005 the Company announced that it has formed an engineering and
design joint venture, Actanol BioEngineering, LLC ("Actanol BioEngineering")
with ACTANOL Service Ltd. ("ACTANOL"), a provider of alternative energy and
biofuel plant solutions, to oversee the design, engineering, construction,
operations and technology support for biodiesel and other biofuel plants is
equally owned by the Company and ACTANOL, who also share equally in profits and
losses. The Company saw a need to have a partner with the highest level of
engineering and design expertise. ACTANOL, based in Munich, Germany, has years
of direct experience designing and operating various types of plants and related
infrastructure in the biofuel, pharmaceutical, and petrochemical industries.
ACTANOL has access to over 1,200 engineers and technicians to ensure that the
Company will have the highest quality biofuel plants in the world. ACTANOL
BioEngineering is already working with the Company and its U.S. subsidiary,
ReFuel America, to develop the previously announced biofuel and green energy
projects in North Carolina, South Carolina, Georgia, Iowa, Texas, California and
Hawaii. ACTANOL is also exploring other opportunities in the U.S. and plans to
deliver projects in Germany, the Ukraine, and Brazil. ACTANOL's complete
"agro-refinery" solution can transfer multiple feedstocks into various biofuels,
biolubricants, fodder, biofertilizer, bioplastics and other forms of energy. The
Company has advanced $12,000 in start up costs subsequent to September 30, 2005.
The Company has advanced $12,000 for initial start up costs to ACTANOL
subsequent to September 30, 2005. The Company has a 50% voting and share of
ACTANOL profits and losses.
In December 2005, the Company sold 1,084,200 shares of Common Stock to various
individuals at a value of $1.00 per share for net cash proceeds of $215,200 and
subscriptions receivable of $869,000. In addition, a warrant was issued to an
individual for the purchase of 140,000 shares at an exercise price of $1.50 per
share. The warrant expires five years from the date of issuance.
During December 2005, an individual exchanged future services at a value of
$1.00 per share for 2,000 shares of common stock totaling $2,000 of which $2,000
has been deferred.
F-15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the Nevada Revised Statutes our directors and officers will have
no individual liability to us or our stockholders or creditors for any damages
resulting from the officer's or director's act or failure to act in his or her
capacity as an officer or director unless it is proven that (i) the officer's or
director's act or failure to act constituted a breach of his or her fiduciary
duties as an officer or director; and (ii) the officer's or director's breach of
those duties involved intentional misconduct, fraud or a knowing violation of
law. The effect of this statute is to eliminate the individual liability of our
officers and directors to the corporation or its stockholders or creditors,
unless any act or failure to act of an officer or director meets both situations
listed in (i) and (ii) above.
Our Amended Articles of Incorporation provide for the indemnification
of our officers and directors to the maximum extent permitted by Nevada law. The
Nevada Revised Statutes also provide that a corporation may indemnify any
officer or director who is a party or is threatened to be made a party to a
litigation by reason of the fact that he or she is or was an officer or director
of the corporation, or is or was serving at the request of the corporation as an
officer or director of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by such officer
or director if (i) there was no breach by the officer or director of his or her
fiduciary duties to the corporation involving intentional misconduct, fraud or
knowing violation of law; or (ii) the officer or director acted in good faith
and in a manner which he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, if any, payable by the Registrant
relating to the sale of common stock being registered. All amounts are estimates
except the SEC registration fee.
SEC registration fee $ 12,346.81
Printing and engraving expenses $ 10,000.00
Legal fees and expenses $ 50,000.00
Accounting fees and expenses $ 20,000.00
Miscellaneous expenses $ 5,000.00
Total........................................... $ 97,346.81
===========
The Registrant has agreed to bear expenses incurred by the selling
stockholders that relate to the registration of the shares of common stock being
offered and sold by the selling stockholders.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Pursuant to a Share Exchange Agreement dated July 29, 2005, which
closed on August 2, 2005, we issued 28,135,033 shares of common stock and a
warrant to purchase 2,155,000 shares of common stock to accredited investors and
non-U.S. persons (as contemplated by Rule 902 under the Securities Act of 1933).
These issuances are exempt from registration requirements under Regulation D or
Regulation S under the Securities Act of 1933, as amended. The shares issued
pursuant to Regulation S were issued in an "offshore transaction" as defined in,
and pursuant to, Rule 902 under the Securities Act of 1933 on the basis that the
purchaser was not offered the shares in the United States and did not execute or
deliver any agreement in the United States.
1
On August 2, 2005, we issued to Sarmatan Developments Ltd. a warrant to
purchase 100,000 shares of common stock, at an exercise price of $5.00 per
share, exercisable for a term of 5 years. The issuance of the warrant is exempt
from the registration requirements under Rule 4(2) of the Securities Act of
1933, as amended.
On August 24, 2005, we completed a private placement offering of
534,000 shares our common stock, par value $0.001 per share, to accredited
investors for an aggregate purchase price of approximately $267,000. The
aforementioned securities were sold in reliance upon the exemption afforded by
the provisions of Regulation D, as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
On September 2, 2005, we completed a private placement offering of
2,238,000 shares our common stock, par value $0.001 per share, to accredited
investors for an aggregate purchase price of approximately $1,119,000.
Additionally, we issued 1,094,000 shares of common stock, par value $0.001 per
share, in consideration for settlement of $547,000 of our debt obligations. The
aforementioned securities were sold in reliance upon the exemption afforded by
the provisions of Regulation D, as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
On September 30, 2005, we completed a private placement offering of
1,187,500 shares our common stock, par value $0.001 per share, to accredited
investors for an aggregate purchase price of approximately $593,750. The
aforementioned securities were sold in reliance upon the exemption afforded by
the provisions of Regulation D, as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
On October 10, 2005, we completed a private placement offering of
266,000 shares our common stock, par value $0.001 per share, to accredited
investors for an aggregate purchase price of approximately $133,000. The
aforementioned securities were sold in reliance upon the exemption afforded by
the provisions of Regulation D, as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
In December 2005, we completed a private placement offering of
1,084,200 shares our common stock, par value $0.001 per share, to accredited
investors for an aggregate purchase price of approximately $1,084,200. The
aforementioned securities were sold in reliance upon the exemption afforded by
the provisions of Regulation D, as promulgated by the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
Cornell Financing
To obtain funding we entered into a Securities Purchase Agreement with
Cornell Capital Partners LP on January 24, 2006 for the sale of $5,000,000 in
secured convertible debentures and warrants to buy 1,125,000 shares of our
common stock. Provided that the terms and conditions of the Securities Purchase
Agreement are satisfied Cornell Capital Partners LP is obligated to provide us
with an aggregate of $5,000,000 as follows:
o $2,200,000 was disbursed on January 24, 2006;
o $650,000 will be disbursed on the earlier to occur of (i) the date
that all shares pledged to Cornell Capital Partners LP have been
received by them, or (ii) two business days before this prospectus
is declared effective; and
o $2,150,000 will be disbursed two business days before this
prospectus is declared effective.
The secured convertible debentures bear interest at 10%, mature three
years from the date of issuance and the principal is convertible into our
common, at a conversion price per share equal to the lesser of (i) $1.00, or
(ii) eighty percent (80%) of the lowest closing bid price for the our common
stock during the five trading days immediately preceding the conversion date,
subject to adjustment. Upon three-business days advance written notice, we may
redeem the secured convertible debentures, in whole or part if the closing bid
price of our common stock at the time of such written notice is less than $1.00.
In the event that we exercise our right of redemption within 90 days of the date
of issuance of the secured convertible debentures, the redemption will be
calculated at 107% of the face value and if the right of redemption is exercised
after 90 days of the date of issuance of the secured convertible debentures, the
redemption will be calculated at 110% of the face value.
2
The warrants are exercisable until three years from the date of
issuance and have an exercise price of $1.00 per share. The conversion price of
the callable secured convertible notes and the exercise price of the warrants
may be adjusted in certain circumstances such as if we pay a stock dividend,
subdivide or combine outstanding shares of common stock into a greater or lesser
number of shares, or take such other actions as would otherwise result in
dilution of the selling stockholder's position. The selling stockholders have
contractually agreed to restrict their ability to convert or exercise their
warrants and receive shares of our common stock such that the number of shares
of common stock held by them and their affiliates after such conversion or
exercise does not exceed 4.99% of the then issued and outstanding shares of
common stock. In addition, we have granted the investors a security interest in
substantially all of our assets and intellectual property and registration
rights.
* All of the above offerings and sales were deemed to be exempt under
Section 4(2) of the Securities Act of 1933, as amended. No advertising or
general solicitation was employed in offering the securities. The offerings and
sales were made to a limited number of persons, all of whom were accredited
investors, business associates of our company or executive officers of our
company, and transfer was restricted by our company in accordance with the
requirements of the Securities Act of 1933. In addition to representations by
the above-referenced persons, we have made independent determinations that all
of the above-referenced persons were accredited or sophisticated investors, and
that they were capable of analyzing the merits and risks of their investment,
and that they understood the speculative nature of their investment.
Except as expressly set forth above, the individuals and entities to
whom we issued securities as indicated in this section of the registration
statement are unaffiliated with us.
ITEM 27. EXHIBITS.
Exhibit
Number Description of Exhibit
3.1 Registrant's Articles of Incorporation (incorporated by reference
to the exhibits to Registrants Form 8-K filed on November 14, 2005).
3.2 Certificate of Amendment to Registrant's Articles of Incorporation
3.4 Articles of Merger changing the Registrant's name to NewGen
Technologies, Inc. (incorporated by reference to the exhibits to
Registrants Form 8-K filed on August 12, 2005).
3.5 Registrant's By-Laws.
5.1 Opinion of Sichenzia Ross Friedman Ference LLP
10.1 Share Exchange Agreement by and among Bongiovi Entertainment,
Inc., ReFuelAmerica, Inc. and the shareholders of ReFuel America,
Inc. (incorporated by reference to a Form 8-K filed by the
Registrant on August 4, 2005)
10.2 Management Services Agreement by and between Bongiovi
Entertainment, Inc. and Sarmatan Developments Ltd. (incorporated by
reference to a Form 8-K filed by the Registrant on August 4, 2005)
10.3 Warrant issued to Frank Crivello SEP IRA dated August 2, 2005
(incorporated by reference to a Form 8-K filed by the Registrant on
August 4, 2005)
10.4 Form of Registration Rights Agreement (incorporated by reference
to the exhibit to Registrants Form 8-K filed on August 25, 2005)
10.5 Limited Liability Company Agreement of Advanced Biotechnology, LLC
(incorporated by reference to a Form 8-K filed by the Registrant on
September 22, 2005)
10.6 Contract of Sale, dated September 28, 2005, by and among Crown
Central LLC and ReFuel America, Inc. (incorporated by reference to a
Form 8-K filed by the Registrant on October 3, 2005)
10.7 Amendment to Contract of Sale, dated December 9, 2005, by and
among Crown Central LLC and ReFuel America, Inc. (incorporated by
reference to the exhibit to Registrants Form 8-K filed on December
16, 2005)
10.8 Limited Liability Company Agreement of Powershift Biofuels of
Hawaii, LLC, dated November 15, 2005, by and among Powershift
Biofuels of Hawaii, LLC, Powershift Energy Company, Inc. and ReFuel
America, Inc. (incorporated by reference to a Form 8-K filed by the
Registrant on November 16, 2005)
3
Exhibit
Number Description of Exhibit
10.9 Limited Liability Company Agreement of Powershift Biofuels of
Iowa, LLC, dated November 15, 2005, by and among Powershift Biofuels
of Hawaii, LLC, Powershift Energy Company, Inc. and ReFuel America,
Inc. (incorporated by reference to a Form 8-K filed by the
Registrant on November 16, 2005)
10.10 Joint Venture Agreement, dated November 29, 2005, by and among
NewGen Technologies, Inc., AG Global Partners Limited and NewGen
Fuel Technologies Limited (incorporated by reference to a Form 8-K
filed by the Registrant on December 6, 2005)
10.11 Technology License & Development Agreement, dated November 29,
2005, by and between Newgen Technologies, Inc. and NewGen Fuel
Technologies Limited (incorporated by reference to a Form 8-K filed
by the Registrant on December 6, 2005)
10.12 Limited Liability Company Agreement of Actanol Bioengineering,
LLC, dated November 28, 2005, by and among Actanol Bioengineering,
LLC, Actanol Service Ltd. and Newgen Technologies, Inc.
(incorporated by reference to a Form 8-K filed by the Registrant on
December 6, 2005)
10.13 $2,200,000 principal amount Secured Convertible Debenture, dated
January 24, 2006, issued by NewGen Technologies, Inc. to Cornell
Capital Partners LP (incorporated by reference to a Form 8-K filed
by the Registrant on January 30, 2006)
10.14 Warrant to purchase 1,125,000 shares of Common Stock of NewGen
Technologies, Inc., issued January 24, 2006 (incorporated by
reference to a Form 8-K filed by the Registrant on January 30, 2006)
10.15 Securities Purchase Agreement, dated January 24, 2006, by and
between NewGen Technologies, Inc. and Cornell Capital Partners LP
(incorporated by reference to a Form 8-K filed by the Registrant on
January 30, 2006)
10.16 Investor Registration Rights Agreement, dated January 24, 2006,
by and between NewGen Technologies, Inc. and Cornell Capital
Partners LP (incorporated by reference to a Form 8-K filed by the
Registrant on January 30, 2006)
10.17 Security Agreement, dated January 24, 2006, by and between NewGen
Technologies, Inc. and Cornell Capital Partners LP (incorporated by
reference to a Form 8-K filed by the Registrant on January 30, 2006)
10.18 Subsidiary Security Agreement, dated January 24, 2006, by and
between ReFuel Terminal Operations, Inc. and Cornell Capital
Partners LP (incorporated by reference to a Form 8-K filed by the
Registrant on January 30, 2006)
10.19 Subsidiary Security Agreement, dated January 24, 2006, by and
between ReFuel America, Inc. and Cornell Capital Partners LP
(incorporated by reference to a Form 8-K filed by the Registrant on
January 30, 2006)
10.20 Subsidiary Security Agreement, dated January 24, 2006, by and
between NewGen International, Inc. and Cornell Capital Partners LP
(incorporated by reference to a Form 8-K filed by the Registrant on
January 30, 2006)
21.1 List of Subsidiaries
23.1 Consent of Weinberg & Company, P.A.
23.2 Consent of Sichenzia Ross Friedman Ference LLP (contained in
Exhibit 5.1)
ITEM 28. UNDERTAKINGS.
The undersigned Company hereby undertakes to:
(1) File, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act of
1933, as amended (the "Securities Act");
4
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of the securities offered would
not exceed that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) under the
Securities Act if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement, and
(iii) Include any additional or changed material information on the plan of
distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) For determining liability of the undersigned small business issuer under the
Securities Act to any purchaser in the initial distribution of the securities,
the undersigned undertakes that in a primary offering of securities of the
undersigned small business issuer pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to the
purchaser, if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned small business issuer will
be a seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned small business
issuer relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned small business issuer or used or referred to by the
undersigned small business issuer;
(iii) The portion of any other free writing prospectus relating to the offering
containing material information about the undersigned small business issuer or
its securities provided by or on behalf of the undersigned small business
issuer; and
(iv) Any other communication that is an offer in the offering made by the
undersigned small business issuer to the purchaser.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Company of expenses incurred or paid by a
director, officer or controlling person of the Company in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
5
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorizes this registration
statement to be signed on its behalf by the undersigned, in Charlotte, North
Carolina, on February 10, 2006.
NEWGEN TECHNOLOGIES, INC.
By: /s/ S. Bruce Wunner
--------------------------
S. Bruce Wunner
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Scott A. Deininger
--------------------------
Scott A. Deininger
Chief Financial Officer
(Principal Financial and Accounting Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints S. Bruce Wunner and Scott A. Deininger
his true and lawful attorneys-in-fact, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this registration statement and to sign a registration statement pursuant to
Section 462(b) of the Securities Act of 1933, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated: Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the following persons
in the capacities and on the dates indicated:
SIGNATURE TITLE DATE
- ------------------------------------ ------------------------------------ ----------------------
/s/ S. Bruce Wunner Chief Executive Officer and Chairman February 10, 2006
- ---------------------------
S. Bruce Wunner
/s/ Ian Williamson President and Director February 10, 2006
- ---------------------------
Ian Williamson
/s/ Scott A. Deininger Chief Financial Officer February 10, 2006
- ---------------------------
Scott Deininger
/s/ Noel M. Corcoran Director February 10, 2006
- ---------------------------
Noel M. Corcoran
/s/ Cliff Hazel Director February 10, 2006
- ---------------------------
Cliff Hazel
/s/ Carlos Genardini Director February 10, 2006
- ---------------------------
Carlos Genardini
6